Capital City Bank Group, Inc. Reports Third Quarter 2008 Results
TALLAHASSEE, Fla., Oct. 21, 2008 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (Nasdaq:CCBG) today reported net income for the third quarter of 2008 totaling $4.8 million ($0.29 per diluted share) compared to $4.8 million ($0.28 per diluted share) in the second quarter of 2008 and $7.2 million ($0.41 per diluted share) for the third quarter of 2007. Earnings for the third quarter of 2008 include a loan loss provision of $10.4 million ($.37 per diluted share) versus $5.4 million ($.20 per diluted share) in the second quarter of 2008 and $1.6 million ($.05 per diluted share) in the third quarter of 2007. Earnings for the third quarter of 2008 also included a $6.25 million pre-tax gain ($0.22 per diluted share (after-tax)) from the sale of a major portion of the bank's merchant services portfolio.
Earnings for the first nine months of 2008 totaled $16.9 million ($0.99 per diluted share) compared to $22.0 million ($1.22 per diluted share) for the same period in 2007. Year-to-date 2008 earnings include a loan loss provision of $20.0 million ($0.72 per diluted share) versus $4.5 million ($.15 per diluted share) for the same period in 2007. In addition to the third quarter gain from the sale of a portion of the bank's merchant services portfolio, earnings for the first nine months of 2008 included a $2.4 million pre-tax gain from the redemption of Visa, Inc. shares related to its initial public offering and the reversal of $1.1 million (pre-tax) in Visa related litigation reserves.
"Net income did not meet our expectations for the third quarter as we provided a substantially larger provision for loan losses," said William G. Smith, Jr., Chairman, CEO, and President.
"During the quarter, nonperforming assets increased by $19.9 million to $67.7 million, or 3.51% of total loans and other real estate. We have committed the necessary resources to manage this portfolio and resolve the underlying credits. Further, we recognize the urgency of the challenge before us and we are appropriately identifying our problems, determining values, and establishing reserves accordingly, as evidenced by the size of this quarter's provision.
"In this time of uncertainty and market turmoil, capital is king. Fortunately, we have long focused on building a strong capital base to help protect the institution in times such as now. Including the one-time gain of $.22 per share, net income covered our dividend and enabled us to again add to our already strong capital position, increasing our total risk based capital to over 15%.
"Looking forward, we believe our overall financial strength will enable us to fully support our ongoing business development efforts as we manage through this challenging environment, and also capitalize on opportunities to expand our franchise both organically and potentially through acquisitions," said Smith.
The Return on Average Assets was .76% and the Return on Average Equity was 6.34% for the third quarter of 2008. These metrics were .73% and 6.43% for the second quarter of 2008 and 1.15% and 9.44% for the third quarter of 2007, respectively.
For the first nine months of 2008, the Return on Average Assets was .87% and the Return on Average Equity was 7.53% compared to 1.18% and 9.53%, respectively, for the same period in 2007.
Discussion of Financial Condition
Average earning assets were $2.208 billion for the third quarter, a decrease of $96.3 million, or 4.18% from the second quarter of 2008, and an increase of $16.4 million, or .75% from the fourth quarter of 2007. The decrease from the linked quarter is primarily attributable to a $107.0 million decrease in short-term investments driven by the decline in client deposits (see discussion below), partially offset by a $6.2 million increase in average loans. Compared to the fourth quarter of 2007, the increase primarily reflects an increase in average short-term investments ($3.2 million), investment securities ($3.2 million), and loans ($6.9 million). Given our risk management practices, the relatively small loan growth in this current economic environment is not unexpected; however, management is encouraged by the stabilized trend realized in loan balances so far in 2008 which reflects our continued focus on the sales and service efforts of our bankers.
Nonperforming assets of $67.7 million increased from the linked second quarter by $19.9 million and from the fourth quarter of 2007 by $39.5 million. For the same periods, nonaccrual loans totaling $61.5 million increased $19.8 million and $36.4 million, respectively. The increase from the second quarter primarily reflects further migration to nonaccrual status of construction and residential real estate loans to builders and investors reflecting the current stress on that segment of our markets and consumers in general. Restructured loans totaled $1.4 million at the end of the quarter. Other real estate owned totaled $4.8 million at the end of the third quarter compared to $4.3 million at the end of the second quarter and $3.0 million at year-end 2007. Other real estate owned properties are reviewed quarterly to assess market conditions and the reasonableness of the fair value for these assets, and adjustments to carrying values are made, as needed. Nonperforming assets represented 3.51% of loans and other real estate at the end of the third quarter compared to 2.49% and 1.47% at the end of the prior quarter and year-end 2007, respectively.
