Capital City Bank Group, Inc. Reports Fourth Quarter and Full Year 2008 Results

TALLAHASSEE, Fla., Jan. 26, 2009 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (Nasdaq:CCBG) today reported a net loss of $1.7 million ($0.10 per diluted share) for the fourth quarter of 2008 compared to net income of $4.8 million ($0.29 per diluted share) for the third quarter of 2008 and net income of $7.7 million ($0.44 per diluted share) in the fourth quarter of 2007. Net income for the year ended 2008 totaled $15.2 million ($.89 per diluted share) compared to $29.7 million ($1.66 per diluted share) for 2007.

Earnings for the fourth quarter of 2008 include a loan loss provision of $12.5 million ($.45 per diluted share) versus $10.4 million ($.37 per diluted share) in the third quarter of 2008 and $1.7 million ($.06 per diluted share) in the fourth quarter of 2007. Earnings for the third quarter of 2008 also included a $6.25 million gain ($0.22 per diluted share) from the sale of a major portion of the bank's merchant services portfolio.

Earnings for the full year 2008 include a loan loss provision of $32.5 million ($1.16 per diluted share) versus $6.2 million ($.21 per diluted share) for 2007. In addition to the third quarter gain from the sale of a portion of the bank's merchant services portfolio, earnings for the full year included a $2.4 million gain from the redemption of Visa, Inc. shares related to its initial public offering and the reversal of $1.1 million in Visa related litigation reserves.

"While disappointed with the fourth quarter, we are pleased with Capital City's overall performance for the year," said William G. Smith, Jr., chairman, president and chief executive officer. "During the fourth quarter, management took aggressive action with problem credits, including charge-offs of $6.1 million and the addition of $6.5 million to the loan loss reserve. During the year, Capital City doubled its loan loss reserve to $37.0 million and ended the year with a loan loss reserve equal to 1.89% of loans. While problem credits and other real estate often involve protracted workout periods, we have reviewed the major relationships in these areas and are very encouraged by the workout plans the Capital City team has in place. While we are acutely focused on problem credits, Capital City will continue to pursue its underlying business growth strategy in 2009 and is prepared to capitalize on opportunities, both specific client relationships and acquisitions.

"Capital City expects to be working the collections process aggressively, often going for court-ordered judgments to produce cash from liquidations occurring ahead of the lengthy foreclosure process. We want history to eventually show that we had the most effective strategy and results among the Florida banks for managing our institution through this cycle.

"As we move into 2009, Capital City Bank Group continues to maintain a very strong and internally generated capital position, substantially above the regulatory guidelines to be considered well-capitalized. At year-end the Tier I Risk-Based Capital, Total Risk-Based Capital and Tangible Equity to Assets ratios were 13.4%, 14.7% and 7.7%, respectively," said Smith. "We believe Capital City has sufficient capital to execute its business plan in 2009 and for the years ahead."

The Return on Average Assets was -.28% and the Return on Average Equity was -2.24% for the fourth quarter of 2008. These metrics were .76% and 6.34% for the third quarter of 2008 and 1.21% and 10.16% for the fourth quarter of 2007, respectively.

For the full year of 2008, the Return on Average Assets was .59% and the Return on Average Equity was 5.06% compared to 1.18% and 9.68%, respectively, for the full year of 2007.

Discussion of Financial Condition

Average earning assets were $2.151 billion for the fourth quarter, a decrease of $56.8 million, or 2.57% from the third quarter of 2008, and a decrease of $40.4 million, or 1.84% from the fourth quarter of 2007. The decrease from the linked quarter is primarily attributable to an $83.3 million decrease in short-term investments driven by the decline in client deposits (see discussion below), partially offset by a $25.1 million increase in average loans. Compared to the fourth quarter of 2007, the decrease primarily reflects a decrease in average short-term investments ($80.1 million) partially offset by a $32.0 million increase in average loans and a $7.7 million increase in investment securities. Our loan pipelines have increased during the second half of the year due to the efforts of our bankers to reach quality clients who are interested in moving or expanding their banking relationships. Year over year, growth was primarily attributable to commercial real estate mortgages and home equity loans.

At the end of the fourth quarter, nonperforming assets (including nonaccrual loans, restructured loans, and other real estate owned) totaled $107.8 million, an increase of $40.1 million, or 59% from the third quarter and $79.7 million, or 283% from the fourth quarter of 2007. The level of nonaccrual loans increased $35.4 million to $96.9 million compared to the prior linked quarter due primarily to the addition of loans to builders, investors, and other borrowers whom operate within our residential real estate markets, which are experiencing continued stress due to general economic conditions, significant slow-down in purchase activity, and property de-valuation. Vacant residential land loans represented 49% of our nonaccrual balance at year-end. In aggregate, a reserve equal to approximately 31% has been allocated to these loans. Restructured loans totaled $1.7 million at the end of the fourth quarter. Other real estate owned totaled $9.2 million at the end of the fourth quarter. Nonperforming assets represented 5.48% of loans and other real estate at the end of the fourth quarter compared to 3.51% and 1.47% at the end of the prior quarter and year-end 2007, respectively.

Average total deposits were $1.946 billion for the fourth quarter, a decrease of $84.8 million, or 4.2%, from the third quarter and a decrease of $70.9 million, or 3.5%, from the fourth quarter of 2007. On a linked quarter basis, the decline in deposits primarily reflects a lower level of NOW account balances (primarily public funds and legal settlement accounts) and certificates of deposit balances. This decline in the public funds balances generally reflects the timing of tax receipts and certain public entity clients seeking higher yield. Compared to the fourth quarter of 2007, a majority of the decrease in deposits has been realized in the money market and certificates of deposit categories. The decrease in the money market account balance is due to lower account balances maintained by both businesses and individuals, which we believe is attributable to lower rates and distressed economic conditions. The decline in the certificate of deposit category reflects a combination of proceeds migrating to other deposit categories, as well as transferring to higher rate paying competitors. Despite the disruption in the market, we continue to pursue prudent pricing discipline and have chosen not to compete with higher rate paying competitors for these deposits.

