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

TALLAHASSEE, Fla., April 25, 2011 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (Nasdaq:CCBG) today reported net income of $1.3 million, or $0.08 per diluted share for the first quarter of 2011 compared to net income of $1.9 million, or $0.12 per diluted share in the fourth quarter of 2010 ("linked quarter") and a net loss of $3.5 million, or $0.20 per diluted share for the first quarter of 2010.

Compared to the fourth quarter of 2010, net income reflects lower net interest income of $1.4 million, an increase in the loan loss provision of $0.3 million, and higher income tax expense of $0.7 million, partially offset by higher noninterest income of $1.6 million, and lower noninterest expense of $0.2 million. During the first quarter of 2011, we sold all of our Visa Class B shares of stock, which resulted in a $3.2 million pre-tax gain reflected in noninterest income and a swap liability of $0.6 million reflected in noninterest expense.

The increase in net income over the first quarter of 2010 was driven by a lower loan loss provision of $6.6 million and higher noninterest income of $2.4 million, partially offset by a reduction in net interest income of $1.0 million and higher income tax expense of $3.2 million.

"Given the current state of our economy, I am pleased to report Capital City earned a profit during the first quarter, but weak loan demand, historically low interest rates and general economic conditions within our markets continue to put pressure on earnings," said William G. Smith, Jr., Chairman, President and Chief Executive Officer. Although our nonperforming assets remain elevated, many credit metrics are showing improved trends. As expected, total credit costs remain elevated as we work loans through the collection cycle and dispose of OREO properties, both of which gained momentum during the quarter. We operate from a position of strength with strong liquidity and capital base; and we continue to focus on core deposits as we believe this is the foundation of our long-term franchise value. While we believe the worst is behind us, early on we suggested the road to recovery would be choppy and this is now playing out as we continue to experience volatility in our quarter to quarter performance."

The Return on Average Assets was 0.20% and the Return on Average Equity was 2.03% for the first quarter of 2011, compared to 0.30% and 2.90%, respectively for the fourth quarter of 2010, and -0.52% and -5.23%, respectively for the comparable quarter in 2010.

Discussion of Financial Condition

Average earning assets were $2.279 billion for the first quarter of 2011, an increase of $60.6 million, or 2.7% from the fourth quarter of 2010, and a decline of $79.7 million, or 3.4%, from the first quarter of 2010. The higher level of earning assets over the linked quarter was funded by growth in both deposits and short-term borrowings. Quarter over quarter, average overnight funds grew by $70.2 million, the investment portfolio grew $43.0 million and loans declined $52.6 million, partially attributable to the resolution of problem loans during the quarter.

As compared to the first quarter of 2010, earning assets declined $79.7 million. A $123.4 million reduction in deposits, partially offset by a $56.6 million increase in short-term borrowings drove the overall reduction in earning assets. The increase in short-term borrowings is attributable to the expiration of our Guarantee NOW Account ("GNA") program and clients shifting deposits from the GNA to retail repurchase agreements, which is explained in greater detail below. Average loans and overnight funds declined $156.0 million and $60.4 million, respectively, while investment securities increased $136.7 million.  Average loans have declined throughout the portfolio, driven primarily by reduction in the commercial real estate 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 has the effect of lowering the loan portfolio as loans are either charged off or transferred to the other real estate owned category. During the first quarter, problem loan resolutions accounted for $15.3 million, or 35% of a net reduction in total loans of $43.9 million, and on a year over year basis, problem loan resolutions accounted for $70.4 million, or 51% of the net reduction of $136.8 million1.

Nonperforming assets (including nonaccrual loans, restructured loans ("TDRs"), and other real estate owned ("OREO")) totaled $153.3 million at the end of the first quarter of 2011, an increase of $8.1 million over the fourth quarter of 2010 and a reduction of $0.3 million from the first quarter of 2010. Compared to the linked quarter, nonaccrual loans  increased $8.3 million due to a higher level of defaults within our problem loan pool, a significant portion of which was related to one borrowing relationship totaling $6.0 million. TDRs totaled $24.0 million at the end of the first quarter, a $2.4 million increase over the linked quarter. The balance of OREO decreased $2.6 million from the linked quarter reflective of an increased pace of property dispositions. Compared to the first quarter of 2010, the slight decline in nonperforming assets reflects a $2.4 million reduction in the nonaccrual loan balance and a $6.8 million decline in TDRs, partially offset by an $8.9 million increase in the OREO balance. Nonperforming assets represented 5.76% of total assets at March 31, 2011 compared to 5.54% at December 31, 2010 and 5.66% at March 31, 2010. 