Average total deposits were $2.031 billion for the third quarter, a decrease of $109.8 million, or 5.1%, from the second quarter and an increase of $13.9 million, or 0.7%, over the fourth quarter of 2007. On a linked quarter basis, deposits declined primarily reflecting a lower level of public funds, which we believe is partially attributable to seasonality, and a reduction in certificates of deposit balances. In managing our deposit base, we continue to focus on managing the overall mix of deposits rather than matching the rates of higher rate paying competitors. Compared to the fourth quarter of 2007, a majority of the increase in deposits has come in the NOW account category which reflected strong growth in public funds deposits attributable to a migration of deposits from the Florida State Board of Administration's Local Government Investment Pool, which began in the fourth quarter of 2007 and continued through the second quarter. Partially offsetting the public funds growth were declines in noninterest bearing demand, money market accounts and certificates of deposit which resulted from management's aforementioned strategy not to compete with higher rate paying competitors.
We had approximately $86.5 million in average net overnight funds sold for the third quarter of 2008 as compared to $195.5 million in the second quarter of 2008 and $84.1 million in the fourth quarter of 2007. The reduction on a linked quarter basis reflects a decline in deposits, primarily public funds and certificates of deposit as noted above.
Discussion of Operating Results
Tax equivalent net interest income for the third quarter of 2008 was $27.8 million compared to $28.1 million for the second quarter of 2008 and $28.5 million for the third quarter of 2007. For the first nine months of 2008, tax equivalent net interest income totaled $83.0 million compared to $86.5 million for the comparable period in 2007.
The decrease in the net interest income on a linked quarter basis reflects higher foregone interest on nonaccrual loans and a decline in loan fees. During this same period, the net interest margin expanded by 11 basis points to 5.01%, which is attributable to a lower cost of funds resulting from a favorable shift in the mix of deposits. Management has responded aggressively to the federal funds rate reductions which began in September 2007, and believe we have successfully neutralized the overall impact.
The decline in net interest income for the three and nine months ended September 30, 2008, as compared to the same periods of 2007 was primarily the result of a higher level of foregone interest associated with the increased level of nonperforming assets, and an unfavorable shift in the mix of earning assets. These factors, coupled with the influx of higher cost municipal deposits in 2008, led to compression in our net interest margin of 26 and 43 basis points, respectively.
Average negotiated deposits, which include public funds, grew from $290 million in the third quarter of 2007 to $490 million in the current quarter, but were down from $538 million in the second quarter of 2008. We believe this change is partially attributable to local governments reaching the end of their fiscal year. Although the 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 $10.4 million compared to $5.4 million in the second quarter of 2008 and $1.6 million for the third quarter of 2007. The provision for the first nine months of 2008 totaled $20.0 million compared to $4.5 million for the same period in 2007. The increase in the provision for the third quarter and for the first nine months of the year generally reflects declining economic conditions and the associated impact on consumers, housing, and real estate markets. Compared to the prior quarter, the increase in the provision primarily reflects a higher level of reserves allocated to our residential real estate, construction, and consumer loan portfolios, all driven by a higher level of nonaccruals and past due loans within those portfolios as well as collateral valuation declines, which have increased the level of reserves held for impaired loans. For the quarter, net charge-offs totaled $2.4 million, or .50%, of average loans compared to $3.2 million, or .67%, in the second quarter of 2008 and $1.0 million, or .21%, in the third quarter of 2007. The decline in net charge-offs for the current quarter primarily reflects a lower level of real estate loan charge-offs, which spiked during the prior quarter due to the write-down of larger problem loans that were working through the foreclosure process, but had permanent collateral shortfalls. Management continues to perform a detailed review and valuation assessment of impaired loans on a quarterly basis and recognizes losses when permanent impairment is identified. At quarter-end, the allowance for loan losses was 1.59% of outstanding loans (net of overdrafts) and provided coverage of 49% of nonperforming loans.
Noninterest income for the third quarter increased $4.5 million, or 28.6%, from the second quarter of 2008. This change is attributable to a pre-tax gain of $6.25 million from the sale of a major portion of the bank's merchant services portfolio on July 31, 2008. The bank retained and will continue to service approximately forty percent of the merchant services portfolio.
This gain was partially offset by a reduction in merchant services fees of $1.5 million attributable to the portion of the merchant services portfolio sold, and lower mortgage banking revenues of $175,000. Compared to the third quarter of 2007, noninterest income increased $5.8 million, or 40.1% due primarily to the same factors previously mentioned. An increase in deposit fees of $724,000, or 11.3% also contributed to the improvement. For the first nine months of 2008, noninterest income grew $10.3 million, or 23.6%, 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 ($2.1 million).
