Capital City Bank Group, Inc. Reports Second Quarter 2008 Results

TALLAHASSEE, Fla., July 22, 2008 (PRIME NEWSWIRE) -- Capital City Bank Group, Inc. (Nasdaq:CCBG) today reported net income for the second quarter of 2008 totaling $4.8 million ($0.28 per diluted share) compared to $7.3 million ($0.42 per diluted share) in the first quarter of 2008 and $7.9 million ($0.43 per diluted share) for the second quarter of 2007. Earnings for the second quarter of 2008 include a loan loss provision of $5.4 million ($.20 per diluted share) versus $4.1 million ($.15 per diluted share) in the first quarter of 2008 and $1.7 million ($.06 per diluted share) in the second quarter of 2007.

Earnings for the first half of 2008 totaled $12.1 million ($0.70 per diluted share) compared to $14.8 million ($0.81 per diluted share) for the first half of 2007. Year-to-date earnings include a loan loss provision of $9.6 million ($0.34 per diluted share). Earnings also include a $2.4 million pre-tax gain from the redemption of Visa, Inc. shares related to its initial public offering, the reversal of $1.1 million (pre-tax) in Visa related litigation reserves, the reversal of $577,000 (pre-tax) in accrued expense for our 2011 Incentive Plan, and the reversal of a $425,000 tax reserve related to the resolution of a tax contingency, all four of which were recorded in the prior quarter.

"Overall, our underlying business is fundamentally sound -- after adjusting for the gain on redemption of Visa shares, operating revenues grew quarter over quarter and our expenses are in check. In Florida, we are managing through a challenging credit cycle and we have responded appropriately by increasing our provision and reserve in both the first and second quarters of this year," said William G. Smith, Jr., chairman, president & CEO. "Because our housing markets did not experience the rapid price appreciation as evidenced in other areas of the state, we believe credit-related problems across our markets may be less severe over an extended economic slowdown. Additionally, our portfolios are well-diversified by loan type and we think our higher-risk loan relationships tend to be smaller in size than most of our Florida-based peers due to our relatively low in-house lending limit and overall lending authorities.

"We are taking a prudent approach in monitoring collateral values for our problem real estate loans, allocating more resources to the review of updated valuations as market conditions change and, where appropriate, recognizing losses prior to final resolution of the problem asset.

"Our capital position is quite strong. Our total shareowners' equity currently stands at $297 million, or 11.2% of total assets and our total risk-based capital ratio equals 14.35%. These measures are well in excess of regulatory minimums for an institution to be considered well-capitalized and are after the repurchase of $45.6 million of our common stock over the last eighteen months. We believe the strength of our balance sheet will allow us to participate in opportunities that naturally arise during periods of economic stress and disruption," said Smith.

The Return on Average Assets was .73% and the Return on Average Equity was 6.43% for the second quarter of 2008. These metrics were 1.11% and 9.87% for the first quarter of 2008 and 1.26% and 10.23% for the second quarter of 2007, respectively.

For the first half of 2008, the Return on Average Assets was .92% and the Return on Average Equity was 8.14% compared to 1.19% and 9.57%, respectively, for the first half of 2007.

Discussion of Financial Condition

Average earning assets were $2.304 billion for the second quarter, an increase of $2.5 million, or .11% from the first quarter of 2008, and $112.7 million, or 5.2% from the fourth quarter of 2007. The increase over the linked quarter is primarily attributable to a $2.6 million increase in investment securities. Compared to the fourth quarter of 2007, the increase primarily reflects a $110.2 million increase in short-term investments which was driven primarily by an increase in our client deposit balances (see discussion below). Average loans were down slightly from both the prior quarter and fourth quarter of 2007 by $.8 million and $.7 million, respectively, as production essentially matched pay-downs and pay-offs. Given our risk management practices, the lack of loan growth in this current economic environment is not unexpected.

Nonperforming assets of $47.8 million increased from the first quarter by $6.7 million and from the fourth quarter of 2007 by $19.6 million. For the same periods, nonaccrual loans totaling $41.7 million increased $6.4 million and $16.6 million, respectively. The increase from the first quarter primarily reflects the migration of smaller balance residential real estate loans to builders and investors to nonaccrual status. Restructured loans totaled $1.7 million at the end of the quarter. Other real estate owned totaled $4.3 million at the end of the second quarter compared to $3.8 million at the end of the first quarter and $3.0 million at year-end 2007. Nonperforming assets represented 2.49% of loans and other real estate at the end of the second quarter compared to 2.14% and 1.47% at the end of the prior quarter and year-end 2007, respectively.

