| ý |   | ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE     |
|--------|--------|---------------------------------------------------------------|
|   |   | SECURITIES      EXCHANGE ACT OF 1934                          |
|   |   | For      the fiscal year ended December 31, 2008              |
|   |   | OR                                                            |
| o      |   | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
|   |   | SECURITIES      EXCHANGE ACT OF 1934                          |

| Florida                                            |   | 0-13358                       |   | 59-2273542                             |
|----------------------------------------------------|--------|-------------------------------|--------|----------------------------------------|
| (State      of Incorporation)                      |   | (Commission      File Number) |   | (IRS      Employer Identification No.) |
| 217      North Monroe Street, Tallahassee, Florida |   |  32301                   |
| (Address      of principal executive offices)      |   | (Zip      Code)               |

| Class                                        |   | Outstanding      at February 27, 2009 |
|----------------------------------------------|--------|---------------------------------------|
| Common      Stock, $0.01 par value per share |   | 17,139,730      shares                |
|                                         |   |                                  |

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TABLE OF CONTENTS

| PART I                   |   |                                                                                                                             |   | PAGE   |
|--------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                     |   |                                                                                                                             |   |   |
| Item      1.             |   | Business                                                                                                                         |   | 4      |
| Item      1A.            |   | Risk      Factors                                                                                                                |   | 15     |
| Item      1B.            |   | Unresolved Staff      Comments                                                                                                   |   | 23     |
| Item      2.             |   | Properties                                                                                                                       |   | 23     |
| Item      3.             |   | Legal      Proceedings                                                                                                           |   | 23     |
| Item      4.             |   | Submission      of Matters to a Vote of Security Holders                                                                         |   | 23     |
|                     |   |                                                                                                                             |   |   |
| PART II                  |   |                                                                                                                             |   |   |
|                     |   |                                                                                                                             |   |   |
|  Item      5.  |   | Market for      the Registrant’s Common Equity, Related Shareowner Matters, and Issuer      Purchases of Equity Securities |   | 23     |
| Item      6.             |   | Selected      Financial Data                                                                                                     |   | 25     |
| Item      7.             |   | Management's      Discussion and Analysis of Financial Condition and Results of      Operations                                  |   | 26     |
| Item      7A.            |   | Quantitative      and Qualitative Disclosure About Market Risk                                                                   |   | 54     |
| Item      8.             |   | Financial      Statements and Supplementary Data                                                                                 |   | 55     |
| Item      9.             |   | Changes in      and Disagreements with Accountants on Accounting and Financial      Disclosure                                   |   | 93     |
| Item      9A.            |   | Controls and      Procedures                                                                                                     |   | 93     |
| Item      9B.            |   | Other      Information                                                                                                           |   | 93     |
|                     |   |                                                                                                                             |   |   |
| PART III                 |   |                                                                                                                             |   |   |
|                     |   |                                                                                                                             |   |   |
| Item      10.            |   | Directors,      Executive Officers, and Corporate Governance                                                                     |   | 95     |
| Item      11.            |   | Executive      Compensation                                                                                                      |   | 95     |
| Item      12.            |   | Security      Ownership of Certain Beneficial Owners and Management and Related      Shareowner Matters                          |   | 95     |
| Item      13.            |   | Certain      Relationships and Related Transactions, and Director      Independence                                              |   | 96     |
| Item      14.            |   | Principal      Accountant Fees and Services                                                                                      |   | 96     |
|                     |   |                                                                                                                             |   |   |
| PART IV                  |   |                                                                                                                             |   |   |
|                     |   |                                                                                                                             |   |   |
| Item      15.            |   | Exhibits and      Financial Statement Schedules                                                                                  |   | 97     |
| Signatures               |   | 99                                                                                                                               |

----

| ·   | the      strength of the United States economy in general and the strength of the      local economies in which we conductoperations; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | changes      in the securities and real estatemarkets; |
|--------------------|--------------------------------------------------------|

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

| ·   | inflation,      interest rate, market and monetaryfluctuations; |
|--------------------|-----------------------------------------------------------------|

| ·   | legislative      or regulatory changes; |
|--------------------|-----------------------------------------|

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

| ·   | the      effects of our lack of a diversified loan portfolio, including the risks      of geographic and industryconcentrations; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

| ·   | the      accuracy of our financial statement estimates and assumptions, including      the estimate for our loan lossprovision; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

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

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

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

| ·   | 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 viceversa; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | increased      competition and its effect onpricing; |
|--------------------|------------------------------------------------------|

| ·   | technological      changes; |
|--------------------|-----------------------------|

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

| ·   | changes      in consumer spending and savinghabits; |
|--------------------|-----------------------------------------------------|

| ·   | growth      and profitability of our noninterestincome; |
|--------------------|---------------------------------------------------------|

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

| ·   | the      limited trading activity of our commonstock; |
|--------------------|-------------------------------------------------------|

| ·   | the      concentration of ownership of our commonstock; |
|--------------------|---------------------------------------------------------|

| ·   | 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. |
|--------------------|------------------------------------------------------------------|

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Table of Contents

PART I

| Item 1. | Business |
|---------|----------|

| ·   | Business Banking – The      Bank provides banking services to corporations and other business      clients.  Credit products are available for a wide variety of      general business purposes, including financing for commercial business      properties, equipment, inventories and accounts receivable, as well as      commercial leasing and letters of credit.  We also provide      treasury management services, and, through a marketing alliance with      Elavon, Inc., merchant credit card transaction processing      services. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Commercial Real Estate      Lending – The Bank provides a wide range of products to meet the      financing needs of commercial developers and investors, residential      builders and developers, and community development.  Credit      products are available to facilitate the purchase of land and/or build      structures for business use and for investors who are developing      residential or commercial property. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Residential Real Estate      Lending – The Bank provides products to help meet the home      financing needs of consumers, including conventional permanent and      construction/permanent (fixed or adjustable rate) financing arrangements,      and FHA/VA loan products.  The bank offers both fixed-rate and      adjustable rate (ARM) residential mortgage loans.  As of      December 31, 2008, approximately 14.1% of the Bank’s loan portfolio      consisted of residential ARM loans.  A portion of our loans      originated are sold into the secondary market.  We do not      originate subprime residential real estate  loans. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | Retail Credit – The      Bank provides a full range of loan products to meet the needs of      consumers, including personal loans, automobile loans, boat/RV loans, home      equity loans, and credit cardprograms. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Institutional Banking –      The Bank provides banking services to meet the needs of state and local      governments, public schools and colleges, charities, membership and      not-for-profit associations including customized checking and savings      accounts, cash management systems, tax-exempt loans, lines of credit, and      term loans. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Retail Banking - The      Bank provides a full range of consumer banking services, including      checking accounts, savings programs, automated teller machines (ATMs),      debit/credit cards, night deposit services, safe deposit facilities, and      PC/Internet banking.  Clients can use the Capital City Bank      Direct which offers both a “live” call center between the hours of 8 a.m.      to 6 p.m. five days a week, and an automated phone system offering 24-hour      access to their deposit and loan account information, and transfer funds      between linked accounts.  The Bank is a member of the “Star” ATM      Network that permits banking clients to access cash at ATMs or point of      sale merchants. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                     |   | Market      Share as of June 30,(1) |   |
|------------------------------------------|--------|-------------------------------------|--------|
|                                     |   | 2008                                |   |   | 2007 |   |   | 2006 |   |
| Florida                                  |   |                                |   |   |   |   |   |   |   |
|         Alachua County    |   |                                | 4.6    | % |   |   | 4.7 | % |   |   | 5.6 | %  |
|         Bradford County   |   |                                | 50.1   | % |   |   | 47.6 | % |   |   | 44.6 | % |
|         Citrus County     |   |                                | 3.1    | % |   |   | 3.0 | % |   |   | 3.3 | % |
|         Clay County       |   |                                | 1.9    | % |   |   | 2.0 | % |   |   | 2.0 | % |
|         Dixie County      |   |                                | 23.4   | % |   |   | 22.9 | % |   |   | 20.8 | % |
|         Gadsden County    |   |                                | 55.7   | % |   |   | 61.0 | % |   |   | 64.9 | % |
|         Gilchrist County  |   |                                | 37.8   | % |   |   | 33.6 | % |   |   | 47.1 | % |
|         Gulf County       |   |                                | 9.1    | % |   |   | 11.7 | % |   |   | 14.3 | % |
|         Hernando County   |   |                                | 1.2    | % |   |   | 1.2 | % |   |   | 1.5 | % |
|         Jefferson County  |   |                                | 21.9   | % |   |   | 22.8 | % |   |   | 24.6 | % |
|         Leon County       |   |                                | 17.6   | % |   |   | 16.2 | % |   |   | 18.0 | % |
|         Levy County       |   |                                | 31.7   | % |   |   | 33.0 | % |   |   | 34.4 | % |
|         Madison County    |   |                                | 12.1   | % |   |   | 13.1 | % |   |   | 14.9 | % |
|         Pasco County      |   |                                | 0.2    | % |   |   | 0.2 | % |   |   | 0.2 | % |
|         Putnam County     |   |                                | 19.7   | % |   |   | 11.1 | % |   |   | 12.3 | % |
|         St. Johns County  |   |                                | 1.1    | % |   |   | 1.2 | % |   |   | 1.5 | % |
|         Suwannee County   |   |                                | 7.2    | % |   |   | 7.7 | % |   |   | 11.8 | % |
|         Taylor County     |   |                                | 31.1   | % |   |   | 30.1 | % |   |   | 28.6 | % |
|         Wakulla County    |   |                                | 5.5    | % |   |   | 2.6 | % |   |   | 2.9 | % |
|         Washington County |   |                                | 17.0   | % |   |   | 13.8 | % |   |   | 17.4 | % |
| Georgia                                  |   |                                |   |   |   |   |   |   |   |   |   |   |
|         Bibb County       |   |                                | 2.1    | % |   |   | 2.5 | % |   |   | 2.9 | % |
|         Burke County      |   |                                | 7.4    | % |   |   | 7.8 | % |   |   | 9.2 | % |
|         Grady County           |   |                                | 16.7   | % |   |   | 18.7 | % |   |   | 20.0 | % |
|         Laurens County    |   |                                | 16.2   | % |   |   | 19.2 | % |   |   | 23.8 | % |
|         Troup County      |   |                                | 5.6    | % |   |   | 6.2 | % |   |   | 8.2 | % |
| Alabama                                  |   |                                |   |   |   |   |   |   |   |   |   |   |
|         Chambers County   |   |                                | 7.3    | % |   |   | 6.5 | % |   |   | 4.7 | % |

| (1) | Obtained      from the June 30, 2008 FDIC/OTS Summary of Deposits  Report. |
|-----|----------------------------------------------------------------------------|

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| County                       |   | Number      ofCommercial      Banks |   |   | Number      of CommercialBank      Offices |   |
|------------------------------|--------|-------------------------------------|--------|--------|--------------------------------------------|--------|
| Florida                      |   |                                |   |   |                                       |   |
|         Alachua    |   |                                | 14     |   |                                       |   | 66 |   |
|         Bradford   |   |                                | 3      |   |                                       |   | 3 |   |
|         Citrus     |   |                                | 14     |   |                                       |   | 49 |   |
|         Clay       |   |                                | 14     |   |                                       |   | 31 |   |
|         Dixie      |   |                                | 3      |   |                                       |   | 4 |   |
|         Gadsden    |   |                                | 4      |   |                                       |   | 6 |   |
|         Gilchrist  |   |                                | 3      |   |                                       |   | 6 |   |
|         Gulf       |   |                                | 6      |   |                                       |   | 9 |   |
|         Hernando   |   |                                | 13     |   |                                       |   | 43 |   |
|         Jefferson  |   |                                | 2      |   |                                       |   | 2 |   |
|         Leon       |   |                                | 19     |   |                                       |   | 96 |   |
|         Levy       |   |                                | 3      |   |                                       |   | 13 |   |
|         Madison    |   |                                | 6      |   |                                       |   | 6 |   |
|         Pasco      |   |                                | 26     |   |                                       |   | 120 |   |
|         Putnam     |   |                                | 6      |   |                                       |   | 16 |   |
|         St. Johns  |   |                                | 23     |   |                                       |   | 66 |   |
|         Suwannee   |   |                                | 5      |   |                                       |   | 8 |   |
|         Taylor     |   |                                | 3      |   |                                       |   | 4 |   |
|         Wakulla    |   |                                | 4      |   |                                       |   | 7 |   |
|         Washington |   |                                | 5      |   |                                       |   | 5 |   |
| Georgia                      |   |                                |   |   |                                       |   |   |   |
|         Bibb       |   |                                | 12     |   |                                       |   | 57 |   |
|         Burke      |   |                                | 5      |   |                                       |   | 10 |   |
|         Grady      |   |                                | 5      |   |                                       |   | 8 |   |
|         Laurens    |   |                                | 10     |   |                                       |   | 20 |   |
|        Troup            |   |                                | 12     |   |                                       |   | 27 |   |
| Alabama                      |   |                                |   |   |                                       |   |   |   |
|         Chambers   |   |                                | 5      |   |                                       |   | 10 |   |

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|        Item      1A | Risk      Factors |
|--------------------------|-------------------|

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| ·   | the      risk characteristics of various classifications of  loans; |
|--------------------|---------------------------------------------------------------------|

| ·   | previous      loan loss experience; |
|--------------------|-------------------------------------|

| ·   | specific      loans that have loss potential; |
|--------------------|-----------------------------------------------|

| ·   | delinquency      trends; |
|--------------------|--------------------------|

| ·   | estimated      fair market value of thecollateral; |
|--------------------|----------------------------------------------------|

| ·   | current      economic conditions; and |
|--------------------|---------------------------------------|

| ·   | geographic      and industry loan concentrations. |
|--------------------|---------------------------------------------------|

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| ·   | general      or local economic conditions; |
|--------------------|--------------------------------------------|

| ·   | environmental      cleanup liability; |
|--------------------|---------------------------------------|

| ·   | neighborhood      values; |
|--------------------|---------------------------|

| ·   | interest      rates; |
|--------------------|----------------------|

| ·   | real      estate tax rates; |
|--------------------|-----------------------------|

| ·   | operating      expenses of the mortgagedproperties; |
|--------------------|-----------------------------------------------------|

| ·   | supply      of and demand for rental units orproperties; |
|--------------------|----------------------------------------------------------|

| ·   | ability      to obtain and maintain adequate occupancy of the    properties; |
|--------------------|------------------------------------------------------------------------------|

| ·   | zoning      laws; |
|--------------------|-------------------|

| ·   | governmental      rules, regulations and fiscal policies;and |
|--------------------|--------------------------------------------------------------|

| ·   | acts      of God. |
|--------------------|-------------------|

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| ·   | Supermajority      voting requirements to remove a director from  office; |
|--------------------|---------------------------------------------------------------------------|

| ·   | Provisions      regarding the timing and content of shareowner proposals and      nominations; |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | Supermajority      voting requirements to amend Articles of Incorporation unless approval is      received by a majority of “disinterested  directors”; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Absence      of cumulative voting; and |
|--------------------|----------------------------------------|

| ·   | Inability      for shareowners to take action by written  consent. |
|--------------------|--------------------------------------------------------------------|

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| Item 1B. |  Unresolved      Staff Comments |
|----------|--------------------------------------|

| Item      2.       Properties |
|------------------------------------------------------------------|

| Item      3. | Legal      Proceedings |
|--------------|------------------------|

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

PART II

| Item      5. | Market for the Registrant's      Common Equity, Related Shareowner Matters, and Issuer Purchases of Equity      Securities |
|--------------|----------------------------------------------------------------------------------------------------------------------------|

|                                   | 2008          |   | 2007         |   |
|----------------------------------------|---------------|--------|--------------|--------|
|                                   | FourthQuarter |   | ThirdQuarter |   | SecondQuarter |   | FirstQuarter |   | FourthQuarter |   | ThirdQuarter |   | SecondQuarter |   | FirstQuarter |   |
| Common      stock price:               |          |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| High                                   |          | $      | 33.32        |   |   | $ | 34.50 |   |   | $ | 30.19 |   |   | $ | 29.99 |   |   | $ | 34.00 |   |   | $ | 36.40 |   |   | $ | 33.69 |   |   | $ | 35.91 |   |
| Low                                    |          |   | 21.06        |   |   |   | 19.20 |   |   |   | 21.76 |   |   |   | 24.76 |   |   |   | 24.60 |   |   |   | 27.69 |   |   |   | 29.12 |   |   |   | 29.79 |   |
| Close                                  |          |   | 27.24        |   |   |   | 31.35 |   |   |   | 21.76 |   |   |   | 29.00 |   |   |   | 28.22 |   |   |   | 31.20 |   |   |   | 31.34 |   |   |   | 33.30 |   |
| Cash      dividends declared per share |          |   | .1900        |   |   |   | .1850 |   |   |   | .1850 |   |   |   | .1850 |   |   |   | .1850 |   |   |   | .1750 |   |   |   | .1750 |   |   |   | .1750 |   |

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|                               |     |   | Period      Ending |   |     |   |
|------------------------------------|----------|--------|--------------------|--------|----------|--------|
| Index                              | 12/31/03 |   | 12/31/04           |   | 12/31/05 |   | 12/31/06 |   | 12/31/07 |   | 12/31/08 |   |
| Capital      City Bank Group, Inc. |     | $      | 100.00             |   |     | $      | 92.50 |   |   | $ | 96.53 |   |   | $ | 101.36 |   |   | $ | 82.95 |   |   | $ | 82.41 |   |
| NASDAQ      Composite              |     |   | 100.00             |   |     |   | 108.59 |   |   |   | 110.08 |   |   |   | 120.56 |   |   |   | 132.39 |   |   |   | 78.72 |   |
| SNL      $1B-$5B Bank Index        |     |   | 100.00             |   |     |   | 123.42 |   |   |   | 121.31 |   |   |   | 140.38 |   |   |   | 102.26 |   |   |   | 84.81 |   |

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| Item 6. | Selected      Financial Data |   |
|---------|------------------------------|--------|

|                                                           |   | For      the Years Ended December 31, |       |
|----------------------------------------------------------------|--------|---------------------------------------|------------|
| (Dollars in Thousands, Except      Per Share Data)(1)      (3) |   | 2008                                  |       |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                                           |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Income                                           |   | $                                     | 142,866    |   |   | $ | 165,323 |   |   | $ | 165,893 |   |   | $ | 140,053 |   |   | $ | 101,525 |   |
| Net      Interest Income                                       |   |                                  | 108,866    |   |   |   | 112,241 |   |   |   | 119,136 |   |   |   | 109,990 |   |   |   | 86,084 |   |
| Provision      for Loan Losses                                 |   |                                  | 32,496     |   |   |   | 6,163 |   |   |   | 1,959 |   |   |   | 2,507 |   |   |   | 2,141 |   |
| Net      Income                                                |   |                                  | 15,225     |   |   |   | 29,683 |   |   |   | 33,265 |   |   |   | 30,281 |   |   |   | 29,371 |   |
|                                                           |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per      Common Share:                                         |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      Net Income                                          |   | $                                     | 0.89       |   |   | $ | 1.66 |   |   | $ | 1.79 |   |   | $ | 1.66 |   |   | $ | 1.74 |   |
| Diluted      Net Income                                        |   |                                  | 0.89       |   |   |   | 1.66 |   |   |   | 1.79 |   |   |   | 1.66 |   |   |   | 1.74 |   |
| Cash      Dividends Declared                                   |   |                                  | .745       |   |   |   | .710 |   |   |   | .663 |   |   |   | .619 |   |   |   | .584 |   |
| Book      Value                                                |   |                                  | 16.27      |   |   |   | 17.03 |   |   |   | 17.01 |   |   |   | 16.39 |   |   |   | 14.51 |   |
|                                                           |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Key      Performance Ratios:                                   |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return      on Average Assets                                  |   |                                  | 0.59       | % |   |   | 1.18 | % |   |   | 1.29 | % |   |   | 1.22 | % |   |   | 1.46 | % |
| Return      on Average Equity                                  |   |                                  | 5.06       |   |   |   | 9.68 |   |   |   | 10.48 |   |   |   | 10.56 |   |   |   | 13.31 |   |
| Net      Interest Margin (FTE)                                 |   |                                  | 4.96       |   |   |   | 5.25 |   |   |   | 5.35 |   |   |   | 5.09 |   |   |   | 4.88 |   |
| Dividend      Pay-Out Ratio                                    |   |                                  | 83.71      |   |   |   | 42.77 |   |   |   | 37.01 |   |   |   | 37.35 |   |   |   | 33.62 |   |
| Equity      to Assets Ratio                                    |   |                                  | 11.20      |   |   |   | 11.19 |   |   |   | 12.15 |   |   |   | 11.65 |   |   |   | 10.86 |   |
|                                                           |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Asset      Quality:                                            |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance      for Loan Losses                                 |   | $                                     | 37,004     |   |   | $ | 18,066 |   |   | $ | 17,217 |   |   | $ | 17,410 |   |   | $ | 16,037 |   |
| Allowance      for Loan Losses to Loans                        |   |                                  | 1.89       | % |   |   | 0.95 | % |   |   | 0.86 | % |   |   | 0.84 | % |   |   | 0.88 | % |
| Nonperforming      Assets                                      |   |                                  | 107,842    |   |   |   | 28,163 |   |   |   | 8,731 |   |   |   | 5,550 |   |   |   | 5,271 |   |
| Nonperforming      Assets to Loans + ORE                       |   |                                  | 5.48       |   |   |   | 1.47 |   |   |   | 0.44 |   |   |   | 0.27 |   |   |   | 0.29 |   |
| Allowance      to Nonperforming Loans                          |   |                                  | 37.52      |   |   |   | 71.92 |   |   |   | 214.09 |   |   |   | 331.11 |   |   |   | 345.18 |   |
| Net      Charge-Offs to Average Loans                          |   |                                  | 0.71       |   |   |   | 0.27 |   |   |   | 0.11 |   |   |   | 0.13 |   |   |   | 0.22 |   |
|                                                           |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Averages      for the Year:                                    |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans,      Net                                                |   | $                                     | 1,918,417  |   |   | $ | 1,934,850 |   |   | $ | 2,029,397 |   |   | $ | 1,968,289 |   |   | $ | 1,538,744 |   |
| Earning      Assets                                            |   |                                  | 2,240,649  |   |   |   | 2,183,528 |   |   |   | 2,258,277 |   |   |   | 2,187,672 |   |   |   | 1,789,843 |   |
| Total      Assets                                              |   |                                  | 2,567,905  |   |   |   | 2,507,217 |   |   |   | 2,581,078 |   |   |   | 2,486,733 |   |   |   | 2,006,745 |   |
| Deposits                                                       |   |                                  | 2,066,065  |   |   |   | 1,990,446 |   |   |   | 2,034,931 |   |   |   | 1,954,888 |   |   |   | 1,599,201 |   |
| Subordinated      Notes                                        |   |                                  | 62,887     |   |   |   | 62,887 |   |   |   | 62,887 |   |   |   | 50,717 |   |   |   | 5,155 |   |
| Long-Term      Borrowings                                      |   |                                  | 39,735     |   |   |   | 37,936 |   |   |   | 57,260 |   |   |   | 70,216 |   |   |   | 59,462 |   |
| Shareowners'      Equity                                       |   |                                  | 300,890    |   |   |   | 306,617 |   |   |   | 317,336 |   |   |   | 286,712 |   |   |   | 220,731 |   |
|                                                           |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Year-End      Balances:                                        |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans,      Net                                                |   | $                                     | 1,957,797  |   |   | $ | 1,915,850 |   |   | $ | 1,999,721 |   |   | $ | 2,067,494 |   |   | $ | 1,828,825 |   |
| Earning      Assets                                            |   |                                  | 2,156,172  |   |   |   | 2,272,829 |   |   |   | 2,270,410 |   |   |   | 2,299,677 |   |   |   | 2,113,571 |   |
| Total      Assets                                              |   |                                  | 2,488,699  |   |   |   | 2,616,327 |   |   |   | 2,597,910 |   |   |   | 2,625,462 |   |   |   | 2,364,013 |   |
| Deposits                                                       |   |                                  | 1,992,174  |   |   |   | 2,142,344 |   |   |   | 2,081,654 |   |   |   | 2,079,346 |   |   |   | 1,894,886 |   |
| Subordinated      Notes                                        |   |                                  | 62,887     |   |   |   | 62,887 |   |   |   | 62,887 |   |   |   | 62,887 |   |   |   | 30,928 |   |
| Long-Term      Borrowings                                      |   |                                  | 51,470     |   |   |   | 26,731 |   |   |   | 43,083 |   |   |   | 69,630 |   |   |   | 68,453 |   |
| Shareowners'      Equity                                       |   |                                  | 278,830    |   |   |   | 292,675 |   |   |   | 315,770 |   |   |   | 305,776 |   |   |   | 256,800 |   |
|                                                           |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other      Data:                                               |   |                                  |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      Average Shares Outstanding                          |   |                                  | 17,141,454 |   |   |   | 17,909,396 |   |   |   | 18,584,519 |   |   |   | 18,263,855 |   |   |   | 16,805,696 |   |
| Diluted      Average Shares Outstanding                        |   |                                  | 17,146,914 |   |   |   | 17,911,587 |   |   |   | 18,609,839 |   |   |   | 18,281,243 |   |   |   | 16,810,926 |   |
| Shareowners      of Record(2)                                  |   |                                  | 1,756      |   |   |   | 1,750 |   |   |   | 1,805 |   |   |   | 1,716 |   |   |   | 1,598 |   |
| Banking      Locations(2)                                      |   |                                  | 68         |   |   |   | 70 |   |   |   | 69 |   |   |   | 69 |   |   |   | 60 |   |
| Full-Time      Equivalent Associates(2)                        |   |                                  | 1,042      |   |   |   | 1,097 |   |   |   | 1,056 |   |   |   | 1,013 |   |   |   | 926 |   |