Average total deposits were $2.125 billion for the first quarter, an increase of $9.5 million, or 0.5%, from the fourth quarter of 2010 and a decrease of $123.4 million, or 5.5%, from the first quarter of 2010. Deposit levels improved slightly from the linked quarter primarily as a result of growth in public funds, partially offset by declines in certificates of deposit and existing clients moving from our GNA product to repurchase agreements. Public funds balances have increased as anticipated from the linked quarter reflecting seasonality within this deposit category. Pursuant to 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. The decrease from the first quarter of 2010 reflects a reduction in money market accounts (primarily promotional deposits), deposits transferring from GNA to repurchase agreements and lower certificates of deposit balances, partially offset by higher public funds. 

We maintained an average net overnight funds (deposits with banks plus fed funds sold less fed funds purchased) sold position of $238.1 million during the first quarter of 2011 compared to an average net overnight funds sold position of $164.9 million in the prior quarter and an average overnight funds sold position of $297.0 million in the first quarter of 2010. The higher balance when compared to the linked quarter primarily reflects the increase in deposits mentioned above, growth in short-term borrowings and declines in the loan portfolio, partially offset by a higher level of investment securities. The unfavorable variance as compared to first quarter of 2010 is primarily attributable to declines in deposits and the deployment of funds to the investment portfolio, partially offset by a net reduction in loans.

Equity capital was $259.3 million as of March 31, 2011, compared to $259.0 million as of December 31, 2010 and $262.0 million as of March 31, 2010. Our leverage ratio was 9.74%, 10.10%, and 9.64%, respectively, for the comparable periods. Further, our risk-adjusted capital ratio of 14.82% at March 31, 2011 exceeds the 10.0% threshold to be designated as "well-capitalized" under the risk-based regulatory guidelines and reflects an improvement of 23 basis points over the linked quarter. At March 31, 2011, our tangible common equity ratio was 6.73%, compared to 6.82% at December 31, 2010 and 6.62% at March 31, 2010.   

Discussion of Operating Results

Tax equivalent net interest income for the first quarter of 2011 was $23.3 million compared to $24.6 million for the fourth quarter of 2010 and $24.5 million for the first quarter of 2010.

The decrease of $1.3 million in tax equivalent net interest income as compared to the linked quarter was due to two less calendar days; a reduction in loan income attributable to declining loan balances and continued unfavorable asset repricing. This was partially offset by lower interest expense and a slight decrease in foregone interest on nonaccrual loans. Lower interest expense reflects a reduction in deposit rates primarily in certificates of deposit.   With the exception of calendar days, the explanation for the $1.2 million decline from the prior year quarter essentially mirrors the explanation for the linked quarter.

The net interest margin in the first quarter of 2011 was 4.14%, a decrease of 27 basis points over the linked quarter and a decline of 7 basis points from the first quarter of 2010. The decrease in the margin when compared to both periods was a reduction in the earning asset yield attributable to a shift in the mix of earning assets and continued unfavorable asset repricing. Partially offsetting the unfavorable variances was a reduction in the cost of funds, primarily the average rate paid on certificates of deposit.

The provision for loan losses for the first quarter of 2011 was $4.1 million compared to $3.8 million in the fourth quarter of 2010 and $10.7 million for the first quarter of 2010. The increase in the loan loss provision compared to the linked quarter primarily reflects reserves for newly identified impaired loans. A reduction in general reserves had a favorable impact on the loan loss provision and reflects a decline in our classified loan balance, partially due to loan upgrades during the quarter, a lower historical loss ratio and a reduction in past dues. Compared to the first quarter of 2010, a reduction in impaired loans was the primary factor driving the decline in the loan loss provision. Net charge-offs for the first quarter of 2011 totaled $5.7 million, or 1.33%, of average loans compared to $6.1 million, or 1.35% for the fourth quarter of 2010 and $13.5 million, or 2.91% in the first quarter of 2010. At quarter-end, the allowance for loan losses of $33.9 million was 1.98% of outstanding loans (net of overdrafts) and provided coverage of 35% of nonperforming loans compared to 2.01% and 41%, respectively, at December 31, 2010, and 2.23% and 38%, respectively, at March 31, 2010.