Average total deposits were $2.141 billion for the second quarter, a decrease of $8.3 million, or 0.39%, from the first quarter and an increase of $123.8 million, or 6.1%, over the fourth quarter of 2007. Compared to the first quarter, non-maturity deposits increased primarily as a result of growth in noninterest bearing and negotiated rate NOW accounts, but this increase was more than offset by a decline in the money market accounts and certificates of deposit. Strong growth in public funds deposits is primarily attributable to a migration of deposits from the Florida State Board of Administration's Local Government Investment Pool, which began in the fourth quarter and has continued through the second quarter. Declines in money market accounts and certificates of deposit reflect management's strategy not to compete with 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 reflecting the aforementioned trend in negotiated rate NOW accounts.

The Company had approximately $195.5 million in average net overnight funds sold for the second quarter of 2008 as compared to $186.8 million in the first quarter of 2008 and $84.1 million in the fourth quarter of 2007. The influx of public deposits generated in the first half of 2008 was the primary factor driving the growth of overnight funds for both periods.

Discussion of Operating Results

Tax equivalent net interest income for the second quarter of 2008 was $28.1 million compared to $27.1 million for the first quarter and $29.0 million for the second quarter of 2007. For the first six months of 2008, tax equivalent net interest income totaled $55.2 million compared to $57.9 million for the comparable period in 2007.

The increase in the net interest income on a linked quarter basis reflects lower interest costs as management has responded aggressively to the Federal Reserve's 225 basis point rate reduction during 2008. The lower interest cost was partially offset by declines in earning asset yields and a slight increase in foregone interest on nonaccrual loans. During this same period, the net interest margin expanded by 17 basis points to 4.90%, attributable to lower deposit rates.

The decline in net interest income for the three and six months ended June 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 as the loan balances declined throughout the first nine months of 2007. These factors, coupled with the influx of higher cost municipal deposits in 2008, led to compression in our net interest margin of 43 and 50 basis points, respectively. We continue to believe we have been successful in neutralizing the impact of reductions in the Federal Reserve's target rate over the last three quarters.

Average negotiated deposits, which include municipal deposits, have grown from $287 million in the second quarter of 2007 to $538 million in the current quarter. Although this growth in deposits has had a positive impact on net interest income, it has had an adverse impact on our margin due to the relatively thin spreads on the municipal deposits. See "Discussion of Financial Condition" for a more detailed analysis of nonperforming assets and deposit growth.

The provision for loan losses for the current quarter was $5.4 million compared to $4.1 million in the first quarter of 2008 and $1.7 million for the second quarter of 2007. The provision for the first six months of 2008 totaled $9.6 million compared to $2.9 million for the same period in 2007. The increase in the provision for the current quarter and for the first six months of the year generally reflects the current economic slowdown and the impact of the stressed housing and real estate markets. Compared to the prior quarter, the increase in the provision reflects a higher level of reserves allocated to our commercial loan and residential real estate loan portfolios. The increase in the provision for the first half of 2008 compared to the same period in 2007 reflects the aforementioned trends as well as stress on our consumer loan portfolios, primarily indirect auto lending. For the quarter, net charge-offs totaled $3.2 million, or .67%, of average loans compared to $1.9 million, or .41%, in the first quarter of 2008 and $1.3 million, or .27%, in the second quarter of 2007. The increase in net charge offs for the current quarter primarily reflects a higher level of consumer (indirect auto), residential real estate, and commercial real estate loan charge-offs. Management performs a detailed review and valuation assessment of impaired loans on a quarterly basis and, in accordance with its current charge-off procedures, writes existing nonaccrual loans down to fair value when principal is deemed uncollectible. Increased resources have been allocated to the aforementioned process to review impaired loans migrating through the foreclosure process and record write-downs on these loans as market conditions change. Due to elevated case loads, it is taking longer for cases to move through the court system and, therefore, where appropriate, we are recognizing losses prior to final resolution of the problem asset. At quarter-end, the allowance for loan losses was 1.18% of outstanding loans (net of overdrafts) and provided coverage of 52% of nonperforming loans.

Noninterest income for the second quarter decreased $2.1 million, or 11.7%, from the first quarter of 2008 attributable to a pre-tax gain of $2.4 million realized in the first quarter of 2008 from the redemption of Visa, Inc. shares. Compared to the second quarter of 2007, noninterest income increased $634,000, or 4.0%, due to increases in deposit fees and retail brokerage fees. For the first six months of 2008, noninterest income grew $4.5 million, or 15.4%, from the comparable period in 2007 due to the aforementioned gain on redemption of Visa, Inc. shares, and strong gains in deposit fees and bank card fees.