| (1) | All share and per share data have      been adjusted to reflect the 5-for-4 stock split effective July 1,      2005. |
|-----|----------------------------------------------------------------------------------------------------------------------|

| (2) | As of the record date. The record      date is on or about March 1st of the following  year. |
|-----|----------------------------------------------------------------------------------------------|

| (3) | The      consolidated financial statements reflect the acquisitions of Quincy State      Bank on March 19, 2004, Farmers and Merchants Bank of Dublin on October      15, 2004, and First Alachua Banking Corporation on May 20,      2005. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Item      7. | Management's Discussion and      Analysis of Financial Condition and Results of      Operations |
|--------------|-------------------------------------------------------------------------------------------------|

|                                                       |   | For      the Years Ended December 31, |   |
|------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                       |   | 2008                                  |   |   | 2007 |   |   | 2006 |   |
| Efficiency      ratio                                      |   |                                  | 68.09  | % |   |   | 70.13 | % |   |   | 68.87 | % |
| Effect      of intangible amortization and merger expenses |   |                                  | (3.19  | )% |   |   | (3.36 | )% |   |   | (3.45 | )% |
| Operating      efficiency ratio                            |   |                                  | 64.91  | % |   |   | 66.77 | % |   |   | 65.42 | % |

|                                                                  |   | For      the Years Ended December 31, |   |
|-----------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                                  |   | 2008                                  |   |   | 2007 |   |   | 2006 |   |
| Net      noninterest expense as a percent of average assets           |   |                                  | 2.12   | % |   |   | 2.50 | % |   |   | 2.56 | % |
| Effect      of intangible amortization and merger expenses            |   |                                  | (0.22  | )% |   |   | (0.23 | )% |   |   | (0.24 | )% |
| Operating      net noninterest expense as a percent of average assets |   |                                  | 1.90   | % |   |   | 2.27 | % |   |   | 2.32 | % |

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| ·   | In      2008, we earned $15.2 million, or $0.89 per diluted share, compared to      $29.7 million, or $1.66 per diluted share in 2007, decreases of 48.7% and      46.4%, respectively.  For the year, turbulent economic and      market conditions and an associated increase in the provision for loan      losses and the level of nonperforming assets significantly impacted our      earnings performance. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Tax      equivalent net interest income fell $3.3 million, or 2.9%, over 2007 due      primarily to a higher level of foregone interest associated with an      increased level of nonperforming assets which drove compression in our net      interest margin of 29 basispoints. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Noninterest      income increased $7.7 million, or 13.0%, from 2007 due primarily to a      $6.25 million gain from the sale of a portion of our merchant services      portfolio ($0.22 per share) and a $2.4 million gain from the redemption of      Visa shares ($0.09) related to their initial public      offering.  Lower asset management revenues (trust fees and      retail brokerage fees) and mortgage banking revenues, all related to weak      economic conditions and turbulent market conditions during 2008 partially      offset the aforementionedgains. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Noninterest      expense declined $0.5 million, or 0.43%, reflecting the impact of the $1.9      million Visa litigation charge in the fourth quarter of 2007 and the      reversal of $1.1 million in Visa litigation reserves in the first quarter      of 2008.  Higher operating expenses primarily for salaries,      legal fees and other real estate owned, partially offset the      aforementioned favorable variance related to our Visa litigation      reserve.  The higher level of legal fees and other real estate      owned expense was driven by legal support needed for loan      workout/resolution and holding costs related to foreclosed      properties. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Loan      loss provision increased $26.3 million ($0.95 per share) in 2008 driven      primarily by a higher level of required reserves for our consumer and our      residential real estate loan portfolios, generally reflective of weak      economic conditions and stress in our residential real estate      markets.  Net loan charge-offs for 2008 were 71 basis points of      average loans compared to 27 basis points in 2007.  At year-end      2008, the allowance for loan losses was 1.89% of outstanding loans (net of      overdrafts) and provided coverage of 38% of nonperforming      loans. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Share      repurchase activity continued in 2008 with 90,041 shares being purchased      during the year compared to 1,404,364 shares being repurchased during      2007.  We remain well-capitalized with a risk based capital      ratio of 14.69% and a tangible capital ratio of  7.76%. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                     |   | For      the Years Ended December 31, |    |
|----------------------------------------------------------|--------|---------------------------------------|---------|
| (Dollars      in Thousands, Except Per Share Data)       |   | 2008                                  |    |   | 2007 |   |   | 2006 |   |
| Interest      Income                                     |   | $                                     | 142,866 |   |   | $ | 165,323 |   |   | $ | 165,893 |   |
| Taxable      Equivalent Adjustments                      |   |                                  | 2,482   |   |   |   | 2,420 |   |   |   | 1,812 |   |
| Total      Interest Income (FTE)                         |   |                                  | 145,348 |   |   |   | 167,743 |   |   |   | 167,705 |   |
| Interest      Expense                                    |   |                                  | 34,000  |   |   |   | 53,082 |   |   |   | 46,757 |   |
| Net      Interest Income (FTE)                           |   |                                  | 111,348 |   |   |   | 114,661 |   |   |   | 120,948 |   |
| Provision      for Loan Losses                           |   |                                  | 32,496  |   |   |   | 6,163 |   |   |   | 1,959 |   |
| Taxable      Equivalent Adjustments                      |   |                                  | 2,482   |   |   |   | 2,420 |   |   |   | 1,812 |   |
| Net      Interest Income After Provision for Loan Losses |   |                                  | 76,370  |   |   |   | 106,078 |   |   |   | 117,177 |   |
| Noninterest      Income                                  |   |                                  | 67,040  |   |   |   | 59,300 |   |   |   | 55,577 |   |
| Noninterest      Expense                                 |   |                                  | 121,472 |   |   |   | 121,992 |   |   |   | 121,568 |   |
| Income      Before Income Taxes                          |   |                                  | 21,938  |   |   |   | 43,386 |   |   |   | 51,186 |   |
| Income      Taxes                                        |   |                                  | 6,713   |   |   |   | 13,703 |   |   |   | 17,921 |   |
| Net      Income                                          |   | $                                     | 15,225  |   |   | $ | 29,683 |   |   | $ | 33,265 |   |
|                                                     |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Basic      Net Income Per Share                          |   | $                                     | 0.89    |   |   | $ | 1.66 |   |   | $ | 1.79 |   |
| Diluted      Net Income Per Share                        |   | $                                     | 0.89    |   |   | $ | 1.66 |   |   | $ | 1.79 |   |

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|                                                   |   | 2008    |      | 2007     |   | 2006    |   |
|--------------------------------------------------------|--------|---------|-----------|----------|--------|---------|--------|
| (Taxable      Equivalent Basis - Dollars in Thousands) |   | Balance |      | Interest |   | Rate    |   | Balance |   | Interest |   | Rate |   | Balance |   | Interest |   | Rate |   |
| ASSETS                                                 |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans,      Net of Unearned Interest(1)(2)             |   | $       | 1,918,417 |     | $      | 133,457 |   |   | 6.96 | % | $ | 1,934,850 |   | $ | 155,434 |   |   | 8.03 | % | $ | 2,029,397 |   | $ | 157,227 |   |   | 7.75 | % |
| Taxable      Investment Securities                     |   |    | 93,149    |     |   | 3,889   |   |   | 5.04 |   |   | 103,840 |   |   | 4,949 |   |   | 4.76 |   |   | 112,392 |   |   | 4,851 |   |   | 4.31 |   |
| Tax-Exempt      Investment Securities(2)               |   |    | 97,010    |     |   | 4,893   |   |   | 4.16 |   |   | 84,849 |   |   | 4,447 |   |   | 5.24 |   |   | 74,634 |   |   | 3,588 |   |   | 4.81 |   |
| Funds      Sold                                        |   |    | 132,073   |     |   | 3,109   |   |   | 2.32 |   |   | 59,989 |   |   | 2,913 |   |   | 4.79 |   |   | 41,854 |   |   | 2,039 |   |   | 4.81 |   |
| Total      Earning Assets                              |   |    | 2,240,649 |     |   | 145,348 |   |   | 6.48 | % |   | 2,183,528 |   |   | 167,743 |   |   | 7.68 | % |   | 2,258,277 |   |   | 167,705 |   |   | 7.42 | % |
| Cash      & Due From Banks                         |   |    | 82,410    |     |   |    |   |   |   |   |   | 86,692 |   |   |   |   |   |   |   |   | 100,237 |   |   |   |   |   |   |   |
| Allowance      for Loan Losses                         |   |    | (23,015   | )        |   |    |   |   |   |   |   | (17,535 | ) |   |   |   |   |   |   |   | (17,486 | ) |   |   |   |   |   |   |
| Other      Assets                                      |   |    | 267,861   |     |   |    |   |   |   |   |   | 254,532 |   |   |   |   |   |   |   |   | 240,050 |   |   |   |   |   |   |   |
| TOTAL      ASSETS                                      |   | $       | 2,567,905 |     |   |    |   |   |   |   | $ | 2,507,217 |   |   |   |   |   |   |   | $ | 2,581,078 |   |   |   |   |   |   |   |
|                                                   |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES                                            |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW      Accounts                                      |   | $       | 743,327   |     | $      | 7,454   |   |   | 1.00 | % | $ | $557,060 |   | $ | 10,748 |   |   | 1.93 | % | $ | 518,671 |   | $ | 7,658 |   |   | 1.48 | % |
| Money      Market Accounts                             |   |    | 374,278   |     |   | 5,242   |   |   | 1.40 |   |   | 397,193 |   |   | 13,667 |   |   | 3.44 |   |   | 370,257 |   |   | 11,687 |   |   | 3.16 |   |
| Savings      Accounts                                  |   |    | 116,413   |     |   | 121     |   |   | 0.10 |   |   | 119,700 |   |   | 279 |   |   | 0.23 |   |   | 134,033 |   |   | 278 |   |   | 0.21 |   |
| Other      Time Deposits                               |   |    | 424,748   |     |   | 14,489  |   |   | 3.41 |   |   | 474,728 |   |   | 19,993 |   |   | 4.21 |   |   | 507,283 |   |   | 17,630 |   |   | 3.48 |   |
| Total      Interest Bearing Deposits                   |   |    | 1,658,766 |     |   | 27,306  |   |   | 1.65 | % |   | 1,548,681 |   |   | 44,687 |   |   | 2.89 | % |   | 1,530,244 |   |   | 37,253 |   |   | 2.43 | % |
| Short-Term      Borrowings                             |   |    | 61,181    |     |   | 1,157   |   |   | 1.88 |   |   | 66,397 |   |   | 2,871 |   |   | 4.31 |   |   | 78,700 |   |   | 3,074 |   |   | 3.89 |   |
| Subordinated      Notes Payable                        |   |    | 62,887    |     |   | 3,735   |   |   | 5.84 |   |   | 62,887 |   |   | 3,730 |   |   | 5.93 |   |   | 62,887 |   |   | 3,725 |   |   | 5.92 |   |
| Other      Long-Term Borrowings                        |   |    | 39,735    |     |   | 1,802   |   |   | 4.54 |   |   | 37,936 |   |   | 1,794 |   |   | 4.73 |   |   | 57,260 |   |   | 2,705 |   |   | 4.72 |   |
| Total      Interest Bearing Liabilities                |   |    | 1,822,569 |     |   | 34,000  |   |   | 1.87 | % |   | 1,715,901 |   |   | 53,082 |   |   | 3.09 | % |   | 1,729,091 |   |   | 46,757 |   |   | 2.70 | % |
| Noninterest      Bearing Deposits                      |   |    | 407,299   |     |   |    |   |   |   |   |   | 441,765 |   |   |   |   |   |   |   |   | 504,687 |   |   |   |   |   |   |   |
| Other      Liabilities                                 |   |    | 37,147    |     |   |    |   |   |   |   |   | 42,934 |   |   |   |   |   |   |   |   | 29,964 |   |   |   |   |   |   |   |
| TOTAL      LIABILITIES                                 |   |    | 2,267,015 |     |   |    |   |   |   |   |   | 2,200,600 |   |   |   |   |   |   |   |   | 2,263,742 |   |   |   |   |   |   |   |
|                                                   |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SHAREOWNERS'      EQUITY                               |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL      SHAREOWNERS' EQUITY                         |   |    | 300,890   |     |   |    |   |   |   |   |   | 306,617 |   |   |   |   |   |   |   |   | 317,336 |   |   |   |   |   |   |   |
|                                                   |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL      LIABILITIES & EQUITY                    |   | $       | 2,567,905 |     |   |    |   |   |   |   | $ | 2,507,217 |   |   |   |   |   |   |   | $ | 2,581,078 |   |   |   |   |   |   |   |
|                                                   |   |    |      |     |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Rate Spread                              |   |    |      |     |   |    |   |   | 4.61 | % |   |   |   |   |   |   |   | 4.59 | % |   |   |   |   |   |   |   | 4.72 | % |
| Net      Interest Income                               |   |    |      |     | $      | 111,348 |   |   |   |   |   |   |   | $ | 114,661 |   |   |   |   |   |   |   | $ | 120,948 |   |   |   |   |
| Net      Interest Margin(3)                            |   |    |      |     |   |    |   |   | 4.96 | % |   |   |   |   |   |   |   | 5.25 | % |   |   |   |   |   |   |   | 5.35 | % |

| (1) | Average balances include      nonaccrual loans.  Interest income includes loan fees of $2.3      million, $3.0 million, and $3.8 million in 2008, 2007, and 2006,      respectively. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| (3) | Taxable equivalent net interest      income divided by average earningassets. |
|-----|-------------------------------------------------------------------------------|

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|                                                   |   |        |  2008      Changes From 2007      |        | 2007      Changes From 2006 |                              |
|--------------------------------------------------------|--------|-------------|----------------------------------------|-------------|-----------------------------|-----------------------------------|
|                                                   |   |        |          Due to Average |        |                        |          Due to Average |   |
| (Taxable      Equivalent Basis - Dollars in Thousands) |   |  Total |                                   | Calendar(3) |                        | Volume                            |   |   |        Rate |  | Total |   | Volume |   | Rate |   |
| Earnings      Assets:                                  |   |        |                                   |        |                        |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans,      Net of Unearned Interest (2)               | $      | (21,978     | )                                      | $           | 426                         |                              | $ | (2,012 | ) | $ | (20,392 | ) | $ | (1,792 | ) | $ | (7,465 | )  | $ | 5,673 |   |
| Investment      Securities:                            |   |        |                                   |        |                        |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                |   | (1,061      | )                                 |        | 13                          |                              |   | (400 | ) |   | (674 | ) |   | 99 |   |   | (350 | ) |   | 449 |   |
| Tax-Exempt      (2)                                    |   | 448         |                                   |        | 12                          |                              |   | 636 |   |   | (200 | ) |   | 858 |   |   | 491 |   |   | 367 |   |
| Funds      Sold                                        |   | 196         |                                   |        | 8                           |                              |   | 3,393 |   |   | (3,205 | )  |   | 873 |   |   | 883 |   |   | (10 | ) |
|                                                   |   |        |                                   |        |                        |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                  |   | (22,395     | )                                 |        | 459                         |                              |   | 1,617 |   |   | (24,471 | )  |   | 38 |   |   | (6,441 | )  |   | 6,479 |   |
|                                                   |   |        |                                   |        |                        |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Bearing Liabilities:                     |   |        |                                   |        |                        |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW      Accounts                                      |   | (3,293      | )                                 |        | 29                          |                              |   | 3,584 |   |   | (6,906 | )  |   | 3,090 |   |   | 567 |   |   | 2,523 |   |
| Money      Market Accounts                             |   | (8,425      | )                                 |        | 37                          |                              |   | (786 | ) |   | (7,676 | )  |   | 1,979 |   |   | 850 |   |   | 1,129 |   |
| Savings      Accounts                                  |   | (159        | )                                 |        | 1                           |                              |   | (8 | ) |   | (152 | )  |   | 2 |   |   | (29 | ) |   | 31 |   |
| Time      Deposits                                     |   | (5.505      | )                                 |        | 55                          |                              |   | (2,099 | ) |   | (3,461 | )  |   | 2,364 |   |   | (1,131 | ) |   | 3,495 |   |
| Short-Term      Borrowings                             |   | (1,713      | )                                 |        | 8                           |                              |   | (185 | ) |   | (1,536 | )  |   | (204 | ) |   | (424 | ) |   | 220 |   |
| Subordinated      Notes Payable                        |   | 5           |                                   |        | 10                          |                              |   | 0 |   |   | (5 | ) |   | 5 |   |   | 0 |   |   | 5 |   |
| Long-Term      Borrowings                              |   | 8           |                                   |        | 5                           |                              |   | 85 |   |   | (82 | ) |   | (911 | ) |   | (913 | ) |   | 2 |   |
|                                                   |   |        |                                   |        |                        |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                  |   | 19,082      |                                   |        | 145                         |                              |   | 591 |   |   | (19,818 | )  |   | 6,325 |   |   | (1,080 | )  |   | 7,405 |   |
|                                                   |   |        |                                   |        |                        |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Changes      in Net Interest Income                    | $      | (3,313      | )                                      | $           | 314                         |                              | $ | 1,026 |   | $ | (4,653 | )  | $ | (6,287 | ) | $ | (5,361 | )  | $ | (926 | ) |

| (1) | This table shows the change in      taxable equivalent net interest income for comparative periods based on      either changes in average volume or changes in average rates for earning      assets and interest bearing liabilities. Changes which are not solely due      to volume changes or solely due to rate changes have been attributed to      rate changes. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Interest income includes the      effects of taxable equivalent adjustments using a 35% tax rate to adjust      interest on tax-exempt loans and securities to a taxable equivalent      basis. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Reflects difference in 366      days year (2008) versus 365 day year  (2007). |
|-----|-------------------------------------------------------------------------------|

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|                                                        |   | For      the Years Ended December 31, |   |
|-------------------------------------------------------------|--------|---------------------------------------|--------|
| (Dollars      in Thousands)                                 |   | 2008                                  |   |   | 2007 |   |   | 2006 |   |
| Noninterest      Income:                                    |   |                                  |   |   |   |   |   |   |   |
| Service      Charges on Deposit Accounts                    |   | $                                     | 27,742 |   |   | $ | 26,130 |   |   | $ | 24,620 |   |
| Data      Processing                                        |   |                                  | 3,435  |   |   |   | 3,133 |   |   |   | 2,723 |   |
| Asset      Management Fees                                  |   |                                  | 4,235  |   |   |   | 4,700 |   |   |   | 4,600 |   |
| Retail      Brokerage Fees                                  |   |                                  | 2,399  |   |   |   | 2,510 |   |   |   | 2,091 |   |
| Gain/(Loss)      on Sale/Call of Investment Securities      |   |                                  | 125    |   |   |   | 14 |   |   |   | (4 | ) |
| Mortgage      Banking Revenues                              |   |                                  | 1,623  |   |   |   | 2,596 |   |   |   | 3,235 |   |
| Merchant      Fees(1)                                       |   |                                  | 5,548  |   |   |   | 7,257 |   |   |   | 6,978 |   |
| Interchange      Fees(1)                                    |   |                                  | 4,165  |   |   |   | 3,757 |   |   |   | 3,105 |   |
| Gain      on Sale of Portion of Merchant Services Portfolio |   |                                  | 6,250  |   |   |   | - |   |   |   | - |   |
| ATM/Debit      Card Fees(1)                                 |   |                                  | 2,988  |   |   |   | 2,692 |   |   |   | 2,519 |   |
| Other                                                       |   |                                  | 8,530  |   |   |   | 6,511 |   |   |   | 5,710 |   |
| Total      Noninterest Income                               |   | $                                     | 67,040 |   |   | $ | 59,300 |   |   | $ | 55,577 |   |

