Capital City Bank Group, Inc. Reports Second Quarter 2011 Results

TALLAHASSEE, Fla., July 26, 2011 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (Nasdaq:CCBG) today reported net income for the second quarter of 2011 totaling $2.1 million, or $0.12 per diluted share, compared to $1.3 million, or $0.08 per diluted share for the first quarter of 2011 ("linked quarter"), and $0.7 million, or $0.04 per diluted share, for the second quarter of 2010. For the first six months of 2011, the Company reported net income of $3.5 million, or $0.20 per diluted share, compared to a net loss of $2.7 million, or $0.16 per diluted share for the same period in 2010.

The increase in earnings over the linked quarter reflects higher net interest income of $0.4 million, lower loan loss provision of $0.6 million, and a reduction in noninterest expense of $2.2 million, partially offset by a decline in noninterest income of $1.9 million and higher income tax expense of $0.5 million. Compared to the second quarter of 2010, a $3.6 million decline in noninterest expense partially offset by a $1.2 million reduction in operating revenues and higher income tax expense of $1.0 million drove the improvement in earnings.

The increase in earnings for the first half of 2011 is attributable to a lower loan loss provision of $6.7 million, reduction in noninterest expense of $3.5 million, and higher noninterest income of $2.1 million, partially offset by lower net interest income of $2.0 million and higher income tax expense of $4.1 million.

2011 performance reflects the sale of our Visa Class B shares of stock during the first quarter which resulted in a $2.6 million net gain ($3.2 million pre-tax included in noninterest income and a swap liability of $0.6 million included in noninterest expense).

"Although we are still facing a challenging operating environment, I am pleased with our progress," said William G. Smith, Jr., Chairman, President and Chief Executive Officer. "Profit in the second quarter of $2.1 million, or $0.12 per share, represents our fifth consecutive quarter of profitability. Highlights from the quarter include lower nonperforming assets, declining credit costs, a strong net interest margin and lower operating expenses. While the economy remains sluggish and loan growth continues to be a challenge, I am pleased with our second quarter performance and believe we have momentum as we enter the latter half of 2011."

The Return on Average Assets was 0.33% and the Return on Average Equity was 3.28% for the second quarter of 2011. These metrics were 0.20% and 2.03% for the first quarter of 2011, and 0.11% and 1.11% for the second quarter of 2010, respectively.

For the first half of 2011, the Return on Average Assets was 0.26% and the Return on Average Equity was 2.66% compared to -0.20% and -2.07%, respectively, for the first half of 2010.

Discussion of Financial Condition

Average earning assets were $2.259 billion for the second quarter of 2011, a decrease of $19.7 million, or 0.9% from the linked quarter and an increase of $40.9 million, or 1.8%, from the fourth quarter of 2010. The lower level of earning assets over the linked quarter was a result of a decline in the loan portfolio of $26.0 million, partially offset by higher short-term investments of $6.2 million. Compared to the fourth quarter of 2010, average overnight funds were higher by $76.4 million, the investment portfolio increased $43.1 million and loans declined $78.6 million, partially attributable to the resolution of problem loans during the first six months. 

Average loans have declined throughout the portfolio, driven primarily by a reduction in the commercial real estate, residential and construction loan categories. The loan portfolio continues to be impacted by weak loan demand attributable to the lack of consumer confidence and a sluggish economy. In addition to lower production, normal amortization and payoffs, the resolution of problem loans (which has the effect of lowering the loan portfolio as loans are either charged off or transferred to the other real estate owned ("OREO") category), contributed to the overall decline. During the second quarter, problem loan resolutions accounted for $20.8 million or 76% of the net reduction in total loans of $27.2 million from the linked quarter. Problem loan resolutions accounted for $36.2 million or 51% of the net reduction in loans of $71.1 million from the fourth quarter of 2010(1).

Nonperforming assets (including nonaccrual loans, restructured loans ("TDRs"), and OREO) totaled $145.7 million at the end of the second quarter of 2011, a decrease of $7.7 million from the first quarter of 2011 and an increase of $0.4 million over the fourth quarter of 2010. Nonaccrual loans decreased $12.9 million to $61.1 million from the linked quarter primarily due to the migration of loans to the OREO category. A slowdown in new additions to the nonaccrual category also contributed to the improvement. Compared to the fourth quarter of 2010, nonaccrual loans declined by $4.6 million reflecting the movement of loans to the OREO category and, to a lesser extent, migration to the TDR category. TDRs totaled $23.6 million at the end of the second quarter, a $0.4 million decrease from the linked quarter and a $1.9 million increase over the fourth quarter of 2010. The balance of OREO totaled $61.0 million at the end of the second quarter, a $5.7 million increase over the linked quarter and $3.1 million over the fourth quarter of 2010, which reflects our efforts in working problem loans through the foreclosure process. Overall, a slower pace of loan defaults, momentum in working loans through the collection cycle, and progress in our property disposition efforts has contributed to the overall improvement in our nonperforming asset portfolio. Through the first six months of 2011, we sold OREO properties totaling $17.7 million, which compares to $18.0 million for the full year 2010. Nonperforming assets represented 5.60% of total assets at June 30, 2011 compared to 5.76% at March 31, 2011 and 5.54% at December 31, 2010. 

Average total deposits were $2.107 billion for the second quarter, a decrease of $18.1 million, or 0.9%, from the linked quarter and $8.6 million, or 0.4%, from the fourth quarter of 2010. Deposits decreased in both periods driven primarily by a reduction in certificates of deposit. Additionally, a decrease resulting from existing clients moving from our Guaranteed Now Account product to repurchase agreements occurred late in the fourth quarter of 2010 as further discussed below. Public funds balances increased as anticipated from the fourth quarter of 2010, but have declined from the first quarter level, which reflects the seasonality within this deposit category. Savings and money market accounts experienced a slight increase in both periods, partially offsetting the above mentioned decline. 