We maintained an average net overnight funds (deposits with banks plus Fed funds sold less Fed funds purchased) purchased position of $18.0 million during the fourth quarter of 2008 as compared to an average net overnight funds sold position of $86.5 million in the third quarter of 2008 and $84.1 million in the fourth quarter of 2007. The decline in the funds position primarily reflects a decline in deposit balances as discussed above, coupled with growth in the loan portfolio.

Discussion of Operating Results

Tax equivalent net interest income for the fourth quarter of 2008 was $28.4 million compared to $27.8 million for the third quarter of 2008 and $28.2 million for the fourth quarter of 2007. For the twelve months of 2008, tax equivalent net interest income totaled $111.3 million compared to $114.7 million in 2007.

The increase in the net interest income on a linked quarter basis and from the fourth quarter of 2007 reflects lower cost of funds resulting from a favorable shift in the mix of deposits and lower market rates. Management responded aggressively to the federal funds rate reductions which began in September 2007, and believe we have successfully neutralized the overall impact. Higher foregone interest on nonaccrual loans and a decline in loan fees partially offset the improvement in net interest income. Additionally, the fourth quarter of 2008 was favorably impacted by $784,000 attributable to the resolution of a problem loan which was acquired in a prior acquisition. The net interest margin of 5.26% expanded by 25 basis points over the linked quarter and 16 basis points over the fourth quarter of 2007, primarily attributable to the favorable shift in the mix of deposits and aggressive deposit repricing.

The decrease in net interest income for the twelve months ended December 31, 2008 as compared to the same period of 2007 was attributable to a higher level of foregone interest associated with the increased level of nonperforming assets. Year over year, the increase in foregone interest coupled with the influx of municipal deposits, which produce relatively thin spreads, led to compression in our net interest margin of 29 basis points.

Average negotiated deposits, which include public funds, grew from $377 million in the fourth quarter of 2007 to $435 million in the current quarter, but were down from $538 million in the second quarter of 2008. We believe this reduction is partially attributable to state budgetary concerns and local governments seeking higher yields. Although the year over year growth in public funds has had a positive impact on net interest income, it has had an adverse impact on our margin percentage due to the relatively thin spreads.

The provision for loan losses for the current quarter was $12.5 million compared to $10.4 million in the third quarter of 2008 and $1.7 million for the fourth quarter of 2007. The provision for the full year of 2008 totaled $32.5 million compared to $6.2 million in 2007. The increase in the provision for both periods generally reflects current stressed economic conditions and the associated impact on consumers, housing, and real estate markets. Over the course of the year, a majority of the increase in our provision has been driven by higher reserves needed for our consumer loan portfolio and for loans where repayment is reliant on activity within residential real estate markets, primarily loans to builders and investors (both business and individual). The increase in the provision for the current quarter reflects a higher level of loan charge-offs which were $6.0 million, or 1.24% of average loans, and an increase in both general and impaired loan reserves required for loans where repayment is tied to residential real estate market activity, which has significantly slowed and has been hampered by property de-valuation. We continue to perform a detailed review and valuation assessment of our impaired loans on a quarterly basis and adjust specific reserves or charge off losses, as appropriate, based on collateral valuations. At quarter-end, the allowance for loan losses was 1.89% of outstanding loans (net of overdrafts) and provided coverage of 38% of nonperforming loans compared to 1.59% and 49%, respectively at the end of the third quarter and .95% and 72%, respectively at the end of the fourth quarter of 2007.

Noninterest income for the fourth quarter decreased $6.9 million, or 34.1%, from the third quarter of 2008 primarily attributable to a pre-tax gain of $6.25 million from the sale of a portion of the bank's merchant services portfolio and a one-time gain from the sale of a banking office ($241,000), both of which were recognized in the third quarter. Lower deposit fees of $303,000 driven by a three day processing variance also contributed to the decline for the quarter. As compared to the fourth quarter of 2007, noninterest income declined $2.5 million, or 15.9% due to lower deposit fees ($449,000) primarily reflective of a higher level of overdraft charge-offs, and a lower level of trust fees ($165,000) and mortgage banking fees ($133,000), both of which reflect turbulent market conditions. Merchant fees also declined $1.1 million, or 62.7%, reflecting a sale of a major portion of this portfolio early in the third quarter of 2008. A one-time gain of $540,000 recognized during the fourth quarter of 2007 from the sale of a banking office also contributed to the unfavorable variance. For the full year of 2008, noninterest income grew $7.7 million, or 13.0%, from the comparable period in 2007 due primarily to the aforementioned gain from the merchant services portfolio sale, a gain from the redemption of Visa Inc. shares during the first quarter of 2008 ($2.4 million) and strong improvement in deposit fees ($1.6 million). These improvements were partially offset by reductions in mortgage banking fees ($1.0 million) and merchant services fees ($1.7 million).

Noninterest expense for the fourth quarter increased $1.1 million, or 3.6%, over the third quarter of 2008 primarily attributable to higher expenses for advertising ($459,000), legal ($201,000), and professional fees ($284,000). Other real estate owned write-downs also increased $186,000 during the quarter. The increase in advertising was driven by our branding campaign which kicked off in late November. Legal expense increased due to a higher level of legal support needed for problem loan collection/workout efforts. The increase in professional fees primarily reflects an increase to both our internal and external audit expense accruals. As compared to the same quarter in 2007, noninterest expense declined $612,000 or 1.9% due to a one-time pre-tax charge of $1.9 million in the fourth quarter of 2007 for Visa Inc. litigation. The favorable variance created by the Visa charge was partially offset by higher pension expense.

For the full year of 2008, noninterest expense declined $520,000 or .43% reflecting the impact of the one-time $1.9 million Visa litigation charge in the fourth quarter of 2007 and the reversal of $1.1 million in Visa reserves during the first quarter of 2008. Lower interchange expense ($1.5 million) reflecting the aforementioned sale of a portion of the merchant services portfolio also contributed to the favorable variance for the year. Partially offsetting the aforementioned favorable variances was higher salary expense ($1.1 million), legal fees ($501,000), FDIC insurance premiums ($555,000), commission fees ($879,000), and other real estate owned expenses ($1.0 million). The increase in salary expense reflects routine merit raises during the course of the year. Legal expense increased due to a higher level of legal support needed for problem loan collection/workout efforts. Our FDIC insurance premium increased during the second half of the year primarily reflecting the full use of our premium credits. The variance in commission fees reflects the cost of supporting our working capital financing product; the revenues of which are reflected in noninterest income and more than offset the higher expense. Expense related to our other real estate owned properties was higher due to an increase in general holding costs driven by a higher level of properties, but more significantly the unfavorable variance was driven by subsequent valuation adjustments (write-downs) on properties.