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|                           |   | For      the Years Ended December 31, |    |
|--------------------------------|--------|---------------------------------------|---------|
| (Dollars      in Thousands)    |   | 2008                                  |    |   | 2007 |   |   | 2006 |   |
| Noninterest      Expense:      |   |                                  |    |   |   |   |   |   |   |
| Salaries                       |   | $                                     | 50,581  |   |   | $ | 49,206 |   |   | $ | 46,604 |   |
| Associate      Benefits        |   |                                  | 11,250  |   |   |   | 11,073 |   |   |   | 14,251 |   |
| Total      Compensation        |   |                                  | 61,831  |   |   |   | 60,279 |   |   |   | 60,855 |   |
|                           |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Premises                       |   |                                  | 9,729   |   |   |   | 9,347 |   |   |   | 9,395 |   |
| Equipment                      |   |                                  | 9,902   |   |   |   | 9,890 |   |   |   | 9,911 |   |
| Total      Occupancy           |   |                                  | 19,631  |   |   |   | 19,237 |   |   |   | 19,306 |   |
|                           |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Legal      Fees                |   |                                  | 2,240   |   |   |   | 1,739 |   |   |   | 1,734 |   |
| Professional      Fees         |   |                                  | 4,083   |   |   |   | 3,855 |   |   |   | 3,402 |   |
| Processing      Services       |   |                                  | 1,758   |   |   |   | 1,994 |   |   |   | 1,863 |   |
| Advertising                    |   |                                  | 3,609   |   |   |   | 3,742 |   |   |   | 4,285 |   |
| Travel      and Entertainment  |   |                                  | 1,390   |   |   |   | 1,470 |   |   |   | 1,664 |   |
| Printing      and Supplies     |   |                                  | 1,977   |   |   |   | 2,124 |   |   |   | 2,472 |   |
| Telephone                      |   |                                  | 2,522   |   |   |   | 2,373 |   |   |   | 2,323 |   |
| Postage                        |   |                                  | 1,743   |   |   |   | 1,565 |   |   |   | 1,145 |   |
| Intangible      Amortization   |   |                                  | 5,685   |   |   |   | 5,834 |   |   |   | 6,085 |   |
| Interchange      Fees          |   |                                  | 4,577   |   |   |   | 6,118 |   |   |   | 6,010 |   |
| Commission      Fees           |   |                                  | 2,163   |   |   |   | 1,284 |   |   |   | 836 |   |
| Courier      Service           |   |                                  | 465     |   |   |   | 641 |   |   |   | 1,307 |   |
| Miscellaneous                  |   |                                  | 7,798   |   |   |   | 9,737 |   |   |   | 8,281 |   |
| Total      Other               |   |                                  | 40,010  |   |   |   | 42,476 |   |   |   | 41,407 |   |
|                           |   |                                  |    |   |   |   |   |   |   |   |   |   |
| Total      Noninterest Expense |   | $                                     | 121,472 |   |   | $ | 121,992 |   |   | $ | 121,568 |   |

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Table of Contents

|                                                          |   | 2007      to |    |   | Percentage    |   |   | Components      of               |   |
|---------------------------------------------------------------|--------|--------------|---------|--------|---------------|--------|--------|----------------------------------|--------|
|                                                          |   | 2008         |    |   | Of      Total |   |   | Average Earning Assets |   |
| (Average      Balances – Dollars In Thousands)          |   | Change       |    |   | Change        |   |   | 2008                             |   |   | 2007 |   |   | 2006 |   |
|                                                          |   |         |    |   |          |   |   |                             |   |   |   |   |   |   |   |
| Loans:                                                        |   |         |    |   |          |   |   |                             |   |   |   |   |   |   |   |
|   Commercial,      Financial, and Agricultural      |   |         | (10,473 | )      |          |   | 18.0   | %                                |   |   | 8.8 | % |   |   | 9.5 | % |   |   | 9.7 | % |
|   Real      Estate – Construction             |   |         | (11,616 | )      |          |   | 20.0   | %                                |   |   | 6.6 | % |   |   | 7.3 | % |   |   | 7.8 | % |
|   Real      Estate – Commercial               |   |         | (8,228  | )      |          |   | 14.0   | %                                |   |   | 28.0 | % |   |   | 29.2 | % |   |   | 29.5 | % |
|   Real      Estate – Residential              |   |         | 8,445   |   |          |   | (15.0  | )%                               |   |   | 31.1 | % |   |   | 31.5 | % |   |   | 32.2 | % |
| Consumer                                                      |   |         | 5,439   |   |          |   | (10.0  | )%                               |   |   | 11.1 | % |   |   | 11.2 | % |   |   | 10.7 | % |
|     Total      Loans                      |   |         | (16,433 | )      |          |   | 29.0   | %                                |   |   | 85.6 | % |   |   | 88.7 | % |   |   | 89.9 | % |
|                                                          |   |         |    |   |          |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment      Securities:                                   |   |         |    |   |          |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |
|   Taxable                                           |   |         | (10,691 | )      |          |   | 19.0   | %                                |   |   | 4.2 | % |   |   | 4.8 | % |   |   | 5.0 | % |
|   Tax-Exempt                                        |   |         | 12,161  |   |          |   | (21.0  | )%                               |   |   | 4.3 | % |   |   | 3.8 | % |   |   | 3.2 | % |
|     Total      Securities                 |   |         | 1,470   |   |          |   | (3.0   | )%                               |   |   | 8.5 | % |   |   | 8.6 | % |   |   | 8.2 | % |
|                                                          |   |         |    |   |          |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Funds      Sold                                               |   |         | 72,084  |   |          |   | (126.0 | )%                               |   |   | 5.9 | % |   |   | 2.7 | % |   |   | 1.9 | % |
|                                                          |   |         |    |   |          |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total      Earning Assets |   | $            | 57,121  |   |          |   | 100.0  | %                                |   |   | 100.0 | % |   |   | 100.0 | % |   |   | 100.0 | % |

|                                        |   | As      of December 31, |      |
|---------------------------------------------|--------|-------------------------|-----------|
| (Dollars      in Thousands)                 |   | 2008                    |      |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
| Commercial,      Financial and Agricultural |   | $                       | 206,230   |   |   | $ | 208,864 |   |   | $ | 229,327 |   |   | $ | 218,434 |   |   | $ | 206,474 |   |
| Real      Estate - Construction             |   |                    | 141,973   |   |   |   | 142,248 |   |   |   | 179,072 |   |   |   | 160,914 |   |   |   | 140,190 |   |
| Real      Estate - Commercial               |   |                    | 656,959   |   |   |   | 634,920 |   |   |   | 643,885 |   |   |   | 718,741 |   |   |   | 655,426 |   |
| Real      Estate - Residential              |   |                    | 484,238   |   |   |   | 488,372 |   |   |   | 536,138 |   |   |   | 558,000 |   |   |   | 450,314 |   |
| Real      Estate – Home Equity        |   |                    | 218,500   |   |   |   | 192,428 |   |   |   | 173,597 |   |   |   | 165,336 |   |   |   | 150,061 |   |
| Consumer                                    |   |                    | 249,897   |   |   |   | 249,018 |   |   |   | 237,702 |   |   |   | 246,069 |   |   |   | 226,360 |   |
| Total      Loans, Net of Unearned Interest  |   | $                       | 1,957,797 |   |   | $ | 1,915,850 |   |   | $ | 1,999,721 |   |   | $ | 2,067,494 |   |   | $ | 1,828,825 |   |

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|                                         |   | Maturity      Periods     |    |
|----------------------------------------------|--------|---------------------------|---------|
| (Dollars      in Thousands)                  |   | One      Yearor      Less |    |   | Over      OneThroughFive      Years |   |   | OverFiveYears |   |   | Total |   |
| Commercial,      Financial and Agricultural  |   | $                         | 91,184  |   |   | $ | 78,937 |   |   | $ | 36,107 |   |   | $ | 206,228 |   |
| Real      Estate - Construction              |   |                      | 132,677 |   |   |   | 8,041 |   |   |   | 1,256 |   |   |   | 141,974 |   |
| Real      Estate – Commercial Mortgage |   |                      | 153,683 |   |   |   | 102,180 |   |   |   | 401,096 |   |   |   | 656,959 |   |
| Real      Estate - Residential               |   |                      | 105,062 |   |   |   | 65,179 |   |   |   | 313,997 |   |   |   | 484,238 |   |
| Real      Estate – Home Equity         |   |                      | 819     |   |   |   | 6,737 |   |   |   | 210,945 |   |   |   | 218,501 |   |
| Consumer(1)                                  |   |                      | 26,507  |   |   |   | 159,536 |   |   |   | 63,854 |   |   |   | 249,897 |   |
| Total                                        |   | $                         | 509,932 |   |   | $ | 420,610 |   |   | $ | 1,027,255 |   |   | $ | 1,957,797 |   |
|                                         |   |                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans      with Fixed Rates                  |   | $                         | 347,099 |   |   | $ | 268,030 |   |   | $ | 35,218 |   |   | $ | 650,347 |   |
| Loans      with Floating or Adjustable Rates |   |                      | 162,833 |   |   |   | 152,580 |   |   |   | 992,037 |   |   |   | 1,307,450 |   |
| Total                                        |   | $                         | 509,932 |   |   | $ | 420,610 |   |   | $ | 1,027,255 |   |   | $ | 1,957,797 |   |

| (1) | Demand loans and overdrafts are      reported in the category of one year or  less. |
|-----|-------------------------------------------------------------------------------------|

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Table of Contents

|                                                                | For      the Years Ended December 31, |   |
|---------------------------------------------------------------------|---------------------------------------|--------|
| (Dollars      in Thousands)                                         | 2008                                  |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at Beginning of Year                                   | $                                     | 18,066 |   |   | $ | 17,217 |   |   | $ | 17,410 |   |   | $ | 16,037 |   |   | $ | 12,429 |   |
| Acquired      Reserves                                              |                                  | -      |   |   |   | - |   |   |   | - |   |   |   | 1,385 |   |   |   | 5,713 |   |
| Reserve      Reversal(1)                                            |                                  | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (800 | ) |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Charge-Offs:                                                        |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial,      Financial and Agricultural                         |                                  | 1,649  |   |   |   | 1,462 |   |   |   | 841 |   |   |   | 1,287 |   |   |   | 873 |   |
| Real      Estate - Construction                                     |                                  | 2,581  |   |   |   | 166 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Real      Estate - Commercial                                       |                                  | 1,499  |   |   |   | 709 |   |   |   | 346 |   |   |   | 255 |   |   |   | 48 |   |
| Real      Estate - Residential                                      |                                  | 3,787  |   |   |   | 407 |   |   |   | 260 |   |   |   | 311 |   |   |   | 154 |   |
| Real      Estate – Home Equity                                |                                  | 267    |   |   |   | 1,022 |   |   |   | 20 |   |   |   | 10 |   |   |   | 37 |   |
| Consumer                                                            |                                  | 6,192  |   |   |   | 3,451 |   |   |   | 2,516 |   |   |   | 2,380 |   |   |   | 3,946 |   |
| Total      Charge-Offs                                              |                                  | 15,975 |   |   |   | 7,217 |   |   |   | 3,983 |   |   |   | 4,243 |   |   |   | 5,058 |   |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Recoveries:                                                         |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial,      Financial and Agricultural                         |                                  | 331    |   |   |   | 174 |   |   |   | 246 |   |   |   | 180 |   |   |   | 81 |   |
| Real      Estate - Construction                                     |                                  | 4      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Real      Estate - Commercial                                       |                                  | 15     |   |   |   | 14 |   |   |   | 17 |   |   |   | 3 |   |   |   | 14 |   |
| Real      Estate - Residential                                      |                                  | 161    |   |   |   | 34 |   |   |   | 11 |   |   |   | 37 |   |   |   | 188 |   |
| Real      Estate – Home Equity                                |                                  | 1      |   |   |   | 2 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Consumer                                                            |                                  | 1,905  |   |   |   | 1,679 |   |   |   | 1,557 |   |   |   | 1,504 |   |   |   | 1,329 |   |
| Total      Recoveries                                               |                                  | 2,417  |   |   |   | 1,903 |   |   |   | 1,831 |   |   |   | 1,724 |   |   |   | 1,612 |   |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Charge-Offs                                                |                                  | 13,558 |   |   |   | 5,314 |   |   |   | 2,152 |   |   |   | 2,519 |   |   |   | 3,446 |   |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision      for Loan Losses                                      |                                  | 32,496 |   |   |   | 6,163 |   |   |   | 1,959 |   |   |   | 2,507 |   |   |   | 2,141 |   |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at End of Year                                         | $                                     | 37,004 |   |   | $ | 18,066 |   |   | $ | 17,217 |   |   | $ | 17,410 |   |   | $ | 16,037 |   |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio      of Net Charge-Offs to Average Loans Outstanding          |                                  | .71    | % |   |   | .27 | % |   |   | .11 | % |   |   | .13 | % |   |   | .22 | % |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance      for Loan Losses as a Percent of Loans at End of Year |                                  | 1.89   | % |   |   | .94 | % |   |   | .86 | % |   |   | .84 | % |   |   | .88 | % |
|                                                                |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance      for Loan Losses as a Multiple of Net Charge-Offs     |                                  | 2.73   | x |   |   | 3.40 | x |   |   | 8.00 | x |   |   | 6.91 | x |   |   | 4.65 | x |

| (1) | Reflects      recapture of reserves allocated to the credit card portfolio sold in      August 2004. |
|-----|------------------------------------------------------------------------------------------------------|

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|                                        |   | 2008            |   | 2007                                                       |   | 2006            |   | 2005                                                       |   | 2004            |                                                       |
|---------------------------------------------|--------|-----------------|--------|------------------------------------------------------------|--------|-----------------|--------|------------------------------------------------------------|--------|-----------------|------------------------------------------------------------|
| (Dollars      in Thousands)                 |   | AllowanceAmount |   | Percentof      Loansin      EachCategoryTo      TotalLoans |   | AllowanceAmount |   | Percentof      Loansin      EachCategoryTo      TotalLoans |   | AllowanceAmount | Percentof      Loansin      EachCategoryTo      TotalLoans |   | AllowanceAmount |   | Percentof      Loansin      EachCategoryTo      TotalLoans |   | AllowanceAmount |   | Percentof      Loansin      EachCategoryTo      TotalLoans |   |
|                                        |   |            |   |                                                       |   |            |   |                                                       |   |            |                                                       |   |   |   |   |   |   |   |   |   |
| Commercial,      Financial and Agricultural |   | $               | 2,401  |                                                       | 10.5   | %               |   | $                                                          | 3,106  |            | 10.9                                                       | % |   | $ | 3,900 |   | 11.5 | % |   | $ | 3,663 |   | 10.6 | % |   | $ | 4,341 |   | 11.3 | % |
| Real      Estate:                           |   |            |   |                                                       |   |            |   |                                                       |   |            |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction                                |   |            | 8,973  |                                                       | 7.3    |            |   |                                                       | 3,117  |            | 7.4                                                        |   |   |   | 745 |   | 9.0 |   |   |   | 762 |   | 7.8 |   |   |   | 578 |   | 7.7 |   |
| Commercial                                  |   |            | 6,022  |                                                       | 33.6   |            |   |                                                       | 4,372  |            | 33.1                                                       |   |   |   | 5,996 |   | 32.2 |   |   |   | 6,352 |   | 34.7 |   |   |   | 6,296 |   | 35.8 |   |
| Residential                                 |   |            | 12,489 |                                                       | 24.7   |            |   |                                                       | 3,733  |            | 35.6                                                       |   |   |   | 1,050 |   | 35.5 |   |   |   | 1,019 |   | 35.0 |   |   |   | 705 |   | 32.8 |   |
| Home      Equity                            |   |            | 1,091  |                                                       | 11.2   |            |   |                                                       | -      |            | -                                                          |   |   |   | - |   | - |   |   |   | - |   | - |   |   |   | - |   | - |   |
| Consumer                                    |   |            | 5,055  |                                                       | 12.8   |            |   |                                                       | 2,790  |            | 13.0                                                       |   |   |   | 3,081 |   | 11.8 |   |   |   | 3,105 |   | 11.9 |   |   |   | 2,966 |   | 12.4 |   |
| Not      Allocated                          |   |            | 973    |                                                       | -      |            |   |                                                       | 948    |            | -                                                          |   |   |   | 2,445 |   | - |   |   |   | 2,509 |   | - |   |   |   | 1,151 |   | - |   |
|                                        |   |            |   |                                                       |   |            |   |                                                       |   |            |                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                       |   | $               | 37,004 |                                                       | 100.0  | %               |   | $                                                          | 18,066 |            | 100.0                                                      | % |   | $ | 17,217 |   | 100.0 | % |   | $ | 17,410 |   | 100.0 | % |   | $ | 16,037 |   | 100.0 | % |

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|                                                    | As      of December 31, |    |
|---------------------------------------------------------|-------------------------|---------|
| (Dollars      in Thousands)                             | 2008                    |    |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|                                                    |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Nonaccruing      Loans                                  | $                       | 96,876  |   |   | $ | 25,119 |   |   | $ | 8,042 |   |   | $ | 5,258 |   |   | $ | 4,646 |   |
| Restructured      Loans                                 |                    | 1,744   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total      Nonperforming Loans                          |                    | 98,620  |   |   |   | 25,119 |   |   |   | 8,042 |   |   |   | 5,258 |   |   |   | 4,646 |   |
| Other      Real Estate Owned                            |                    | 9,222   |   |   |   | 3,043 |   |   |   | 689 |   |   |   | 292 |   |   |   | 625 |   |
| Total      Nonperforming Assets                         | $                       | 107,842 |   |   | $ | 28,162 |   |   | $ | 8,731 |   |   | $ | 5,550 |   |   | $ | 5,271 |   |
|                                                    |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Past      Due 90 Days or More (still accruing interest) | $                  | 88      |   |   |  $ | 416 |   |   |  $ | 135 |   |   | $  | 309 |   |   | $ | 605 |   |
|                                                    |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nonperforming      Loans/Loans                          |                    | 5.04    | % |   |   | 1.31 | % |   |   | .40 | % |   |   | .25 | % |   |   | .25 | % |
| Nonperforming      Assets/Loans Plus Other Real Estate  |                    | 5.48    | % |   |   | 1.47 | % |   |   | .44 | % |   |   | .27 | % |   |   | .29 | % |
| Nonperforming      Assets/Capital(1)                    |                    | 34.15   | % |   |   | 9.06 | % |   |   | 2.62 | % |   |   | 1.72 | % |   |   | 1.93 | % |
| Allowance/Nonperforming      Loans                      |                    | 37.52   | % |   |   | 71.92 | % |   |   | 214.09 | % |   |   | 331.11 | % |   |   | 345.18 | % |

| (1) | For computation of this      percentage, "Capital" refers to shareowners' equity plus the allowance for      loan losses. |
|-----|---------------------------------------------------------------------------------------------------------------------------|

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|                                     |   | As      of December 31, |    |
|------------------------------------------|--------|-------------------------|---------|
|                                     |   | 2008                    |    | 2007 |   | 2006 |   |
| (Dollars      in Thousands)              |   | AmortizedCost           |    | MarketValue |   | Weighted(1)AverageYield |   | AmortizedCost |   | MarketValue |   | Weighted(1)AverageYield |   | AmortizedCost |   | MarketValue |   | Weighted(1)AverageYield |   |
|                                     |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      GOVERNMENTS                    |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due      in 1 year or less               |   | $                       | 18,695  |   | $ | 19,033 |   |   | 3.54 | % | $ | 36,441 |   | $ | 36,570 |   |   | 4.62 | % | $ | 17,329 |   | $ | 17,150 |   |   | 3.45 | % |
| Due      over 1 year through 5 years     |   |                    | 17,490  |   |   | 17,909 |   |   | 1.98 |   |   | 25,264 |   |   | 25,493 |   |   | 4.46 |   |   | 56,388 |   |   | 55,978 |   |   | 4.64 |   |
| Due      over 5 years through 10 years   |   |                    | -       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Due      over 10 years                   |   |                    | -       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| TOTAL                                    |   |                    | 36,185  |   |   | 36,942 |   |   | 2.79 |   |   | 61,705 |   |   | 62,063 |   |   | 4.56% |   |   | 73,717 |   |   | 73,128 |   |   | 4.36 |   |
|                                     |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| STATES      & POLITICAL SUBDIVISIONS |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due      in 1 year or less               |   |                    | 39,277  |   |   | 39,581 |   |   | 5.02 |   |   | 25,675 |   |   | 25,697 |   |   | 5.19 |   |   | 31,438 |   |   | 31,300 |   |   | 4.21 |   |
| Due      over 1 year through 5 years     |   |                    | 61,093  |   |   | 61,981 |   |   | 4.55 |   |   | 64,339 |   |   | 64,304 |   |   | 5.38 |   |   | 52,183 |   |   | 51,922 |   |   | 5.25 |   |
| Due      over 5 years through 10 years   |   |                    | -       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Due      over 10 years                   |   |                    | -       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| TOTAL                                    |   |                    | 100,370 |   |   | 101,562 |   |   | 4.74 |   |   | 90,014 |   |   | 90,001 |   |   | 5.32% |   |   | 83,621 |   |   | 83,222 |   |   | 4.86 |   |
|                                     |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| MORTGAGE-BACKED      SECURITIES(2)       |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due      in 1 year or less               |   |                    | 1,258   |   |   | 1,267 |   |   | 3.84 |   |   | 4,125 |   |   | 4,117 |   |   | 4.23 |   |   | 3,568 |   |   | 3,571 |   |   | 5.37 |   |
| Due      over 1 year through 5 years     |   |                    | 30,803  |   |   | 30,907 |   |   | 4.44 |   |   | 15,043 |   |   | 15,070 |   |   | 4.89 |   |   | 14,942 |   |   | 14,732 |   |   | 4.58 |   |
| Due      over 5 years through 10 years   |   |                    | 1,420   |   |   | 1,426 |   |   | 5.29 |   |   | 7,166 |   |   | 7,100 |   |   | 5.21 |   |   | 4,734 |   |   | 4,593 |   |   | 5.02 |   |
| Due      over 10 years                   |   |                    | 6,379   |   |   | 6,476 |   |   | 5.38 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| TOTAL                                    |   |                    | 39,860  |   |   | 40,076 |   |   | 3.74 |   |   | 26,334 |   |   | 26,287 |   |   | 4.87% |   |   | 23,244 |   |   | 22,896 |   |   | 4.79 |   |
|                                     |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER      SECURITIES                    |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Due      in 1 year or less               |   |                    | -       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Due      over 1 year through 5 years     |   |                    | -       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Due      over 5 years through 10 years   |   |                    | 1,000   |   |   | 1,107 |   |   | 5.00 |   |   | 1,000 |   |   | 1,061 |   |   | 5.00 |   |   | - |   |   | - |   |   | - |   |
| Due      over 10 years(3)                |   |                    | 11,882  |   |   | 11,882 |   |   | 5.94 |   |   | 11,307 |   |   | 11,307 |   |   | 5.90 |   |   | 12,648 |   |   | 12,648 |   |   | 5.78 |   |
| TOTAL                                    |   |                    | 12,882  |   |   | 12,989 |   |   | 5.87 |   |   | 12,307 |   |   | 12,368 |   |   | 5.90 |   |   | 12,648 |   |   | 12,648 |   |   | 5.78 |   |
|                                     |   |                    |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL      INVESTMENT SECURITIES         |   | $                       | 189,297 |   | $ | 191,569 |   |   | 4.26 | % | $ | 190,360 |   | $ | 190,719 |   |   | 5.08 | % | $ | 193,230 |   | $ | 191,894 |   |   | 4.72 | % |

| (1) | Weighted average yields are      calculated on the basis of the amortized cost of the security. The      weighted average yields on tax-exempt obligations are computed on a      taxable equivalent basis using a 35% tax  rate. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Based on weighted average      life. |
|-----|--------------------------------------|

| (3) | Federal Home Loan Bank Stock and      Federal Reserve Bank Stock are included in this category for weighted      average yield, but do not have stated  maturities. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                   | As      of December 31, |
|----------------------------------------|-------------------------|
| (In      Years)                        | 2008                    |   | 2007 |   | 2006 |
| U.S.      Governments                  | 1.15                    |   |   | 1.09 |   | 1.76 |
| States      and Political Subdivisions | 1.56                    |   |   | 1.48 |   | 1.39 |
| Mortgage-Backed      Securities        | 4.98                    |   |   | 3.47 |   | 3.05 |
| Other      Securities                  | -                       |   |   | - |   | - |
| TOTAL                                  | 2.24                    |   |   | 1.63 |   | 1.75 |