Noninterest income for the first quarter of 2011 totaled $16.3 million, an increase of $1.6 million, or 10.9% over the fourth quarter of 2010 and $2.4 million, or 16.9% over the first quarter of 2010. The increase for both periods was due to a $3.2 million gain (reflected in other income) from the sale of all the Class B shares of Visa stock that were obtained from the initial public offering of Visa, Inc. Compared to the linked quarter, a lower level of deposit fees of $0.5 million and mortgage banking fees of $0.4 million partially offset the gain realized from the sale of Visa stock. The decline in deposit fees reflects a two-day calendar variance and a seasonal variance in the use of our overdraft product. Mortgage banking fees declined primarily due to lower new loan production reflective of a slowdown in new home purchase activity in our Tallahassee market. Additionally, gains from the sale of OREO properties and miscellaneous recoveries, both of which are reflected as other income, also declined from the linked quarter by $0.3 million and $0.4 million, respectively. Compared to the first quarter of 2010, noninterest income increased $2.4 million reflecting the $3.2 million gain on the sale of Visa shares, a $0.3 million increase in bank card fees, and higher retail brokerage fees of $0.2 million, partially offset by a $0.6 million decline in deposit fees and a $0.7 million decline in merchant fees which is included in other income. The decline in deposit fees compared to the first quarter of 2010 reflects a lower level of overdraft fees due to reduced activity reflective of current economic conditions, a higher level of consumer awareness that has both impacted consumer and business spending habits, as well as the implementation of new rules under Regulation E, which regulate our ability to post one-time debit card/ATM transactions for clients who have not opted in to our overdraft protection service. The reduction in merchant fees reflects the migration of our last remaining merchant to another processor – the decline in these revenues are substantially offset by a reduction in processing costs, which are reflected as interchange fees in noninterest expense.   

Noninterest expense for the first quarter of 2011 totaled $33.3 million, a decrease of $0.2 million, or 0.62%, from the fourth quarter of 2010 and $0.1 million, or 0.16%, from the first quarter of 2010. The decline compared to the linked quarter was primarily due to a reduction in other expense of $1.1 million and intangible amortization expense of $0.2 million, partially offset by higher salary/benefit expense of $1.2 million. Other expense declined due to lower OREO expense of $1.0 million, advertising expense of $0.4 million, professional fees of $0.3 million, and a decline in other losses of $0.6 million. Unfavorable variances related to the recognition of a $0.6 million swap liability related to the sale of our Visa stock and the prior quarter reversal of our $0.8 million Visa litigation reserve partially offset the aforementioned reductions. Lower carrying costs of $0.5 million and valuation adjustments/losses of $0.5 million were the primary reason for the decline in OREO expense. A lower level of advertising and public relations activity drove the decline in advertising expense. Professional fees were lower primarily due to nonrecurring expenses in the fourth quarter of 2010 for consulting engagements. Intangible amortization expense declined due to the full amortization of core deposit intangibles related to several past acquisitions. The increase in salary/benefit expense was due to higher incentive expense (cash and stock), the resetting of payroll/unemployment taxes and pension expense. Incentive expense increased due to the resetting to par of several performance incentive programs. The increase in pension expense reflects utilization of a lower discount rate in 2011 reflective of lower long-term bond interest rates. Compared to the first quarter of 2010, the slight decrease in noninterest expense was attributable to lower salary/benefit expense of $0.2 million and intangible amortization of $0.4 million, partially offset by an unfavorable variance of $0.5 million in other expense. The unfavorable variance for other expense was due to higher OREO expense of $0.8 million and recognition of a $0.6 million swap liability, partially offset by a decline in interchange fees of $0.6 million and professional fees of $0.2 million.

Income tax expense for the first quarter of 2011 totaled $0.5 million, an increase of $0.7 million over the fourth quarter of 2010, and $3.2 million over the first quarter of 2010. A higher level of book operating profit at our bank subsidiary due to the gain on sale of Visa stock drove the higher level of tax expense compared to both periods. Reversal of a tax contingency during the fourth quarter of 2010 also contributed to the variance.

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 $2.7 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 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. 

1The 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
     (Dollars in thousands, except per share data)     Mar 31, 2011     Dec 31, 2010     Mar 31, 2010
                                          EARNINGS                                                
                                  Net Income(Loss)           $1,310           $1,918         $(3,463)
                 Net Income(Loss) Per Common Share            $0.08            $0.12          $(0.20)
                                       PERFORMANCE                                                
                          Return on Average Equity            2.03%            2.90%           -5.23%
                          Return on Average Assets            0.20%            0.30%           -0.52%
                               Net Interest Margin            4.14%            4.41%            4.21%
      Noninterest Income as % of Operating Revenue           41.54%           37.69%           36.77%
                                  Efficiency Ratio           83.30%           83.75%           85.00%
                                  CAPITAL ADEQUACY                                                
                              Tier 1 Capital Ratio           13.46%           13.24%           12.81%
                               Total Capital Ratio           14.82%           14.59%           14.16%
                            Tangible Capital Ratio            6.73%            6.82%            6.62%
                                    Leverage Ratio            9.74%           10.10%            9.64%
                                  Equity to Assets            9.74%            9.88%            9.65%
                                     ASSET QUALITY                                                
            Allowance as % of Non-Performing Loans           34.57%           40.57%           38.42%
                         Allowance as a % of Loans            1.98%            2.01%            2.23%
             Net Charge-Offs as % of Average Loans            1.33%            1.35%            2.91%
        Nonperforming Assets as % of Loans and ORE            8.66%            8.00%            8.10%
         Nonperforming Assets as % of Total Assets            5.76%            5.54%            5.66%
                                 STOCK PERFORMANCE                                                
                                            High           $13.80          $14.19          $14.61
                                               Low          $11.87          $11.56          $11.57
                                             Close          $12.68          $12.60          $14.25
                      Average Daily Trading Volume          21,740          21,385          26,854
                                                                                                 