As a result of changes in the FDIC's Temporary Liquidity Guarantee Program, our government guaranteed NOW product was discontinued during the fourth quarter. As of December 31, 2010, approximately $95 million in balances from this product remained in the NOW category, $95 million migrated to the noninterest bearing DDA category, and $60 million moved into repurchase agreements.

We continue to pursue prudent pricing discipline to manage the mix of our deposits. Therefore, we are not attempting to compete with higher rate paying competitors for deposits. 

We maintained an average net overnight funds (deposits with banks plus fed funds sold less fed funds purchased) sold position of $249.1 million during the second quarter of 2011 compared to an average overnight funds sold position of $238.1 million in the linked quarter and $164.9 million in the fourth quarter of 2010. The higher balance when compared to the linked quarter primarily reflects a decline in the loan portfolio, partially offset by the decrease in deposits mentioned above and lower levels of short-term borrowings. The favorable variance as compared to the fourth quarter of 2010 is primarily attributable to an increase in repurchase agreements and a net reduction in loans, partially offset by a decline in deposits and the deployment of funds to the investment portfolio. 

Equity capital was $260.5 million as of June 30, 2011, compared to $259.3 million as of March 31, 2011 and $259.0 million as of December 31, 2010. Our leverage ratio was 9.95%, 9.74%, and 10.10%, respectively, for these periods. Further, our risk-adjusted capital ratio of 15.19% at June 30, 2011 exceeds the 10.0% threshold to be designated as "well-capitalized" under the risk-based regulatory guidelines. At June 30, 2011, our tangible common equity ratio was 6.96%, compared to 6.73% at March 31, 2011 and 6.82% at December 31, 2010.   

Discussion of Operating Results

Tax equivalent net interest income for the second quarter of 2011 was $23.7 million compared to $23.3 million for the first quarter of 2010 and $24.7 million for the second quarter of 2010. For the first six months of 2011, tax equivalent net interest income totaled $47.0 million compared to $49.2 million in 2010.

The increase of $0.4 million in tax equivalent net interest income on a linked quarter basis was due to lower cost of funds and one additional calendar day. Lower interest expense reflects a reduction in deposit rates, primarily in certificates of deposit. Interest income on earning assets was higher as a result of the one additional calendar day. Additionally, net interest income was impacted by favorable net interest adjustments on nonaccrual loans (i.e. quarter over quarter improvement in the level of interest income reversals), which offset lower interest income attributable to a reduction in loans outstanding and unfavorable asset repricing.

The decrease in tax equivalent net interest income of $1.0 million and $2.2 million, for the three and six month periods ended June 30, 2011, respectively, as compared to the same periods in 2010, resulted from a reduction in loans outstanding, lower earning assets yields reflecting unfavorable asset repricing and lower loan fees, partially offset by a reduction in interest expense and favorable net interest adjustments as noted above.

The net interest margin in the second quarter of 2011 was 4.21%, an increase of 7 basis points over the linked quarter and a decline of 6 basis points from the second quarter of 2010. Year over year, for the six month period, the margin declined 7 basis points to 4.17%. The increase in the margin when compared to the linked quarter reflects a 3 basis point reduction in the cost of funds, and an improvement in the yield on earning assets of 4 basis points. The higher yield on earning assets was primarily attributable to an increase in the loan yield resulting from the favorable interest income adjustments mentioned above, while the lower cost of funds resulted from a reduction in the rates on certificates of deposit, which were significantly reduced in all markets. The 7 basis point decline in the margin for the six months of 2011 is attributable to the shift in our earning asset mix and unfavorable asset repricing, partially offset by a favorable variance in our average cost of funds.

The provision for loan losses for the second quarter of 2011 was $3.5 million compared to $4.1 million in the first quarter of 2011 and $3.6 million for the second quarter of 2010. The reduction in the loan loss provision for both periods primarily reflects a reduction in the level of impaired loans and required reserves. For the first six months of 2011, the loan loss provision totaled $7.7 million compared to $14.4 million for the same period in 2010, also reflective of lower impaired loan reserves as well as a decline in general reserves, primarily due to a reduction in the level of internally classified loans and lower loss rates. Net charge-offs for the second quarter of 2011 totaled $6.3 million, or 1.49%, of average loans compared to $5.7 million, or 1.33% for the first quarter of 2011 and $6.4 million, or 1.39% in the second quarter of 2010. For the first half of 2011, net charge-offs totaled $12.0 million, or 1.41%, of average loans compared to $19.9 million, or 2.16% for the same period of 2010. At quarter-end, the allowance for loan losses of $31.1 million was 1.84% of outstanding loans (net of overdrafts) and provided coverage of 37% of nonperforming loans compared to 1.98% and 35%, respectively, at March 31, 2011, and 2.01% and 41%, respectively, at December 31, 2010.

Noninterest income for the second quarter of 2011 totaled $14.4 million, a decrease of $1.9 million, or 11.5% from the first quarter of 2011 and $0.2 million, or 1.5% from the second quarter of 2010. The unfavorable variance compared to the linked quarter reflects the sale of our Class B shares of Visa stock during the first quarter of 2011, which resulted in a $3.2 million pre-tax gain (reflected in other income), as well as a $0.2 million reduction in data processing fees. Favorable variances for deposit fees, retail brokerage fees, and gains from the sale of OREO partially offset the aforementioned unfavorable variances. For the first six months of 2011, noninterest income totaled $30.8 million, an increase of $2.1 million over the same period of 2010 driven by the Visa gain, partially offset by lower deposit and merchant fees. The decline in deposit fees reflects a lower level of overdraft fees due to reduced activity as well as the implementation of new rules under Regulation E. The reduction in merchant fees reflects the transfer of our merchant processing business to another processor, which was completed in August 2010. The decline in our merchant fees is substantially offset by a reduction in processing costs, which are reflected as interchange fees in noninterest expense.