About Capital City Bank Group, Inc.

Capital City Bank Group, Inc. (Nasdaq:CCBG) is one of the largest publicly traded financial services companies headquartered in Florida and has approximately $2.5 billion in assets. The Company provides a full range of banking services, including traditional deposit and credit services, asset management, trust, mortgage banking, merchant services, bankcards, data processing and securities brokerage services. The Company's bank subsidiary, Capital City Bank, was founded in 1895 and now has 68 banking offices and 80 ATMs in Florida, Georgia and Alabama. Since 2005, the Company has been named as a Dividend Achiever by Mergent, Inc., a leading provider of information on publicly traded companies. To be named a Dividend Achiever, a public company must have increased its regular cash dividends for at least 10 consecutive years. For more information about Capital City Bank Group, Inc., visit www.ccbg.com.

FORWARD-LOOKING STATEMENTS

Forward-looking statements in this Press Release are based on current plans and expectations that are subject to uncertainties and risks, which could cause the Company's future results to differ materially. The following factors, among others, could cause the Company's actual results to differ: the frequency and magnitude of foreclosure of the Company's loans; the effects of the Company's lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; the accuracy of the Company's financial statement estimates and assumptions, including the estimate for the Company's loan loss provision; the Company's ability to integrate acquisitions; the strength of the U.S. economy and the local economies where the Company conducts operations; harsh weather conditions; fluctuations in inflation, interest rates, or monetary policies; changes in the stock market and other capital and real estate markets; legislative or regulatory changes; customer acceptance of third-party products and services; increased competition and its effect on pricing; technological changes; the effects of security breaches and computer viruses that may affect the Company's computer systems; changes in consumer spending and savings habits; the Company's growth and profitability; changes in accounting; and the Company's ability to manage the risks involved in the foregoing. Additional factors can be found in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and the Company's other filings with the SEC, which are available at the SEC's internet site (http://www.sec.gov). Forward-looking statements in this Press Release speak only as of the date of the Press Release, and the Company assumes no obligation to update forward-looking statements or the reasons why actual results could differ.


 EARNINGS HIGHLIGHTS
 --------------------------------------------------------------------
 (Dollars in              Three Months Ended      Twelve Months Ended
  thousands,         ------------------------------------------------
  except per          Dec 31,   Sep 30,   Dec 31,   Dec 31,   Dec 31,
  share data)          2008      2008      2007      2008      2007
 --------------------------------------------------------------------
 EARNINGS
 Net Income          $ (1,703) $  4,838  $  7,664  $ 15,225  $ 29,683
 Diluted Earnings
  Per Common Share   $  (0.10) $   0.29  $   0.44  $   0.89  $   1.66
 --------------------------------------------------------------------
 PERFORMANCE               --        --        --        --        --
 Return on Average
  Equity                -2.24%     6.34%    10.16%     5.06%     9.68%
 Return on Average
  Assets                -0.28%     0.76%     1.21%     0.59%     1.18%
 Net Interest Margin     5.26%     5.01%     5.10%     4.96%     5.25%
 Non-interest Income
  as % of Operating
  Revenue               32.42%    42.64%    36.49%    38.11%    34.57%
 Efficiency Ratio       71.21%    59.27%    68.51%    64.91%    66.77%
 --------------------------------------------------------------------
 CAPITAL ADEQUACY          --        --        --        --        --
 Tier 1 Capital Ratio   13.34%    13.54%    13.05%    13.34%    13.05%
 Total Capital Ratio    14.69%    15.15%    14.05%    14.69%    14.05%
 Tangible Capital
  Ratio                  7.76%     8.67%     7.71%     7.76%     7.71%
 Leverage Ratio         11.51%    11.21%    10.83%    11.51%    10.83%
 Equity to Assets       11.20%    12.17%    11.19%    11.20%    11.19%
 --------------------------------------------------------------------
 ASSET QUALITY             --        --        --        --        --
 Allowance as % of
  Non-Performing
  Loans                 37.52%    48.55%    71.92%    37.52%    71.92%
 Allowance as a % of
  Loans                  1.89%     1.59%     0.95%     1.89%     0.95%
 Net Charge-Offs as
  % of Average Loans     1.24%     0.50%     0.34%     0.71%     0.27%
 Nonperforming Assets
  as % of Loans and
  ORE                    5.48%     3.51%     1.47%     5.48%     1.47%
 --------------------------------------------------------------------
 STOCK PERFORMANCE                   --        --        --        --
 High                $  33.32  $  34.50  $  34.00  $  34.50  $  36.40
 Low                 $  21.06  $  19.20  $  24.60  $  19.20  $  24.60
 Close               $  27.24  $  31.35  $  28.22  $  27.24  $  28.22
 Average Daily
  Trading Volume       43,379    45,717    52,489    39,293    39,385
 --------------------------------------------------------------------