CAPITAL CITY BANK GROUP, INC.                                                                                                                                    
                    CONSOLIDATED STATEMENT OF OPERATIONS                                                                                                                                    
                                               Unaudited                                                                                                                                    
                                                                                                                                                                                                
                                                                                                                                                                                           
                                                                                                                                                                                           
           (Dollars in thousands, except per share data)     2011
    First Quarter     2010
    Fourth Quarter     2010
    Third Quarter     2010
    Second Quarter     2010
    First Quarter
                                                                                                                                                                                           
                                         INTEREST INCOME                                                                                                                                    
                              Interest and Fees on Loans                   $23,947                    $25,656                   $26,418                    $26,644                   $26,992
                                   Investment Securities                     1,071                      1,080                     1,014                      1,114                       990
                                              Funds Sold                       171                         95                       144                        176                       172
                                   Total Interest Income                    25,189                     26,831                    27,576                     27,934                    28,154
                                                                                                                                                                                           
                                        INTEREST EXPENSE                                                                                                                                    
                                                Deposits                     1,258                      1,524                     1,820                      2,363                     2,938
                                   Short-Term Borrowings                       111                         99                        31                         12                        17
                              Subordinated Notes Payable                       340                        342                       376                        639                       651
                              Other Long-Term Borrowings                       494                        508                       565                        551                       526
                                  Total Interest Expense                     2,203                      2,473                     2,792                      3,565                     4,132
                                     Net Interest Income                    22,986                     24,358                    24,784                     24,369                    24,022
                               Provision for Loan Losses                     4,133                      3,783                     5,668                      3,633                    10,740
     Net Interest Income after Provision for Loan Losses                    18,853                     20,575                    19,116                     20,736                    13,282
                                                                                                                                                                                           
                                      NONINTEREST INCOME                                                                                                                                    
                     Service Charges on Deposit Accounts                     5,983                      6,434                     6,399                      7,039                     6,628
                                    Data Processing Fees                       974                        880                       911                        919                       900
                                   Asset Management Fees                     1,080                      1,095                     1,040                      1,080                     1,020
                                   Retail Brokerage Fees                       729                        738                       671                        846                       565
                   Gain on Sale of Investment Securities                        --                         --                         3                         --                         5
                                   Mortgage Banking Fees                       617                      1,027                       772                        641                       508
                                    Interchange Fees (1)                     1,360                      1,285                     1,291                      1,289                     1,212
                                 ATM/Debit Card Fees (1)                     1,136                      1,051                     1,036                      1,073                       963
                                                 Other                      4,455                      2,225                     1,326                      1,787                     2,166
                                Total Noninterest Income                    16,334                     14,735                    13,449                     14,674                    13,967
                                                                                                                                                                                           
                                     NONINTEREST EXPENSE                                                                                                                                    
                         Salaries and Associate Benefits                    16,577                     15,389                    15,003                     15,584                    16,779
                                          Occupancy, Net                     2,396                      2,406                     2,611                      2,585                     2,408
                                 Furniture and Equipment                     2,226                      2,268                     2,288                      2,192                     2,181
                                 Intangible Amortization                       353                        553                       709                        710                       710
                                                 Other                     11,779                     12,924                    11,752                     13,558                    11,306
                               Total Noninterest Expense                    33,331                     33,540                    32,363                     34,629                    33,384
                                                                                                                                                                                           
                                  OPERATING PROFIT(LOSS)                     1,856                      1,770                       202                        781                   (6,135)
                              Provision for Income Taxes                       546                      (148)                     (199)                         50                   (2,672)
                                        NET INCOME(LOSS)                     $1,310                      $1,918                       $401                        $731                   $(3,463)
                                                                                                                                                                                           