Noninterest expense for the second quarter of 2011 totaled $31.2 million, a decrease of $2.2 million from the first quarter of 2011 and $3.5 million from the second quarter of 2010. The decline over the linked quarter reflects lower expense for compensation of $0.6 million, FDIC insurance of $0.3 million, intangible amortization of $0.2 million, OREO expenses of $0.6 million, and miscellaneous expense of $0.3 million. Compensation expense declined due to a reduction in performance compensation and lower unemployment taxes. The reduction in FDIC insurance expense reflects a lower rate due to recent changes to the FDIC premium structure. Intangible amortization expense declined due to the full amortization of core deposit intangibles related to several past acquisitions. The lower level of OREO expense primarily reflects a reduction in the level of losses recognized on the sale of OREO. Recognition of a $0.6 million swap liability associated with the sale of our Visa shares during the first quarter of 2011 drove the favorable variance in miscellaneous expense. For the first six months of 2011, noninterest expense totaled $64.5 million, a $3.5 million decline from the same period of 2010 attributable to lower professional fees of $0.3 million, advertising expense of $0.3 million, FDIC insurance of $0.7 million, intangible amortization expense of $1.0 million, and interchange fees of $0.9 million. Professional fees declined due to lower consulting fees and appraisal fees for OREO properties. The reduction in advertising fees reflects a lower level of activity as well as improved efficiencies gained from restructuring of the direct mail campaigns for our free checking products. The reduction in FDIC insurance expense reflects a lower rate due to recent changes to the FDIC premium structure. Intangible amortization expense declined due to the full amortization of core deposit intangibles related to several past acquisitions. Lower interchange fees are attributable to the sale of our merchant processing business as noted above in our discussion of noninterest income.       

About Capital City Bank Group, Inc.

Capital City Bank Group, Inc. ("The Company") (Nasdaq:CCBG) is one of the largest publicly traded financial services companies headquartered in Florida and has approximately $2.6 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 70 banking offices and 79 ATMs in Florida, Georgia and Alabama. 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: legislative or regulatory changes, including the Dodd-Frank Act; the strength of the U.S. economy and the local economies where the Company conducts operations; the accuracy of the Company's financial statement estimates and assumptions, including the estimate for the Company's loan loss provision; the frequency and magnitude of foreclosure of the Company's loans; continued depression of the market value of the Company that could result in an impairment of goodwill; restrictions on our operations, including the inability to pay dividends without our regulators' consent; the effects of the health and soundness of other financial institutions, including the FDIC's need to increase Deposit Insurance Fund assessments; our ability to declare and pay dividends; the effects of the Company's lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; harsh weather conditions and man-made disasters; fluctuations in inflation, interest rates, or monetary policies; changes in the stock market and other capital and real estate markets; 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; the Company's ability to integrate acquisitions; 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, 2010, 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.

(1) The problem loan resolutions and reductions in portfolio balances stated in this paragraph are based on "as of" balances, not averages.  

EARNINGS HIGHLIGHTS
                                                                                  Three Months Ended                  Six Months Ended
     (Dollars in thousands, except per share data)     Jun 30, 2011     Mar 31, 2011     Jun 30, 2010     Jun 30, 2011     Jun 30, 2010
                                          EARNINGS                                                                                
                                 Net Income (Loss)        $ 2,145        $ 1,310          $ 731        $ 3,455      $ (2,732)
                Net Income (Loss) Per Common Share         $ 0.12         $ 0.08         $ 0.04         $ 0.20       $ (0.16)
                                       PERFORMANCE                                                                                
                          Return on Average Equity            3.28%            2.03%            1.11%            2.66%           -2.07%
                          Return on Average Assets            0.33%            0.20%            0.11%            0.26%           -0.20%
                               Net Interest Margin            4.21%            4.14%            4.26%            4.17%            4.24%
      Noninterest Income as % of Operating Revenue           38.13%           41.54%           37.58%           39.87%           37.18%
                                  Efficiency Ratio           81.41%           83.30%           86.06%           82.37%           85.54%
                                  CAPITAL ADEQUACY                                                                                
                              Tier 1 Capital Ratio           13.83%           13.46%           12.78%           13.83%           12.78%
                               Total Capital Ratio           15.19%           14.82%           14.14%           15.19%           14.14%
                      Tangible Common Equity Ratio            6.96%            6.73%            6.80%            6.96%            6.80%
                                    Leverage Ratio            9.95%            9.74%            9.58%            9.95%            9.58%
                                  Equity to Assets           10.02%            9.74%            9.87%           10.02%            9.87%
                                     ASSET QUALITY                                                                                
            Allowance as % of Non-Performing Loans           36.71%           34.57%           37.80%           36.71%           37.80%
                         Allowance as a % of Loans            1.84%            1.98%            2.11%            1.84%            2.11%
             Net Charge-Offs as % of Average Loans            1.49%            1.33%            1.39%            1.41%            2.16%
        Nonperforming Assets as % of Loans and ORE            8.33%            8.66%            8.01%            8.33%            8.01%
         Nonperforming Assets as % of Total Assets            5.60%            5.76%            5.65%            5.60%            5.65%
                                 STOCK PERFORMANCE                                                                                
                                            High         $ 13.12        $ 13.80        $ 18.25        $ 13.80        $ 18.25
                                               Low         $ 9.94        $ 11.87        $ 12.36         $ 9.94        $ 11.57
                                             Close        $ 10.26        $ 12.68        $ 12.38        $ 10.26        $ 12.38
                      Average Daily Trading Volume          29,716          21,740          46,507          25,696          36,917
 