Noninterest expense for the second quarter increased $958,000, or 3.2%, from the first quarter of 2008 attributable to a one-time entry of $1.1 million realized in the first quarter of 2008 to reverse a portion of our Visa, Inc. litigation accrual. In addition, we reversed $577,000 in accrued expense in the first quarter of 2008 related to the termination of our 2011 Incentive Plan. Compared to the second quarter of 2007, noninterest expense increased $859,000, or 2.9%, due primarily to an increase in compensation and occupancy costs. The increase in compensation is attributable to higher associate base salaries reflective of annual merit/market based raises and the opening of three new banking offices in 2007. The increase in occupancy is primarily due to higher depreciation expense also attributable to the aforementioned new banking offices and the implementation of a new telephone system in early 2008. For the first six months of 2008, noninterest expense grew $95,000, or .16%, from the comparable period in 2007 primarily due to the aforementioned higher compensation and occupancy expense, with the one-time reversal of our Visa, Inc. litigation accrual partially offsetting those increases. Higher expense for commission fees related to processing cost for our accounts receivable financing product also increased over this period. Management continues to work on expense reduction opportunities and improvement in cost controls as a core strategic objective.

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 $2.7 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 82 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      Six Months Ended
                           -------------------------  ----------------
 (Dollars in thousands,    Jun 30,  Mar 31,  Jun 30,  Jun 30,  Jun 30,
  except per share data)    2008     2008     2007     2008     2007
 ---------------------------------------------------------------------
 EARNINGS
 Net Income                $ 4,810  $ 7,280  $ 7,891  $12,090  $14,848
 Diluted Earnings Per
  Common Share             $  0.28  $  0.42  $  0.43  $  0.70  $  0.81
 ---------------------------------------------------------------------
 PERFORMANCE
 Return on Average Equity     6.43%    9.87%   10.23%    8.14%    9.57%
 Return on Average Assets     0.73%    1.11%    1.26%    0.92%    1.19%
 Net Interest Margin          4.90%    4.73%    5.33%    4.81%    5.31%
 Noninterest Income as
  % of Operating Revenue     36.39%   40.22%   34.64%   38.33%   33.84%
 Efficiency Ratio            66.89%   63.15%   64.44%   65.00%   66.15%
 ---------------------------------------------------------------------
 CAPITAL ADEQUACY
 Tier 1 Capital Ratio        13.15%   12.94%   13.67%   13.15%   13.67%
 Total Capital Ratio         14.35%   14.01%   14.66%   14.35%   14.66%
 Leverage Ratio              10.54%   10.32%   11.14%   10.54%   11.14%
 Equity to Assets            11.19%   11.06%   11.91%   11.19%   11.91%
 ---------------------------------------------------------------------
 ASSET QUALITY
 Allowance as % of
  Non-Performing Loans       51.80%   54.32%  193.69%   51.80%  193.69%
 Allowance as a % of
  Loans                       1.18%    1.06%    0.91%    1.18%    0.90%
 Net Charge-Offs as %
  of Average Loans            0.67%    0.41%    0.27%    0.54%    0.27%
 Nonperforming Assets
  as % of Loans and ORE       2.49%    2.14%    0.52%    2.49%    0.52%
 ---------------------------------------------------------------------
 STOCK PERFORMANCE
 High                      $ 30.19  $ 29.99  $ 33.69  $ 30.19  $ 35.91
 Low                       $ 21.76  $ 24.76  $ 29.12  $ 21.76  $ 29.12
 Close                     $ 21.76  $ 29.00  $ 31.34  $ 21.76  $ 31.34
 Average Daily Trading
  Volume                    36,196   31,827   40,051   34,064   32,338
 ---------------------------------------------------------------------