Noninterest expense for the third quarter decreased $840,000, or 2.7%, from the second quarter of 2008 primarily attributable to lower interchange fees ($1.4 million) related to the cost of processing and supporting the bank's merchant services portfolio, a major portion of which was sold on July 31, 2008. Higher expense for commission fees related to processing cost for our accounts receivable financing product and the write-down of several other real estate properties during the quarter partially offset the aforementioned decline. Compared to the third quarter of 2007, the reduction in interchange fees associated with the partial sale of the merchant services portfolio were offset by a higher level of commission fees and other real estate owned write-downs. For the first nine months of 2008, noninterest expense grew $92,000, or .10% from the comparable period in 2007 due to higher compensation and occupancy expense, and commission fees. The increase in compensation expense is due to higher associate base salaries reflective of annual merit/market based raises and the opening of three new banking offices during 2007. The increase in occupancy is due to higher depreciation expense also attributable to the aforementioned new banking offices and the implementation of a new telephone system in early 2008. The reversal of a portion ($1.1 million) of our Visa litigation accrual and the reduction of interchange fees of approximately $596,000 partially offset the aforementioned increases in compensation, occupancy, and commission fees. Management continues to work on expense reduction opportunities, improvement in cost controls, and enhancement of operating efficiencies as core strategic objectives.
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 69 banking offices, one mortgage lending office, 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 ---------------------------------------------------------------------- Three Months Ended Nine Months Ended ------------------------- ----------------- (Dollars in thousands, Sep 30, Jun 30, Sep 30, Sep 30, Sep 30, except per share data) 2008 2008 2007 2008 2007 ---------------------------------------------------------------------- EARNINGS Net Income $ 4,838 $ 4,810 $ 7,171 $16,928 $22,019 Diluted Earnings Per Common Share $ 0.29 $ 0.28 $ 0.41 $ 0.99 $ 1.22 ---------------------------------------------------------------------- PERFORMANCE Return on Average Equity 6.34% 6.43% 9.44% 7.53% 9.53% Return on Average Assets 0.76% 0.73% 1.15% 0.87% 1.18% Net Interest Margin 5.01% 4.90% 5.27% 4.87% 5.30% Noninterest Income as % of Operating Revenue 42.64% 36.39% 34.08% 39.84% 33.92% Efficiency Ratio 59.27% 66.89% 66.27% 62.98% 66.18% ---------------------------------------------------------------------- CAPITAL ADEQUACY Tier 1 Capital Ratio 13.54% 13.15% 13.74% 13.54% 13.74% Total Capital Ratio 15.15% 14.35% 14.76% 15.15% 14.76% Leverage Ratio 11.21% 10.54% 11.36% 11.21% 11.36% Equity to Assets 12.17% 11.19% 12.26% 12.17% 12.26% ---------------------------------------------------------------------- ASSET QUALITY Allowance as % of Non-Performing Loans 48.55% 51.80% 145.49% 48.55% 145.49% Allowance as a % of Loans 1.59% 1.18% 0.95% 1.59% 0.95% Net Charge-Offs as % of Average Loans 0.50% 0.67% 0.21% 0.53% 0.25% Nonperforming Assets as % of Loans and ORE 3.51% 2.49% 0.74% 3.51% 0.74% ---------------------------------------------------------------------- STOCK PERFORMANCE High $ 34.50 $ 30.19 $ 36.40 $ 34.50 $ 36.40 Low $ 19.20 $ 21.76 $ 27.69 $ 19.20 $ 27.69 Close $ 31.35 $ 21.76 $ 31.20 $ 31.35 $ 31.20 Average Daily Trading Volume 45,717 36,196 40,247 37,902 35,017 ---------------------------------------------------------------------- CAPITAL CITY BANK GROUP, INC. CONSOLIDATED STATEMENT OF INCOME Unaudited --------------------------------------------------------------------- 2008 2008 2008 2007 2007 (Dollars in thousands, Third Second First Fourth Third except per share data) Quarter Quarter Quarter Quarter Quarter --------------------------------------------------------------------- INTEREST INCOME Interest and Fees on Loans $32,435 $33,422 $35,255 $37,730 $38,692 Investment Securities 1,744 1,810 1,893 1,992 1,968 Funds Sold 475 1,028 1,575 1,064 639 --------------------------------------------------------------------- Total Interest Income 34,654 36,260 38,723 40,786 41,299 --------------------------------------------------------------------- INTEREST EXPENSE Deposits 5,815 7,162 10,481 11,323 11,266 Short-Term Borrowings 230 296 521 639 734 Subordinated Notes Payable 936 931 931 936 936 