 CAPITAL CITY BANK GROUP, INC.
 CONSOLIDATED STATEMENT OF INCOME
 Unaudited
 --------------------------------------------------------------------
 (Dollars in           2008      2008      2008      2008      2007
  thousands, except   Fourth    Third     Second    First     Fourth
  per share data)     Quarter   Quarter   Quarter   Quarter   Quarter
 --------------------------------------------------------------------
 INTEREST INCOME
 Interest and Fees
  on Loans           $ 31,570  $ 32,435  $ 33,422  $ 35,255  $ 37,730
 Investment
  Securities            1,627     1,744     1,810     1,894     1,992
 Funds Sold                32       475     1,028     1,574     1,064
 --------------------------------------------------------------------
  Total Interest
   Income              33,229    34,654    36,260    38,723    40,786
 --------------------------------------------------------------------
 INTEREST EXPENSE
 Deposits               3,848     5,815     7,162    10,481    11,323
 Short-Term
  Borrowings              110       230       296       521       639
 Subordinated Notes
  Payable                 937       936       931       931       936
 Other Long-Term
  Borrowings              587       488       396       331       343
 --------------------------------------------------------------------
  Total Interest
   Expense              5,482     7,469     8,785    12,264    13,241
 --------------------------------------------------------------------
 Net Interest Income   27,747    27,185    27,475    26,459    27,545
 Provision for
  Loan Losses          12,497    10,425     5,432     4,142     1,699
 --------------------------------------------------------------------
 Net Interest
  Income after
  Provision for
  Loan Losses          15,250    16,760    22,043    22,317    25,846
 --------------------------------------------------------------------
 NONINTEREST INCOME
 Service Charges
  on Deposit Accounts   6,807     7,110     7,060     6,765     7,256
 Data Processing Fees     937       873       812       813       853
 Asset Management
  Fees                    935     1,025     1,125     1,150     1,100
 Retail Brokerage
  Fees                    630       565       735       469       619
 Gain on Sale of
  Investment
  Securities                3        27        30        65         7
 Mortgage Banking
  Revenues                292       331       506       494       425
 Merchant Fees            650       616     2,074     2,208     1,743
 Interchange Fees       1,007     1,073     1,076     1,009       962
 Gain on Sale of
  Portion of Merchant
  Services Portfolio       --     6,250        --        --        --
 ATM/Debit Card Fees      744       742       758       744       705
 Other                  1,306     1,600     1,542     4,082     2,153
 --------------------------------------------------------------------
  Total Noninterest
   Income              13,311    20,212    15,718    17,799    15,823
 --------------------------------------------------------------------
 NONINTEREST EXPENSE
 Salaries and
  Associate Benefits   15,492    15,417    15,318    15,604    14,472
 Occupancy, Net         2,503     2,373     2,491     2,362     2,378
 Furniture and
  Equipment             2,368     2,369     2,583     2,582     2,534
 Intangible
  Amortization          1,308     1,459     1,459     1,459     1,458
 Other                  9,331     8,298     8,905     7,791    10,772
 --------------------------------------------------------------------
  Total Noninterest
   Expense             31,002    29,916    30,756    29,798    31,614
 --------------------------------------------------------------------
 OPERATING PROFIT      (2,441)    7,056     7,005    10,318    10,055
 Provision for
  Income Taxes           (738)    2,218     2,195     3,038     2,391
 --------------------------------------------------------------------
 NET INCOME          $ (1,703) $  4,838  $  4,810  $  7,280  $  7,664
 --------------------------------------------------------------------
 PER SHARE DATA
 Basic Earnings      $  (0.10) $   0.29  $   0.28  $   0.42  $   0.44
 Diluted Earnings    $  (0.10) $   0.29  $   0.28  $   0.42  $   0.44
 Cash Dividends         0.190     0.185     0.185     0.185     0.185
 AVERAGE SHARES
 Basic                 17,126    17,124    17,146    17,170    17,444
 Diluted               17,135    17,128    17,147    17,178    17,445
 --------------------------------------------------------------------

 --------------------------------------------------------------------
                                                  Twelve Months Ended
                                                      December 31
 (Dollars in thousands, except per share data)       2008      2007
 --------------------------------------------------------------------
 INTEREST INCOME
 Interest and Fees on Loans                        $132,682  $154,567
 Investment Securities                                7,075     7,843
 Funds Sold                                           3,109     2,913
 --------------------------------------------------------------------
  Total Interest Income                             142,866   165,323
 --------------------------------------------------------------------
 INTEREST EXPENSE
 Deposits                                            27,306    44,687
 Short-Term Borrowings                                1,157     2,871
 Subordinated Notes Payable                           3,735     3,730
 Other Long-Term Borrowings                           1,802     1,794
 --------------------------------------------------------------------
  Total Interest Expense                             34,000    53,082
 --------------------------------------------------------------------
 Net Interest Income                                108,866   112,241
 Provision for Loan Losses                           32,496     6,163
 --------------------------------------------------------------------
 Net Interest Income after Provision for
  Loan Losses                                        76,370   106,078
 --------------------------------------------------------------------
 NONINTEREST INCOME
 Service Charges on Deposit Accounts                 27,742    26,130
 Data Processing Fees                                 3,435     3,133
 Asset Management Fees                                4,235     4,700
 Retail Brokerage Fees                                2,399     2,510
 Gain on Sale of Investment Securities                  125        14
 Mortgage Banking Revenues                            1,623     2,596
 Merchant Fees                                        5,548     7,257
 Interchange Fees                                     4,165     3,757
 Gain on Sale of Portion of Merchant Services
  Portfolio                                           6,250        --
 ATM/Debit Card Fees                                  2,988     2,692
 Other                                                8,530     6,511
 --------------------------------------------------------------------
  Total Noninterest Income                           67,040    59,300
 --------------------------------------------------------------------
 NONINTEREST EXPENSE
 Salaries and Associate Benefits                     61,831    60,279
 Occupancy, Net                                       9,729     9,347
 Furniture and Equipment                              9,902     9,890
 Intangible Amortization                              5,685     5,834
 Other                                               34,325    36,642
 --------------------------------------------------------------------
  Total Noninterest Expense                         121,472   121,992
 --------------------------------------------------------------------
 OPERATING PROFIT                                    21,938    43,386
 Provision for Income Taxes                           6,713    13,703
 --------------------------------------------------------------------
 NET INCOME                                        $ 15,225  $ 29,683
 --------------------------------------------------------------------
 PER SHARE DATA
 Basic Earnings                                    $   0.89  $   1.66
 Diluted Earnings                                  $   0.89  $   1.66
 Cash Dividends                                       0.745     0.710
 AVERAGE SHARES
 Basic                                               17,141    17,909
 Diluted                                             17,147    17,912
 --------------------------------------------------------------------