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|                                           |   | 2007      to |    |   | Percentage    |   |   | Components      of  |   |
|------------------------------------------------|--------|--------------|---------|--------|---------------|--------|--------|---------------------|--------|
|                                           |   | 2008         |    |   | of      Total |   |   | Total      Deposits |   |
| (Average      Balances - Dollars in Thousands) |   | Change       |    |   | Change        |   |   | 2008                |   |   | 2007 |   |   | 2006 |   |
| Noninterest      Bearing Deposits              |   | $            | (34,466 | )      |          |   | (45.6  | )      %            |   |   | 19.7 | % |   |   | 22.2 | % |   |   | 24.8 | % |
| NOW      Accounts                              |   |         | 186,267 |   |          |   | 246.3  |                |   |   | 36.0 |   |   |   | 28.0 |   |   |   | 25.5 |   |
| Money      Market Accounts                     |   |         | (22,915 | )      |          |   | (30.3  | )                   |   |   | 18.1 |   |   |   | 20.0 |   |   |   | 18.2 |   |
| Savings                                        |   |         | (3,287  | )      |          |   | (4.3   | )                   |   |   | 5.6 |   |   |   | 6.0 |   |   |   | 6.6 |   |
| Time      Deposits                             |   |         | (49,980 | )      |          |   | (66.1  | )                   |   |   | 20.6 |   |   |   | 23.9 |   |   |   | 24.9 |   |
| Total      Deposits                            |   | $            | 75,619  |   |          |   | 100.0  | %                   |   |   | 100.0 | % |   |   | 100.0 | % |   |   | 100.0 | % |

|                                |   | December      31, 2008            |   |
|-------------------------------------|--------|-----------------------------------|--------|
| (Dollars      in Thousands)         |   | Time      Certificates of Deposit |   |   | Percent |   |
| Three      months or less           |   | $                                 | 37,420 |   |   |   | 39.33 | % |
| Over      three through six months  |   |                              | 21,300 |   |   |   | 22.38 |   |
| Over      six through twelve months |   |                              | 30,993 |   |   |   | 32.57 |   |
| Over      twelve months             |   |                              | 5,440  |   |   |   | 5.72 |   |
| Total                               |   | $                                 | 95,153 |   |   |   | 100.00 | % |

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| Changes      in Interest Rates | +300      bp | +200      bp | +100      bp | -100      bp |
|--------------------------------|--------------|--------------|--------------|--------------|
|                           |         |         |         |         |
| Policy      Limit              | -10.0%       | -7.5%        | -5.0%        | -5.0%        |
| December      31, 2008         | 1.4%         | 1.6%         | 1.2%         | -1.4%        |
| December      31, 2007         | 1.4%         | 4.1%         | 3.5%         | -4.1%        |

| Changes      in Interest Rates | +300      bp | +200      bp | +100      bp | -100      bp |
|--------------------------------|--------------|--------------|--------------|--------------|
|                           |         |         |         |         |
| Policy      Limit              | -12.5%       | -10.0%       | -7.5%        | -7.5%        |
| December      31, 2008         | 0.8%         | 2.3%         | 1.9%         | -4.1%        |
| December      31, 2007         | 1.8%         | 3.4%         | 2.7%         | -3.5%        |

| (1) | Down      200 and 300 rate scenarios have been excluded due to the current      historically low interest rateenvironment. |
|-----|----------------------------------------------------------------------------------------------------------------------------|

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|                                         |   | Payments      Due By Period |    |
|----------------------------------------------|--------|-----------------------------|---------|
| (Dollars      in Thousands)                  |   | <      1 Yr              |    |   | 1 –      3 Yrs |   |   | 3 –      5 Yrs |   |   | >      5 Years |   |   | Total |   |
| Federal      Home Loan Bank Advances         |   | $                           | 2,969   |   |   | $ | 16,628 |   |   | $ | 12,957 |   |   | $ | 18,768 |   |   | $ | 51,322 |   |
| Subordinated      Notes Payable              |   |                        | -       |   |   |   | - |   |   |   | - |   |   |   | 62,887 |   |   |   | 62,887 |   |
| Operating      Lease Obligations             |   |                        | 1,429   |   |   |   | 1,744 |   |   |   | 994 |   |   |   | 5,095 |   |   |   | 9,262 |   |
| Time      Deposit Maturities                 |   |                        | 330,407 |   |   |   | 41,649 |   |   |   | 1,539 |   |   |   | - |   |   |   | 373,595 |   |
| Liability      for Unrecognized Tax Benefits |   |                        | -       |   |   |   | 645 |   |   |   | 2,015 |   |   |   | 2,090 |   |   |   | 4,750 |   |
| Total      Contractual Cash Obligations      |   | $                           | 334,805 |   |   | $ | 60,666 |   |   | $ | 17,505 |   |   | $ | 88,840 |   |   | $ | 501,816 |   |

| (Dollars      in Thousands)                             | 2008   |    |   | 2007   |   |    | 2006   |   |
|---------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|
| Common      Stock                                       |   | 171     |   |   |   | 172     |   |   |   | 185 |   |
| Additional      Paid-in Capital                         |   | 36,783  |   |   |   | 38,243  |   |   |   | 80,654 |   |
| Retained      Earnings                                  |   | 262,890 |   |   |   | 260,325 |   |   |   | 243,242 |   |
| Subtotal                                                |   | 299,844 |   |   |   | 298,740 |   |   |   | 324,081 |   |
| Accumulated      Other Comprehensive (Loss), Net of Tax |   | (21,014 | )      |   |   | (6,065  | )      |   |   | (8,311 | ) |
| Total      Shareowners' Equity                          | $      | 278,830 |   |   | $      | 292,675 |   |   | $ | 315,770 |   |

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| ·   | Compliance      with state and federal laws andregulations; |
|--------------------|-------------------------------------------------------------|

| ·   | Our      capital position and our ability to meet our financial      obligations; |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | Projected      earnings and asset levels;and |
|--------------------|----------------------------------------------|

| ·   | The      ability of the Bank and us to funddividends. |
|--------------------|-------------------------------------------------------|

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| ITEM      7A. | QUANTITATIVE AND QUALITATIVE      DISCLOSURE ABOUT MARKET RISK |
|---------------|----------------------------------------------------------------|

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| Item 8.   | Financial      Statements and Supplementary Data |
|---------------------|--------------------------------------------------|

|                                                         |   | 2008   |      |   | 2007     |   |
|--------------------------------------------------------------|--------|--------|-----------|--------|----------|--------|
| (Dollars      in Thousands, Except Per Share Data)           |   | Fourth |      |   | Third(1) |   |   | Second |   |   | First |   |   | Fourth |   |   | Third |   |   | Second |   |   | First |   |
| Summary      of Operations:                                  |   |   |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Income                                         |   | $      | 33,229    |   |     | $      | 34,654 |   |   | $ | 36,260 |   |   | $ | 38,723 |   |   | $ | 40,786 |   |   | $ | 41,299 |   |   | $ | 41,724 |   |   | $ | 41,514 |   |
| Interest      Expense                                        |   |   | 5,482     |   |     |   | 7,469 |   |   |   | 8,785 |   |   |   | 12,264 |   |   |   | 13,241 |   |   |   | 13,389 |   |   |   | 13,263 |   |   |   | 13,189 |   |
| Net      Interest Income                                     |   |   | 27,747    |   |     |   | 27,185 |   |   |   | 27,475 |   |   |   | 26,459 |   |   |   | 27,545 |   |   |   | 27,910 |   |   |   | 28,461 |   |   |   | 28,325 |   |
| Provision      for Loan Losses                               |   |   | 12,497    |   |     |   | 10,425 |   |   |   | 5,432 |   |   |   | 4,142 |   |   |   | 1,699 |   |   |   | 1,552 |   |   |   | 1,675 |   |   |   | 1,237 |   |
| Net      Interest Income AfterProvision      for Loan Losses |   |   | 15,250    |   |     |   | 16,760 |   |   |   | 22,043 |   |   |   | 22,317 |   |   |   | 25,846 |   |   |   | 26,358 |   |   |   | 26,786 |   |   |   | 27,088 |   |
| Noninterest      Income                                      |   |   | 13,311    |   |     |   | 20,212 |   |   |   | 15,718 |   |   |   | 17,799 |   |   |   | 15,823 |   |   |   | 14,431 |   |   |   | 15,084 |   |   |   | 13,962 |   |
| Noninterest      Expense                                     |   |   | 31,002    |   |     |   | 29,916 |   |   |   | 30,756 |   |   |   | 29,798 |   |   |   | 31,614 |   |   |   | 29,919 |   |   |   | 29,897 |   |   |   | 30,562 |   |
| (Loss)      Income Before Provision for Income Taxes         |   |   | (2,441    | )      |     |   | 7,056 |   |   |   | 7,005 |   |   |   | 10,318 |   |   |   | 10,055 |   |   |   | 10,870 |   |   |   | 11,973 |   |   |   | 10,488 |   |
| Provision      for Income Taxes                              |   |   | (738      | )      |     |   | 2,218 |   |   |   | 2,195 |   |   |   | 3,038 |   |   |   | 2,391 |   |   |   | 3,699 |   |   |   | 4,082 |   |   |   | 3,531 |   |
| Net      (Loss) Income                                       |   | $      | (1,703    | )      |     | $      | 4,838 |   |   | $ | 4,810 |   |   | $ | 7,280 |   |   | $ | 7,664 |   |   | $ | 7,171 |   |   | $ | 7,891 |   |   | $ | 6,957 |   |
| Net      Interest Income (FTE)                               |   | $      | 28,387    |   |     | $      | 27,802 |   |   | $ | 28,081 |   |   | $ | 27,078 |   |   | $ | 28,196 |   |   | $ | 28,517 |   |   | $ | 29,050 |   |   | $ | 28,898 |   |
|                                                         |   |   |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per      Common Share:                                       |   |   |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      (Loss) Income Basic                                 |   | $      | (0.10     | )      |     | $      | 0.29 |   |   | $ | 0.28 |   |   | $ | 0.42 |   |   | $ | 0.44 |   |   | $ | 0.41 |   |   | $ | 0.43 |   |   | $ | 0.38 |   |
| Net      (Loss) Income Diluted                               |   |   | (0.10     | )      |     |   | 0.29 |   |   |   | 0.28 |   |   |   | 0..42 |   |   |   | 0.44 |   |   |   | 0.41 |   |   |   | 0.43 |   |   |   | 0.38 |   |
| Dividends      Declared                                      |   |   | 0.190     |   |     |   | 0.185 |   |   |   | 0.185 |   |   |   | 0.185 |   |   |   | 0.185 |   |   |   | 0.175 |   |   |   | 0.175 |   |   |   | 0.175 |   |
| Diluted      Book Value                                      |   |   | 16.27     |   |     |   | 17.45 |   |   |   | 17.33 |   |   |   | 17.33 |   |   |   | 17.03 |   |   |   | 16.95 |   |   |   | 16.87 |   |   |   | 16.97 |   |
| Market      Price:                                           |   |   |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| High                                                         |   |   | 33.32     |   |     |   | 34.50 |   |   |   | 30.19 |   |   |   | 29.99 |   |   |   | 34.00 |   |   |   | 36.40 |   |   |   | 33.69 |   |   |   | 35.91 |   |
| Low                                                          |   |   | 21.06     |   |     |   | 19.20 |   |   |   | 21.76 |   |   |   | 24.76 |   |   |   | 24.60 |   |   |   | 27.69 |   |   |   | 29.12 |   |   |   | 29.79 |   |
| Close                                                        |   |   | 27.24     |   |     |   | 31.35 |   |   |   | 21.76 |   |   |   | 29.00 |   |   |   | 28.22 |   |   |   | 31.20 |   |   |   | 31.34 |   |   |   | 33.30 |   |
|                                                         |   |   |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selected      Average                                        |   |   |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balances:                                                    |   |   |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                                        |   | $      | 1,940,083 |   |     | $      | 1,915,008 |   |   | $ | 1,908,802 |   |   | $ | 1,909,574 |   |   | $ | 1,908,069 |   |   | $ | 1,907,235 |   |   | $ | 1,944,969 |   |   | $ | 1,980,224 |   |
| Earning      Assets                                          |   |   | 2,150,841 |   |     |   | 2,207,670 |   |   |   | 2,303,971 |   |   |   | 2,301,463 |   |   |   | 2,191,230 |   |   |   | 2,144,737 |   |   |   | 2,187,236 |   |   |   | 2,211,560 |   |
| Assets                                                       |   |   | 2,463,318 |   |     |   | 2,528,638 |   |   |   | 2,634,771 |   |   |   | 2,646,474 |   |   |   | 2,519,682 |   |   |   | 2,467,703 |   |   |   | 2,511,252 |   |   |   | 2,530,790 |   |
| Deposits                                                     |   |   | 1,945,866 |   |     |   | 2,030,684 |   |   |   | 2,140,545 |   |   |   | 2,148,874 |   |   |   | 2,016,736 |   |   |   | 1,954,160 |   |   |   | 1,987,418 |   |   |   | 2,003,726 |   |
| Shareowners’      Equity                               |   |   | 302,227   |   |     |   | 303,595 |   |   |   | 300,890 |   |   |   | 296,804 |   |   |   | 299,342 |   |   |   | 301,536 |   |   |   | 309,352 |   |   |   | 316,484 |   |
| Common      Equivalent Average Shares:                       |   |   |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                        |   |   | 17,125    |   |     |   | 17,124 |   |   |   | 17,146 |   |   |   | 17,170 |   |   |   | 17,444 |   |   |   | 17,709 |   |   |   | 18,089 |   |   |   | 18,409 |   |
| Diluted                                                      |   |   | 17,135    |   |     |   | 17,128 |   |   |   | 17,147 |   |   |   | 17,178 |   |   |   | 17,445 |   |   |   | 17,719 |   |   |   | 18,089 |   |   |   | 18,420 |   |
|                                                         |   |   |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratios:                                                      |   |   |      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Return      on Assets                                        |   |   | -0.28     | %      |     |   | 0.76 | % |   |   | .73 | % |   |   | 1.11 | % |   |   | 1.21 | % |   |   | 1.15 | % |   |   | 1.26 | % |   |   | 1.11 | % |
| Return      on Equity                                        |   |   | -2.24     | %      |     |   | 6.34 | % |   |   | 6.43 | % |   |   | 9.87 | % |   |   | 10.16 | % |   |   | 9.44 | % |   |   | 10.23 | % |   |   | 8.91 | % |
| Net      Interest Margin (FTE)                               |   |   | 5.26      | %      |     |   | 5.01 | % |   |   | 4.90 | % |   |   | 4.73 | % |   |   | 5.10 | % |   |   | 5.27 | % |   |   | 5.33 | % |   |   | 5.29 | % |
| Efficiency      Ratio                                        |   |   | 71.21     | %      |     |   | 59.27 | % |   |   | 66.89 | % |   |   | 63.15 | % |   |   | 68.51 | % |   |   | 66.27 | % |   |   | 64.44 | % |   |   | 67.90 | % |

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| PAGE     |                                                            |
|----------|-----------------------------------------------------------------|
|     |                                                            |
|  57 | Reports of      Independent Registered Public Accounting  Firms |
|     |                                                            |
|  59 | Consolidated      Statements of Financial Condition             |
|     |                                                            |
|  60 | Consolidated      Statements of Income                          |
|     |                                                            |
|  61 | Consolidated      Statements of Changes in Shareowners' Equity  |
|     |                                                            |
|  62 | Consolidated      Statements of Cash Flows                      |
|     |                                                            |
| 63       | Notes to      Consolidated FinancialStatements                  |

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CAPITAL CITY BANK GROUP, INC.

|                                                                                                                                                                                        | As      of December 31, |      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|-----------|
| (Dollars      in Thousands)                                                                                                                                                                 | 2008                    |      |   | 2007 |   |
| ASSETS                                                                                                                                                                                      |                    |      |   |   |   |
| Cash      and Due From Banks                                                                                                                                                                | $                       | 88,143    |   |   | $ | 93,437 |   |
| Federal      Funds Sold and Interest Bearing Deposits                                                                                                                                       |                    | 6,806     |   |   |   | 166,260 |   |
| Total      Cash and Cash Equivalents                                                                                                                                                        |                    | 94,949    |   |   |   | 259,697 |   |
|                                                                                                                                                                                        |                    |      |   |   |   |   |   |
| Investment      Securities, Available-for-Sale                                                                                                                                              |                    | 191,569   |   |   |   | 190,719 |   |
|                                                                                                                                                                                        |                    |      |   |   |   |   |   |
| Loans,      Net of Unearned Interest                                                                                                                                                        |                    | 1,957,797 |   |   |   | 1,915,850 |   |
| Allowance      for Loan Losses                                                                                                                                                              |                    | (37,004   | ) |   |   | (18,066 | ) |
| Loans,      Net                                                                                                                                                                             |                    | 1,920,793 |   |   |   | 1,897,784 |   |
|                                                                                                                                                                                        |                    |      |   |   |   |   |   |
| Premises      and Equipment, Net                                                                                                                                                            |                    | 106,433   |   |   |   | 98,612 |   |
| Goodwill                                                                                                                                                                                    |                    | 84,811    |   |   |   | 84,811 |   |
| Other      Intangible Assets                                                                                                                                                                |                    | 8,072     |   |   |   | 13,757 |   |
| Other      Assets                                                                                                                                                                           |                    | 82,072    |   |   |   | 70,947 |   |
| Total      Assets                                                                                                                                                                           | $                       | 2,488,699 |   |   | $ | 2,616,327 |   |
|                                                                                                                                                                                        |                    |      |   |   |   |   |   |
| LIABILITIES                                                                                                                                                                                 |                    |      |   |   |   |   |   |
| Deposits:                                                                                                                                                                                   |                    |      |   |   |   |   |   |
| Noninterest      Bearing Deposits                                                                                                                                                           | $                       | 419,696   |   |   | $ | 432,659 |   |
| Interest      Bearing Deposits                                                                                                                                                              |                    | 1,572,478 |   |   |   | 1,709,685 |   |
| Total      Deposits                                                                                                                                                                         |                    | 1,992,174 |   |   |   | 2,142,344 |   |
|                                                                                                                                                                                        |                    |      |   |   |   |   |   |
| Short-Term      Borrowings                                                                                                                                                                  |                    | 62,044    |   |   |   | 53,131 |   |
| Subordinated      Notes Payable                                                                                                                                                             |                    | 62,887    |   |   |   | 62,887 |   |
| Other      Long-Term Borrowings                                                                                                                                                             |                    | 51,470    |   |   |   | 26,731 |   |
| Other      Liabilities                                                                                                                                                                      |                    | 41,294    |   |   |   | 38,559 |   |
| Total      Liabilities                                                                                                                                                                      |                    | 2,209,869 |   |   |   | 2,323,652 |   |
|                                                                                                                                                                                        |                    |      |   |   |   |   |   |
| SHAREOWNERS'      EQUITY                                                                                                                                                                    |                    |      |   |   |   |   |   |
| Preferred      Stock, $.01 par value; 3,000,000 shares authorized; no shares issued and      outstanding                                                                                    |                    | -         |   |   |   | - |   |
| Common      Stock, $.01 par value; 90,000,000 shares authorized; 17,126,997 and      17,182,553 shares issued and outstanding at December 31, 2008 and December      31, 2007, respectively |                    | 171       |   |   |   | 172 |   |
| Additional      Paid-In Capital                                                                                                                                                             |                    | 36,783    |   |   |   | 38,243 |   |
| Retained      Earnings                                                                                                                                                                      |                    | 262,890   |   |   |   | 260,325 |   |
| Accumulated      Other Comprehensive Loss, Net of Tax                                                                                                                                       |                    | (21,014   | ) |   |   | (6,065 | ) |
| Total      Shareowners' Equity                                                                                                                                                              |                    | 278,830   |   |   |   | 292,675 |   |
| Total      Liabilities and Shareowners' Equity                                                                                                                                              | $                       | 2,488,699 |   |   | $ | 2,616,327 |   |