Other Long-Term Borrowings 488 396 331 343 453 --------------------------------------------------------------------- Total Interest Expense 7,469 8,785 12,264 13,241 13,389 --------------------------------------------------------------------- Net Interest Income 27,185 27,475 26,459 27,545 27,910 Provision for Loan Losses 10,425 5,432 4,142 1,699 1,552 --------------------------------------------------------------------- Net Interest Income after Provision for Loan Losses 16,760 22,043 22,317 25,846 26,358 --------------------------------------------------------------------- NONINTEREST INCOME Service Charges on Deposit Accounts 7,110 7,060 6,765 7,256 6,387 Data Processing Fees 873 812 813 853 775 Asset Management Fees 1,025 1,125 1,150 1,100 1,200 Retail Brokerage Fees 565 735 469 619 625 Gain on Sale of Investment Securities 27 30 65 7 -- Mortgage Banking Revenues 331 506 494 425 642 Merchant Fees 616 2,074 2,208 1,743 1,686 Interchange Fees 1,073 1,076 1,009 962 934 Gain on Sale of Merchant Services Portfolio 6,250 -- -- -- -- ATM/Debit Card Fees 742 758 744 705 685 Other 1,600 1,542 4,082 2,153 1,497 --------------------------------------------------------------------- Total Noninterest Income 20,212 15,718 17,799 15,823 14,431 --------------------------------------------------------------------- NONINTEREST EXPENSE Salaries and Associate Benefits 15,417 15,318 15,604 14,472 15,096 Occupancy, Net 2,373 2,491 2,362 2,378 2,409 Furniture and Equipment 2,369 2,583 2,582 2,534 2,513 Intangible Amortization 1,459 1,459 1,459 1,458 1,459 Other 8,298 8,905 7,791 10,772 8,442 --------------------------------------------------------------------- Total Noninterest Expense 29,916 30,756 29,798 31,614 29,919 --------------------------------------------------------------------- OPERATING PROFIT 7,056 7,005 10,318 10,055 10,870 Provision for Income Taxes 2,218 2,195 3,038 2,391 3,699 --------------------------------------------------------------------- NET INCOME $ 4,838 $ 4,810 $ 7,280 $ 7,664 $ 7,171 --------------------------------------------------------------------- PER SHARE DATA Basic Earnings $ 0.29 $ 0.28 $ 0.42 $ 0.44 $ 0.41 Diluted Earnings $ 0.29 $ 0.28 $ 0.42 $ 0.44 $ 0.41 Cash Dividends 0.185 0.185 0.185 0.185 0.175 AVERAGE SHARES Basic 17,124 17,146 17,170 17,444 17,709 Diluted 17,128 17,147 17,178 17,445 17,719 --------------------------------------------------------------------- --------------------------------------------------------------------- Nine Months Ended September 30 (Dollars in thousands, except per share data) 2008 2007 --------------------------------------------------------------------- INTEREST INCOME Interest and Fees on Loans $101,112 $116,837 Investment Securities 5,447 5,851 Funds Sold 3,078 1,849 --------------------------------------------------------------------- Total Interest Income 109,637 124,537 --------------------------------------------------------------------- INTEREST EXPENSE Deposits 23,458 33,364 Short-Term Borrowings 1,047 2,232 Subordinated Notes Payable 2,798 2,794 Other Long-Term Borrowings 1,215 1,451 --------------------------------------------------------------------- Total Interest Expense 28,518 39,841 --------------------------------------------------------------------- Net Interest Income 81,119 84,696 Provision for Loan Losses 19,999 4,464 --------------------------------------------------------------------- Net Interest Income after Provision for Loan Losses 61,120 80,232 --------------------------------------------------------------------- NONINTEREST INCOME Service Charges on Deposit Accounts 20,935 18,874 Data Processing Fees 2,498 2,280 Asset Management Fees 3,300 3,600 Retail Brokerage Fees 1,769 1,891 Gain on Sale of Investment Securities 122 7 Mortgage Banking Revenues 1,331 2,171 Merchant Fees 4,898 5,514 Interchange Fees 3,158 2,795 Gain on Sale of Merchant Services Portfolio 6,250 -- ATM/Debit Card Fees 2,244 1,987 Other 7,224 4,358 --------------------------------------------------------------------- Total Noninterest Income 53,729 43,477 --------------------------------------------------------------------- NONINTEREST EXPENSE Salaries and Associate Benefits 46,339 45,807 Occupancy, Net 7,226 6,969 Furniture and Equipment 7,534 7,356 Intangible Amortization 4,377 4,376 Other 24,994 25,870 --------------------------------------------------------------------- Total Noninterest Expense 90,470 90,378 --------------------------------------------------------------------- OPERATING PROFIT 24,379 33,331 Provision for Income Taxes 7,451 11,312 --------------------------------------------------------------------- NET INCOME $ 16,928 $ 22,019 --------------------------------------------------------------------- PER SHARE DATA Basic Earnings $ 0.99 $ 1.22 Diluted Earnings $ 0.99 $ 1.22 Cash Dividends 0.555 0.525 AVERAGE SHARES Basic 17,147 18,066 Diluted 17,149 18,077 --------------------------------------------------------------------- CAPITAL CITY BANK GROUP, INC. CONSOLIDATED STATEMENT OF FINANCIAL CONDITION Unaudited --------------------------------------------------------------------- (Dollars in thousands, 2008 2008 2008 2007 2007 except per Third Second First Fourth Third share data) Quarter Quarter Quarter Quarter Quarter --------------------------------------------------------------------- ASSETS Cash and Due From Banks $ 71,062 $ 108,672 $ 97,525 $ 93,437 $ 91,378 Funds Sold and Interest Bearing Deposits 27,419 192,786 241,202 166,260 19,599 --------------------------------------------------------------------- Total Cash and Cash Equivalents 98,481 301,458 338,727 259,697 110,977 Investment Securities, Available-for- Sale 193,978 185,971 186,944 190,719 184,609 Loans, Net of Unearned Interest Commercial, Financial, & Agricultural 189,676 196,075 202,238 208,864 205,628 Real Estate - Construction 148,160 150,907 152,060 142,248 145,343 Real Estate - Commercial 639,443 622,282 624,826 634,920 631,418 Real Estate - Residential 473,962 481,397 482,058 481,150 480,488 Real Estate - Home Equity 212,118 205,536 197,093 192,428 183,620 Consumer 252,743 244,071 238,663 243,415 246,137 Other Loans 7,378 9,436 10,506 7,222 8,739 Overdrafts 3,749 7,111 7,014 5,603 2,515 --------------------------------------------------------------------- Total Loans, Net of Unearned Interest 1,927,229 1,916,815 1,914,458 1,915,850 1,903,888 Allowance for Loan Losses (30,544) (22,518) (20,277) (18,066) (18,001) --------------------------------------------------------------------- Loans, Net 1,896,685 1,894,297 1,894,181 1,897,784 1,885,887 Premises and Equipment, Net 104,806 102,559 100,145 98,612 95,816 Intangible Assets 94,192 95,651 97,109 98,568 100,026 Other Assets 66,308 69,479 75,406 70,947 62,611 --------------------------------------------------------------------- Total Other Assets 265,306 267,689 272,660 268,127 258,453 --------------------------------------------------------------------- Total Assets $2,454,450 $2,649,415 $2,692,512 $2,616,327 $2,439,926 --------------------------------------------------------------------- LIABILITIES Deposits: Noninterest Bearing Deposits $ 382,878 $ 416,992 $ 432,904 $ 432,659 $ 419,242 NOW Accounts 698,509 814,380 800,128 744,093 530,619 Money Market Accounts 368,453 387,011 381,474 386,619 399,578 Regular Savings Accounts 116,858 118,307 116,018 111,600 115,955 Certificates of Deposit 396,086 426,236 462,081 467,373 472,019 --------------------------------------------------------------------- Total Deposits 1,962,784 2,162,926 2,192,605 2,142,344 1,937,413 Short-Term Borrowings 47,069 51,783 61,781 53,131 63,817 Subordinated Notes Payable 62,887 62,887 62,887 62,887 62,887 Other Long-Term Borrowings 53,074 36,857 29,843 26,731 29,725 Other Liabilities 29,841 38,382 47,723 38,559 47,031 --------------------------------------------------------------------- Total Liabilities 2,155,655 2,352,835 2,394,839 2,323,652 2,140,873 --------------------------------------------------------------------- SHAREOWNERS' EQUITY Common Stock 171 171 172 172 176 Additional Paid-In Capital 36,681 36,382 38,042 38,243 50,789 Retained Earnings 267,853 266,171 264,538 260,325 255,876 Accumulated Other Comprehensive Loss, Net of Tax (5,910) (6,144) (5,079) (6,065) (7,788) --------------------------------------------------------------------- Total Shareowners' Equity 298,795 296,580 297,673 292,675 299,053 --------------------------------------------------------------------- Total Liabilities and Shareowners' Equity $2,454,450 $2,649,415 $2,692,512 $2,616,327 $2,439,926 --------------------------------------------------------------------- OTHER BALANCE SHEET DATA Earning Assets $2,148,626 $2,295,572 $2,342,604 $2,272,829 $2,108,096 Intangible Assets Goodwill 84,811 84,811 84,811 84,811 84,811 Deposit Base 8,345 9,756 11,167 12,578 13,988 Other 1,036 1,084 1,131 1,179 1,227 Interest Bearing Liabilities 1,742,936 1,897,461 1,914,212 1,852,434 1,674,600 --------------------------------------------------------------------- Book Value Per Diluted Share $ 17.45 $ 17.33 $ 17.33 $ 17.03 $ 16.95 Tangible Book Value Per Diluted Share 11.94 11.74 11.67 11.30 11.28 --------------------------------------------------------------------- Actual Basic Shares Outstanding 17,125 17,111 17,175 17,183 17,628 Actual Diluted Shares Outstanding 17,129 17,112 17,183 17,184 17,639 --------------------------------------------------------------------- CAPITAL CITY BANK GROUP, INC. ALLOWANCE FOR LOAN LOSSES AND NONPERFORMING ASSETS Unaudited ---------------------------------------------------------------------- 2008 2008 2008 2007 2007 (Dollars in Third Second First Fourth Third thousands) Quarter Quarter Quarter Quarter Quarter ---------------------------------------------------------------------- ALLOWANCE FOR LOAN LOSSES Balance at Beginning of Period $ 22,518 $ 20,277 $ 18,066 $ 18,001 $ 17,469 Provision for Loan Losses 10,425 5,432 4,142 1,699 1,552 Net Charge-Offs 2,399 3,191 1,931 1,634 1,020 ---------------------------------------------------------------------- Balance at End of Period $ 30,544 $ 22,518 $ 20,277 $ 18,066 $ 18,001 ---------------------------------------------------------------------- As a % of Loans 1.59% 1.18% 1.06% 0.95% 0.95% As a % of Nonperforming Loans 48.55% 51.80% 54.32% 71.92% 145.49% As a % of Nonperforming Assets 45.10% 47.12% 49.34% 64.15% 128.05% ---------------------------------------------------------------------- CHARGE-OFFS Commercial, Financial and Agricultural $ 275 $ 407 $ 636 $ 370 $ 279 Real Estate - Construction 77 158 572 58 -- Real Estate - Commercial (35) 1,115 126 133 245 Real Estate - Residential 797 817 176 209 161 Consumer 1,797 1,232 1,170 1,302 854 ---------------------------------------------------------------------- Total Charge-Offs $ 2,911 $ 3,729 $ 2,680 $ 2,072 $ 1,539 ---------------------------------------------------------------------- RECOVERIES Commercial, Financial and Agricultural $ 68 $ 55 $ 139 $ 47 $ 44 Real Estate - Construction 4 -- -- -- -- Real Estate - Commercial 1 13 1 2 2 Real Estate - Residential 6 24 3 5 2 Consumer 433 446 606 384 471 ---------------------------------------------------------------------- Total Recoveries $ 512 $ 538 $ 749 $ 438 $ 519 ---------------------------------------------------------------------- NET CHARGE-OFFS $ 2,399 $ 3,191 $ 1,931 $ 1,634 $ 1,020 ---------------------------------------------------------------------- QTD Average Loans 1,915,008 1,908,802 1,909,573 1,908,069 1,907,235 Net Charge-Offs as a % of Average Loans(1) 0.50% 0.67% 0.41% 0.34% 0.21% ---------------------------------------------------------------------- RISK ELEMENT ASSETS Nonaccruing Loans $ 61,509 $ 41,738 $ 35,352 $ 25,120 $ 12,373 Restructured Loans 1,403 1,733 1,980 -- -- ---------------------------------------------------------------------- Total Nonperforming Loans 62,912 43,471 37,332 25,120 12,373 Other Real Estate 4,813 4,322 3,768 3,043 1,685 ---------------------------------------------------------------------- Total Nonperforming Assets $ 67,725 $ 47,793 $ 41,100 $ 28,163 $ 14,058 ---------------------------------------------------------------------- Capital 329,339 319,098 317,949 310,741 317,054 Past Due Loans 90 Days or More $ 50 $ 896 $ 842 $ 416 $ 874 ---------------------------------------------------------------------- EOM Loans 1,927,229 1,916,815 1,914,458 1,915,850 1,903,888 Nonperforming Loans as a % of Loans 3.26% 2.27% 1.95% 1.31% 0.65% Nonperforming Assets as a % of Loans and Other Real Estate 3.51% 2.49% 2.14% 1.47% 0.74% Nonperforming Assets as a % of Capital(2) 20.56% 14.98% 12.93% 9.06% 4.43% ---------------------------------------------------------------------- (1) Annualized (2) Capital includes allowance for loan losses. AVERAGE BALANCE AND INTEREST RATES(1) Unaudited ---------------------------------------------------------------------- Third Quarter 2008 Second Quarter 2008 -------------------------- -------------------------- (Dollars in Average Average Average Average thousands) Balance Interest Rate Balance Interest Rate ------------------------- -------- ------- ------- -------- ------- ASSETS: Loans, Net of Unearned Interest $1,915,008 32,622 6.78% $1,908,802 33,610 7.08% Investment Securities Taxable Investment Securities 93,723 940 3.99% 93,814 1,028 4.38% Tax-Exempt Investment Securities 98,966 1,234 4.99% 94,371 1,200 5.09% --------------------------------------------------------------------- Total Investment Securities 192,689 2,174 4.50% 188,185 2,228 4.73% Funds Sold 99,973 475 1.86% 206,984 1,028 1.96% --------------------------------------------------------------------- Total Earning Assets 2,207,670 $35,271 6.36% 2,303,971 $36,866 6.43% -------------- -------------- Cash and Due From Banks 77,309 82,182 