 CAPITAL CITY BANK GROUP, INC.
 CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
 Unaudited
 --------------------------------------------------------------------
 (Dollars in                        2008         2008         2008
  thousands, except                Fourth       Third        Second
  per share data)                  Quarter      Quarter      Quarter
 --------------------------------------------------------------------
 ASSETS
 Cash and Due From Banks         $   88,143   $   71,062   $  108,672
 Funds Sold and Interest Bearing
  Deposits                            6,806       27,419      192,786
 --------------------------------------------------------------------
  Total Cash and Cash Equivalents    94,949       98,481      301,458

 Investment Securities,
  Available-for-Sale                191,569      193,978      185,971

 Loans, Net of Unearned Interest
  Commercial, Financial, &
   Agricultural                     206,230      189,676      196,075
  Real Estate - Construction        141,973      148,160      150,907
  Real Estate - Commercial          656,959      639,443      622,282
  Real Estate - Residential         468,399      473,962      481,397
  Real Estate - Home Equity         218,500      212,118      205,536
  Consumer                          246,973      252,743      244,071
  Other Loans                        15,838        7,378        9,436
  Overdrafts                          2,925        3,749        7,111
 --------------------------------------------------------------------
  Total Loans, Net of Unearned
   Interest                       1,957,797    1,927,229    1,916,815
  Allowance for Loan Losses         (37,004)     (30,544)     (22,518)
 --------------------------------------------------------------------
  Loans, Net                      1,920,793    1,896,685    1,894,297

 Premises and Equipment, Net        106,433      104,806      102,559
 Intangible Assets                   92,883       94,192       95,651
 Other Assets                        82,072       66,308       69,479
 --------------------------------------------------------------------
  Total Other Assets                281,388      265,306      267,689
 --------------------------------------------------------------------
 Total Assets                    $2,488,699   $2,454,450   $2,649,415
 --------------------------------------------------------------------
 LIABILITIES
 Deposits:
  Noninterest Bearing Deposits   $  419,696   $  382,878   $  416,992
  NOW Accounts                      758,976      698,509      814,380
  Money Market Accounts             324,646      368,453      387,011
  Regular Savings Accounts          115,261      116,858      118,307
  Certificates of Deposit           373,595      396,086      426,236
 --------------------------------------------------------------------
  Total Deposits                  1,992,174    1,962,784    2,162,926

 Short-Term Borrowings               62,044       47,069       51,783
 Subordinated Notes Payable          62,887       62,887       62,887
 Other Long-Term Borrowings          51,470       53,074       36,857
 Other Liabilities                   41,294       29,841       38,382
 --------------------------------------------------------------------
 Total Liabilities                2,209,869    2,155,655    2,352,835
 --------------------------------------------------------------------
 SHAREOWNERS' EQUITY
 Common Stock                           171          171          171
 Additional Paid-In Capital          36,783       36,681       36,382
 Retained Earnings                  262,890      267,853      266,171
 Accumulated Other Comprehensive
  Loss, Net of Tax                  (21,014)      (5,910)      (6,144)
 --------------------------------------------------------------------
 Total Shareowners' Equity          278,830      298,795      296,580
 --------------------------------------------------------------------
 Total Liabilities and
  Shareowners' Equity            $2,488,699   $2,454,450   $2,649,415
 --------------------------------------------------------------------
 OTHER BALANCE SHEET DATA
 Earning Assets                  $2,156,172   $2,148,626   $2,295,572
 Intangible Assets
  Goodwill                           84,811       84,811       84,811
  Deposit Base                        7,084        8,345        9,756
  Other                                 988        1,036        1,084
 Interest Bearing Liabilities     1,748,879    1,742,936    1,897,461
 --------------------------------------------------------------------
 Book Value Per Diluted Share    $    16.27   $    17.45   $    17.33
 Tangible Book Value Per
  Diluted Share                       10.85        11.94        11.74
 --------------------------------------------------------------------
 Actual Basic Shares Outstanding     17,127       17,125       17,111
 Actual Diluted Shares
  Outstanding                        17,136       17,129       17,112
 --------------------------------------------------------------------

                                                 2008         2007
                                                 First       Fourth
 (Dollars in thousands, except per share data)  Quarter      Quarter
 --------------------------------------------------------------------
 ASSETS
 Cash and Due From Banks                      $   97,525   $   93,437
 Funds Sold and Interest Bearing Deposits        241,202      166,260
 --------------------------------------------------------------------
  Total Cash and Cash Equivalents                338,727      259,697

 Investment Securities, Available-for-Sale       186,944      190,719

 Loans, Net of Unearned Interest
  Commercial, Financial, & Agricultural          202,238      208,864
  Real Estate - Construction                     152,060      142,248
  Real Estate - Commercial                       624,826      634,920
  Real Estate - Residential                      482,058      481,150
  Real Estate - Home Equity                      197,093      192,428
  Consumer                                       238,663      243,415
  Other Loans                                     10,506        7,222
  Overdrafts                                       7,014        5,603
 --------------------------------------------------------------------
  Total Loans, Net of Unearned Interest        1,914,458    1,915,850
  Allowance for Loan Losses                      (20,277)     (18,066)
 --------------------------------------------------------------------
  Loans, Net                                   1,894,181    1,897,784

 Premises and Equipment, Net                     100,145       98,612
 Intangible Assets                                97,109       98,568
 Other Assets                                     75,406       70,947
 --------------------------------------------------------------------
  Total Other Assets                             272,660      268,127
 --------------------------------------------------------------------
 Total Assets                                 $2,692,512   $2,616,327
 --------------------------------------------------------------------
 LIABILITIES
 Deposits:
  Noninterest Bearing Deposits                $  432,904   $  432,659
  NOW Accounts                                   800,128      744,093
  Money Market Accounts                          381,474      386,619
  Regular Savings Accounts                       116,018      111,600
  Certificates of Deposit                        462,081      467,373
 --------------------------------------------------------------------
  Total Deposits                               2,192,605    2,142,344