                                          PER SHARE DATA                                                                                                                                    
                                          Basic Earnings                     $0.08                      $0.12                     $0.02                      $0.04                   $(0.20)
                                        Diluted Earnings                     $0.08                      $0.12                     $0.02                      $0.04                   $(0.20)
                                          Cash Dividends                     0.100                      0.100                     0.100                      0.100                     0.190
                                          AVERAGE SHARES                                                                                                                                    
                                                 Basic                     17,122                     17,095                    17,087                     17,063                    17,057
                                               Diluted                     17,130                     17,096                    17,088                     17,074                    17,070
                                                                                                                                                                                           
                                                                                                                                                                                           
           (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
    First Quarter     2010
    Fourth Quarter     2010
    Third Quarter     2010
    Second Quarter     2010
    First Quarter       
                                                                                                                                                                                               
                                               ASSETS                                                                                                                                           
                              Cash and Due From Banks                 $ 52,000                  $ 35,410                 $ 48,701                  $ 52,380                 $ 52,615       
             Funds Sold and Interest Bearing Deposits                   271,375                    200,783                   193,415                    250,508                   293,413       
                      Total Cash and Cash Equivalents                   323,375                    236,193                   242,116                    302,888                   346,028       
                                                                                                                                                                                               
            Investment Securities, Available-for-Sale                   311,356                    309,731                   231,303                    218,785                   217,606       
                                                                                                                                                                                               
                      Loans, Net of Unearned Interest                                                                                                                                           
                Commercial, Financial, & Agricultural                   153,960                    157,394                   156,049                    161,268                   169,766       
                           Real Estate - Construction                    35,614                     43,239                    45,346                     56,910                    79,145       
                             Real Estate - Commercial                   668,583                    671,702                   680,639                    676,516                   729,011       
                            Real Estate - Residential                   404,204                    420,604                   448,704                    450,997                   394,132       
                            Real Estate - Home Equity                   248,745                    251,565                   250,795                    247,726                   245,185       
                                             Consumer                   196,205                    200,727                   207,207                    215,723                   224,793       
                                          Other Loans                     5,098                      9,937                     9,828                      9,498                     6,888       
                                           Overdrafts                     2,385                      3,503                     2,669                      3,144                     2,701       
                Total Loans, Net of Unearned Interest                 1,714,794                  1,758,671                 1,801,237                  1,821,782                 1,851,621       
                            Allowance for Loan Losses                  (33,873)                   (35,436)                  (37,720)                   (38,442)                  (41,198)       
                                           Loans, Net                 1,680,921                  1,723,235                 1,763,517                  1,783,340                 1,810,423       
                                                                                                                                                                                               
                          Premises and Equipment, Net                   113,918                    115,356                   115,689                    116,802                   117,055       
                                    Intangible Assets                    85,806                     86,159                    86,712                     87,421                    88,131       
                              Other Real Estate Owned                    55,364                     57,937                    51,208                     48,110                    46,444       
                                         Other Assets                    91,754                     93,442                    89,451                     93,398                    89,416       
                                   Total Other Assets                   346,842                    352,894                   343,060                    345,731                   341,046       
                                                                                                                                                                                               
                                         Total Assets              $ 2,662,494               $ 2,622,053              $ 2,579,996               $ 2,650,744              $ 2,715,103       
                                                                                                                                                                                               
                                          LIABILITIES                                                                                                                                           
                                            Deposits:                                                                                                                                           
                         Noninterest Bearing Deposits                $ 540,184                 $ 546,257                $ 479,887                 $ 460,168                $ 446,855       
                                         NOW Accounts                   818,512                    770,149                   830,297                    891,636                   890,570       
                                Money Market Accounts                   288,224                    275,416                   282,848                    303,369                   376,091       
                             Regular Savings Accounts                   150,051                    139,888                   135,143                    132,174                   130,936       
                              Certificates of Deposit                   350,076                    372,266                   393,268                    412,964                   438,488       
                                       Total Deposits                 2,147,047                  2,103,976                 2,121,443                  2,200,311                 2,282,940       
                                                                                                                                                                                               
                                Short-Term Borrowings                    86,650                     92,928                    38,138                     21,376                    18,900       
                           Subordinated Notes Payable                    62,887                     62,887                    62,887                     62,887                    62,887       
                           Other Long-Term Borrowings                    50,050                     50,101                    46,456                     55,605                    50,679       
                                    Other Liabilities                    56,582                     53,142                    50,383                     48,885                    37,738       
                                                                                                                                                                                               
                                    Total Liabilities                  2,403,216                   2,363,034                  2,319,307                   2,389,064                  2,453,144       
                                                                                                                                                                                               
                                  SHAREOWNERS' EQUITY                                                                                                                                           
                                         Common Stock                       171                        171                       171                        171                       171       
                           Additional Paid-In Capital                    37,548                     36,920                    36,864                     36,633                    36,816       
                                    Retained Earnings                   237,276                    237,679                   237,471                    238,779                   239,755       
     Accumulated Other Comprehensive Loss, Net of Tax                  (15,717)                   (15,751)                  (13,817)                   (13,903)                  (14,783)       
                                                                                                                                                                                               