 CAPITAL CITY BANK GROUP, INC.
 CONSOLIDATED STATEMENT OF INCOME
 Unaudited

 ---------------------------------------------------------------------
                            2008     2008     2007     2007     2007
 (Dollars in thousands,    Second    First   Fourth    Third   Second
  except per share data)   Quarter  Quarter  Quarter  Quarter  Quarter
 ---------------------------------------------------------------------
 INTEREST INCOME
 Interest and Fees on
  Loans                    $33,422  $35,255  $37,730  $38,692  $39,092
 Investment Securities       1,810    1,893    1,992    1,968    1,943
 Funds Sold                  1,028    1,575    1,064      639      689
 ---------------------------------------------------------------------
   Total Interest Income    36,260   38,723   40,786   41,299   41,724
 ---------------------------------------------------------------------
 INTEREST EXPENSE
 Deposits                    7,162   10,481   11,323   11,266   11,098
 Short-Term Borrowings         296      521      639      734      737
 Subordinated Notes
  Payable                      931      931      936      936      932
 Other Long-Term
  Borrowings                   396      331      343      453      496
 ---------------------------------------------------------------------
   Total Interest Expense    8,785   12,264   13,241   13,389   13,263
 ---------------------------------------------------------------------
 Net Interest Income        27,475   26,459   27,545   27,910   28,461
 Provision for Loan Losses   5,432    4,142    1,699    1,552    1,675
 ---------------------------------------------------------------------
 Net Interest Income
  after Provision for
  Loan Losses               22,043   22,317   25,846   26,358   26,786
 ---------------------------------------------------------------------
 NONINTEREST INCOME
 Service Charges on
  Deposit Accounts           7,060    6,765    7,256    6,387    6,442
 Data Processing               812      813      853      775      790
 Asset Management Fees       1,125    1,150    1,100    1,200    1,175
 Retail Brokerage Fees         735      469      619      625      804
 Gain on Sale of
  Investment Securities         30       65        7       --       --
 Mortgage Banking
  Revenues                     506      494      425      642      850
 Merchant Fees               2,074    2,208    1,743    1,686    1,892
 Interchange Fees            1,076    1,009      962      934      951
 ATM/Debit Card Fees           758      744      705      685      661
 Other                       1,542    4,082    2,153    1,497    1,519
 ---------------------------------------------------------------------
   Total Noninterest
    Income                  15,718   17,799   15,823   14,431   15,084
 ---------------------------------------------------------------------
 NONINTEREST EXPENSE
 Salaries and Associate
  Benefits                  15,318   15,604   14,472   15,096   14,992
 Occupancy, Net              2,491    2,362    2,378    2,409    2,324
 Furniture and Equipment     2,583    2,582    2,534    2,513    2,494
 Intangible Amortization     1,459    1,459    1,458    1,459    1,458
 Other                       8,905    7,791   10,772    8,442    8,629
 ---------------------------------------------------------------------
   Total Noninterest
    Expense                 30,756   29,798   31,614   29,919   29,897
 ---------------------------------------------------------------------
 OPERATING PROFIT            7,005   10,318   10,055   10,870   11,973
 Provision for Income
  Taxes                      2,195    3,038    2,391    3,699    4,082
 ---------------------------------------------------------------------
 NET INCOME                $ 4,810  $ 7,280  $ 7,664  $ 7,171  $ 7,891
 ---------------------------------------------------------------------
 PER SHARE DATA
 Basic Earnings            $  0.28  $  0.42  $  0.44  $  0.41  $  0.43
 Diluted Earnings          $  0.28  $  0.42  $  0.44  $  0.41  $  0.43
 Cash Dividends              0.185    0.185    0.185    0.175    0.175
 AVERAGE SHARES
 Basic                      17,146   17,170   17,444   17,709   18,089
 Diluted                    17,147   17,178   17,445   17,719   18,089
 ---------------------------------------------------------------------