                                                                                                                                                                                                                                  
                                                                                                                                                                                                      CAPITAL CITY BANK GROUP, INC.
                                                                                                                                                                                               CONSOLIDATED STATEMENT OF OPERATIONS
                                                                                                                                                                                                                          Unaudited
                                                                                                                                                                                                             Six Months Ended
                                                                                                                                                                                                                      June 30
           (Dollars in thousands, except per share data)     2011
    Second Quarter     2011
    First Quarter     2010
    Fourth Quarter     2010
    Third Quarter     2010
    Second Quarter            2011             2010
                                                                                                                                                                                                                           
                                         INTEREST INCOME                                                                                                                                                                    
                              Interest and Fees on Loans                  $ 24,305                 $ 23,947                  $ 25,656                 $ 26,418                  $ 26,644      $ 48,252       $ 53,636
                                   Investment Securities                      1,017                     1,071                      1,080                     1,014                      1,114          2,088           2,104
                                              Funds Sold                        145                       171                         95                       144                        176            316             348
                                   Total Interest Income                     25,467                    25,189                     26,831                    27,576                     27,934         50,656          56,088
                                                                                                                                                                                                                           
                                        INTEREST EXPENSE                                                                                                                                                                    
                                                Deposits                      1,083                     1,258                      1,524                     1,820                      2,363          2,341           5,301
                                   Short-Term Borrowings                        110                       111                         99                        31                         12            221              29
                              Subordinated Notes Payable                        343                       340                        342                       376                        639            683           1,290
                              Other Long-Term Borrowings                        492                       494                        508                       565                        551            986           1,077
                                  Total Interest Expense                      2,028                     2,203                      2,473                     2,792                      3,565          4,231           7,697
                                     Net Interest Income                     23,439                    22,986                     24,358                    24,784                     24,369         46,425          48,391
                               Provision for Loan Losses                      3,545                     4,133                      3,783                     5,668                      3,633          7,678          14,373
     Net Interest Income after Provision for Loan Losses                     19,894                    18,853                     20,575                    19,116                     20,736         38,747          34,018
                                                                                                                                                                                                                           
                                      NONINTEREST INCOME                                                                                                                                                                    
                     Service Charges on Deposit Accounts                      6,309                     5,983                      6,434                     6,399                      7,039         12,292          13,667
                                    Data Processing Fees                        764                       974                        880                       911                        919          1,738           1,819
                                   Asset Management Fees                      1,080                     1,080                      1,095                     1,040                      1,080          2,160           2,100
                                   Retail Brokerage Fees                        939                       729                        738                       671                        846          1,668           1,411
                   Gain on Sale of Investment Securities                         --                        --                         --                         3                         --             --               5
                                   Mortgage Banking Fees                        568                       617                      1,027                       772                        641          1,185           1,149
                                    Interchange Fees (1)                      1,443                     1,360                      1,285                     1,291                      1,289          2,803           2,501
                                 ATM/Debit Card Fees (1)                      1,115                     1,136                      1,051                     1,036                      1,073          2,251           2,036
                                                 Other                       2,230                     4,455                      2,225                     1,326                      1,787          6,685           3,953
                                Total Noninterest Income                     14,448                    16,334                     14,735                    13,449                     14,674         30,782          28,641
                                                                                                                                                                                                                           
                                     NONINTEREST EXPENSE                                                                                                                                                                    
                         Salaries and Associate Benefits                     16,000                    16,577                     15,389                    15,003                     15,584         32,577          32,363
                                          Occupancy, Net                      2,447                     2,396                      2,406                     2,611                      2,585          4,843           4,993
                                 Furniture and Equipment                      2,117                     2,226                      2,268                     2,288                      2,192          4,343           4,373
                                 Intangible Amortization                        107                       353                        553                       709                        710            460           1,420
                                       Other Real Estate                      3,033                     3,677                      4,709                     3,306                      4,082          6,710           6,907
                                                 Other                       7,463                     8,102                      8,215                     8,446                      9,476         15,565          17,957
                               Total Noninterest Expense                     31,167                    33,331                     33,540                    32,363                     34,629         64,498          68,013
                                                                                                                                                                                                                           
                                  OPERATING PROFIT(LOSS)                      3,175                     1,856                      1,770                       202                        781          5,031         (5,354)
                              Provision for Income Taxes                      1,030                       546                      (148)                     (199)                         50          1,576         (2,622)
                                        NET INCOME(LOSS)                   $ 2,145                  $ 1,310                   $ 1,918                    $ 401                     $ 731       $ 3,455      $ (2,732)
                                                                                                                                                                                                                           
                                          PER SHARE DATA                                                                                                                                                                    
                                          Basic Earnings                    $ 0.12                   $ 0.08                    $ 0.12                   $ 0.02                    $ 0.04        $ 0.20       $ (0.16)
                                        Diluted Earnings                    $ 0.12                   $ 0.08                    $ 0.12                   $ 0.02                    $ 0.04        $ 0.20       $ (0.16)
                                          Cash Dividends                      0.100                     0.100                      0.100                     0.100                      0.100          0.200           0.290
                                          AVERAGE SHARES                                                                                                                                                                    
                                                 Basic                      17,127                    17,122                     17,095                    17,087                     17,063         17,124          17,060
                                               Diluted                      17,139                    17,130                     17,096                    17,088                     17,074         17,135          17,071
                                                                                                                                                                                      (1) Together referred to as "Bank Card Fees"
                                                                                                                                                                         