 Short-Term Borrowings                            61,781       53,131
 Subordinated Notes Payable                       62,887       62,887
 Other Long-Term Borrowings                       29,843       26,731
 Other Liabilities                                47,723       38,559
 --------------------------------------------------------------------
 Total Liabilities                             2,394,839    2,323,652
 --------------------------------------------------------------------
 SHAREOWNERS' EQUITY
 Common Stock                                        172          172
 Additional Paid-In Capital                       38,042       38,243
 Retained Earnings                               264,538      260,325
 Accumulated Other Comprehensive Loss,
  Net of Tax                                      (5,079)      (6,065)
 --------------------------------------------------------------------
 Total Shareowners' Equity                       297,673      292,675
 --------------------------------------------------------------------
 Total Liabilities and Shareowners' Equity    $2,692,512   $2,616,327
 --------------------------------------------------------------------
 OTHER BALANCE SHEET DATA
 Earning Assets                               $2,342,604   $2,272,829
 Intangible Assets
  Goodwill                                        84,811       84,811
  Deposit Base                                    11,167       12,578
  Other                                            1,131        1,179
 Interest Bearing Liabilities                  1,914,212    1,852,434
 --------------------------------------------------------------------
 Book Value Per Diluted Share                 $    17.33   $    17.03
 Tangible Book Value Per Diluted Share             11.67        11.30
 --------------------------------------------------------------------
 Actual Basic Shares Outstanding                  17,175       17,183
 Actual Diluted Shares Outstanding                17,183       17,184
 --------------------------------------------------------------------


 CAPITAL CITY BANK GROUP, INC.
 ALLOWANCE FOR LOAN LOSSES
 AND NONPERFORMING ASSETS
 Unaudited
 --------------------------------------------------------------------
                       2008      2008      2008      2008      2007
 (Dollars in          Fourth    Third     Second    First     Fourth
  thousands)         Quarter   Quarter   Quarter   Quarter   Quarter
 --------------------------------------------------------------------
 ALLOWANCE FOR
  LOAN LOSSES
 Balance at
  Beginning of
  Period             $ 30,544  $ 22,518  $ 20,277  $ 18,066  $ 18,001
 Provision for
  Loan Losses          12,497    10,425     5,432     4,142     1,699
 Net Charge-Offs        6,037     2,399     3,191     1,931     1,634
 --------------------------------------------------------------------
 Balance at End
  of Period          $ 37,004  $ 30,544  $ 22,518  $ 20,277  $ 18,066
 --------------------------------------------------------------------
 As a % of Loans         1.89%     1.59%     1.18%     1.06%     0.95%
 As a % of
  Nonperforming
  Loans                 37.52%    48.55%    51.80%    54.32%    71.92%
 As a % of
  Nonperforming
  Assets                34.31%    45.10%    47.12%    49.34%    64.15%
 --------------------------------------------------------------------
 CHARGE-OFFS
 Commercial,
  Financial and
  Agricultural       $    331  $    275  $    407  $    636  $    370
 Real Estate -
  Construction          1,774        77       158  $    572        58
 Real Estate -
  Commercial              293       (35)    1,115       126       133
 Real Estate -
  Residential           2,264       797       817       176       209
 Consumer               1,993     1,797     1,232     1,170     1,302
 --------------------------------------------------------------------
 Total Charge-Offs   $  6,655  $  2,911  $  3,729  $  2,680  $  2,072
 --------------------------------------------------------------------
 RECOVERIES
 Commercial,
  Financial and
  Agricultural        $    68  $     68  $     55  $    139  $     47
 Real Estate -
  Construction             --         4        --        --        --
 Real Estate -
  Commercial               --         1        13         1         2
 Real Estate -
  Residential             128         6        24         3         5
 Consumer                 422       433       446       606       384
 --------------------------------------------------------------------
 Total Recoveries    $    618  $    512  $    538  $    749  $    438
 --------------------------------------------------------------------
 NET CHARGE-OFFS     $  6,037  $  2,399  $  3,191  $  1,931  $  1,634
 --------------------------------------------------------------------
 Net Charge-Offs
  as a % of Average
  Loans(1)               1.24%     0.50%     0.67%     0.41%     0.34%
 --------------------------------------------------------------------
 RISK ELEMENT ASSETS
 Nonaccruing Loans   $ 96,876  $ 61,509  $ 41,738  $ 35,352  $ 25,120
 Restructured Loans     1,744     1,403     1,733     1,980        --
 --------------------------------------------------------------------
 Total Nonperforming
  Loans                98,620    62,912    43,471    37,332    25,120
 Other Real Estate      9,222     4,813     4,322     3,768     3,043
 --------------------------------------------------------------------
 Total Nonperforming
  Assets             $107,842  $ 67,725  $ 47,793  $ 41,100  $ 28,163
 --------------------------------------------------------------------
 Past Due Loans 90
  Days or More       $     88  $     50  $    896  $    842  $    416
 --------------------------------------------------------------------
 Nonperforming Loans
  as a % of Loans        5.04%     3.26%     2.27%     1.95%     1.31%
 Nonperforming Assets
  as a % of Loans and
  Other Real Estate      5.48%     3.51%     2.49%     2.14%     1.47%
 Nonperforming Assets
  as a % of
  Capital(2)            34.15%    20.56%    14.98%    12.93%     9.06%
 --------------------------------------------------------------------

 (1) Annualized
 (2) Capital includes allowance for loan losses.


 AVERAGE BALANCE AND INTEREST RATES(1)
 Unaudited
 --------------------------------------------------------------------
                     Fourth Quarter 2008        Third Quarter 2008
                  ------------------------   ------------------------
 (Dollars in       Average          Average   Average          Average
  thousands)       Balance  Interest Rate     Balance  Interest Rate
  -------------------------- ------- ----   ---------- ------- ----

 ASSETS:
 Loans, Net of
  Unearned
  Interest        $1,940,083  31,772  6.52%  $1,915,008  32,622  6.78%

 Investment
  Securities
  Taxable
   Investment
   Securities         90,296     813  3.59%      93,723     940  3.99%
  Tax-Exempt
   Investment
   Securities        103,817   1,252  4.82%      98,966   1,234  4.99%
 --------------------------------------------------------------------

 Total Investment
  Securities         194,113   2,065  4.25%     192,689   2,174  4.50%

 Funds Sold           16,645      32  0.74%      99,973     475  1.86%
 --------------------------------------------------------------------

 Total Earning
  Assets           2,150,841 $33,869  6.27%   2,207,670 $35,271  6.36%
                             -------------              -------------