 ---------------------------------------------------------------------
                                                      Six Months Ended
                                                          June 30
 (Dollars in thousands, except per share data)         2008     2007
 ---------------------------------------------------------------------
 INTEREST INCOME
 Interest and Fees on Loans                           $68,677  $78,145
 Investment Securities                                  3,703    3,883
 Funds Sold                                             2,603    1,210
 ---------------------------------------------------------------------
   Total Interest Income                               74,983   83,238
 ---------------------------------------------------------------------
 INTEREST EXPENSE
 Deposits                                              17,643   22,098
 Short-Term Borrowings                                    817    1,498
 Subordinated Notes Payable                             1,862    1,858
 Other Long-Term Borrowings                               727      998
 ---------------------------------------------------------------------
   Total Interest Expense                              21,049   26,452
 ---------------------------------------------------------------------
 Net Interest Income                                   53,934   56,786
 Provision for Loan Losses                              9,574    2,912
 ---------------------------------------------------------------------
 Net Interest Income after Provision for Loan Losses   44,360   53,874
 ---------------------------------------------------------------------
 NONINTEREST INCOME
 Service Charges on Deposit Accounts                   13,825   12,487
 Data Processing                                        1,625    1,505
 Asset Management Fees                                  2,275    2,400
 Retail Brokerage Fees                                  1,204    1,266
 Gain on Sale of Investment Securities                     95        7
 Mortgage Banking Revenues                              1,000    1,529
 Merchant Fees                                          4,282    3,828
 Interchange Fees                                       2,085    1,861
 ATM/Debit Card Fees                                    1,502    1,302
 Other                                                  5,624    2,861
 ---------------------------------------------------------------------
   Total Noninterest Income                            33,517   29,046
 ---------------------------------------------------------------------
 NONINTEREST EXPENSE
 Salaries and Associate Benefits                       30,922   30,711
 Occupancy, Net                                         4,853    4,560
 Furniture and Equipment                                5,165    4,843
 Intangible Amortization                                2,918    2,917
 Other                                                 16,696   17,428
 ---------------------------------------------------------------------
   Total Noninterest Expense                           60,554   60,459
 ---------------------------------------------------------------------
 OPERATING PROFIT                                      17,323   22,461
 Provision for Income Taxes                             5,233    7,613
 ---------------------------------------------------------------------
 NET INCOME                                           $12,090  $14,848
 ---------------------------------------------------------------------
 PER SHARE DATA
 Basic Earnings                                       $  0.70  $  0.81
 Diluted Earnings                                     $  0.70  $  0.81
 Cash Dividends                                         0.370    0.350
 AVERAGE SHARES
 Basic                                                 17,158   18,248
 Diluted                                               17,159   18,248
 ---------------------------------------------------------------------


 CAPITAL CITY BANK GROUP, INC.
 CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
 Unaudited

 ---------------------------------------------------------------------
 (Dollars in
  thousands,       2008       2008       2007       2007       2007
  except per      Second      First     Fourth      Third     Second
  share data)     Quarter    Quarter    Quarter    Quarter    Quarter
 ---------------------------------------------------------------------
 ASSETS
 Cash and Due
  From Banks    $  108,672 $   97,525 $   93,437 $   91,378 $   95,573
 Funds Sold and
  Interest
  Bearing
  Deposits         192,786    241,202    166,260     19,599     77,297
 ---------------------------------------------------------------------
   Total Cash
    and Cash
    Equivalents    301,458    338,727    259,697    110,977    172,870

 Investment
  Securities,
  Available-for-
  Sale             185,971    186,944    190,719    184,609    189,680

 Loans, Net of
  Unearned
  Interest
   Commercial,
    Financial, &
    Agricultural   196,075    202,238    208,864    205,628    203,555
   Real Estate -
    Construction   150,907    152,060    142,248    145,343    159,751
   Real Estate -
    Commercial     622,282    624,826    634,920    631,418    640,172
   Real Estate -
    Residential    481,397    482,058    481,150    480,488    493,783
   Real Estate -
    Home Equity    205,536    197,093    192,428    183,620    175,781
   Consumer        244,071    238,663    243,415    246,137    240,110
   Other Loans       9,436     10,506      7,222      8,739     14,715
   Overdrafts        7,111      7,014      5,603      2,515      2,844
 ---------------------------------------------------------------------
   Total Loans,
    Net of
    Unearned
    Interest     1,916,815  1,914,458  1,915,850  1,903,888  1,930,711
   Allowance for
    Loan Losses    (22,518)   (20,277)   (18,066)   (18,001)   (17,469)
 ---------------------------------------------------------------------
   Loans, Net    1,894,297  1,894,181  1,897,784  1,885,887  1,913,242

 Premises and
  Equipment, Net   102,559    100,145     98,612     95,816     92,656
 Intangible
  Assets            95,651     97,109     98,568    100,026    101,485
 Other Assets       69,479     75,406     70,947     62,611     60,815
 ---------------------------------------------------------------------
   Total Other
    Assets         267,689    272,660    268,127    258,453    254,956
 ---------------------------------------------------------------------
 Total Assets   $2,649,415 $2,692,512 $2,616,327 $2,439,926 $2,530,748
 ---------------------------------------------------------------------
 LIABILITIES
 Deposits:
   Noninterest
    Bearing
    Deposits    $  416,992 $  432,904 $  432,659 $  419,242 $  456,986
   NOW Accounts    814,380    800,128    744,093    530,619    559,050
   Money Market
    Accounts       387,011    381,474    386,619    399,578    401,415
   Regular
    Savings
    Accounts       118,307    116,018    111,600    115,955    119,585
   Certificates
    of Deposit     426,236    462,081    467,373    472,019    472,554
 ---------------------------------------------------------------------
   Total
    Deposits     2,162,926  2,192,605  2,142,344  1,937,413  2,009,590