Allowance for Loan Losses (22,851) (20,558) Other Assets 266,510 269,176 --------------------------- ---------- Total Assets $2,528,638 $2,634,771 --------------------------- ---------- LIABILITIES: Interest Bearing Deposits NOW Accounts $ 727,754 $ 1,443 0.79% $ 788,237 $ 1,935 0.99% Money Market Accounts 369,544 1,118 1.20% 376,996 1,210 1.29% Savings Accounts 117,970 30 0.10% 117,182 29 0.10% Time Deposits 410,101 3,224 3.13% 443,006 3,988 3.62% --------------------------------------------------------------------- Total Interest Bearing Deposits 1,625,369 5,815 1.42% 1,725,421 7,162 1.67% Short-Term Borrowings 51,738 230 1.76% 55,830 296 2.13% Subordinated Notes Payable 62,887 936 5.83% 62,887 931 5.86% Other Long-Term Borrowings 43,237 488 4.48% 34,612 396 4.60% --------------------------------------------------------------------- Total Interest Bearing Liabilities 1,783,231 $ 7,469 1.67% 1,878,750 $ 8,785 1.88% -------------- -------------- Noninterest Bearing Deposits 405,314 415,125 Other Liabilities 36,498 40,006 --------------------------- ---------- Total Liabilities 2,225,043 2,333,881 SHAREOWNERS' EQUITY: $ 303,595 $ 300,890 --------------------------- ---------- Total Liabilities and Shareowners' Equity $2,528,638 $2,634,771 --------------------------- ---------- Interest Rate Spread $27,802 4.69% $28,081 4.55% ------------------------------------------ -------------- Interest Income and Rate Earned(1) $35,271 6.36% $36,866 6.43% Interest Expense and Rate Paid(2) 7,469 1.35% 8,785 1.53% ------------------------------------------ -------------- Net Interest Margin $27,802 5.01% $28,081 4.90% ------------------------------------------ -------------- First Quarter 2008 ----------------------------- Average Average (Dollars in thousands) Balance Interest Rate ---------------------- ----------- -------- ------- ASSETS: Loans, Net of Unearned Interest $ 1,909,574 35,452 7.47% Investment Securities Taxable Investment Securities 94,786 1,108 4.67% Tax-Exempt Investment Securities 90,790 1,207 5.32% --------------------------------------------------------------------- Total Investment Securities 185,576 2,315 4.99% Funds Sold 206,313 1,574 3.02% --------------------------------------------------------------------- Total Earning Assets 2,301,463 $39,341 6.87% ----------------- Cash and Due From Banks 94,247 Allowance for Loan Losses (18,227) Other Assets 268,991 ---------- Total Assets $2,646,474 ---------- LIABILITIES: Interest Bearing Deposits NOW Accounts $ 773,891 $ 3,440 1.79% Money Market Accounts 389,828 2,198 2.27% Savings Accounts 113,163 34 0.12% Time Deposits 467,280 4,809 4.14% --------------------------------------------------------------------- Total Interest Bearing Deposits 1,744,162 10,481 2.42% Short-Term Borrowings 68,095 521 3.06% Subordinated Notes Payable 62,887 931 5.96% Other Long-Term Borrowings 27,644 331 4.82% --------------------------------------------------------------------- Total Interest Bearing Liabilities 1,902,788 $12,264 2.59% ----------------- Noninterest Bearing Deposits 404,712 Other Liabilities 42,170 ---------------------------------- ---------- Total Liabilities 2,349,670 SHAREOWNERS' EQUITY: $ 296,804 ---------------------------------- ---------- Total Liabilities and Shareowners' Equity $2,646,474 ---------------------------------- ---------- Interest Rate Spread $27,077 4.28% ---------------------------------- ----------------- Interest Income and Rate Earned(1) $39,341 6.87% Interest Expense and Rate Paid(2) 12,264 2.14% ---------------------------------- ----------------- Net Interest Margin $27,077 4.73% ---------------------------------- ----------------- AVERAGE BALANCE AND INTEREST RATES(1) Unaudited ---------------------------------------------------------------------- Fourth Quarter 2007 Third Quarter 2007 ----------------------------------------------------- (Dollars in Average Average Average Average thousands) Balance Interest Rate Balance Interest Rate -------------------------- -------- ------- ------- -------- ------- ASSETS: Loans, Net of Unearned Interest $1,908,069 37,969 7.89% $1,907,235 38,901 8.09% Investment Securities Taxable Investment Securities 99,055 1,226 4.93% 102,618 1,224 4.75% Tax-Exempt Investment Securities 87,358 1,178 5.39% 85,446 1,142 5.35% ---------------------------------------------------------------------- Total Investment Securities 186,413 2,404 5.15% 188,064 2,366 5.02% Funds Sold 96,748 1,064 4.31% 49,438 639 5.06% ---------------------------------------------------------------------- Total Earning Assets 2,191,230 $41,437 7.50% 