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CONSOLIDATED STATEMENTS OF INCOME

|                                                        | For      the Years Ended December 31, |    |
|-------------------------------------------------------------|---------------------------------------|---------|
| (Dollars      in Thousands, Except Per Share Data)          | 2008                                  |    |   | 2007 |   |   | 2006 |   |
| INTEREST      INCOME                                        |                                  |    |   |   |   |   |   |   |
| Interest      and Fees on Loans                             | $                                     | 132,682 |   |   | $ | 154,567 |   |   | $ | 156,666 |   |
| Investment      Securities:                                 |                                  |    |   |   |   |   |   |   |   |   |   |
| U.S.      Treasury                                          |                                  | 747     |   |   |   | 574 |   |   |   | 453 |   |
| U.S.      Government Agencies and Corporations              |                                  | 2,562   |   |   |   | 3,628 |   |   |   | 3,605 |   |
| States      and Political Subdivisions                      |                                  | 3,185   |   |   |   | 2,894 |   |   |   | 2,337 |   |
| Other      Securities                                       |                                  | 581     |   |   |   | 747 |   |   |   | 793 |   |
| Funds      Sold                                             |                                  | 3,109   |   |   |   | 2,913 |   |   |   | 2,039 |   |
| Total      Interest Income                                  |                                  | 142,866 |   |   |   | 165,323 |   |   |   | 165,893 |   |
|                                                        |                                  |    |   |   |   |   |   |   |   |   |   |
| INTEREST      EXPENSE                                       |                                  |    |   |   |   |   |   |   |   |   |   |
| Deposits                                                    |                                  | 27,306  |   |   |   | 44,687 |   |   |   | 37,253 |   |
| Short-Term      Borrowings                                  |                                  | 1,157   |   |   |   | 2,871 |   |   |   | 3,075 |   |
| Subordinated      Notes Payable                             |                                  | 3,735   |   |   |   | 3,730 |   |   |   | 3,725 |   |
| Other      Long-Term Borrowings                             |                                  | 1,802   |   |   |   | 1,794 |   |   |   | 2,704 |   |
| Total      Interest Expense                                 |                                  | 34,000  |   |   |   | 53,082 |   |   |   | 46,757 |   |
|                                                        |                                  |    |   |   |   |   |   |   |   |   |   |
| NET      INTEREST INCOME                                    |                                  | 108,866 |   |   |   | 112,241 |   |   |   | 119,136 |   |
| Provision      for Loan Losses                              |                                  | 32,496  |   |   |   | 6,163 |   |   |   | 1,959 |   |
| Net      Interest Income After Provision for Loan Losses    |                                  | 76,370  |   |   |   | 106,078 |   |   |   | 117,177 |   |
|                                                        |                                  |    |   |   |   |   |   |   |   |   |   |
| NONINTEREST      INCOME                                     |                                  |    |   |   |   |   |   |   |   |   |   |
| Service      Charges on Deposit Accounts                    |                                  | 27,742  |   |   |   | 26,130 |   |   |   | 24,620 |   |
| Data      Processing                                        |                                  | 3,435   |   |   |   | 3,133 |   |   |   | 2,723 |   |
| Asset      Management Fees                                  |                                  | 4,235   |   |   |   | 4,700 |   |   |   | 4,600 |   |
| Securities      Transactions                                |                                  | 125     |   |   |   | 14 |   |   |   | (4 | ) |
| Mortgage      Banking Revenues                              |                                  | 1,623   |   |   |   | 2,596 |   |   |   | 3,235 |   |
| Bank      Card Fees                                         |                                  | 12,701  |   |   |   | 13,706 |   |   |   | 12,602 |   |
| Gain      on Sale of Portion of Merchant Services Portfolio |                                  | 6,250   |   |   |   | - |   |   |   | - |   |
| Other                                                       |                                  | 10,929  |   |   |   | 9,021 |   |   |   | 7,801 |   |
| Total      Noninterest Income                               |                                  | 67,040  |   |   |   | 59,300 |   |   |   | 55,577 |   |
|                                                        |                                  |    |   |   |   |   |   |   |   |   |   |
| NONINTEREST      EXPENSE                                    |                                  |    |   |   |   |   |   |   |   |   |   |
| Salaries      and Associate Benefits                        |                                  | 61,831  |   |   |   | 60,279 |   |   |   | 60,855 |   |
| Occupancy,      Net                                         |                                  | 9,729   |   |   |   | 9,347 |   |   |   | 9,395 |   |
| Furniture      and Equipment                                |                                  | 9,902   |   |   |   | 9,890 |   |   |   | 9,911 |   |
| Intangible      Amortization                                |                                  | 5,685   |   |   |   | 5,834 |   |   |   | 6,085 |   |
| Other                                                       |                                  | 34,325  |   |   |   | 36,642 |   |   |   | 35,322 |   |
| Total      Noninterest Expense                              |                                  | 121,472 |   |   |   | 121,992 |   |   |   | 121,568 |   |
|                                                        |                                  |    |   |   |   |   |   |   |   |   |   |
| INCOME      BEFORE INCOME TAXES                             |                                  | 21,938  |   |   |   | 43,386 |   |   |   | 51,186 |   |
| Income      Taxes                                           |                                  | 6,713   |   |   |   | 13,703 |   |   |   | 17,921 |   |
|                                                        |                                  |    |   |   |   |   |   |   |   |   |   |
| NET      INCOME                                             | $                                     | 15,225  |   |   | $ | 29,683 |   |   | $ | 33,265 |   |
| BASIC      NET INCOME PER SHARE                             | $                                     | 0.89    |   |   | $ | 1.66 |   |   | $ | 1.79 |   |
| DILUTED      NET INCOME PER SHARE                           | $                                     | 0.89    |   |   | $ | 1.66 |   |   | $ | 1.79 |   |
|                                                        |                                  |    |   |   |   |   |   |   |   |   |   |
| Average      Basic Common Shares Outstanding                |                                  | 17,141  |   |   |   | 17,909 |   |   |   | 18,585 |   |
| Average      Diluted Common Shares Outstanding              |                                  | 17,147  |   |   |   | 17,912 |   |   |   | 18,610 |   |

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CONSOLIDATED STATEMENT OF CHANGES IN SHAREOWNERS'EQUITY

| (Dollars      in Thousands, Except Per Share Data)                                       |   | Shares      Outstanding |   |   | Common      Stock |   |   | AdditionalPaid-InCapital |    |   | RetainedEarnings |   |    | Accumulated      OtherComprehensive(Loss)      Income,Net      of Taxes |   |   |        Total |   |
|------------------------------------------------------------------------------------------|--------|-------------------------|--------|--------|-------------------|--------|--------|--------------------------|---------|--------|------------------|--------|---------|-------------------------------------------------------------------------|--------|--------|-------------------|--------|
|                                                                                     |   |                    |   |   |              |   |   |                     |    |   |             |   |    |                                                                    |   |   |              |
| Balance,      December 31, 2005                                                          |   |  18,631,706        |   | $      | 186               |   |   |  $                  | 83,304  |   |             | $      | 222,299 |                                                                    |   | $      | (1,246            | )      |   | $ | 304,543 |   |
| Comprehensive      Income:                                                               |   |                    |   |   |              |   |   |                     |    |   |             |   |    |                                                                    |   |   |              |   |   |   |   |   |
| Net      Income                                                                          |   |                    |   |   | -                 |   |   |                     | -       |   |             |   | 33,265  |                                                                    |   |   | -                 |   |   |   | 33,265 |   |
| Net      Change in Unrealized Loss On Available-for-Sale Securities(net      of tax)     |   |                    |   |   | -                 |   |   |                     | -       |   |             |   | -       |                                                                    |   |   | 412               |   |   |   | 412 |   |
| Total      Comprehensive Income                                                          |   |                    |   |   | -                 |   |   |                     | -       |   |             |   | -       |                                                                    |   |   | -                 |   |   |   | 33,677 |   |
| Establish      Pension Liability upon adoption of SFAS No. 158 (net of    tax)           |   |                    |   |   | -                 |   |   |                     | -       |   |             |   | -       |                                                                    |   |   | (7,477            | )      |   |   | (7,477 | ) |
| Cash      Dividends ($.663 per share)                                                    |   |                    |   |   | -                 |   |   |                     | -       |   |             |   | (12,322 | )                                                                       |   |   | -                 |   |   |   | (12,322 | ) |
| Stock      Performance Plan Compensation                                                 |   |                    |   |   | -                 |   |   |                     | 1,673   |   |             |   | -       |                                                                    |   |   | -                 |   |   |   | 1,673 |   |
| Issuance      of Common Stock                                                            |   |  51,288            |   |   | 1                 |   |   |                     | 1,035   |   |             |   | -       |                                                                    |   |   | -                 |   |   |   | 1,036 |   |
| Repurchase      of Common Stock                                                          |   | (164,596                | )      |   | (2                | )      |   |                     | (5,358  | )      |             |   | -       |                                                                    |   |   | -                 |   |   |   | (5,360 | ) |
|                                                                                     |   |                    |   |   |              |   |   |                     |    |   |             |   |    |                                                                    |   |   |              |   |   |   |   |   |
| Balance,      December 31, 2006                                                          |   |   18,518,398  |   |   | 185               |   |   |                     | 80,654  |   |             |   | 243,242 |                                                                    |   |   | (8,311            | )      |   |   | 315,770 |   |
| Comprehensive      Income:                                                               |   |                    |   |   |              |   |   |                     |    |   |             |   |    |                                                                    |   |   |              |   |   |   |   |   |
| Net      Income                                                                          |   |                    |   |   | -                 |   |   |                     | -       |   |             |   | 29,683  |                                                                    |   |   | -                 |   |   |   | 29,683 |   |
| Net      Change in Unrealized Loss On Available-for-Sale Securities(net      of tax)     |   |                    |   |   | -                 |   |   |                     | -       |   |             |   | -       |                                                                    |   |   | 1,080             |   |   |   | 1,080  |   |
| Net      Change in Funded Status of Defined Pension Plan and SERP Plan (net of      tax) |   |                    |   |   | -                 |   |   |                     | -       |   |             |   | -       |                                                                    |   |   | 1,166             |   |   |   | 1,166  |   |
| Total      Comprehensive Income                                                          |   |                    |   |   | -                 |   |   |                     | -       |   |             |   | -       |                                                                    |   |   | -                 |   |   |   | 31,929 |   |
| Miscellaneous      – Other                                                         |   |                    |   |   | -                 |   |   |                     | -       |   |             |   | 223     |                                                                    |   |   | -                 |   |   |   | 223 |   |
| Cash      Dividends ($.710 per share)                                                    |   |                    |   |   | -                 |   |   |                     | -       |   |             |   | (12,823 | )                                                                       |   |   | -                 |   |   |   | (12,823 | ) |
| Stock      Performance Plan Compensation                                                 |   |                    |   |   | -                 |   |   |                     | 265     |   |             |   | -       |                                                                    |   |   | -                 |   |   |   | 265 |   |
| Issuance      of Common Stock                                                            |   |  68,519            |   |   | 1                 |   |   |                     | 571     |   |             |   | -       |                                                                    |   |   | -                 |   |   |   | 572 |   |
| Repurchase      of Common Stock                                                          |   | (1,404,364              | )      |   | (14               | )      |   |                     | (43,247 | )      |             |   | -       |                                                                    |   |   | -                 |   |   |   | (43,261 | ) |
|                                                                                     |   |                    |   |   |              |   |   |                     |    |   |             |   |    |                                                                    |   |   |              |   |   |   |   |   |
| Balance,      December 31, 2007                                                          |   |  17,182,553        |   |   | 172               |   |   |                     | 38,243  |   |             |   | 260,325 |                                                                    |   |   | (6,065            | )      |   |   | 292,675 |   |
| Cumulative      Effect of Adoption of EITF 06-4                                          |   |                    |   |   |              |   |   |                     |    |   |             |   | (30     | )                                                                       |   |   |              |   |   |   | (30 | ) |
| Comprehensive      Income:                                                               |   |                    |   |   |              |   |   |                     |    |   |             |   |    |                                                                    |   |   |              |   |   |   |   |   |
| Net      Income                                                                          |   |                    |   |   | -                 |   |   |                     | -       |   |             |   | 15,225  |                                                                    |   |   | -                 |   |   |   | 15,225 |   |
| Net      Change in Unrealized Gain On Available-for-Sale Securities(net      of tax)     |   |                    |   |   | -                 |   |   |                     | -       |   |             |   | -       |                                                                    |   |   | 1,230             |   |   |   |  1,230 |   |
| Net      Change in Funded Status of Defined Pension Plan and SERP Plan (net of      tax) |   |                    |   |   | -                 |   |   |                     | -       |   |             |   | -       |                                                                    |   |   | (16,179           | )      |   |   | (16,179 | ) |
| Total      Comprehensive Income                                                          |   |                    |   |   | -                 |   |   |                     | -       |   |             |   | -       |                                                                    |   |   | -                 |   |   |   | 276 |   |
| Cash      Dividends ($.7450 per share)                                                   |   |                    |   |   | -                 |   |   |                     | -       |   |             |   | (12,630 | )                                                                       |   |   | -                 |   |   |   | (12,630 | ) |
| Stock      Performance Plan Compensation                                                 |   |                    |   |   | -                 |   |   |                     | 62      |   |             |   | -       |                                                                    |   |   | -                 |   |   |   | 62 |   |
| Issuance      of Common Stock                                                            |   |  34,485            |   |   |              |   |   |                     | 891     |   |             |   | -       |                                                                    |   |   | -                 |   |   |   | 891 |   |
| Repurchase      of Common Stock                                                          |   | (90,041                 | )      |   | (1                | )      |   |                     | (2,413  | )      |             |   | -       |                                                                    |   |   | -                 |   |   |   | (2,414 | ) |
|                                                                                     |   |                    |   |   |              |   |   |                     |    |   |             |   |    |                                                                    |   |   |              |   |   |   |   |   |
| Balance,      December 31, 2008                                                          |   | 17,126,997              |   | $      | 171               |   |   | $                        | 36,783  |   |             | $      | 262,890 |                                                                    |   | $      | (21,014           | )      |   | $ | 278,830 |   |

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CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                                      | For      the Years Ended December 31, |     |
|---------------------------------------------------------------------------------------------------------------------------|---------------------------------------|----------|
| (Dollars      in Thousands)                                                                                               | 2008                                  |     |   | 2007 |   |   | 2006 |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                                                                |                                  |     |   |   |   |   |   |   |
| Net      Income                                                                                                           | $                                     | 15,225   |   |   | $ | 29,683 |   |   | $ | 33,265 |   |
| Adjustments      to Reconcile Net Income to Cash Provided by Operating      Activities:                                   |                                  |     |   |   |   |   |   |   |   |   |   |
| Provision      for Loan Losses                                                                                            |                                  | 32,496   |   |   |   | 6,163 |   |   |   | 1,959 |   |
| Depreciation                                                                                                              |                                  | 6,798    |   |   |   | 6,338 |   |   |   | 6,795 |   |
| Net      Securities Amortization                                                                                          |                                  | 990      |   |   |   | 279 |   |   |   | 582 |   |
| Amortization      of Intangible Assets                                                                                    |                                  | 5,685    |   |   |   | 5,834 |   |   |   | 6,085 |   |
| (Gain)      Loss on Securities Transactions                                                                               |                                  | (125     | ) |   |   | (14 | ) |   |   | 4 |   |
| Origination  of      Loans Held-for-Sale                                                                        |                                  | (106,340 | ) |   |   | (158,390 | ) |   |   | (190,945 | ) |
| Proceeds      From Sales of Loans Held-for-Sale                                                                           |                                  | 108,218  |   |   |   | 162,835 |   |   |   | 194,569 |   |
| Net      Gain From Sales of Loans Held-for Sale                                                                           |                                  | (1,623   | ) |   |   | (2,596 | ) |   |   | (3,235 | ) |
| Gain      on Sale of Portion of Merchant Services Portfolio                                                               |                                  | (6,250   | ) |   |   | - |   |   |   | - |   |
| Proceeds      From Sale of Portion of Merchant Services Portfolio                                                         |                                  | 6,250    |   |   |   | - |   |   |   | - |   |
| Non-Cash      Compensation                                                                                                |                                  | 62       |   |   |   | 265 |   |   |   | 1,673 |   |
| Increase      (Decrease) in Deferred Income Taxes                                                                         |                                  | (15,235  | ) |   |   | 1,328 |   |   |   | 1,614 |   |
| Net      (Increase) Decrease in Other Assets                                                                              |                                  | (1,371   | ) |   |   | (12,894 | ) |   |   | (11,327 | ) |
| Net      Increase (Decrease) in Other Liabilities                                                                         |                                  | 2,200    |   |   |   | 8,115 |   |   |   | 5,148 |   |
| Net      Cash Provided by Operating Activities                                                                            |                                  | 46,980   |   |   |   | 46,946 |   |   |   | 46,187 |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                                                                |                                  |     |   |   |   |   |   |   |   |   |   |
| Securities      Available-for-Sale:                                                                                       |                                  |     |   |   |   |   |   |   |   |   |   |
| Purchases                                                                                                                 |                                  | (89,059  | ) |   |   | (56,289 | ) |   |   | (102,628 | ) |
| Sales                                                                                                                     |                                  | 10,490   |   |   |   | - |   |   |   | 283 |   |
| Payments,      Maturities, and Calls                                                                                      |                                  | 78,767   |   |   |   | 58,894 |   |   |   | 81,500 |   |
| Net      (Increase) Decrease in Loans                                                                                     |                                  | (66,635  | ) |   |   | 74,058 |   |   |   | 64,213 |   |
| Purchase      of Premises & Equipment                                                                                 |                                  | (14,626  | ) |   |   | (18,613 | ) |   |   | (20,145 | ) |
| Proceeds      From Sales of Premises & Equipment                                                                      |                                  | 6        |   |   |   | 203 |   |   |   | 630 |   |
| Net      Cash (Used In) Provided By Investing Activities                                                                  |                                  | (81,057  | ) |   |   | 58,253 |   |   |   | 23,853 |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                                                                                |                                  |     |   |   |   |   |   |   |   |   |   |
| Net      (Decrease) Increase in Deposits                                                                                  |                                  | (150,171 | ) |   |   | 60,690 |   |   |   | 2,308 |   |
| Net      Increase (Decrease) in Short-Term Borrowings                                                                     |                                  | 8,925    |   |   |   | (12,263 | ) |   |   | (31,412 | ) |
| Increase      (Decrease) in Other Long-Term Borrowings                                                                    |                                  | 30,600   |   |   |   | (10,618 | ) |   |   | 3,250 |   |
| Repayment      of Other Long-Term Borrowings                                                                              |                                  | (5,872   | ) |   |   | (5,363 | ) |   |   | (16,335 | ) |
| Dividends      Paid                                                                                                       |                                  | (12,630  | ) |   |   | (12,823 | ) |   |   | (12,322 | ) |
| Repurchase      of Common Stock                                                                                           |                                  | (2,414   | )  |   |   | (43,261 | ) |   |   | (5,360 | ) |
| Issuance      of Common Stock                                                                                             |                                  | 891      |   |   |   | 572 |   |   |   | 1,036 |   |
| Net      Cash Used In Financing Activities                                                                                |                                  | (130,671 | ) |   |   | (23,066 | ) |   |   | (58,835 | ) |
|                                                                                                                      |                                  |     |   |   |   |   |   |   |   |   |   |
| NET      CHANGE IN CASH AND CASH EQUIVALENTS                                                                              |                                  | (164,748 | ) |   |   | 82,133 |   |   |   | 11,205 |   |
|                                                                                                                      |                                  |     |   |   |   |   |   |   |   |   |   |
| Cash      and Cash Equivalents at Beginning of Year                                                                       |                                  | 259,697  |   |   |   | 177,564 |   |   |   | 166,359 |   |
| Cash      and Cash Equivalents at End of Year                                                                             | $                                     | 94,949   |   |   | $ | 259,697 |   |   | $ | 177,564 |   |
|                                                                                                                      |                                  |     |   |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURES:                                                                                            |                                  |     |   |   |   |   |   |   |   |   |   |
|   Interest      Paid on Deposits                                                                                | $                                     | 29,729   |   |   | $ | 44,510 |   |   | $ | 36,509 |   |
|   Interest      Paid on Debt                                                                                    | $                                     | 6,658    |   |   | $ | 8,463 |   |   | $ | 9,688 |   |
|   Taxes      Paid                                                                                               | $                                     | 16,998   |   |   | $ | 12,431 |   |   | $ | 16,797 |   |
|   Loans      Transferred to Other Real Estate                                                                   | $                                     | 10,874   |   |   | $ | 3,494 |   |   | $ | 1,018 |   |
|   Cumulative      Effect Adjustment to Beginning Retained Earnings – SAB 108                              | $                                     | -        |   |   | $ | - |   |   | $ | 1,233 |   |
| Cumulative      Effect Adjustment to Other Comprehensive Income to Record Minimum Pension      Liability – SFAS 158 | $                                     | -        |   |   | $ | - |   |   | $ | 7,477 |   |
|   Issuance      of Common Stock as Non-Cash Compensation                                                        | $                                     | -        |   |   | $ | 1,160 |   |   | $ | 711 |   |
| Transfer      of Current Portion of Long-Term Borrowingsto      Short-Term Borrowings                                     | $                                     | 176      |   |   | $ | 12,318 |   |   | $ | 13,061 |   |

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|                                           | 2008          |                                      |
|------------------------------------------------|---------------|-------------------------------------------|
| (Dollars      in Thousands)                    | AmortizedCost |                                      |   | UnrealizedGains |   |   | UnrealizedLosses |   |   | MarketValue |   |
| U.S.      Treasury                             | $             |     29,094            |   |   | $ |      577 |   |   | $ | - |   |   | $ |        29,671 |   |
| U.S.      Government Agencies and Corporations |          |       7,091 |   |   |   |      180 |   |   |   | - |   |   |   |          7,271 |   |
| States      and Political Subdivisions         |          |   100,370                       |   |   |   | 1,224 |   |   |   | 32 |   |   |   |      101,562 |   |
| Mortgage-Backed      Securities                |          |     39,860            |   |   |   | 332 |   |   |   | 116 |   |   |   |        40,076 |   |
| Other      Securities(1)                       |          |     12,882            |   |   |   | 107 |   |   |   | - |   |   |   |        12,989 |   |
| Total      Investment Securities               | $             |   189,297                       |   |   | $ | 2,420 |   |   | $ | 148 |   |   | $ | 191,569 |   |

|                                           | 2007          |    |
|------------------------------------------------|---------------|---------|
| (Dollars      in Thousands)                    | AmortizedCost |    |   | UnrealizedGains |   |   | UnrealizedLosses |   |   | MarketValue |   |
| U.S.      Treasury                             | $             | 16,216  |   |   | $ | 97 |   |   | $ | - |   |   | $ | 16,313 |   |
| U.S.      Government Agencies and Corporations |          | 45,489  |   |   |   | 295 |   |   |   | 34 |   |   |   | 45,750 |   |
| States      and Political Subdivisions         |          | 90,014  |   |   |   | 164 |   |   |   | 177 |   |   |   | 90,001 |   |
| Mortgage-Backed      Securities                |          | 26,334  |   |   |   | 85 |   |   |   | 132 |   |   |   | 26,287 |   |
| Other      Securities(1)                       |          | 12,307  |   |   |   | 61 |   |   |   | 0 |   |   |   | 12,368 |   |
| Total      Investment Securities               | $             | 190,360 |   |   | $ | 702 |   |   | $ | 343 |   |   | $ | 190,719 |   |

| (1) | Includes FHLB and Federal      Reserve Bank stock recorded at cost of $7.0 million and $4.8 million,      respectively, at December 31, 2008 and $6.5 million and $4.8 million,      respectively, at December 31,2007. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (Dollars      in Thousands) | Year       |   | TotalProceeds |   |   | GrossRealized      Gains |   |   | GrossRealized      Losses |   |
|-----------------------------|------------|--------|---------------|--------|--------|--------------------------|--------|--------|---------------------------|--------|
|                        |  2008 |   | $             | 57,762 |   |                     | $      | 126    |                      |   | $ | (1 | ) |
|                        |  2007 |   | $             | 53,011 |   |                     | $      | 14     |                      |   | $ | - |   |
|                        |  2006 |   | $             | 283    |   |                     | $      | -      |                      |   | $ | 4 |   |

| (Dollars      in Thousands)           |   | Amortized      Cost                                               |   | Market      Value |
|---------------------------------------|--------|-------------------------------------------------------------------|--------|-------------------|
| Due      in one year or less          | $      |      59,231                              |   |  $           |               59,881 |   |
| Due      after one through five years |   |       109,386                       |   |              |             110,797 |   |
| Due      after five through ten years |   |           2,420 |   |              |                 2,533 |   |
| Due      over ten years               |   |           6,378 |   |              |                 6,476 |   |
| No      Maturity                      |   |         11,882            |   |              |               11,882 |   |
| Total      Investment Securities      | $      |    189,297                                         |   |  $           |        191,569 |   |