                                                                                                                                                                                                                            
                        CAPITAL CITY BANK GROUP, INC.                                                                                                                                                                        
                                    CONSOLIDATED STATEMENT OF FINANCIAL CONDITION                                                                                                                                             
                                                                                                                                                                                      Unaudited                              
        (Dollars in thousands, except per share data)     2011
    Second Quarter     2011
    First Quarter     2010
    Fourth Quarter     2010
    Third Quarter     2010
    Second Quarter                                   
                                                                                                                                                                                                                            
                                               ASSETS                                                                                                                                                                        
                              Cash and Due From Banks                  $ 71,554                 $ 52,000                  $ 35,410                 $ 48,701                  $ 52,380                                   
             Funds Sold and Interest Bearing Deposits                    223,183                   271,375                    200,783                   193,415                    250,508                                   
                      Total Cash and Cash Equivalents                    294,737                   323,375                    236,193                   242,116                    302,888                                   
                                                                                                                                                                                                                            
            Investment Securities, Available-for-Sale                    304,313                   311,356                    309,731                   231,303                    218,785                                   
                                                                                                                                                                                                                            
                      Loans, Net of Unearned Interest                                                                                                                                                                        
                Commercial, Financial, & Agricultural                    149,830                   153,960                    157,394                   156,049                    161,268                                   
                           Real Estate - Construction                     30,867                    35,614                     43,239                    45,346                     56,910                                   
                             Real Estate - Commercial                    660,058                   668,583                    671,702                   680,639                    676,516                                   
                            Real Estate - Residential                    395,126                   404,204                    420,604                   448,704                    450,997                                   
                            Real Estate - Home Equity                    248,228                   248,745                    251,565                   250,795                    247,726                                   
                                             Consumer                    194,624                   196,205                    200,727                   207,207                    215,723                                   
                                          Other Loans                      5,987                     5,098                      9,937                     9,828                      9,498                                   
                                           Overdrafts                      2,882                     2,385                      3,503                     2,669                      3,144                                   
                Total Loans, Net of Unearned Interest                  1,687,602                 1,714,794                  1,758,671                 1,801,237                  1,821,782                                   
                            Allowance for Loan Losses                   (31,080)                  (33,873)                   (35,436)                  (37,720)                   (38,442)                                   
                                           Loans, Net                  1,656,522                 1,680,921                  1,723,235                 1,763,517                  1,783,340                                   
                                                                                                                                                                                                                            
                          Premises and Equipment, Net                    112,576                   113,918                    115,356                   115,689                    116,802                                   
                                    Intangible Assets                     85,699                    85,806                     86,159                    86,712                     87,421                                   
                              Other Real Estate Owned                     61,016                    55,364                     57,937                    51,208                     48,110                                   
                                         Other Assets                     84,395                    91,754                     93,442                    89,451                     93,398                                   
                                   Total Other Assets                    343,686                   346,842                    352,894                   343,060                    345,731                                   
                                                                                                                                                                                                                            
                                         Total Assets               $ 2,599,258              $ 2,662,494               $ 2,622,053              $ 2,579,996               $ 2,650,744                                   
                                                                                                                                                                                                                            
                                          LIABILITIES                                                                                                                                                                        
                                            Deposits:                                                                                                                                                                        
                         Noninterest Bearing Deposits                 $ 568,813                $ 540,184                 $ 546,257                $ 479,887                 $ 460,168                                   
                                         NOW Accounts                    764,480                   818,512                    770,149                   830,297                    891,636                                   
                                Money Market Accounts                    283,230                   288,224                    275,416                   282,848                    303,369                                   
                             Regular Savings Accounts                    153,403                   150,051                    139,888                   135,143                    132,174                                   
                              Certificates of Deposit                    331,085                   350,076                    372,266                   393,268                    412,964                                   
                                       Total Deposits                  2,101,011                 2,147,047                  2,103,976                 2,121,443                  2,200,311                                   
                                                                                                                                                                                                                            
                                Short-Term Borrowings                     65,237                    86,650                     92,928                    38,138                     21,376                                   
                           Subordinated Notes Payable                     62,887                    62,887                     62,887                    62,887                     62,887                                   
                           Other Long-Term Borrowings                     49,196                    50,050                     50,101                    46,456                     55,605                                   
                                    Other Liabilities                     60,383                    56,582                     53,142                    50,383                     48,885                                   
                                                                                                                                                                                                                            
                                    Total Liabilities                   2,338,714                  2,403,216                   2,363,034                  2,319,307                   2,389,064                                   
                                                                                                                                                                                                                            
                                  SHAREOWNERS' EQUITY                                                                                                                                                                        
                                         Common Stock                        171                       171                        171                       171                        171                                   
                           Additional Paid-In Capital                     37,724                    37,548                     36,920                    36,864                     36,633                                   
                                    Retained Earnings                    237,709                   237,276                    237,679                   237,471                    238,779                                   
     Accumulated Other Comprehensive Loss, Net of Tax                   (15,060)                  (15,717)                   (15,751)                  (13,817)                   (13,903)                                   
                                                                                                                                                                                                                            
                            Total Shareowners' Equity                    260,544                   259,278                    259,019                   260,689                    261,680                                   
                                                                                                                                                                                                                            
            Total Liabilities and Shareowners' Equity               $ 2,599,258              $ 2,662,494               $ 2,622,053              $ 2,579,996               $ 2,650,744                                   
                                                                                                                                                                                                                            
                             OTHER BALANCE SHEET DATA                                                                                                                                                                        
                                       Earning Assets               $ 2,215,098              $ 2,297,525               $ 2,269,185              $ 2,225,955               $ 2,291,075                                   
                                    Intangible Assets                                                                                                                                                                        
                                             Goodwill                     84,811                    84,811                     84,811                    84,811                     84,811                                   
                                        Core Deposits                        378                       437                        742                     1,248                      1,910                                   
                                                Other                        510                       558                        606                       653                        700                                   
                         Interest Bearing Liabilities                  1,709,518                 1,806,450                  1,763,635                 1,789,037                  1,880,011                                   
                                                                                                                                                                                                                            