2,144,737 $41,906 7.75% -------------- -------------- Cash and Due From Banks 85,598 84,477 Allowance for Loan Losses (18,127) (17,664) Other Assets 260,981 256,153 --------------------------- ---------- Total Assets $2,519,682 $2,467,703 --------------------------- ---------- LIABILITIES: Interest Bearing Deposits NOW Accounts $ 608,347 $ 2,980 1.94% $ 525,795 $ 2,531 1.91% Money Market Accounts 404,406 3,217 3.16% 403,957 3,565 3.50% Savings Accounts 113,527 57 0.20% 117,451 70 0.24% Time Deposits 471,454 5,069 4.27% 471,868 5,100 4.29% ---------------------------------------------------------------------- Total Interest Bearing Deposits 1,597,734 11,323 2.81% 1,519,071 11,266 2.94% Short-Term Borrowings 64,842 639 3.89% 65,130 734 4.45% Subordinated Notes Payable 62,887 936 5.91% 62,887 936 5.91% Other Long-Term Borrowings 28,215 343 4.83% 38,269 453 4.70% ---------------------------------------------------------------------- Total Interest Bearing Liabilities 1,753,678 $13,241 3.00% 1,685,357 $13,389 3.15% -------------- -------------- Noninterest Bearing Deposits 419,002 435,089 Other Liabilities 47,660 45,721 --------------------------- ---------- Total Liabilities 2,220,340 2,166,167 SHAREOWNERS' EQUITY: $ 299,342 $ 301,536 --------------------------- ---------- Total Liabilities and Shareowners' Equity $2,519,682 $2,467,703 --------------------------- ---------- Interest Rate Spread $28,196 4.50% $28,517 4.60% ------------------------------------------ -------------- Interest Income and Rate Earned(1) $41,437 7.50% $41,906 7.75% Interest Expense and Rate Paid(2) 13,241 2.40% 13,389 2.48% ------------------------------------------ -------------- Net Interest Margin $28,196 5.10% $28,517 5.27% ------------------------------------------ -------------- AVERAGE BALANCE AND INTEREST RATES(1) Unaudited ---------------------------------------------------------------------- September 2008 YTD September 2007 YTD ------------------------------------------------------- (Dollars in Average Average Average Average thousands) Balance Interest Rate Balance Interest Rate ------------------------- -------- ------- ---------- -------- ------- ASSETS: Loans, Net of Unearned Interest $1,911,142 101,684 7.11% $1,943,874 117,465 8.08% Investment Securities Taxable Investment Securities 94,106 3,076 4.35% 105,453 3,723 4.70% Tax-Exempt Investment Securities 94,725 3,641 5.13% 84,003 3,269 5.19% --------------------------------------------------------------------- Total Investment Securities 188,831 6,717 4.74% 189,456 6,992 4.92% Funds Sold 170,831 3,077 2.37% 47,602 1,849 5.12% --------------------------------------------------------------------- Total Earning Assets 2,270,804 $111,478 6.55% 2,180,932 $126,306 7.74% --------------- --------------- Cash and Due From Banks 84,552 87,062 Allowance for Loan Losses (20,554) (17,336) Other Assets 268,220 252,359 ------------------------- ---------- Total Assets $2,603,022 $2,503,017 ------------------------- ---------- LIABILITIES: Interest Bearing Deposits NOW Accounts $ 763,164 $ 6,818 1.19% $ 539,777 $ 7,768 1.92% Money Market Accounts 378,756 4,526 1.60% 394,762 10,450 3.54% Savings Accounts 116,112 93 0.11% 121,781 222 0.24% Time Deposits 440,019 12,021 3.65% 475,831 14,924 4.19% --------------------------------------------------------------------- Total Interest Bearing Deposits 1,698,051 23,458 1.85% 1,532,151 33,364 2.91% Short-Term Borrowings 58,530 1,047 2.38% 66,921 2,232 4.44% Subordinated Notes Payable 62,887 2,798 5.85% 62,887 2,794 5.94% Other Long-Term Borrowings 35,194 1,215 4.61% 41,212 1,451 4.71% --------------------------------------------------------------------- Total Interest Bearing Liabilities 1,854,662 $ 28,518 2.05% 1,703,171 $ 39,841 3.13% --------------- --------------- Noninterest Bearing Deposits 408,372 449,436 Other Liabilities 39,547 41,341 ------------------------- ---------- Total Liabilities 2,302,581 2,193,948 SHAREOWNERS' EQUITY: $ 300,441 $ 309,069 ------------------------- ---------- Total Liabilities and Shareowners' Equity $2,603,022 $2,503,017 ------------------------- ---------- Interest Rate Spread $ 82,960 4.50% $ 86,465 4.61% ----------------------------------------- --------------- Interest Income and Rate Earned(1) $111,478 6.55% $126,306 7.74% Interest Expense and Rate Paid(2) 28,518 1.68% 39,841 2.44% ----------------------------------------- --------------- Net Interest Margin $ 82,960 4.87% $86,465 5.30% ----------------------------------------- --------------- (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
Released October 21, 2008