 Cash and Due
  From Banks          76,027                     77,309
 Allowance for
  Loan Losses        (30,347)                   (22,851)
 Other Assets        266,797                    266,510
 ---------------------------                 ----------

 Total Assets     $2,463,318                 $2,528,638
 ---------------------------                 ----------

 LIABILITIES:
 Interest Bearing
  Deposits
 NOW Accounts     $  684,246 $   636  0.37%  $  727,754 $ 1,443  0.79%
 Money Market
  Accounts           360,940     716  0.79%     369,544   1,118  1.20%
 Savings Accounts    117,311      28  0.09%     117,970      30  0.10%
 Time Deposits       379,266   2,468  2.59%     410,101   3,224  3.13%
 --------------------------------------------------------------------

 Total Interest
  Bearing Deposits 1,541,763   3,848  0.99%   1,625,369   5,815  1.42%

 Short-Term
  Borrowings          69,079     110  0.62%      51,738     230  1.76%
 Subordinated
  Notes Payable       62,887     937  5.83%      62,887     936  5.83%
 Other Long-Term
  Borrowings          53,261     587  4.39%      43,237     488  4.48%
 --------------------------------------------------------------------

 Total Interest
  Bearing
  Liabilities      1,726,990 $ 5,482  1.26%   1,783,231 $ 7,469  1.67%
                             -------------              -------------

 Noninterest
  Bearing Deposits   404,103                    405,314
 Other Liabilities    29,998                     36,498
 ---------------------------                 ----------

 Total
  Liabilities      2,161,091                  2,225,043

 SHAREOWNERS'
  EQUITY:         $  302,227                 $  303,595
 ---------------------------                 ----------

 Total Liabilities
  and Shareowners'
  Equity          $2,463,318                 $2,528,638
 ---------------------------                 ----------

 Interest Rate
  Spread                     $28,387  5.01%             $27,802  4.69%
 -----------------------------------------              -------------

 Interest Income
  and Rate
  Earned(1)                  $33,869  6.27%             $35,271   6.36%
 Interest
  Expense and
  Rate Paid(2)                 5,482  1.01%               7,469   1.35%
 -----------------------------------------              -------------

 Net Interest
  Margin                     $28,387  5.26%             $27,802  5.01%
 -----------------------------------------              -------------

 (1) Interest and average rates are calculated on a tax-equivalent
     basis using the 35% Federal tax rate.
 (2) Rate calculated based on average earning assets.


 AVERAGE BALANCE AND INTEREST RATES(1)
 Unaudited
 --------------------------------------------------------------------
                    Second Quarter 2008         First Quarter 2008
                  ------------------------   ------------------------
 (Dollars in       Average          Average   Average          Average
  thousands)       Balance  Interest Rate     Balance  Interest Rate
  -------------------------- ------- ----    ---------- ------- ----


 ASSETS:
 Loans, Net of
  Unearned
  Interest        $1,908,802  33,610  7.08%  $1,909,574  35,453  7.47%

 Investment
  Securities
  Taxable
   Investment
   Securities         93,814   1,028  4.38%      94,786   1,108  4.67%
  Tax-Exempt
   Investment
   Securities         94,371   1,200  5.09%      90,790   1,207  5.32%
 --------------------------------------------------------------------

 Total Investment
  Securities         188,185   2,228  4.73%     185,576   2,315  4.99%

 Funds Sold          206,984   1,028  1.96%     206,313   1,574  3.02%
 --------------------------------------------------------------------

 Total Earning
  Assets           2,303,971 $36,866  6.43%   2,301,463 $39,342  6.87%
                             -------------              -------------

 Cash and Due
  From Banks          82,182                     94,247
 Allowance for
  Loan Losses        (20,558)                   (18,227)
 Other Assets        269,176                    268,991
 ---------------------------                 ----------

 Total Assets     $2,634,771                 $2,646,474
 ---------------------------                 ----------

 LIABILITIES:
 Interest Bearing
  Deposits
 NOW Accounts     $  788,237 $ 1,935  0.99%  $  773,891 $ 3,440  1.79%
 Money Market
  Accounts           376,996   1,210  1.29%     389,828   2,198  2.27%
 Savings Accounts    117,182      29  0.10%     113,163      34  0.12%
 Time Deposits       443,006   3,988  3.62%     467,280   4,809  4.14%
 --------------------------------------------------------------------
 Total Interest
  Bearing Deposits 1,725,421   7,162  1.67%   1,744,162  10,481  2.42%

 Short-Term
  Borrowings          55,830     296  2.13%      68,095     521  3.06%
 Subordinated
  Notes Payable       62,887     931  5.86%      62,887     931  5.96%
 Other Long-Term
  Borrowings          34,612     396  4.60%      27,644     331  4.82%
 --------------------------------------------------------------------

 Total Interest
  Bearing
  Liabilities      1,878,750 $ 8,785  1.88%   1,902,788 $12,264  2.59%
                             -------------              -------------

 Noninterest
  Bearing Deposits   415,125                    404,712
 Other Liabilities    40,006                     42,170
 ---------------------------                 ----------

 Total
  Liabilities      2,333,881                  2,349,670

 SHAREOWNERS'
  EQUITY:         $  300,890                 $  296,804
 ---------------------------                 ----------

 Total Liabilities
  and Shareowners'
  Equity          $2,634,771                 $2,646,474
 ---------------------------                 ----------

 Interest Rate
  Spread                     $28,081  4.55%             $27,078  4.28%
 -----------------------------------------              -------------

 Interest Income
  and Rate
  Earned(1)                  $36,866  6.43%             $39,342  6.87%
 Interest
  Expense and
  Rate Paid(2)                 8,785  1.53%              12,264  2.14%
 -----------------------------------------              -------------

 Net Interest
  Margin                     $28,081  4.90%             $27,078  4.73%
 -----------------------------------------              -------------

 (1) Interest and average rates are calculated on a tax-equivalent
     basis using the 35% Federal tax rate.
 (2) Rate calculated based on average earning assets.