                         Book Value Per Diluted Share                   $ 15.20                  $ 15.13                   $ 15.15                  $ 15.25                   $ 15.32                                   
                Tangible Book Value Per Diluted Share                      10.21                     10.13                      10.11                     10.18                      10.21                                   
                                                                                                                                                                                                                            
                      Actual Basic Shares Outstanding                     17,127                    17,127                     17,100                    17,095                     17,067                                   
                    Actual Diluted Shares Outstanding                     17,139                    17,136                     17,101                    17,096                     17,078
 
                                                                                                                                                
                                                                                                                    CAPITAL CITY BANK GROUP, INC.
                                                                                                                      ALLOWANCE FOR LOAN LOSSES 
                                                                                                                         AND NONPERFORMING ASSETS
                                                                                                                                        Unaudited
                                                                  2011              2011               2010              2010               2010
                              (Dollars in thousands)     Second Quarter     First Quarter     Fourth Quarter     Third Quarter     Second Quarter
                                                                                                                                           
                           ALLOWANCE FOR LOAN LOSSES                                                                                        
                      Balance at Beginning of Period         $ 33,873        $ 35,436         $ 37,720        $ 38,442         $ 41,199
                           Provision for Loan Losses             3,545            4,133             3,783            5,668             3,633
     Transfer of Unfunded Reserve to Other Liability                --               --                --               --                --
                                     Net Charge-Offs             6,338            5,696             6,067            6,390             6,390
                                                                                                                                           
                            Balance at End of Period         $ 31,080        $ 33,873         $ 35,436        $ 37,720         $ 38,442
                                     As a % of Loans              1.84%             1.98%              2.01%             2.10%              2.11%
                       As a % of Nonperforming Loans             36.71%            34.57%             40.57%            39.94%             37.80%
                      As a % of Nonperforming Assets             21.34%            22.09%             24.39%            25.90%             25.66%
                                                                                                                                           
                                         CHARGE-OFFS                                                                                        
              Commercial, Financial and Agricultural            $ 301           $ 721            $ 629           $ 242            $ 405
                          Real Estate - Construction                14               --               234              701             1,220
                            Real Estate - Commercial             2,808              430             1,469            1,741               920
                           Real Estate - Residential             3,315            4,445             3,629            3,175             4,725
                                            Consumer               606              620               582            1,057               360
                                                                                                                                           
                                   Total Charge-Offs          $ 7,044         $ 6,216          $ 6,543         $ 6,916          $ 7,630
                                                                                                                                           
                                          RECOVERIES                                                                                        
              Commercial, Financial and Agricultural             $ 43            $ 63             $ 48            $ 65            $ 181
                          Real Estate - Construction                 5                9                --               --                 8
                            Real Estate - Commercial               115               12                55                6                43
                           Real Estate - Residential               170               96                 7              181               638
                                            Consumer               373              340               366              274               370
                                                                                                                                           
                                    Total Recoveries            $ 706           $ 520            $ 476           $ 526          $ 1,240
                                                                                                                                           
                                     NET CHARGE-OFFS          $ 6,338         $ 5,696          $ 6,067         $ 6,390          $ 6,390
                                                                                                                                           
          Net Charge-Offs as a % of Average Loans(1)              1.49%             1.33%              1.35%             1.40%              1.39%
                                                                                                                                           
                                 RISK ELEMENT ASSETS                                                                                        
                                   Nonaccruing Loans         $ 61,076        $ 73,954         $ 65,700        $ 74,168         $ 74,504
                                  Restructured Loans            23,582           24,028            21,649           20,267            27,200
                           Total Nonperforming Loans            84,658           97,982            87,349           94,435           101,704
                                   Other Real Estate            61,016           55,364            57,937           51,208            48,110
                          Total Nonperforming Assets        $ 145,674       $ 153,346        $ 145,286       $ 145,643        $ 149,814
                                                                                                                                           
                         Past Due Loans 30-89 Days          $ 18,103        $ 19,391         $ 24,193        $ 24,904         $ 21,192
                      Past Due Loans 90 Days or More            $ 271            $ --            $ 159            $ --             $ --
                                                                                                                                           
                 Nonperforming Loans as a % of Loans              5.02%             5.71%              4.97%             5.24%              5.58%
                      Nonperforming Assets as a % of                                                                                        
                         Loans and Other Real Estate              8.33%             8.66%              8.00%             7.86%              8.01%
           Nonperforming Assets as a % of Capital(2)             49.95%            52.31%             49.34%            48.81%             49.92%
         Nonperforming Assets as a % of Total Assets              5.60%             5.76%              5.54%             5.65%              5.65%
                                                                                                                                           
                                                                                                                                   (1) Annualized
                                                                                                (2) Capital includes allowance for loan losses. 
 