                            Total Shareowners' Equity                   259,278                    259,019                   260,689                    261,680                   261,959       
                                                                                                                                                                                               
            Total Liabilities and Shareowners' Equity              $ 2,662,494               $ 2,622,053              $ 2,579,996               $ 2,650,744              $ 2,715,103       
                                                                                                                                                                                               
                             OTHER BALANCE SHEET DATA                                                                                                                                           
                                       Earning Assets              $ 2,297,525               $ 2,269,185              $ 2,225,955               $ 2,291,075              $ 2,362,640       
                                    Intangible Assets                                                                                                                                           
                                             Goodwill                    84,811                     84,811                    84,811                     84,811                    84,811       
                                        Core Deposits                       437                        742                     1,248                      1,910                     2,572       
                                                Other                       558                        606                       653                        700                       748       
                         Interest Bearing Liabilities                 1,806,450                  1,763,635                 1,789,037                  1,880,011                 1,968,551       
                                                                                                                                                                                               
                         Book Value Per Diluted Share                  $ 15.13                   $ 15.15                  $ 15.25                   $ 15.32                  $ 15.34       
                Tangible Book Value Per Diluted Share                     10.13                      10.11                     10.18                      10.21                     10.18       
                                                                                                                                                                                               
                      Actual Basic Shares Outstanding                    17,127                     17,100                    17,095                     17,067                    17,063       
                    Actual Diluted Shares Outstanding                    17,136                     17,101                    17,096                     17,078                    17,076       
                                                                                                                                                                                        
CAPITAL CITY BANK GROUP, INC.                                                                                       
                           ALLOWANCE FOR LOAN LOSSES                                                                                        
                              AND NONPERFORMING ASSETS                                                                                       
                                                                                                                                         Unaudited
                                                                   2011               2010              2010               2010              2010
                                (Dollars in thousands)     First Quarter     Fourth Quarter     Third Quarter     Second Quarter     First Quarter
                                                                                                                                            
                             ALLOWANCE FOR LOAN LOSSES                                                                                       
                        Balance at Beginning of Period        $ 35,436         $ 37,720        $ 38,442         $ 41,199        $ 43,999
                             Provision for Loan Losses            4,133             3,783            5,668             3,633           10,740
                                       Net Charge-Offs            5,696             6,067            6,390             6,390           13,540
                                                                                                                                            
                              Balance at End of Period        $ 33,873         $ 35,436        $ 37,720         $ 38,442        $ 41,199
                                       As a % of Loans             1.98%              2.01%             2.10%              2.11%             2.23%
                         As a % of Nonperforming Loans            34.57%             40.57%            39.94%             37.80%            38.42%
                        As a % of Nonperforming Assets            22.09%             24.39%            25.90%             25.66%            26.81%
                                                                                                                                            
                                           CHARGE-OFFS                                                                                       
                Commercial, Financial and Agricultural           $ 721            $ 629           $ 242            $ 405           $ 842
                            Real Estate - Construction               --               234              701             1,220            3,722
                              Real Estate - Commercial              430             1,469            1,741               920            4,631
                             Real Estate - Residential            4,445             3,629            3,175             4,725            3,727
                                              Consumer              620               582            1,057               360            1,507
                                                                                                                                            
                                     Total Charge-Offs         $ 6,216          $ 6,543         $ 6,916          $ 7,630        $ 14,429
                                                                                                                                            
                                            RECOVERIES                                                                                       
                Commercial, Financial and Agricultural            $ 63             $ 48            $ 65            $ 181            $ 77
                            Real Estate - Construction                9                --               --                 8               --
                              Real Estate - Commercial               12                55                6                43              157
                             Real Estate - Residential               96                 7              181               638              114
                                              Consumer              340               366              274               370              541
                                                                                                                                            
                                      Total Recoveries           $ 520            $ 476           $ 526          $ 1,240           $ 889
                                                                                                                                            
                                       NET CHARGE-OFFS         $ 5,696          $ 6,067         $ 6,390          $ 6,390        $ 13,540
                                                                                                                                            
            Net Charge-Offs as a % of Average Loans(1)             1.33%              1.35%             1.40%              1.39%             2.91%
                                                                                                                                            
                                   RISK ELEMENT ASSETS                                                                                       
                                     Nonaccruing Loans        $ 73,954         $ 65,700        $ 74,168         $ 74,504        $ 76,382
                                    Restructured Loans           24,028            21,649           20,267            27,200           30,843
                             Total Nonperforming Loans           97,982            87,349           94,435           101,704          107,225
                                     Other Real Estate           55,364            57,937           51,208            48,110           46,444
                            Total Nonperforming Assets       $ 153,346        $ 145,286       $ 145,643        $ 149,814       $ 153,669
                                                                                                                                            