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|                                           |                         |   | December      31, 2008          |   |        |   |
|------------------------------------------------|------------------------------|--------|---------------------------------|--------|-------------|--------|
|                                           | Less      Than12      Months |   | Greater      Than12      Months |   | Total       |   |
| (Dollars      in Thousands)                    | MarketValue                  |   | UnrealizedLosses                |   | MarketValue |   | UnrealizedLosses |   | MarketValue |   | UnrealizedLosses |   |
| U.S.      Treasury                             |                         | $      | -                               |   |        | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| U.S.      Government Agencies and Corporations |                         |   | -                               |   |        |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| States      and Political Subdivisions         |                         |   | 2,652                           |   |        |   | 32 |   |   |   | - |   |   |   | - |   |   |   | 2,652 |   |   |   | 32 |   |
| Mortgage-Backed      Securities                |                         |   | 14,149                          |   |        |   | 116 |   |   |   | - |   |   |   | - |   |   |   | 14,149 |   |   |   | 116 |   |
| Total      Investment Securities               |                         | $      | 16,801                          |   |        | $      | 148 |   |   | $ |   |   |   | $ |   |   |   | $ | 16,801 |   |   | $ | 148 |   |

|                                           |                         |   | December      31, 2007          |   |        |   |
|------------------------------------------------|------------------------------|--------|---------------------------------|--------|-------------|--------|
|                                           | Less      Than12      Months |   | Greater      Than12      Months |   | Total       |   |
| (Dollars      in Thousands)                    | MarketValue                  |   | UnrealizedLosses                |   | MarketValue |   | UnrealizedLosses |   | MarketValue |   | UnrealizedLosses |   |
| U.S.      Treasury                             |                         | $      | 12,258                          |   |        | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | 12,258 |   |   | $ | - |   |
| U.S.      Government Agencies and Corporations |                         |   | 39,278                          |   |        |   | 16 |   |   |   | 6,471 |   |   |   | 18 |   |   |   | 45,749 |   |   |   | 34 |   |
| States      and Political Subdivisions         |                         |   | 70,701                          |   |        |   | 147 |   |   |   | 13,924 |   |   |   | 30 |   |   |   | 84,625 |   |   |   | 177 |   |
| Mortgage-Backed      Securities                |                         |   | 14,058                          |   |        |   | 4 |   |   |   | 10,376 |   |   |   | 128 |   |   |   | 24,434 |   |   |   | 132 |   |
| Total      Investment Securities               |                         | $      | 136,295                         |   |        | $      | 167 |   |   | $ | 30,771 |   |   | $ | 176 |   |   | $ | 167,066 |   |   | $ | 343 |   |

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| (Dollars      in Thousands)                 | 2008   |      | 2007   |   |
|---------------------------------------------|--------|-----------|--------|--------|
| Commercial,      Financial and Agricultural | $      | 206,230   |   | $      | 208,864 |   |
| Real      Estate - Construction             |   | 141,973   |   |   | 142,248 |   |
| Real      Estate - Commercial Mortgage      |   | 656,959   |   |   | 634,920 |   |
| Real      Estate – Residential(1)     |   | 481,034   |   |   | 485,608 |   |
| Real      Estate - Home Equity              |   | 218,500   |   |   | 192,428 |   |
| Real      Estate - Loans Held-for-Sale      |   | 3,204     |   |   | 2,764 |   |
| Consumer                                    |   | 249,897   |   |   | 249,018 |   |
| Total      Loans, Net of Unearned Interest  | $      | 1,957,797 |   | $      | 1,915,850 |   |

| (1) | Includes      loans in process with outstanding balances of $13.9 million and $7.5      million for 2008 and 2007,respectively. |
|-----|---------------------------------------------------------------------------------------------------------------------------------|

| (Dollars      in Thousands)                     | 2008   |    |   | 2007   |   |   | 2006   |   |
|-------------------------------------------------|--------|---------|--------|--------|--------|--------|--------|--------|
| Balance,      Beginning of Year                 | $      | 18,066  |   |   | $      | 17,217 |   |   | $ | 17,410 |   |
| Provision      for Loan Losses                  |   | 32,496  |   |   |   | 6,163  |   |   |   | 1,959 |   |
| Recoveries      on Loans Previously Charged-Off |   | 2,417   |   |   |   | 1,903  |   |   |   | 1,830 |   |
| Loans      Charged-Off                          |   | (15,975 | )      |   |   | (7,217 | )      |   |   | (3,982 | ) |
| Balance,      End of Year                       | $      | 37,004  |   |   | $      | 18,066 |   |   | $ | 17,217 |   |

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|                                  | 2008             |   | 2007               |   |
|---------------------------------------|------------------|--------|--------------------|--------|
| (Dollars      in Thousands)           | ValuationBalance |   | ValuationAllowance |   | ValuationBalance |   | ValuationAllowance |   |
| Impaired      Loans:                  |             |   |               |   |   |   |   |   |   |   |   |   |
| With      Related Credit Allowance    |             | $      | 68,705             |   |   | $ | 15,901 |   |   | $ | 21,615 |   |   | $ | 4,702 |   |
| Without      Related Credit Allowance |             |   | 37,723             |   |   |   | - |   |   |   | 15,019 |   |   |   | - |   |

| (Dollars      in Thousands)                        | 2008   |   |   | 2007   |   |   | 2006   |   |
|----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Average      Recorded Investment in Impaired Loans | $      | 80,827 |   |   | $      | 23,922 |   |   | $ | 12,782 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Income on Impaired Loans             |   |   |   |   |   |   |   |   |   |   |   |
| Recognized                                         | $      | 1,708  |   |   | $      | 761    |   |   | $ | 398 |   |
| Collected      in Cash                             |   | 1,708  |   |   |   | 761    |   |   |   | 398 |   |

|                                  | 2008        |    |   | 2007                    |   |
|---------------------------------------|-------------|---------|--------|-------------------------|--------|
| (Dollars      in Thousands)           | GrossAmount |    |   | AccumulatedAmortization |   |   | GrossAmount |   |   | AccumulatedAmortization |   |
| Core      Deposits Intangibles        | $           | 47,176  |   |                    | $      | 40,092 |   |   | $ | 47,176 |   |   | $ | 34,598 |   |
| Goodwill                              |        | 84,811  |   |                    |   | - |   |   |   | 84,811 |   |   |   | - |   |
| Customer      Relationship Intangible |        | 1,867   |   |                    |   | 879 |   |   |   | 1,867 |   |   |   | 688 |   |
| Non-Compete      Agreement            |        | -       |   |                    |   | - |   |   |   | 537 |   |   |   | 537 |   |
| Total      Intangible Assets          | $           | 133,854 |   |                    | $      | 40,971 |   |   | $ | 134,391 |   |   | $ | 35,823 |   |

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| (Dollars      in Thousands)      | 2008   |    |   | 2007   |   |
|----------------------------------|--------|---------|--------|--------|--------|
| Land                             | $      | 24,289  |   |   | $      | 22,722 |   |
| Buildings                        |   | 100,179 |   |   |   | 90,335 |   |
| Fixtures      and Equipment      |   | 56,493  |   |   |   | 55,783 |   |
| Total                            |   | 180,961 |   |   |   | 168,840 |   |
| Accumulated      Depreciation    |   | (74,528 | )      |   |   | (70,228 | ) |
| Premises      and Equipment, Net | $      | 106,433 |   |   | $      | 98,612 |   |

| (Dollars      in Thousands) | 2008   |      | 2007   |   |
|-----------------------------|--------|-----------|--------|--------|
| NOW      Accounts           | $      | 758,976   |   | $      | 744,093 |   |
| Money      Market Accounts  |   | 324,646   |   |   | 386,619 |   |
| Savings      Accounts       |   | 115,261   |   |   | 111,600 |   |
| Time      Deposits          |   | 373,595   |   |   | 467,373 |   |
| Total                       | $      | 1,572,478 |   | $      | 1,709,685 |   |

| (Dollars      in Thousands) |   |   |    |
|-----------------------------|--------|--------|---------|
| 2009                        |   | $      | 330,407 |   |
| 2010                        |   |   | 30,122  |   |
| 2011                        |   |   | 9,140   |   |
| 2012                        |   |   | 2,387   |   |
| 2013      and thereafter    |   |   | 1,539   |   |
| Total                       |   | $      | 373,595 |   |

| (Dollars      in Thousands)      | 2008   |   | 2007   |   |   | 2006   |   |
|----------------------------------|--------|--------|--------|--------|--------|--------|--------|
| NOW      Accounts                | $      | 7,454  |   | $      | 10,748 |   |   | $ | 7,658 |   |
| Money      Market Accounts       |   | 5,242  |   |   | 13,666 |   |   |   | 11,687 |   |
| Savings      Accounts            |   | 121    |   |   | 280    |   |   |   | 278 |   |
| Time      Deposits < $100,000 |   | 10,199 |   |   | 13,990 |   |   |   | 12,087 |   |
| Time      Deposits > $100,000 |   | 4,290  |   |   | 6,003  |   |   |   | 5,543 |   |
| Total                            | $      | 27,306 |   | $      | 44,687 |   |   | $ | 37,253 |   |

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| (Dollars      in Thousands)                     |   | FederalFundsPurchased |   |   | SecuritiesSold      UnderRepurchaseAgreements(1) |   |   | OtherShort-TermBorrowings |   |
|-------------------------------------------------|--------|-----------------------|--------|--------|--------------------------------------------------|--------|--------|---------------------------|--------|
| 2008                                            |   |                  |   |   |                                             |   |   |                      |   |
| Balance      at December 31,                    |   | $                     | 19,875 |   |                                             | $      | 40,868 |                      |   | $ | 1,302 |  (2) |
| Maximum      indebtedness at any month end      |   |                  | 36,700 |   |                                             |   | 40,868 |                      |   |   | 14,087 |   |
| Daily      average indebtedness outstanding     |   |                  | 19,777 |   |                                             |   | 32,433 |                      |   |   | 8,971 |   |
| Average      rate paid for the year             |   |                  | 1.58   | %      |                                             |   | 1.50   | %                         |   |   | 3.93 |  % |
| Average      rate paid on period-end borrowings |   |                  | 0.56   | %      |                                             |   | 0.11   | %                         |   |   | 0.41 |  % |
|                                            |   |                  |   |   |                                             |   |   |                      |   |   |   |   |
| 2007                                            |   |                  |   |   |                                             |   |   |                      |   |   |   |   |
| Balance      at December 31,                    |   | $                     | 7,550  |   |                                             | $      | 32,806 |                      |   | $ | 12,775 |  (2) |
| Maximum      indebtedness at any month end      |   |                  | 26,400 |   |                                             |   | 47,047 |                      |   |   | 13,664 |   |
| Daily      average indebtedness outstanding     |   |                  | 15,812 |   |                                             |   | 38,683 |                      |   |   | 11,902 |   |
| Average      rate paid for the year             |   |                  | 4.89   | %      |                                             |   | 4.11   | %                         |   |   | 4.17 |  % |
| Average      rate paid on period-end borrowings |   |                  | 2.47   | %      |                                             |   | 3.32   | %                         |   |   | 4.29 |  % |
|                                            |   |                  |   |   |                                             |   |   |                      |   |   |   |   |
| 2006                                            |   |                  |   |   |                                             |   |   |                      |   |   |   |   |
| Balance      at December 31,                    |   | $                     | 11,950 |   |                                             | $      | 38,022 |                      |   | $ | 15,051 |  (2) |
| Maximum      indebtedness at any month end      |   |                  | 39,225 |   |                                             |   | 55,321 |                      |   |   | 34,738 |   |
| Daily      average indebtedness outstanding     |   |                  | 16,645 |   |                                             |   | 34,335 |                      |   |   | 27,720 |   |
| Average      rate paid for the year             |   |                  | 4.82   | %      |                                             |   | 3.79   | %                         |   |   | 3.47 |  % |
| Average      rate paid on period-end borrowings |   |                  | 4.61   | %      |                                             |   | 3.79   | %                         |   |   | 3.90 |  % |

| (1) | Balances      are fully collateralized by government treasury or agency securities held      in the company’s investmentportfolio. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Includes      FHLB debt and client tax deposit balances of $134,000 and $1.2 million,      respectively at December 31, 2008, $12.2 million and $0.6 million,      respectively at December 31, 2007, and $13.0 million and $2.0 million,      respectively at December 31, 2006. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (Dollars      in Thousands)                       | 2008   |                                                                                        | 2007   |   |
|---------------------------------------------------|--------|---------------------------------------------------------------------------------------------|--------|--------|
| Due      on May 30, 2008, fixed rate 2.50%        |   | -                                                                                           |   |   |               21 | (1) |
| Due      on June 13, 2008, fixed rate 5.40%       |   |                - |   |   |               72 | (1) |
| Due      on September 8, 2008, fixed rate 4.32%   |   |                - |   |   |        10,000 | (1) |
| Due      on November 10, 2008, fixed rate 4.12%   |   |                - |   |   |          2,105 | (1) |
| Due      on October 19, 2009, fixed rate 3.69%(1) |   |           134                             | (1)    |   |             302 |   |
| Due      on November 10, 2010, fixed rate 4.72%   |   |          665                                   |   |   |             695 |   |
| Due      on December 31, 2010, fixed rate 3.85%   |   |      349                                                           |   |   |             524 |   |
| Due      on September 08, 2011, fixed rate 3.66%  |   |    10,000                                                                    |   |   | - |   |
| Due      on December 18, 2012, fixed rate 4.84%   |   | 517                                                                                         |   |   |             542 |   |
| Due      on March 18, 2013, fixed rate 3.55%      |   | 1,188                                                                                       |   |   |         - |   |
| Due      on March 18, 2013, fixed rate 3.31%      |   |            399                       |   |   | - |   |
| Due      on March 18, 2013, fixed rate 6.37%      |   |             420                 |   |   | 499 |   |
| Due      on April 17, 2013, fixed rate 3.42%      |   |          1,155                                 |   |   | - |   |
| Due      on April 17, 2013, fixed rate 3.50%      |   |          1,694                                 |   |   | - |   |
| Due      on May 15, 2013, fixed rate 3.81%        |   |             970                 |   |   | - |   |
| Due      on May 15, 2013, fixed rate 3.81%        |   |          1,120                                 |   |   | - |   |
| Due      on June 17, 2013, fixed rate 3.53%       |   | 82                                                                                          |   |   | 692 |   |
| Due      on June 17, 2013, fixed rate 3.85%       |   |             583                 |   |   |          85 |   |
| Due      on June 17, 2013, fixed rate of 4.11%    |   | 1,597                                                                                       |   |   | 1,660 |   |
| Due      on September 23, 2013, fixed rate 5.64%  |   |             622                 |   |   |          727 |   |
| Due      on January 26, 2014, fixed rate 5.79%    |   |          1,067                                 |   |   |          1,131 |   |
| Due      on January 27, 2014, fixed rate 5.79%    |   | -                                                                                           |   |   | 1,641 |   |
| Due      on January 27, 2014, fixed rate 5.31%    |   |          1,571                                 |   |   |             - |   |
| Due      on March 10, 2014, fixed rate 4.21%      |   |             435                 |   |   |             505 |   |
| Due      on May 27, 2014, fixed rate 5.92%        |   |             334                 |   |   |          386 |   |
| Due      on May 31, 2014, fixed rate 4.88%        |   |          2,357                                 |   |   | - |   |
| Due      on June 2, 2014, fixed rate 4.52%        |   |                - |   |   |          2,726 |   |
| Due      on February 23, 2015, fixed rate 4.07%   |   |             725                 |   |   | - |   |
| Due      on August 17, 2015, fixed rate 4.31%     |   |             586                 |   |   | - |   |
| Due      on October 15, 2015, fixed rate 4.11%    |   |             745                 |   |   | - |   |
| Due      on July 20, 2016, fixed rate 6.27%       |   |             897                 |   |   | 1,016 |   |
| Due      on October 3, 2016, fixed rate 5.41%     |   |             235                 |   |   |             265 |   |
| Due      on October 31, 2016, fixed rate 5.16%    |   |             522                 |   |   |             589 |   |
| Due      on June 27, 2017, fixed rate 5.53%       |   |             595                 |   |   |             665 |   |
| Due      on October 31, 2017, fixed rate 4.79%    |   |             736                 |   |   |             819 |   |
| Due      on December 11, 2017, fixed rate 4.78%   |   |             656                 |   |   |             728 |   |
| Due      on February 22, 2018, fixed rate 4.61%   |   |          1,425                                 |   |   | - |   |
| Due      on February 26, 2018, fixed rate 4.36%   |   |                - |   |   |          1,735 |   |
| Due      on April 10, 2018, fixed rate 4.20%      |   |          1,217                                 |   |   | - |   |
| Due      on April 10, 2018, fixed rate 4.20%      |   |          1,010                                 |   |   | - |   |
| Due      on September 17, 2018, fixed rate 4.23%  |   |          2,925                                 |   |   | - |   |
| Due      on September 18, 2018, fixed rate 5.15%  |   |             468                 |   |   |             516 |   |
| Due      on November 5, 2018, fixed rate 5.10%    |   |          3,222                                 |   |   |          3,364 |   |
| Due      on December 3, 2018, fixed rate 4.87%    |   |             492                 |   |   |             541 |   |
| Due      on December 17, 2018, fixed rate 6.33%   |   |          1,310                                 |   |   |          1,401 |   |
| Due      on December 24,2018, fixed rate 6.29%    |   |                - |   |   |                - |   |
| Due      on February 16, 2021, fixed rate 3.00%   |   |             736                 |   |   |             776 |   |
| Due      on January 18, 2022, fixed rate 5.25%    |   |             926                 |   |   |          1,033 |   |
| Due      on May 30, 2023, fixed rate 2.50%        |   |             858                 |   |   |             896 |   |
| Due      on June 15, 2023, fixed rate 4.77%       |   |             483                 |   |   | - |   |
| Due      on July 1, 2025, fixed rate 4.80%        |   |          3,294                                 |   |   |               - |   |
| Total      Outstanding                            | $      | 51,322                                                                                      |   | $      |   38,657 |   |

| (1) | $134,000 is classified as      short-term borrowings as of December 31, 2008 and $12.2 million classified      as short-term borrowings as of December 31,  2007. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

| (Dollars      in Thousands) |   |   |   |      |
|-----------------------------|--------|--------|--------|-----------|
| 2009                        |   | $      | 2,969  |  (1) |   |
| 2010                        |   |   | 3,650  |      |   |
| 2011                        |   |   | 12,978 |      |   |
| 2012                        |   |   | 3,528  |      |   |
| 2013                        |   |   | 9,429  |      |   |
| 2014      and thereafter    |   |   | 18,768 |      |   |
| Total                       |   | $      | 51,322 |      |   |

| (1) | $134,000 is classified as      short-term borrowings. |
|-----|-------------------------------------------------------|

----

Table of Contents

| (Dollars      in Thousands) | 2008   |   |   | 2007   |   |   | 2006   |   |
|-----------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Current:                    |   |   |   |   |   |   |   |   |
| Federal                     | $      | 11,730 |   |   | $      | 13,603 |   |   | $ | 14,780 |   |
| State                       |   | 510    |   |   |   | 280    |   |   |   | 1,527 |   |
| Deferred:                   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                     |   | (4,882 | )      |   |   | (32    | )      |   |   | 1,384 |   |
| State                       |   | (1,289 | )      |   |   | (148   | )      |   |   | 230 |   |
| Valuation      Allowance    |   | 644    |   |   |   | -      |   |   |   | - |   |
| Total                       | $      | 6,713  |   |   | $      | 13,703 |   |   | $ | 17,921 |   |

| (Dollars      in Thousands)                | 2008   |   |   | 2007   |   |   | 2006   |   |
|--------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
| Tax      Expense at Federal Statutory Rate | $      | 7,678  |   |   | $      | 15,185 |   |   | $ | 17,915 |   |
| Increases      (Decreases) Resulting From: |   |   |   |   |   |   |   |   |   |   |   |
| Tax-Exempt      Interest Income            |   | (1,663 | )      |   |   | (1,630 | )      |   |   | (1,334 | ) |
| State      Taxes, Net of Federal Benefit   |   | (506   | )      |   |   | 86     |   |   |   | 1,142 |   |
| Other                                      |   | 560    |   |   |   | 62     |   |   |   | 198 |   |
| Change      in Valuation Allowance         |   | 644    |   |   |   | -      |   |   |   | - |   |
| Actual      Tax Expense                    | $      | 6,713  |   |   | $      | 13,703 |   |   | $ | 17,921 |   |

| (Dollars      in Thousands)                        | 2008   |   | 2007   |   |
|----------------------------------------------------|--------|--------|--------|--------|
| Deferred      Tax Assets attributable to:          |   |   |   |   |
| Allowance      for Loan Losses                     | $      | 14,276 |   | $      | 7,110 |   |
| Associate      Benefits                            |   | 385    |   |   | 510 |   |
| Accrued      Pension/SERP                          |   | 14,127 |   |   | 3,964 |   |
| Interest      on Nonperforming Loans               |   | 2,247  |   |   | 603 |   |
| State      Net Operating Loss Carry Forwards       |   | 776    |   |   | 511 |   |
| Intangible      Assets                             |   | 121    |   |   | 95 |   |
| Core      Deposit Intangible                       |   | 2,569  |   |   | 1,360 |   |
| Contingency      Reserve                           |   | 323    |   |   | 746 |   |
| Accrued      Expense                               |   | 450    |   |   | 611 |   |
| Leases                                             |   | 456    |   |   | 464 |   |
| Other      Real Estate Owned                       |   | 482    |   |   | 38 |   |
| Other                                              |   | 586    |   |   | 479 |   |
| Total      Deferred Tax Assets                     | $      | 36,798 |   | $      | 16,491 |   |
|                                               |   |   |   |   |   |   |
| Deferred      Tax Liabilities attributable to:     |   |   |   |   |   |   |
| Depreciation      on Premises and Equipment        | $      | 4,677  |   | $      | 3,290 |   |
| Deferred      Loan Fees and Costs                  |   | 3,897  |   |   | 3,887 |   |
| Net      Unrealized Gains on Investment Securities |   | 796    |   |   | 113 |   |
| Intangible      Assets                             |   | 1,919  |   |   | 1,619 |   |
| Accrued      Pension/SERP                          |   | 7,080  |   |   | 4,669 |   |
| Securities      Accretion                          |   | 15     |   |   | 25 |   |
| Market      Value on Loans Held for Sale           |   | 2      |   |   | 59 |   |
| Other                                              |   | -      |   |   | 68 |   |
| Total      Deferred Tax Liabilities                |   | 18,386 |   |   | 13,730 |   |
| Valuation      Allowance                           |   | 644    |   |   | - |   |
| Net      Deferred Tax Assets                       | $      | 17,768 |   | $      | 2,761 |   |