                                                                                                                                                                                                                                          
                                                                                                                                                                                                      AVERAGE BALANCE AND INTEREST RATES(1)
                                                                                                                                                                                                                                  Unaudited
                                                                                                                                                                                                                                 
                                                                                         Second Quarter 2011                                             First Quarter 2011                                            Fourth Quarter 2010
                        (Dollars in thousands)     Average
    Balance          Interest     Average
    Rate     Average
    Balance          Interest     Average
    Rate     Average
    Balance          Interest     Average
    Rate
                                                                                                                                                                                                                                 
                                       ASSETS:                                                                                                                                                                                    
               Loans, Net of Unearned Interest            $ 1,704,348           24,465                5.76%            $ 1,730,330           24,101                5.65%            $ 1,782,916           25,799                5.74%
                                                                                                                                                                                                                                 
                         Investment Securities                                                                                                                                                                                    
                 Taxable Investment Securities                244,487              825                1.35%                231,153              851                1.48%                178,926              799                1.78%
              Tax-Exempt Investment Securities                 60,963              297                1.95%                 74,226              337                1.81%                 83,469              434                2.08%
                                                                                                                                                                                                                                 
                   Total Investment Securities                305,450            1,122                1.47%                305,379            1,188                1.56%                262,395            1,233                1.87%
                                                                                                                                                                                                                                 
                                    Funds Sold                249,133              145                0.23%                242,893              171                0.28%                172,738               95                0.24%
                                                                                                                                                                                                                                 
                          Total Earning Assets              2,258,931        $ 25,732                4.57%              2,278,602        $ 25,460                4.53%              2,218,049        $ 27,127                4.85%
                                                                                                                                                                                                                                 
                       Cash and Due From Banks                 47,465                                                      50,942                                                      51,030                                     
                     Allowance for Loan Losses               (32,993)                                                    (34,822)                                                    (37,713)                                     
                                  Other Assets                344,884                                                     348,295                                                     345,427                                     
                                                                                                                                                                                                                                 
                                  Total Assets            $ 2,618,287                                                 $ 2,643,017                                                 $ 2,576,793                                     
                                                                                                                                                                                                                                 
                                  LIABILITIES:                                                                                                                                                                                    
                     Interest Bearing Deposits                                                                                                                                                                                    
                                  NOW Accounts             $ 782,698           $ 259                0.13%             $ 786,939           $ 261                0.13%             $ 837,625           $ 296                0.14%
                         Money Market Accounts                284,411              136                0.19%                278,562              131                0.19%                282,887              134                0.19%
                              Savings Accounts                152,599               16                0.04%                144,623               18                0.05%                136,276               16                0.05%
                                 Time Deposits                338,723              672                0.80%                360,575              848                0.95%                382,870            1,078                1.12%
               Total Interest Bearing Deposits              1,558,431            1,083                0.28%              1,570,699            1,258                0.32%              1,639,658            1,524                0.37%
                                                                                                                                                                                                                                 
                         Short-Term Borrowings                 76,754              110                0.58%                 87,267              111                0.52%                 34,706               99                1.14%
                    Subordinated Notes Payable                 62,887              343                2.16%                 62,887              340                2.16%                 62,887              342                2.13%
                    Other Long-Term Borrowings                 49,650              492                3.97%                 50,345              494                3.98%                 50,097              508                4.02%
                                                                                                                                                                                                                                 
            Total Interest Bearing Liabilities              1,747,722         $ 2,028                0.47%              1,771,198         $ 2,203                0.50%              1,787,348         $ 2,473                0.55%
                                                                                                                                                                                                                                 
                  Noninterest Bearing Deposits                548,870                                                     554,680                                                     476,209                                     
                             Other Liabilities                 59,324                                                      55,536                                                      50,614                                     
                                                                                                                                                                                                                                 
                             Total Liabilities              2,355,916                                                   2,381,414                                                   2,314,171                                     
                                                                                                                                                                                                                                 
                          SHAREOWNERS' EQUITY:             $ 262,371                                                  $ 261,603                                                  $ 262,622                                     
                                                                                                                                                                                                                                 
     Total Liabilities and Shareowners' Equity            $ 2,618,287                                                 $ 2,643,017                                                 $ 2,576,793                                     
                                                                                                                                                                                                                                 
                          Interest Rate Spread                               $ 23,704                4.10%                               $ 23,257                4.03%                               $ 24,654                4.30%
                                                                                                                                                                                                                                 
            Interest Income and Rate Earned(1)                               $ 25,732                4.57%                               $ 25,460                4.53%                               $ 27,127                4.85%
             Interest Expense and Rate Paid(2)                                   2,028                0.36%                                   2,203                0.39%                                   2,473                0.44%
                                                                                                                                                                                                                                 
                           Net Interest Margin                               $ 23,704                4.21%                               $ 23,257                4.14%                               $ 24,654                4.41%
                                                                                                                         
                                                                                                                                                                     
                                                                                          Third Quarter 2010                                            Second Quarter 2010
                        (Dollars in thousands)     Average
    Balance          Interest     Average
    Rate     Average
    Balance          Interest     Average
    Rate
                                                                                                                                                                     
                                       ASSETS:                                                                                                                        
               Loans, Net of Unearned Interest            $ 1,807,483           26,568                5.83%            $ 1,841,379           26,795                5.84%
                                                                                                                                                                     
                         Investment Securities                                                                                                                        
                 Taxable Investment Securities                124,625              674                2.15%                128,268              708                2.21%
              Tax-Exempt Investment Securities                 88,656              521                2.35%                 92,140              624                2.71%
                                                                                                                                                                     
                   Total Investment Securities                213,281            1,195                2.23%                220,408            1,332                2.42%
                                                                                                                                                                     
                                    Funds Sold                252,434              144                0.22%                267,578              176                0.26%
                                                                                                                                                                     
                          Total Earning Assets              2,273,198        $ 27,907                4.87%              2,329,365        $ 28,303                4.87%
                                                                                                                                                                     
                       Cash and Due From Banks                 50,942                                                      50,739                                     
                     Allowance for Loan Losses               (39,584)                                                    (41,074)                                     
                                  Other Assets                342,202                                                     339,458                                     
                                                                                                                                                                     
                                  Total Assets            $ 2,626,758                                                 $ 2,678,488                                     
                                                                                                                                                                     