                           Past Due Loans 30-89 Days         $ 19,391         $ 24,193        $ 24,904         $ 21,192        $ 18,768
                        Past Due Loans 90 Days or More            $ --            $ 159            $ --             $ --            $ --
                                                                                                                                            
                   Nonperforming Loans as a % of Loans             5.71%              4.97%             5.24%              5.58%             5.79%
                        Nonperforming Assets as a % of                                                                                       
                           Loans and Other Real Estate             8.66%              8.00%             7.86%              8.01%             8.10%
             Nonperforming Assets as a % of Capital(2)            52.31%             49.34%            48.81%             49.92%            50.69%
           Nonperforming Assets as a % of Total Assets             5.76%              5.54%             5.65%              5.65%             5.66%
                                                                                                                                            
                                        (1) Annualized                                                                                       
     (2) Capital includes allowance for loan losses.                                                                                        
                                                                                                                                            
                                                                                                                                            
AVERAGE BALANCE AND INTEREST RATES(1)                                                                                                                                                                                             
                                     Unaudited                                                                                                                                                                                             
                                                                                                                                                                                                                                                   
                                                                                                                                                                                                                                          
                                                                                      First Quarter 2011                                        Fourth Quarter 2010                                         Third 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             $1,730,330       24,101                5.65%             $1,782,916       25,799                5.74%             $1,807,483       26,568                5.83%                     
                                                                                                                                                                                                                                          
                         Investment Securities                                                                                                                                                                                             
                 Taxable Investment Securities                231,153          851                1.48%                178,926          799                1.78%                124,625          674                2.15%                     
              Tax-Exempt Investment Securities                 74,226          337                1.81%                 83,469          434                2.08%                 88,656          521                2.35%                     
                                                                                                                                                                                                                                          
                   Total Investment Securities                305,379        1,188                1.56%                262,395        1,233                1.87%                213,281        1,195                2.23%                     
                                                                                                                                                                                                                                          
                                    Funds Sold                242,893          171                0.28%                172,738           95                0.24%                252,434          144                0.22%                     
                                                                                                                                                                                                                                          
                          Total Earning Assets              2,278,602      $25,460                4.53%              2,218,049      $27,127                4.85%              2,273,198      $27,907                4.87%                     
                                                                                                                                                                                                                                          
                       Cash and Due From Banks                 50,942                                                  51,030                                                  50,942                                                      
                     Allowance for Loan Losses               (34,822)                                                (37,713)                                                (39,584)                                                      
                                  Other Assets                348,295                                                 345,427                                                 342,202                                                      
                                                                                                                                                                                                                                          
                                  Total Assets             $2,643,017                                              $2,576,793                                              $2,626,758                                                      
                                                                                                                                                                                                                                          
                                  LIABILITIES:                                                                                                                                                                                             
                     Interest Bearing Deposits                                                                                                                                                                                             
                                  NOW Accounts               $786,939         $261                0.13%               $837,625         $296                0.14%               $871,158         $326                0.15%                     
                         Money Market Accounts                278,562          131                0.19%                282,887          134                0.19%                293,424          145                0.20%                     
                              Savings Accounts                144,623           18                0.05%                136,276           16                0.05%                133,690           17                0.05%                     
                                 Time Deposits                360,575          848                0.95%                382,870        1,078                1.12%                402,880        1,332                1.31%                     
               Total Interest Bearing Deposits              1,570,699        1,258                0.32%              1,639,658        1,524                0.37%              1,701,152        1,820                0.42%                     
                                                                                                                                                                                                                                          
                         Short-Term Borrowings                 87,267          111                0.52%                 34,706           99                1.14%                 23,388           31                0.54%                     
                    Subordinated Notes Payable                 62,887          340                2.16%                 62,887          342                2.13%                 62,887          376                2.34%                     
                    Other Long-Term Borrowings                 50,345          494                3.98%                 50,097          508                4.02%                 54,258          565                4.13%                     
                                                                                                                                                                                                                                          
            Total Interest Bearing Liabilities              1,771,198       $2,203                0.50%              1,787,348       $2,473                0.55%              1,841,685       $2,792                0.60%              
                                                                                                                                                                                                                                   
                  Noninterest Bearing Deposits                554,680                                                 476,209                                                 471,013                                               
                             Other Liabilities                 55,536                                                  50,614                                                  50,318                                               
                                                                                                                                                                                                                                          