----

Table of Contents

| (Dollars      in Thousands)                                                                         | 2008   |   |    | 2007   |   |
|-----------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|
| Balance      at Beginning of Year                                                                   | $      | 2,761  |    |   | $      | 4,027 |   |
| Income      Tax Benefit (Expense) From Change in Pension    Liability                               |   | 10,163 |    |   |   | (830 | ) |
| Income      Tax Expense From Change in Unrealized Losses on Available-for-Sale      Securities |   | (683   | )  |   |   | (616 | )  |
| Deferred      Income Tax Expense on Continuing Operations                                           |   | 5,527  |    |   |   | 180 |   |
| Balance      at End of Year                                                                         | $      | 17,768 |    |   | $      | 2,761 |   |

| (Dollars      in Thousands)                                   |        2008 |        | 2007   |
|---------------------------------------------------------------|------------------|-------------|--------|
| Balance      at January 1,                                    |  $          | 3,254       |   |   |  $ |  2,021 |
| Additions Based on Tax Positions Related to Prior      Years  |             |        |   |   |   |  252 |
| Decreases      Based on Tax Positions Related to Prior Years  |             | (252        | )      |   |   |   |
| Addition Based on Tax Positions Related to      Current Years |             | 914         |   |   |   | 918 |
| Balance at December 31, 2008                                  |  $          |  3,916 |   |   |  $ |  3,254 |

----

Table of Contents

| Options                               |   | Shares |   |   | Weighted-Average      Exercise Price |   |   | Weighted-Average      Remaining Contractual Term |   |   | Aggregate      Intrinsic Value |   |
|---------------------------------------|--------|--------|--------|--------|--------------------------------------|--------|--------|--------------------------------------------------|--------|--------|--------------------------------|--------|
| Outstanding      at January 1, 2008   |   |   | 60,384 |   |                                 | $      | 32.79  |                                             |   | $      | 6.9                            |   |   | $ | - |   |
| Granted                               |   |   | -      |   |                                 |   | -      |                                             |   |   | -                              |   |   |   | - |   |
| Exercised                             |   |   | -      |   |                                 |   | -      |                                             |   |   | -                              |   |   |   | - |   |
| Forfeited      or expired             |   |   | -      |   |                                 |   | -      |                                             |   |   | -                              |   |   |   | - |   |
| Outstanding      at December 31, 2008 |   |   | 60,384 |   |                                 | $      | 32.79  |                                             |   | $      | 5.9                            |   |   | $ | - |   |
| Exercisable      at December 31, 2008 |   |   | 60,384 |   |                                 | $      | 32.79  |                                             |   | $      | 5.9                            |   |   | $ | - |   |

----

Table of Contents

|                          |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|-------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Dividend      yield           |   |   | 3.0    | %      |   |   | 2.1    | %      |   |   | 1.9 | % |
| Expected      volatility      |   |   | 37.0   | %      |   |   | 25.5   | %      |   |   | 23.5 | % |
| Risk-free      interest rate  |   |   | 2.6    | %      |   |   | 4.8    | %      |   |   | 4.5 | % |
| Expected      life (in years) |   |   | 0.5    |   |   |   | 0.5    |   |   |   | 0.5 |   |

----

Table of Contents

| (Dollars      in Thousands)                                                         | 2008     |                                                                   |    | 2007     |   |       | 2006     |   |
|-------------------------------------------------------------------------------------|----------|------------------------------------------------------------------------|---------|----------|--------|------------|----------|--------|
| Change      in Projected Benefit Obligation:                                        |     |                                                                   |    |     |   |       |     |   |
| Benefit      Obligation at Beginning of Year                                        | $        |    70,118                                               |    |     | $      | 68,671     |     |   | $ | 64,131 |   |
| Service      Cost                                                                   |     |          5,351            |    |     |   | 4,903      |     |   |   | 4,930 |   |
| Interest      Cost                                                                  |     |          4,482            |    |     |   | 3,967      |     |   |   | 3,622 |   |
| Actuarial      Loss/(Gain)                                                          |     |          4,038            |    |     |   | (1,420     | )        |   |   | (1,421 | ) |
| Benefits      Paid                                                                  |     |         (6,483                 | )       |     |   | (5,759     | )        |   |   | (3,267 | ) |
| Expenses      Paid                                                                  |     |            (165 | )       |     |   | (244       | )        |   |   | (149 | ) |
| Plan      Change(1)                                                                 |     | 2,266                                                                  |    |     |   | -          |     |   |   | 825 |   |
| Projected      Benefit Obligation at End of Year                                    | $        | 79,607                                                                 |    |     | $      | 70,118     |     |   | $ | 68,671 |   |
|                                                                                |     |                                                                   |    |     |   |       |     |   |   |   |   |
| Accumulated      Benefit Obligation at End of Year                                  | $        | 56,368                                                                 |    |     | $      | 51,256     |     |   | $ | 49,335 |   |
|                                                                                |     |                                                                   |    |     |   |       |     |   |   |   |   |
| Change      in Plan Assets:                                                         |     |                                                                   |    |     |   |       |     |   |   |   |   |
| Fair      Value of Plan Assets at Beginning of Year                                 | $        |     75,653                                         |    |     | $      | 66,554     |     |   | $ | 52,277 |   |
| Actual      (Loss)Return on Plan Assets                                             |     | (14,642                                                                | )       |     |   | 3,602      |     |   |   | 6,342 |   |
| Employer      Contributions                                                         |     |        12,000                       |    |     |   | 11,500     |     |   |   | 11,350 |   |
| Benefits      Paid                                                                  |     |         (6,483                 | )       |     |   | (5,759     | )        |   |   | (3,267 | ) |
| Expenses      Paid                                                                  |     |            (165 | )       |     |   | (244       | )        |   |   | (149 | ) |
| Fair      Value of Plan Assets at End of Year                                       | $        | 66,363                                                                 |    |     | $      | 75,653     |     |   | $ | 66,553 |   |
|                                                                                |     |                                                                   |    |     |   |       |     |   |   |   |   |
| Amounts      Recognized in the Consolidated Statements of Financial      Condition: |     |                                                                   |    |     |   |       |     |   |   |   |   |
| Other      Assets                                                                   | $        | -                                                                      |    |     | $      | 5,535      |     |   | $ | - |   |
| Other      Liabilities                                                              |     | 13,245                                                                 |    |     |   | -          |     |   |   | 2,117 |   |
|                                                                                |     |                                                                   |    |     |   |       |     |   |   |   |   |
| Amounts      (Pre-Tax) Recognized in Accumulated Other Comprehensive      Income:   |     |                                                                   |    |     |   |       |     |   |   |   |   |
| Net      Actuarial Losses                                                           | $        | 32,341                                                                 |    |     | $      | 8,622      |     |   | $ | 9,601 |   |
| Prior      Service Cost                                                             |     | 3,369                                                                  |    |     |   | 1,611      |     |   |   | 1,912 |   |
|                                                                                |     |                                                                   |    |     |   |       |     |   |   |   |   |
| Components      of Net Periodic Benefit Costs:                                      |     |                                                                   |    |     |   |       |     |   |   |   |   |
| Service      Cost                                                                   | $        | 5,351                                                                  |    |     | $      | 4,903      |     |   | $ | 4,930 |   |
| Interest      Cost                                                                  |     | 4,482                                                                  |    |     |   | 3,967      |     |   |   | 3,622 |   |
| Expected      Return on Plan Assets                                                 |     | (5,921                                                                 | )       |     |   | (5,083     | )        |   |   | (4,046 | ) |
| Amortization      of Prior Service Costs                                            |     | 509                                                                    |    |     |   | 301        |     |   |   | 215 |   |
| Recognized      Net Actuarial Loss                                                  |     | 882                                                                    |    |     |   | 1,039      |     |   |   | 1,598 |   |
| Net      Periodic Benefit Cost                                                      | $        | 5,303                                                                  |    |     | $      | 5,127      |     |   | $ | 6,319 |   |
|                                                                                |     |                                                                   |    |     |   |       |     |   |   |   |   |
| Assumptions:                                                                        |     |                                                                   |    |     |   |       |     |   |   |   |   |
| Weighted-average      used to determine benefit obligations:                        |     |                                                                   |    |     |   |       |     |   |   |   |   |
| Discount      Rate                                                                  |     | 6.00                                                                   | %       |     |   | 6.25       | %        |   |   | 6.00 | % |
| Expected      Return on Plan Assets                                                 |     | 8.00                                                                   | %       |     |   | 8.00       | %        |   |   | 8.00 | % |
| Rate      of Compensation Increase                                                  |     | 5.50                                                                   | %       |     |   | 5.50       | %        |   |   | 5.50 | % |
| Measurement      Date                                                               | 12/31/08 |                                                                   |    | 12/31/07 |   |       | 12/31/06 |   |
|                                                                                |     |                                                                   |    |     |   |       |     |   |   |   |   |
| Weighted-average      used to determine net cost:                                   |     |                                                                   |    |     |   |       |     |   |   |   |   |
| Discount      Rate                                                                  |     | 6.25                                                                   | %       |     |   | 6.00       | %        |   |   | 5.75 | % |
| Expected      Return on Plan Assets                                                 |     | 8.00                                                                   | %       |     |   | 8.00       | %        |   |   | 8.00 | % |
| Rate      of Compensation Increase                                                  |     | 5.50                                                                   | %       |     |   | 5.50       | %        |   |   | 5.50 | % |
|                                                                                |     |                                                                   |    |     |   |       |     |   |   |   |   |
|  Assumptions:                                                                  |     |                                                                   |    |     |   |       |     |   |   |   |   |
|  Weighted-average      used to determine benefit obligations:                  |     |                                                                   |    |     |   |       |     |   |   |   |   |
|  Discount      Rate                                                            |     |  6.00                                                             | %       |     |   |  6.25 | %   |   |   | 6.00 | %  |
| Expected      Return on Plan Assets                                                 |     |  8.00                                                             | %       |     |   | 8.00       | %   |   |   | 8.00 | %  |
|  Rate      of Compensation Increase                                            |     |  5.50                                                             | %       |     |   | 5.50       | %        |   |   | 5.50 | %  |
| Measurement      Date                                                               |     |  12/31/08                                                         |    |     |   | 12/31/07   |     |   |   | 12/31/06 |   |
|                                                                                |     |                                                                   |    |     |   |       |     |   |   |   |   |
|                                                                                |     |                                                                   |    |     |   |       |     |   |   |   |   |
|  Weighted-average      used to determine net cost:                             |     |                                                                   |    |     |   |       |     |   |   |   |   |
|  Discount      Rate                                                            |     | 6.25                                                                   | %  |     |   | 6.00       | %   |   |   | 5.75 | %  |
|  Expected      Return on Plan Assets                                           |     | 8.00                                                                   | %  |     |   | 8.00       | %   |   |   | 8.00 | %  |
|  Rate      of Compensation Increase                                            |     | 5.50                                                                   | %  |     |   | 5.50       | %   |   |   | 5.50 | %  |

| (1) | In      2008, plan was amended to include stock as plan    compensation. |
|-----|--------------------------------------------------------------------------|

----

Table of Contents

| Actuarial      Loss     |   | $      | 2,971 |   |
|-------------------------|--------|--------|-------|--------|
| Prior      Service Cost |   |   | 509   |   |
|                    |   | $      | 3,480 |   |

|                   | Target      Allocation |   |   | Percentage      of PlanAssets      at Year-End(1) |   |
|------------------------|------------------------|--------|--------|---------------------------------------------------|--------|
|                   | 2009                   |   |   | 2008                                              |   |   | 2007 |   |
| Equity      Securities | 65                     | %      |   |                                              | 39     | % |   |   | 58 | % |
| Debt      Securities   | 30                     | %      |   |                                              | 26     | % |   |   | 27 | % |
| Cash      Equivalent   | 5                      | %      |   |                                              | 35     | % |   |   | 15 | % |
| Total                  | 100                    | %      |   |                                              | 100    | % |   |   | 100 | % |

| (1) | Represents asset allocation at      year-end which may differ from the average target allocation for the year      due to the year-end cash contribution to the  plan. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2009                   |   | $      | 3,684,807  |   |
|------------------------|--------|--------|------------|--------|
| 2010                   |   |   | 3,658,868  |   |
| 2011                   |   |   | 4,555,218  |   |
| 2012                   |   |   | 5,270,913  |   |
| 2013                   |   |   | 5,767,479  |   |
| 2014      through 2018 |   |   | 42,243,894 |   |
| Total                  |   | $      | 65,181,179 |   |

|  (Dollars      in Thousands) | 2008          |   | 2007          |   | Expected      Range of Contribution2009(1) |
|-----------------------------------|---------------|--------|---------------|--------|--------------------------------------------|
| Actual      Contributions         | $      12,000 |   | $      11,500 |   | $      8,000 - $15,000                     |

| (1) | Estimate      reflects the Company’s best estimate given historical funding practice and      the 2009 minimum ($5.5 million) and maximum ($45.0 million) allowable      contribution. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

| (Dollars      in Thousands)                                                         | 2008     |                                                                                   |   | 2007     |   |   | 2006     |   |
|-------------------------------------------------------------------------------------|----------|----------------------------------------------------------------------------------------|--------|----------|--------|--------|----------|--------|
| Change      in Projected Benefit Obligation:                                        |     |                                                                                   |   |     |   |   |     |   |
| Benefit      Obligation at Beginning of Year                                        | $        |      3,706                                                    |   |     | $      | 4,018  |     |   | $ | 3,878 |   |
| Service      Cost                                                                   |     |               31 |   |     |   | 83     |     |   |   | 123 |   |
| Interest      Cost                                                                  |     |             287            |   |     |   | 208    |     |   |   | 230 |   |
| Actuarial      (Gain) Loss                                                          |     |            (180                 | )      |     |   | (603   | )        |   |   | 62 |   |
| Plan      Change(1)                                                                 |     |          1,190                            |   |     |   | -      |     |   |   | (274 | )  |
| Projected      Benefit Obligation at End of Year                                    | $        |    5,034                                                                |   |     | $      | 3,706  |     |   | $ | 4,019 |   |
|                                                                                |     |                                                                                   |   |     |   |   |     |   |   |   |   |
| Accumulated      Benefit Obligation at End of Year                                  | $        | 2,899                                                                                  |   |     | $      | 2,603  |     |   | $ | 2,252 |   |
|                                                                                |     |                                                                                   |   |     |   |   |     |   |   |   |   |
| Amounts      Recognized in the Consolidated Statements of Financial      Condition: |     |                                                                                   |   |     |   |   |     |   |   |   |   |
| Other      Liabilities                                                              | $        |            5,034                |   |     | $      | 3,706  |     |   | $ | 4,019 |   |
|                                                                                |     |                                                                                   |   |     |   |   |     |   |   |   |   |
| Amounts      (Pre-Tax) Recognized in Accumulated Other Comprehensive      Income:   |     |                                                                                   |   |     |   |   |     |   |   |   |   |
| Net      Actuarial (Gain) Loss                                                      | $        | (148)                                                                                  |   |     | $      | (3)    |     |   | $ | 608 |   |
| Prior      Service Cost                                                             |     | 1,055                                                                                  |   |     |   | 44     |     |   |   | 52 |   |
|                                                                                |     |                                                                                   |   |     |   |   |     |   |   |   |   |
| Components      of Net Periodic Benefit Costs:                                      |     |                                                                                   |   |     |   |   |     |   |   |   |   |
| Service      Cost                                                                   | $        | 31                                                                                     |   |     | $      | 83     |     |   | $ | 123 |   |
| Interest      Cost                                                                  |     | 287                                                                                    |   |     |   | 208    |     |   |   | 230 |   |
| Amortization      of Prior Service Cost                                             |     | 180                                                                                    |   |     |   | 7      |     |   |   | 61 |   |
| Recognized      Net Actuarial (Gain)Loss                                            |     |            (36                  | )      |     |   | 8      |     |   |   | 100 |   |
| Net      Periodic Benefit Cost                                                      | $        | 462                                                                                    |   |     | $      | 306    |     |   | $ | 514 |   |
|                                                                                |     |                                                                                   |   |     |   |   |     |   |   |   |   |
| Assumptions:                                                                        |     |                                                                                   |   |     |   |   |     |   |   |   |   |
| Weighted-average      used to determine the benefit obligations:                    |     |                                                                                   |   |     |   |   |     |   |   |   |   |
| Discount      Rate                                                                  |     | 6.00                                                                                   | %      |     |   | 6.25   | %        |   |   | 6.00 | % |
| Rate      of Compensation Increase                                                  |     | 5.50                                                                                   | %      |     |   | 5.50   | %        |   |   | 5.50 | % |
| Measurement      Date                                                               | 12/31/08 |                                                                                   |   | 12/31/07 |   |   | 12/31/06 |   |
|                                                                                |     |                                                                                   |   |     |   |   |     |   |   |   |   |
| Weighted-average      used to determine the net cost:                               |     |                                                                                   |   |     |   |   |     |   |   |   |   |
| Discount      Rate                                                                  |     | 6.25                                                                                   | %      |     |   | 6.00   | %        |   |   | 5.75 | % |
| Rate      of Compensation Increase                                                  |     | 5.50                                                                                   | %      |     |   | 5.50   | %        |   |   | 5.50 | % |

| (1) | In      2008, plan was amended to include stock as plan    compensation. |
|-----|--------------------------------------------------------------------------|

----

Table of Contents

| 2009                   |   | $      | 198,184   |   |
|------------------------|--------|--------|-----------|--------|
| 2010                   |   |   | 265,194   |   |
| 2011                   |   |   | 360,150   |   |
| 2012                   |   |   | 457,858   |   |
| 2013                   |   |   | 524,547   |   |
| 2014      through 2018 |   |   | 3,963,163 |   |
|        Total      |   | $      | 5,769,096 |   |

| (Dollars      in Thousands, Except Per Share Data)                                                            | 2008   |   | 2007   |   | 2006   |   |
|---------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Numerator:                                                                                                    |   |   |   |   |   |   |
| Net      Income                                                                                               | $      | 15,225 |   | $      | 29,683 |   | $ | 33,265 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |   |
| Denominator:                                                                                                  |   |   |   |   |   |   |   |   |   |
| Denominator      for Basic Earnings Per Share Weighted-Average Shares                                         |   | 17,141 |   |   | 17,909 |   |   | 18,585 |   |
| Effects      of Dilutive Securities Stock Compensation Plans                                                  |   | 5,460  |   |   | 2,191  |   |   | 25,320 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |   |
| Denominator      for Diluted Earnings Per Share Adjusted Weighted-Average Shares and      Assumed Conversions |   | 17,147 |   |   | 17,912 |   |   | 18,610 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |   |
| Basic      Earnings Per Share                                                                                 | $      | 0.89   |   | $      | 1.66   |   | $ | 1.79 |   |
|                                                                                                          |   |   |   |   |   |   |   |   |   |
| Diluted      Earnings per Share                                                                               | $      | 0.89   |   | $      | 1.66   |   | $ | 1.79 |   |

----

Table of Contents

|                          |   | Actual |                                  | RequiredFor      CapitalAdequacy      Purposes |   | To      Be Well-Capitalized      UnderPrompt      CorrectiveAction      Provisions |   |
|-------------------------------|--------|--------|---------------------------------------|------------------------------------------------|--------|------------------------------------------------------------------------------------|--------|
| (Dollars in Thousands)   |   | Amount |                                  | Ratio                                          |   | Amount                                                                             | Ratio  |   | Amount | Ratio |   |
| As      of December 31, 2008: |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |
| Tier      I Capital:          |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |
| CCBG                          |   | $      | 271,767                               |                                           | 13.34  | %                                                                                  | $      | 81,948 | 4.00 | % | * | * |   |
| CCB                           |   |   | 269,812                               |                                           | 13.27  | %                                                                                  |   | 81,762 | 4.00 | % | 122,643 | 6.00 | % |
|                          |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |
| Total      Capital:           |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |
| CCBG                          |   |   | 299,263                               |                                           | 14.69  | %                                                                                  |   | 163,895 | 8.00 | % | * | * |   |
| CCB                           |   |   | 295,362                               |                                           | 14.53  | %                                                                                  |   | 163,524 | 8.00 | % | 204,405 | 10.00 | % |
|                          |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |
| Tier      I Leverage:         |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |
| CCBG                          |   |   | 271,767                               |                                           | 11.51  | %                                                                                  |   | 81,948 | 4.00 | % | * | * |   |
| CCB                           |   |   | 269,812                               |                                           | 11.45  | %                                                                                  |   | 81,762 | 4.00 | % | 102,202 | 5.00 | % |
|                          |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |
| As      of December 31, 2007: |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |
| Tier      I Capital:          |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |
| CCBG                          |   | $      |  261,172                         |                                           | 13.05  | %                                                                                  | $      | 80,047 | 4.00 | % | * | * |   |
| CCB                           |   |   |     260,720       |                                           | 13.05  | %                                                                                  |   | 79,934 | 4.00 | % | 119,901 | 6.00 | % |
|                          |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |
| Total      Capital:           |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |
| CCBG                          |   |   |      281,125 |                                           | 14.05  | %                                                                                  |   | 160,094 | 8.00 | % | * | * |   |
| CCB                           |   |   |      278,787 |                                           | 13.95  | %                                                                                  |   | 159,868 | 8.00 | % | 199,835 | 10.00 | % |
|                          |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |
| Tier      I Leverage:         |   |   |                                  |                                           |   |                                                                               |   |   |   |   |   |   |   |
| CCBG                          |   |   |      261,172 |                                           | 10.41  | %                                                                                  |   | 80,047 | 4.00 | % | * | * |   |
| CCB                           |   |   |      260,720 |                                           | 10.42  | %                                                                                  |   | 79,934 | 4.00 | % | 99,917 | 5.00 | % |

| * | Not applicable to bank holding      companies. |
|---|------------------------------------------------|

----

Table of Contents

| (Dollars      in Thousands)                       |   | 2008   |   | 2007      |   | 2006   |      |
|---------------------------------------------------|--------|--------|--------|-----------|--------|--------|-----------|
| Noninterest      Income:                          |   |   |   |      |   |   |      |
| Merchant      Fee Income                          |   | $      | 5,548  |      | $      | 7,257  |      | $ | 6,978 |   |
| Interchange      Commission Fees                  |   |   | 4,165  |      |   | 3,757  |      |   | 3,105 |   |
| ATM/Debit      Card Fees                          |   |   | 2,988  |      |   | 2,692  |      |   | 2,519 |   |
| Retail      Brokerage Fees                        |   |   | 2,399  |      |   | 2,510  |      |   | 2,091 |   |
|                                              |   |   |   |      |   |   |      |   |   |   |
| Noninterest      Expense:                         |   |   |   |      |   |   |      |   |   |   |
| Maintenance      Agreements -  FF&E |   |   | 3,506  |      |   | 3,684  |      |   | 3,483 |   |
| Legal      Fees                                   |   |   | 2,240  |      |   | 1,739  |      |   | 1,734 |   |
| Professional      Fees                            |   |   | 4,083  |      |   | 3,855  |      |   | 3,402 |   |
| Interchange      Service Fees                     |   |   | 4,577  |      |   | 6,118  |      |   | 6,010 |   |
| Telephone                                         |   |   | 2,522  |      |   | 2,373  |      |   | 2,323 |   |
| Advertising                                       |   |   | 3,609  |      |   | 3,742  |      |   | 4,285 |   |
| Commissions      Fees                             |   |   | 2,163  |      |   | 1,284  |      |   | 836 |   |
| Printing      & Supplies                      |   |   | 1,977  | (1)  |   | 2,124  | (1)  |   | 2,472 |   |

| (1) | <1% of appropriate      threshold. |
|-----|---------------------------------------|