 Short-Term
  Borrowings        51,783     61,781     53,131     63,817     74,307
 Subordinated
  Notes Payable     62,887     62,887     62,887     62,887     62,887
 Other Long-Term
  Borrowings        36,857     29,843     26,731     29,725     41,276
 Other
  Liabilities       38,382     47,723     38,559     47,031     41,251
 ---------------------------------------------------------------------
 Total
  Liabilities    2,352,835  2,394,839  2,323,652  2,140,873  2,229,311
 ---------------------------------------------------------------------
 SHAREOWNERS'
  EQUITY
 Common Stock          171        172        172        176        179
 Additional
  Paid-In Capital   36,382     38,042     38,243     50,789     58,001
 Retained
  Earnings         266,171    264,538    260,325    255,876    251,838
 Accumulated
  Other
  Comprehensive
  Loss, Net of
  Tax               (6,144)    (5,079)    (6,065)    (7,788)    (8,581)
 ---------------------------------------------------------------------
 Total
  Shareowners'
  Equity           296,580    297,673    292,675    299,053    301,437
 ---------------------------------------------------------------------
 Total
  Liabilities and
  Shareowners'
  Equity        $2,649,415 $2,692,512 $2,616,327 $2,439,926 $2,530,748
 ---------------------------------------------------------------------
 OTHER BALANCE
  SHEET DATA
 Earning Assets $2,295,572 $2,342,604 $2,272,829 $2,108,096 $2,197,688
 Intangible
  Assets
   Goodwill         84,811     84,811     84,811     84,811     84,811
   Deposit Base      9,756     11,167     12,578     13,988     15,399
   Other             1,084      1,131      1,179      1,227      1,275
 Interest
  Bearing
  Liabilities    1,897,461  1,914,212  1,852,434  1,674,600  1,731,074
 ---------------------------------------------------------------------
 Book Value Per
  Diluted Share $    17.33 $    17.33 $    17.03 $    16.95 $    16.87
 Tangible Book
  Value Per
  Diluted Share      11.74      11.67      11.30      11.28      11.19
 ---------------------------------------------------------------------
 Actual Basic
  Shares
  Outstanding       17,111     17,175     17,183     17,628     17,869
 Actual Diluted
  Shares
  Outstanding       17,112     17,183     17,184     17,639     17,869
 ---------------------------------------------------------------------


 CAPITAL CITY BANK GROUP, INC.
 ALLOWANCE FOR LOAN LOSSES
 AND NONPERFORMING ASSETS
 Unaudited
 ---------------------------------------------------------------------
                            2008     2008     2007     2007     2007
                           Second    First   Fourth    Third   Second
 (Dollars in thousands)    Quarter  Quarter  Quarter  Quarter  Quarter
 ---------------------------------------------------------------------
 ALLOWANCE FOR LOAN LOSSES
 Balance at Beginning of
  Period                   $20,277  $18,066  $18,001  $17,469  $17,108
 Provision for Loan Losses   5,432    4,142    1,699    1,552    1,675
 Net Charge-Offs             3,191    1,931    1,634    1,020    1,314