 AVERAGE BALANCE AND INTEREST RATES(1)
 Unaudited
                                             ------------------------
                                                Fourth Quarter 2007
                                             ------------------------
 (Dollars in                                  Average          Average
  thousands)                                  Balance  Interest Rate
  ----------------------------------------------------- ------- ----

 ASSETS:
 Loans, Net of Unearned Interest             $1,908,069  37,969  7.89%

 Investment Securities
  Taxable Investment Securities                  99,055   1,226  4.93%
  Tax-Exempt Investment Securities               87,358   1,178  5.39%
 --------------------------------------------------------------------

 Total Investment Securities                    186,413   2,404  5.15%

 Funds Sold                                      96,748   1,064  4.31%
 --------------------------------------------------------------------
 Total Earning Assets                         2,191,230 $41,437  7.50%
                                                        -------------

 Cash and Due From Banks                         85,598
 Allowance for Loan Losses                      (18,127)
 Other Assets                                   260,981
 ------------------------------------------------------

 Total Assets                                $2,519,682
 ------------------------------------------------------

 LIABILITIES:
 Interest Bearing Deposits
 NOW Accounts                                $  608,347 $ 2,980  1.94%
 Money Market Accounts                          404,406   3,217  3.16%
 Savings Accounts                               113,527      57  0.20%
 Time Deposits                                  471,454   5,069  4.27%
 --------------------------------------------------------------------
 Total Interest Bearing Deposits              1,597,734  11,323  2.81%

 Short-Term Borrowings                           64,842     639  3.89%
 Subordinated Notes Payable                      62,887     936  5.91%
 Other Long-Term Borrowings                      28,215     343  4.83%
 --------------------------------------------------------------------

 Total Interest Bearing Liabilities           1,753,678 $13,241  3.00%
                                                        -------------

 Noninterest Bearing Deposits                   419,002
 Other Liabilities                               47,660
 ------------------------------------------------------

 Total Liabilities                            2,220,340

 SHAREOWNERS' EQUITY:                        $  299,342
 ------------------------------------------------------

 Total Liabilities and Shareowners' Equity   $2,519,682
 ------------------------------------------------------


 Interest Rate Spread                                   $28,196  4.50%
 --------------------------------------------------------------------

 Interest Income and Rate Earned(1)                     $41,437  7.50%
 Interest Expense and Rate Paid(2)                       13,241  2.40%
 --------------------------------------------------------------------

 Net Interest Margin                                    $28,196  5.10%
 --------------------------------------------------------------------

 (1) Interest and average rates are calculated on a tax-equivalent
     basis using the 35% Federal tax rate.
 (2) Rate calculated based on average earning assets.


 AVERAGE BALANCE AND INTEREST RATES(1)
 Unaudited
 --------------------------------------------------------------------
                     December 2008 YTD          December 2007 YTD
                  ------------------------   ------------------------
 (Dollars in       Average          Average   Average          Average
  thousands)       Balance  Interest Rate     Balance  Interest Rate
  -------------------------- ------- ----    ---------- ------- ----

 ASSETS:
 Loans, Net of
  Unearned
  Interest        $1,918,417  133,457 6.96%  $1,934,850  155,434 8.03%

 Investment
  Securities
  Taxable
   Investment
   Securities         93,149    3,889 5.04%     103,840    4,949 4.76%
  Tax-Exempt
   Investment
   Securities         97,010    4,893 4.16%      84,849    4,447 5.24%
 --------------------------------------------------------------------

 Total Investment
  Securities         190,159    8,782 4.61%     188,689    9,396 4.97%

 Funds Sold          132,073    3,109 2.32%      59,989    2,913 4.79%
 --------------------------------------------------------------------

 Total Earning
  Assets           2,240,649 $145,348 6.48%   2,183,528 $167,743 7.68%
                             -------------              -------------

 Cash and Due
  From Banks          82,410                     86,692
 Allowance for
  Loan Losses        (23,015)                   (17,535)
 Other Assets        267,861                    254,532
 ---------------------------                 ----------
 Total Assets     $2,567,905                 $2,507,217
 ---------------------------                 ----------

 LIABILITIES:
 Interest Bearing
  Deposits
 NOW Accounts     $  743,327 $  7,454 1.00%  $  557,060 $ 10,748 1.93%
 Money Market
  Accounts           374,278    5,242 1.40%     397,193   13,667 3.44%
 Savings Accounts    116,413      121 0.10%     119,700      279 0.23%
 Time Deposits       424,748   14,489 3.41%     474,728   19,993 4.21%
 --------------------------------------------------------------------
 Total Interest
  Bearing Deposits 1,658,766   27,306 1.65%   1,548,681   44,687 2.89%

 Short-Term
  Borrowings          61,181    1,157 1.88%      66,397    2,871 4.31%
 Subordinated
  Notes Payable       62,887    3,735 5.84%      62,887    3,730 5.93%
 Other Long-Term
  Borrowings          39,735    1,802 4.54%      37,936    1,794 4.73%
 --------------------------------------------------------------------

 Total Interest
  Bearing
  Liabilities      1,822,569 $ 34,000 1.87%   1,715,901 $ 53,082 3.09%
                             -------------              -------------

 Noninterest
  Bearing Deposits   407,299                    441,765
 Other Liabilities    37,147                     42,934
 ---------------------------                 ----------
 Total
  Liabilities      2,267,015                  2,200,600

 SHAREOWNERS'
  EQUITY:         $  300,890                 $  306,617
 ---------------------------                 ----------

 Total Liabilities
  and Shareowners'
  Equity          $2,567,905                 $2,507,217
 ---------------------------                 ----------

 Interest Rate
  Spread                     $111,348 4.61%             $114,661 4.59%
 -----------------------------------------              -------------

 Interest Income
  and Rate
  Earned(1)                  $145,348 6.48%             $167,743 7.68%
 Interest Expense
  and Rate Paid(2)             34,000 1.52%               53,082 2.43%
 -----------------------------------------              -------------

 Net Interest
  Margin                     $111,348 4.96%             $114,661 5.25%
 -----------------------------------------              -------------

 (1) Interest and average rates are calculated on a tax-equivalent
     basis using the 35% Federal tax rate.
 (2) Rate calculated based on average earning assets.
CONTACT:  Capital City Bank Group, Inc.
          J. Kimbrough Davis, Executive Vice President
           and Chief Financial Officer
          850.402.7820