                                  LIABILITIES:                                                                                                                        
                     Interest Bearing Deposits                                                                                                                        
                                  NOW Accounts             $ 871,158           $ 326                0.15%             $ 879,329           $ 400                0.18%
                         Money Market Accounts                293,424              145                0.20%                333,976              331                0.40%
                              Savings Accounts                133,690               17                0.05%                131,333               17                0.05%
                                 Time Deposits                402,880            1,332                1.31%                430,571            1,615                1.50%
               Total Interest Bearing Deposits              1,701,152            1,820                0.42%              1,775,209            2,363                0.53%
                                                                                                                                                                     
                         Short-Term Borrowings                 23,388               31                0.54%                 22,694               12                0.20%
                    Subordinated Notes Payable                 62,887              376                2.34%                 62,887              639                4.02%
                    Other Long-Term Borrowings                 54,258              565                4.13%                 52,704              551                4.20%
                                                                                                                                                                     
            Total Interest Bearing Liabilities              1,841,685         $ 2,792                0.60%              1,913,494         $ 3,565                0.75%
                                                                                                                                                                     
                  Noninterest Bearing Deposits                471,013                                                     458,969                                     
                             Other Liabilities                 50,318                                                      42,152                                     
                                                                                                                                                                     
                             Total Liabilities              2,363,016                                                   2,414,615                                     
                                                                                                                                                                     
                          SHAREOWNERS' EQUITY:             $ 263,742                                                  $ 263,873                                     
                                                                                                                                                                     
     Total Liabilities and Shareowners' Equity            $ 2,626,758                                                 $ 2,678,488                                     
                                                                                                                                                                     
                          Interest Rate Spread                               $ 25,115                4.27%                               $ 24,738                4.12%
                                                                                                                                                                     
            Interest Income and Rate Earned(1)                               $ 27,907                4.87%                               $ 28,303                4.87%
             Interest Expense and Rate Paid(2)                                   2,792                0.49%                                   3,565                0.61%
                                                                                                                                                                     
                           Net Interest Margin                               $ 25,115                4.38%                               $ 24,738                4.26%
                                                                                                                             
                                                                                                                                                                         
                                                                                                 June 2011 YTD                                                    June 2010 YTD
                        (Dollars in thousands)     Average 
    Balance          Interest     Average 
    Rate     Average 
    Balance          Interest     Average 
    Rate
                                                                                                                                                                         
                                       ASSETS:                                                                                                                            
               Loans, Net of Unearned Interest            $ 1,717,267           48,566                 5.76%            $ 1,863,749           53,975                 5.84%
                                                                                                                                                                         
                         Investment Securities                                                                                                                            
                 Taxable Investment Securities                 237,857            1,676                 1.41%                  99,954            1,208                 2.42%
              Tax-Exempt Investment Securities                  67,558              634                 1.88%                  94,713            1,377                 2.91%
                                                                                                                                                                         
                   Total Investment Securities                 305,415            2,310                 1.52%                 194,667            2,585                 2.66%
                                                                                                                                                                         
                                    Funds Sold                 246,030              316                 0.23%                 285,331              348                 0.24%
                                                                                                                                                                         
                          Total Earning Assets               2,268,712        $ 51,192                 4.55%               2,343,747        $ 56,908                 4.90%
                                                                                                                                                                         
                       Cash and Due From Banks                  49,194                                                        52,795                                      
                     Allowance for Loan Losses                (33,903)                                                      (42,820)                                      
                                  Other Assets                 346,581                                                       334,677                                      
                                                                                                                                                                         
                                  Total Assets            $ 2,630,584                                                  $ 2,688,399                                      
                                                                                                                                                                         
                                  LIABILITIES:                                                                                                                            
                     Interest Bearing Deposits                                                                                                                            
                                  NOW Accounts              $ 784,806           $ 520                 0.13%              $ 873,200           $ 784                 0.18%
                         Money Market Accounts                 281,503              267                 0.19%                 353,958            1,020                 0.58%
                              Savings Accounts                 148,633               34                 0.05%                 128,856               32                 0.05%
                                 Time Deposits                 349,589            1,520                 0.88%                 434,321            3,465                 1.61%
               Total Interest Bearing Deposits               1,564,531            2,341                 0.30%               1,790,335            5,301                 0.60%
                                                                                                                                                                         
                         Short-Term Borrowings                  81,982              221                 0.54%                  26,662               29                 0.21%
                    Subordinated Notes Payable                  62,887              683                 2.16%                  62,887            1,290                 4.08%
                    Other Long-Term Borrowings                  49,995              986                 3.98%                  51,350            1,077                 4.23%
                                                                                                                                                                         
            Total Interest Bearing Liabilities               1,759,395         $ 4,231                 0.48%               1,931,234         $ 7,697                 0.80%
                                                                                                                                                                         
                  Noninterest Bearing Deposits                 551,759                                                       451,094                                      
                             Other Liabilities                  57,440                                                        39,870                                      
                                                                                                                                                                         
                             Total Liabilities               2,368,594                                                     2,422,198                                      
                                                                                                                                                                         
                          SHAREOWNERS' EQUITY:              $ 261,990                                                    $ 266,201                                      
                                                                                                                                                                         
     Total Liabilities and Shareowners' Equity            $ 2,630,584                                                  $ 2,688,399                                      
                                                                                                                                                                         
                          Interest Rate Spread                                $ 46,961                 4.07%                                $ 49,211                 4.10%
                                                                                                                                                                         
            Interest Income and Rate Earned(1)                                $ 51,192                 4.55%                                $ 56,908                 4.90%
             Interest Expense and Rate Paid(2)                                    4,231                 0.38%                                    7,697                 0.66%
                                                                                                                                                                         
                           Net Interest Margin                                $ 46,961                 4.17%                                $ 49,211                 4.24%
                                                                                                                                                                         
                                                                        (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: J. Kimbrough Davis
         Executive Vice President and Chief Financial Officer
         850.402.7820
Source: Capital City Bank Group, Inc.