 ---------------------------------------------------------------------
 Balance at End of Period  $22,518  $20,277  $18,066  $18,001  $17,469
 ---------------------------------------------------------------------
 As a % of Loans              1.18%    1.06%    0.95%    0.95%    0.91%
 As a % of Nonperforming
  Loans                      51.80%   54.32%   71.92%  145.49%  193.68%
 As a % of Nonperforming
  Assets                     47.12%   49.34%   64.15%  128.05%  172.62%
 ---------------------------------------------------------------------
 CHARGE-OFFS
 Commercial, Financial and
  Agricultural             $   407  $   636  $   370  $   279  $   253
 Real Estate - Construction    158      572       58       --       --
 Real Estate - Commercial    1,115      126      133      245        5
 Real Estate - Residential     817      176      209      161      992
 Consumer                    1,232    1,170    1,302      854      534
 ---------------------------------------------------------------------
 Total Charge-Offs         $ 3,729  $ 2,680  $ 2,072  $ 1,539  $ 1,784
 ---------------------------------------------------------------------
 RECOVERIES
 Commercial, Financial
  and Agricultural         $    55  $   139  $    47  $    44  $    47
 Real Estate - Construction     --       --       --       --       --
 Real Estate - Commercial       13        1        2        2        5
 Real Estate - Residential      24        3        5        2       26
 Consumer                      446      606      384      471      392
 ---------------------------------------------------------------------
 Total Recoveries          $   538  $   749  $   438  $   519  $   470
 ---------------------------------------------------------------------
 NET CHARGE-OFFS           $ 3,191  $ 1,931  $ 1,634  $ 1,020  $ 1,314
 ---------------------------------------------------------------------
 Net Charge-Offs as a %
  of Average Loans(1)         0.67%    0.41%    0.34%    0.21%    0.27%
 ---------------------------------------------------------------------
 RISK ELEMENT ASSETS
 Nonaccruing Loans         $41,738  $35,352  $25,120  $12,373  $ 9,019
 Restructured Loans          1,733    1,980       --       --       --
 ---------------------------------------------------------------------
 Total Nonperforming Loans  43,471   37,332   25,120   12,373    9,019
 Other Real Estate           4,322    3,768    3,043    1,685    1,102
 ---------------------------------------------------------------------
 Total Nonperforming
  Assets                   $47,793  $41,100  $28,163  $14,058  $10,121
 ---------------------------------------------------------------------
 Past Due Loans 90 Days
  or More                  $   896  $   842  $   416  $   874  $   332
 ---------------------------------------------------------------------
 Nonperforming Loans as
  a % of Loans                2.27%    1.95%    1.31%    0.65%    0.47%
 Nonperforming Assets as
  a % of Loans and Other
  Real Estate                 2.49%    2.14%    1.47%    0.74%    0.52%
 Nonperforming Assets as
  a % of Capital(2)          14.98%   12.93%    9.06%    4.43%    3.17%
 ---------------------------------------------------------------------

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


 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 Liabil-
  ities 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%
 --------------------------------------------            -------------

 ---------------------------------------------------------------------
                                               Fourth Quarter 2007
 ---------------------------------------------------------------------
                                              Average           Average
 (Dollars in 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%
 ---------------------------------------------------------------------


 AVERAGE BALANCE AND INTEREST RATES(1)
 Unaudited


                    Third Quarter 2007          Second Quarter 2007
                 -------------------------   -------------------------
 (Dollars in      Average           Average   Average           Average
  thousands)      Balance   Interest  Rate    Balance   Interest  Rate
 --------------------------  -------  ----   ----------  -------  ----
 ASSETS:
 Loans, Net of
  Unearned
  Interest       $1,907,235   38,901  8.09%  $1,944,969   39,300  8.10%

 Investment
  Securities
   Taxable
    Investment
    Securities      102,618    1,224  4.75%     105,425    1,236  4.68%
   Tax-Exempt
    Investment
    Securities       85,446    1,142  5.35%      83,907    1,088  5.19%
 ---------------------------------------------------------------------
 Total
  Investment
  Securities        188,064    2,366  5.02%     189,332    2,324  4.91%

 Funds Sold          49,438      639  5.06%      52,935      689  5.15%
 ---------------------------------------------------------------------
 Total Earning
  Assets          2,144,737  $41,906  7.75%   2,187,236  $42,313  7.76%
                             -------------               -------------
 Cash and Due
  From Banks         84,477                      88,075
 Allowance for
  Loan Losses       (17,664)                    (17,263)
 Other Assets       256,153                     253,204
 --------------------------                  ----------
 Total Assets    $2,467,703                  $2,511,252
 --------------------------                  ----------

 LIABILITIES:
 Interest
  Bearing
  Deposits
 NOW Accounts    $  525,795  $ 2,531  1.91%  $  541,525  $ 2,611  1.93%
 Money Market
  Accounts          403,957    3,565  3.50%     393,403    3,458  3.53%
 Savings
  Accounts          117,451       70  0.24%     122,560       74  0.24%
 Time Deposits      471,868    5,100  4.29%     474,761    4,955  4.19%
 ---------------------------------------------------------------------
 Total Interest
  Bearing
  Deposits        1,519,071   11,266  2.94%   1,532,249   11,098  2.91%

 Short-Term
  Borrowings         65,130      734  4.45%      66,764      737  4.41%
 Subordinated
  Notes Payable      62,887      936  5.91%      62,887      932  5.94%
 Other Long-Term
  Borrowings         38,269      453  4.70%      42,284      496  4.71%
 ---------------------------------------------------------------------
 Total Interest
  Bearing
  Liabilities     1,685,357  $13,389  3.15%   1,704,184  $13,263  3.12%
                             -------------               -------------
 Noninterest
  Bearing
  Deposits          435,089                     455,169
 Other
  Liabilities        45,721                      42,547
 --------------------------                  ----------
 Total
  Liabilities     2,166,167                   2,201,900