----

Table of Contents

| (Dollars      in Thousands)          |   | Amount |    |
|--------------------------------------|--------|--------|---------|
| Commitments      to Extend Credit(1) |   | $      | 384,253 |   |
| Standby      Letters of Credit       |   | $      | 18,946  |   |

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

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----

Table of Contents

| (Dollars      in Thousands)        |   | Level      1 Inputs |   | Level      2 Inputs |   | Level      3 Inputs |   | Total      Fair Value |
|------------------------------------|--------|---------------------|--------|---------------------|--------|---------------------|--------|-----------------------|
|                               |   |                |   |                |   |                |   |                  |
| Securities      Available for Sale | $      | 32,370              | $      | 146,210             | $      | 1,107               | $      | 179,687               |

----

Table of Contents

|                                         | At      December 31, |      |
|----------------------------------------------|----------------------|-----------|
|                                         | 2008                 |      |   | 2007 |   |
| (Dollars      in Thousands)                  | CarryingValue        |      | EstimatedFairValue |   |   | CarryingValue |   |   | EstimatedFairValue |   |
| Financial      Assets:                       |                 |      |   |   |   |   |   |   |   |   |
| Cash                                         | $                    | 88,143    |   | $ | 88,143 |   |   | $ | 93,437 |   |   | $ | 93,437 |   |
| Short-Term      Investments                  |                 | 6,806     |   |   | 6,806 |   |   |   | 166,260 |   |   |   | 166,260 |   |
| Investment      Securities                   |                 | 191,569   |   |   | 191,569 |   |   |   | 190,719 |   |   |   | 190,719 |   |
| Loans,      Net of Allowance for Loan Losses |                 | 1,920,793 |   |   | 1,915,887 |   |   |   | 1,897,784 |   |   |   | 1,982,661 |   |
| Total      Financial Assets                  | $                    | 2,207,311 |   | $ | 2,202,405 |   |   | $ | 2,348,200 |   |   | $ | 2,433,077 |   |
|                                         |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial      Liabilities:                  |                 |      |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                     | $                    | 1,992,174 |   | $ | 1,960,361 |   |   | $ | 2,142,344 |   |   | $ | 2,089,550 |   |
| Short-Term      Borrowings                   |                 | 62,044    |   |   | 61,799 |   |   |   | 53,131 |   |   |   | 53,022 |   |
| Subordinated      Notes Payable              |                 | 62,887    |   |   | 63,637 |   |   |   | 62,887 |   |   |   | 63,371 |   |
| Long-Term      Borrowings                    |                 | 51,470    |   |   | 57,457 |   |   |   | 26,731 |   |   |   | 28,284 |   |
| Total      Financial Liabilities             | $                    | 2,168,575 |   | $ | 2,143,254 |   |   | $ | 2,285,093 |   |   | $ | 2,234,227 |   |

----

Table of Contents

| (Dollars      in Thousands)                                                                  | 2008   |   |   | 2007   |   |    | 2006   |   |
|----------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|---------|--------|--------|
| OPERATING      INCOME                                                                        |   |   |   |   |   |    |   |   |
| Income      Received from Subsidiary Bank:                                                   |   |   |   |   |   |    |   |   |
| Dividends                                                                                    | $      | 16,655 |   |   | $      | 49,207  |   |   | $ | 20,166 |   |
| Overhead      Fees                                                                           |   | 3,209  |   |   |   | 3,532   |   |   |   | 3,524 |   |
| Other      Income                                                                            |   | 184    |   |   |   | 164     |   |   |   | 112 |   |
| Total      Operating Income                                                                  |   | 20,048 |   |   |   | 52,903  |   |   |   | 23,802 |   |
|                                                                                         |   |   |   |   |   |    |   |   |   |   |   |
| OPERATING      EXPENSE                                                                       |   |   |   |   |   |    |   |   |   |   |   |
| Salaries      and Associate Benefits                                                         |   | 1,341  |   |   |   | 1,812   |   |   |   | 2,360 |   |
| Interest      on Long-Term Debt                                                              |   | 35     |   |   |   | -       |   |   |   | - |   |
| Interest      on Subordinated Notes Payable                                                  |   | 3,735  |   |   |   | 3,730   |   |   |   | 3,725 |   |
| Professional      Fees                                                                       |   | 978    |   |   |   | 787     |   |   |   | 741 |   |
| Advertising                                                                                  |   | 244    |   |   |   | 260     |   |   |   | 403 |   |
| Legal      Fees                                                                              |   | 213    |   |   |   | 375     |   |   |   | 604 |   |
| Other                                                                                        |   | 620    |   |   |   | 621     |   |   |   | 649 |   |
| Total      Operating Expense                                                                 |   | 7,166  |   |   |   | 7,585   |   |   |   | 8,482 |   |
| Income      Before Income Taxes and Equity in Undistributed Earnings of Subsidiary      Bank |   | 12,882 |   |   |   | 45,318  |   |   |   | 15,320 |   |
| Income      Tax Benefit                                                                      |   | (737   | )      |   |   | (1,429  | )      |   |   | (1,835 | ) |
| Income      Before Equity in Undistributed Earnings of Subsidiary      Bank                  |   | 13,619 |   |   |   | 46,747  |   |   |   | 17,155 |   |
| Equity      in Undistributed Earnings of Subsidiary Bank                                     |   | 1,606  |   |   |   | (17,064 | )      |   |   | 16,110 |   |
| Net      Income                                                                              | $      | 15,225 |   |   | $      | 29,683  |   |   | $ | 33,265 |   |

| (Dollars      in Thousands, Except Per Share Data)                                                                                                                                               | 2008   |    |   | 2007   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------|
| ASSETS                                                                                                                                                                                           |   |    |   |   |   |
| Cash      and Due From Subsidiary Bank                                                                                                                                                           | $      | 950     |   |   | $      | 958 |   |
| Investment      in Subsidiary Bank                                                                                                                                                               |   | 343,603 |   |   |   | 357,093 |   |
| Other      Assets                                                                                                                                                                                |   | 2,689   |   |   |   | 2,826 |   |
| Total      Assets                                                                                                                                                                                | $      | 347,242 |   |   | $      | 360,877 |   |
|                                                                                                                                                                                             |   |    |   |   |   |   |   |
| LIABILITIES                                                                                                                                                                                      |   |    |   |   |   |   |   |
| Subordinated      Notes Payable                                                                                                                                                                  | $      | 62,887  |   |   | $      | 62,887 |   |
| Other      Liabilities                                                                                                                                                                           |   | 5,525   |   |   |   | 5,315 |   |
| Total      Liabilities                                                                                                                                                                           | $      | 68,412  |   |   | $      | 68,202 |   |
|                                                                                                                                                                                             |   |    |   |   |   |   |   |
| SHAREOWNERS'      EQUITY                                                                                                                                                                         |   |    |   |   |   |   |   |
| Preferred      Stock, $.01 par value, 3,000,000 shares authorized; no shares issued and      outstanding                                                                                         |   | -       |   |   |   | - |   |
| Common      Stock, $.01 par value; 90,000,000 shares authorized; 17,126,997 and      17,182,553 shares issued and outstanding at December 31, 2008 and      December 31, 2007, respectively |   | 171     |   |   |   | 172 |   |
| Additional      Paid-In Capital                                                                                                                                                                  |   | 36,783  |   |   |   | 38,243 |   |
| Retained      Earnings                                                                                                                                                                           |   | 262,890 |   |   |   | 260,325 |   |
| Accumulated      Other Comprehensive Loss, Net of Tax                                                                                                                                            |   | (21,014 | )      |   |   | (6,065 | ) |
| Total      Shareowners' Equity                                                                                                                                                                   |   | 278,830 |   |   |   | 292,675 |   |
| Total      Liabilities and Shareowners' Equity                                                                                                                                                   | $      | 347,242 |   |   | $      | 360,877 |   |

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| (Dollars      in Thousands)                                                                 | 2008   |    |   | 2007   |   |    | 2006   |   |
|---------------------------------------------------------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                                  |   |    |   |   |   |    |   |   |
| Net      Income                                                                             | $      | 15,225  |   |   | $      | 29,683  |   |   | $ | 33,265 |   |
| Adjustments      to Reconcile Net Income to Net Cash Provided by Operating      Activities: |   |    |   |   |   |    |   |   |   |   |   |
| Equity      in Undistributed Earnings of Subsidiary Bank                                    |   | (1,606  | )      |   |   | 17,064  |   |   |   | (16,110 | ) |
| Non-Cash      Compensation                                                                  |   | 62      |   |   |   | 238     |   |   |   | 1,673 |   |
| Increase      in Other Assets                                                               |   | 254     |   |   |   | (152    | )      |   |   | (670 | ) |
| Increase      in Other Liabilities                                                          |   | 210     |   |   |   | 222     |   |   |   | 1,976 |   |
| Net      Cash Provided by Operating Activities                                              |   | 14,145  |   |   |   | 47,055  |   |   |   | 20,134 |   |
|                                                                                        |   |    |   |   |   |    |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                                                  |   |    |   |   |   |    |   |   |   |   |   |
| Cash      Paid for Investment in:                                                           |   |    |   |   |   |    |   |   |   |   |   |
| Purchase      of held-to-maturity and available-for-salesecurities                          |   | -       |   |   |   | (1,000  | )      |   |   | - |   |
| Increase      in Investment in Bank Subsidiary                                              |   | -       |   |   |   | 1,466   |   |   |   | - |   |
| Net      Cash Used in Investing Activities                                                  |   | -       |   |   |   | 466     |   |   |   | - |   |
|                                                                                        |   |    |   |   |   |    |   |   |   |   |   |
| CASH      FROM FINANCING ACTIVITIES:                                                        |   |    |   |   |   |    |   |   |   |   |   |
| Payment      of Dividends                                                                   |   | (12,630 | )      |   |   | (12,823 | )      |   |   | (12,322 | ) |
| Repurchase      of Common Stock                                                             |   | (2,414  | )      |   |   | (43.233 | )      |   |   | (5,360 | ) |
| Issuance      of Common Stock                                                               |   | 891     |   |   |   | 572     |   |   |   | 1,035 |   |
| Net      Cash (Used in) Provided by Financing Activities                                    |   | (14,153 | )      |   |   | (55,484 | )      |   |   | (16,647 | ) |
|                                                                                        |   |    |   |   |   |    |   |   |   |   |   |
| Net      Increase (Decrease) in Cash                                                        |   | (8      | )      |   |   | (7,963  | )      |   |   | 3,487 |   |
| Cash      at Beginning of Period                                                            |   | 958     |   |   |   | 8,921   |   |   |   | 5,434 |   |
| Cash      at End of Period                                                                  | $      | 950     |   |   | $      | 958     |   |   | $ | 8,921 |   |

|  (Dollars in      Thousands)                                                                                                                                 |   | 2008   |    |   | 2007   |   |   | 2006   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|
| Other      Comprehensive Income (Loss):                                                                                                                           |   |   |    |   |   |   |   |   |   |
|             Securities available for sale:                                                                                          |   |   |    |   |   |   |   |   |   |
|              Change      in net unrealized gain, net of tax expense of $683, $616, and      $202 |   | $      | 1,230   |   |   | $      | 1,080  |   |   | $ | 412 |   |
|             Retirement plans:                                                                                                       |   |   |    |   |   |   |   |   |   |   |   |   |
| Change      in funded status of defined benefit pension plan and SERP, net of tax      benefit of $10,613 and tax expense of $830                                 |   |   | (16,179 | )      |   |   | 1,166  |   |   |   | - |   |
|  Net      Other Comprehensive (Loss) Gain                                                                                                                    |   | $      | (14,949 | )      |   | $      | 2,246  |   |   | $ | 412 |   |
|                                                                                                                                                              |   |   |    |   |   |   |   |   |   |   |   |   |
| The      components of accumulated other comprehensive income, net of tax, as of      year-end were as follows:                                                   |   |   |    |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                              |   |   |    |   |   |   |   |   |   |   |   |   |
|             Net unrealized gain (loss) on securities available for      sale                                                        |   | $      | 1,476   |   |   | $      | 246    |   |   | $ | (834 | ) |
|             Net unfunded liability for defined benefit pension plan and      SERP                                                   |   |   | (22,490 | )      |   |   | (6,311 | )      |   |   | (7,477 | ) |
|                                                                                                                                                              |   | $      | (21,014 | )      |   | $      | (6,065 | )      |   | $ | (8,311 | ) |

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| Item  9. | Changes      in and Disagreements with Accountants on Accounting and Financial      Disclosure |
|--------------------|------------------------------------------------------------------------------------------------|

| Item 9A. | Controls      and Procedures |
|----------|------------------------------|

| Item 9B. | Other      Information |
|----------|------------------------|

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Part III

| Item 10. | Directors,      Executive Officers, and CorporateGovernance |
|----------|-------------------------------------------------------------|

| Item 11. | Executive      Compensation |
|----------|-----------------------------|

| Item 12. | Security      Ownership of Certain Beneficial Owners and Management and Related      Shareowners Matters |
|----------|----------------------------------------------------------------------------------------------------------|

| Plan      Category                                               |   | Number      of securities to be issued upon exercise ofoutstanding      options, warrants and rights |   | Weighted-average      exercise priceof      outstanding options, warrants and rights |   | Number      of securities remaining availablefor      future issuance under equitycompensation      plans (excludingsecurities      reflected in column (a)) |
|------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                             |   | (a)                                                                                                  |   | (b)                                                                                  |   | (c)                                                                                                                                                          |
| Equity      Compensation Plans Approved by Securities Holders    |   | 60,384(1)                                                                                            |   | $32.79                                                                               |   | 1,376,506(2)                                                                                                                                                 |
|                                                             |   |                                                                                                 |   |                                                                                 |   |                                                                                                                                                         |
| Equity      Compensation Plans Not Approved by SecuritiesHolders |   |                                                                                                 |   |                                                                                 |   |                                                                                                                                                         |
| Total                                                            |   | 60,384                                                                                               |   | $32.79                                                                               |   | 1,376,506                                                                                                                                                    |

|  (1) | Includes      60,384 shares that may be issued upon exercise of outstanding options      under the terminated 1996 Associate Incentive  Plan. |
|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Consists      of 814,108 shares available for issuance under our 2005 Associate      Incentive Plan, 511,968 shares available for issuance under our 2005      Associate Stock Purchase Plan, and 50,430 shares available for issuance      under our 2005 Director Stock Purchase Plan.  Of these plans,      the only plan under which options may be granted in the future is our 2005      Associate Incentive Plan. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Item13. 

Item14.  

----

Table of Contents

PART IV

| Item 15. | Exhibits      and Financial Statement Schedules |
|----------|-------------------------------------------------|

|   | The      following documents are filed as part of this  report |
|--------|----------------------------------------------------------------|

|                      Consolidated Statements of Changes in Shareowners’ Equity for Fiscal Years      2008, 2007, and 2006 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.   | Exhibits      Required to be Filed by Item 601 of Regulation  S-K |
|----------------|-------------------------------------------------------------------|

|   | 3.1 | Amended      and Restated Articles of Incorporation - incorporated herein by reference      to Exhibit 3 of the Registrant’s 1996 Proxy Statement (filed 4/11/96) (No.      0-13358). |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.2 | Amended      and Restated Bylaws - incorporated herein by reference to Exhibit 3.2 of      the Registrant’s Form 8-K (filed 11/30/07) (No.  0-13358). |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.1 | See      Exhibits 3.1, and 3.2 for provisions of Amended and Restated Articles of      Incorporation and Amended and Restated Bylaws, which define the rights of      its shareholders. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.2 | Capital      City Bank Group, Inc. 2005 Director Stock Purchase Plan - incorporated      herein by reference to Exhibit 4.3 of the Registrant’s Form S-8      (filed 11/5/04) (No. 333-120242). |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.3 | Capital      City Bank Group, Inc. 2005 Associate Stock Purchase Plan - incorporated      herein by reference to Exhibit 4.4 of the Registrant’s Form S-8      (filed 11/5/04) (No. 333-120242). |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.4 | Capital      City Bank Group, Inc. 2005 Associate Incentive Plan - incorporated herein      by reference to Exhibit 4.5 of the Registrant’s Form S-8 (filed      11/5/04) (No. 333-120242). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.5 | In      accordance with Regulation S-K, Item 601(b)(4)(iii)(A) certain      instruments defining the rights of holders of long-term debt of Capital      City Bank Group, Inc. not exceeding 10% of the total assets of Capital      City Bank Group, Inc. and its consolidated subsidiaries have been omitted;      the Registrant agrees to furnish a copy of any such instruments to the      Commission upon request. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1 | Capital      City Bank Group, Inc. 1996 Dividend Reinvestment and Optional Stock      Purchase Plan - incorporated herein by reference to Exhibit 10 of the      Registrant’s Form S-3 (filed 01/30/97) (No.  333-20683). |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.2 | Capital      City Bank Group, Inc. Supplemental Executive Retirement Plan -      incorporated herein by reference to Exhibit 10(d) of the Registrant’s Form      10-K (filed 3/27/03) (No. 0-13358). |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.3 | Capital      City Bank Group, Inc. 401(k) Profit Sharing Plan – incorporated herein by      reference to Exhibit 4.3 of Registrant’s Form S-8 (filed 09/30/97) (No.      333-36693). |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.4 | 2005      Stock Option Agreement by and between Capital City Bank Group, Inc. and      William G. Smith, Jr., dated March 24, 2005 – incorporated herein by      reference to Exhibit 10.1 of the Registrant’s Form 8-K (filed 3/31/05)      (No. 0-13358). |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.5 | 2006      Stock Option Agreement by and between Capital City Bank Group, Inc. and      William G. Smith, Jr., dated March 23, 2006 – incorporated herein by      reference to Exhibit 10.1 of the Registrant’s Form 8-K (filed 3/29/06)      (No. 0-13358). |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.6 | Capital      City Bank Group, Inc. Non-Employee Director Plan, as amended –      incorporated herein by reference to Exhibit 10.2 of the Registrant’s Form      8-K (filed 3/29/06) (No. 0-13358). |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.7 | Form      of Participant Agreement for the Capital City Bank Group, Inc. Long-Term      Incentive Plan – incorporated herein by reference to Exhibit 10.1 of the      Registrant’s Form 10-Q (filed 8/10/06) (No.  0-13358). |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.8 | Form      of Participant Agreement for 2008 Stock-Based Incentive Plan –      incorporated herein by reference to Exhibit 10.1 of the Registrant’s Form      8-K (filed 6/5/08) (No. 0-13358). |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11 | Statement      re Computation of Per ShareEarnings.* |
|--------|----|------------------------------------------------------|

|   | 14 | Capital      City Bank Group, Inc. Code of Ethics for the Chief Financial Officer and      Senior Financial Officers - incorporated herein by reference to Exhibit 14      of the Registrant’s Form 8-K (filed 3/11/05) (No.  0-13358). |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 21 | Capital      City Bank Group, Inc. Subsidiaries, as of December 31,    2008.** |
|--------|----|--------------------------------------------------------------------------------|

|   | 23.1 | Consent      of Independent Registered Public Accounting  Firm.** |
|--------|------|-------------------------------------------------------------------|

|   | 23.2 | Consent      of Independent Registered Public Accounting  Firm.** |
|--------|------|-------------------------------------------------------------------|

|   | 31.1 | Certification      of CEO pursuant to Securities and Exchange Act Section 302 of the      Sarbanes-Oxley Act of 2002.** |
|--------|------|-------------------------------------------------------------------------------------------------------------------------|

|   | 31.2 | Certification      of CFO pursuant to Securities and Exchange Act Section 302 of the      Sarbanes-Oxley Act of 2002.** |
|--------|------|-------------------------------------------------------------------------------------------------------------------------|

|   | 32.1 | Certification      of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section      906 of the Sarbanes-Oxley Act of2002.** |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | 32.2 | Certification      of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section      906 of the Sarbanes-Oxley Act of2002.** |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------|

| *  | Information      required to be presented in Exhibit 11 is provided in Note 13 to the      consolidated financial statements under Part II, Item 8 of this Form 10-K      in accordance with the provisions of FASB Statement of Financial      Accounting Standards (SFAS) No. 128, Earnings Per      Share. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** | Filed      electronically herewith.                                                                                                                                                                                                                                                                           |

----

Table of Contents

Signatures

|                                                 |   |
|------------------------------------------------------|--------|
|                                                 |   |
| /s/ William      G. Smith, Jr.                  |   |
| William      G. Smith, Jr.                      |   |
| Chairman,      President and Chief Executive Officer |   |
|  (Principal      Executive Officer)             |   |

|                                                 |   |
|------------------------------------------------------|--------|
| /s/      William G. Smith, Jr.                       |   |
| William      G. Smith, Jr.                           |   |
| Chairman,      President and Chief Executive Officer |   |

| /s/ J.      Kimbrough Davis                          |   |
|-----------------------------------------------------------|--------|
| J.      Kimbrough Davis                                   |   |
| Executive      Vice President and Chief Financial Officer |   |
|  (Principal      Financial and Accounting Officer)   |   |

----

Table of Contents

| Directors:                            |   |                                 |
|---------------------------------------|--------|--------------------------------------|
|                                  |   |                                 |
| /s/      DuBose Ausley           |   | /s/ John      K. Humphress      |
|  DuBose      Ausley              |   |  John      K. Humphress         |
|                                  |   |                                 |
| /s/      Thomas A. Barron        |   | /s/      L. McGrath Keen, Jr.   |
|  Thomas      A. Barron           |   |  L.      McGrath Keen, Jr.      |
|                                  |   |                                 |
| /s/      Frederick Carroll, III  |   |  /s/      Lina S. Knox          |
|  Frederick      Carroll, III     |   |  Lina      S. Knox              |
|                                  |   |                                 |
| /s/ Cader      B. Cox, III       |   |  /s/      Henry Lewis III       |
|  Cader      B. Cox, III          |   |  Henry      Lewis III           |
|                                  |   |                                 |
| /s/      J. Everitt Drew         |   |  /s/      William G. Smith, Jr. |
|  J.      Everitt Drew            |   |  William      G. Smith, Jr.     |
|                                  |   |                                 |