 SHAREOWNERS'
  EQUITY:        $  301,536                  $  309,352
 --------------------------                  ----------
 Total Liabil-
  ities and
  Shareowners'
  Equity         $2,467,703                  $2,511,252
 --------------------------                  ----------
 Interest Rate
  Spread                     $28,517  4.60%              $29,050  4.64%
 -----------------------------------------               -------------
 Interest
  Income and
  Rate Earned(1)             $41,906  7.75%              $42,313  7.76%
 Interest
  Expense and
  Rate Paid(2)                13,389  2.48%               13,263  2.43%
 -----------------------------------------               -------------
 Net Interest
  Margin                     $28,517  5.27%              $29,050  5.33%
 -----------------------------------------               -------------


 AVERAGE BALANCE AND INTEREST RATES(1)
 Unaudited

                      June 2008 YTD              June 2007 YTD
                 -----------------------------------------------------
 (Dollars in      Average           Average   Average           Average
  thousands)      Balance   Interest  Rate    Balance   Interest  Rate
 --------------------------  -------  ----   ----------  -------  ----
 ASSETS:
 Loans, Net of
  Unearned
  Interest        1,909,187   69,063  7.27%  $1,962,499   78,564  8.07%

 Investment
  Securities
   Taxable
    Investment
    Securities       94,300    2,136  4.52%     106,894    2,499  4.68%
   Tax-Exempt
    Investment
    Securities       92,581    2,407  5.20%      83,270    2,127  5.11%
 ---------------------------------------------------------------------
 Total
  Investment
  Securities        186,881    4,543  4.86%     190,164    4,626  4.87%

 Funds Sold         206,649    2,602  2.49%      46,669    1,210  5.16%
 ---------------------------------------------------------------------
 Total Earning
  Assets          2,302,717  $76,208  6.65%   2,199,332  $84,400  7.73%
                             -------------               -------------
 Cash and Due
  From Banks         88,214                      88,376
 Allowance for
  Loan Losses       (19,392)                    (17,169)
 Other Assets       269,083                     250,428
 --------------------------                  ----------
 Total Assets     2,640,622                  $2,520,967
 --------------------------                  ----------

 LIABILITIES:
 Interest
  Bearing
  Deposits
 NOW Accounts       781,064  $ 5,375  1.38%  $  546,884  $ 5,237  1.93%
 Money Market
  Accounts          383,412    3,408  1.79%     390,088    6,885  3.56%
 Savings
  Accounts          115,172       63  0.11%     123,982      152  0.25%
 Time Deposits      455,143    8,797  3.89%     477,845    9,824  4.15%
 ---------------------------------------------------------------------
 Total Interest
  Bearing
  Deposits        1,734,791   17,643  2.05%   1,538,799   22,098  2.90%

 Short-Term
  Borrowings         61,963      817  2.64%      67,832    1,498  4.44%
 Subordinated
  Notes Payable      62,887    1,862  5.86%      62,887    1,858  5.96%
 Other Long-Term
  Borrowings         31,128      727  4.70%      42,708      998  4.71%
 ---------------------------------------------------------------------
 Total Interest
  Bearing
  Liabilities     1,890,769  $21,049  2.24%   1,712,226  $26,452  3.11%
                             -------------               -------------
 Noninterest
  Bearing
  Deposits          409,918                     456,728
 Other
  Liabilities        41,088                      39,115
 --------------------------                  ----------
 Total
  Liabilities     2,341,775                   2,208,069

 SHAREOWNERS'
  EQUITY:           298,847                  $  312,898
 --------------------------                  ----------
 Total Liabil-
  ities and
  Shareowners'
  Equity          2,640,622                  $2,520,967
 --------------------------                  ----------
 Interest Rate
  Spread                     $55,159  4.41%              $57,948  4.62%
 -----------------------------------------               -------------
 Interest
  Income and
  Rate Earned(1)             $76,208  6.65%              $84,400  7.73%
 Interest
  Expense and
  Rate Paid(2)                21,049  1.84%               26,452  2.42%
 -----------------------------------------               -------------
 Net Interest
  Margin                     $55,159  4.81%              $57,948  5.31%
 -----------------------------------------               -------------

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