                             Total Liabilities              2,381,414                                               2,314,171                                               2,363,016                                               
                                                                                                                                                                                                                                          
                          SHAREOWNERS' EQUITY:               $261,603                                                $262,622                                                $263,742                                               
                                                                                                                                                                                                                                   
     Total Liabilities and Shareowners' Equity             $2,643,017                                              $2,576,793                                              $2,626,758                                               
                                                                                                                                                                                                                                   
                          Interest Rate Spread                              $23,257                4.03%                              $24,654                4.30%                              $25,115                4.27%              
                                                                                                                                                                                                                                   
            Interest Income and Rate Earned(1)                             $25,460                4.53%                             $27,127                4.85%                             $27,907                4.87%              
             Interest Expense and Rate Paid(2)                               2,203                0.39%                               2,473                0.44%                               2,792                0.49%              
                                                                                                                                                                                                                                          
                           Net Interest Margin                             $23,257                4.14%                             $24,654                4.41%                             $25,115                4.38%              
                                                                                                                                                                                                                                   
                                                                                                                                                                                                                                   
                                                            (1) Interest and average rates are calculated on a tax-equivalent basis using the 35% Federal tax rate.                                                                          
                               (2) Rate calculated based on average earning assets.                                                                                                                                                        
                                                                                                                                                                                                                     
AVERAGE BALANCE AND INTEREST RATES(1)                                                                                                                                                                 
                                     Unaudited                                                                                                                                                                 
                                                                                                                                                                   
                                                                                                                                                             
                                                                                     Second Quarter 2010                                         First Quarter 2010              
                        (Dollars in thousands)     Average
    Balance      Interest     Average
    Rate     Average
    Balance      Interest     Average
    Rate                            
                                                                                                                                                                                                              
                                       ASSETS:                                                                                                                                                                 
               Loans, Net of Unearned Interest             $1,841,379       26,795                5.84%             $1,886,367       27,180                5.84%                                                 
                                                                                                                                                                                                              
                         Investment Securities                                                                                                                
                 Taxable Investment Securities                128,268          708                2.21%                 71,325          500                2.81%
              Tax-Exempt Investment Securities                 92,140          624                2.71%                 97,316          753                3.10%
                                                                                                                                                             
                   Total Investment Securities                220,408        1,332                2.42%                168,641        1,253                2.98%
                                                                                                                                                             
                                    Funds Sold                267,578          176                0.26%                303,280          172                0.23%
                                                                                                                                                             
                          Total Earning Assets              2,329,365      $28,303                4.87%              2,358,288      $28,605                4.92%
                                                                                                                                                             
                       Cash and Due From Banks                 50,739                                                  54,873                                 
                     Allowance for Loan Losses               (41,074)                                                (44,584)                                 
                                  Other Assets                339,458                                                 329,842                                 
                                                                                                                                                             
                                  Total Assets             $2,678,488                                              $2,698,419                                 
                                                                                                                                                             
                                  LIABILITIES:                                                                                                                
                     Interest Bearing Deposits                                                                                                                
                                  NOW Accounts               $879,329         $400                0.18%               $867,004         $384                0.18%
                         Money Market Accounts                333,976          331                0.40%                374,161          689                0.75%
                              Savings Accounts                131,333           17                0.05%                126,352           15                0.05%
                                 Time Deposits                430,571        1,615                1.50%                438,112        1,850                1.71%
               Total Interest Bearing Deposits              1,775,209        2,363                0.53%              1,805,629        2,938                0.66%
                                                                                                                                                             
                         Short-Term Borrowings                 22,694           12                0.20%                 30,673           17                0.22%
                    Subordinated Notes Payable                 62,887          639                4.02%                 62,887          651                4.14%
                    Other Long-Term Borrowings                 52,704          551                4.20%                 49,981          526                4.27%
                                                                                                                                                             
            Total Interest Bearing Liabilities              1,913,494       $3,565                0.75%              1,949,170       $4,132                0.86%
                                                                                                                                                             
                  Noninterest Bearing Deposits                458,969                                                 443,131                                 
                             Other Liabilities                 42,152                                                  37,563                                 
                                                                                                                                                             
                             Total Liabilities              2,414,615                                               2,429,864                                 
                                                                                                                                                             
                          SHAREOWNERS' EQUITY:               $263,873                                                $268,555                                 
                                                                                                                                                             
     Total Liabilities and Shareowners' Equity             $2,678,488                                              $2,698,419                                 
                                                                                                                                                             
                          Interest Rate Spread                              $24,738                4.12%                              $24,473                4.06%
                                                                                                                                                             
            Interest Income and Rate Earned(1)                             $28,303                4.87%                             $28,605                4.92%
             Interest Expense and Rate Paid(2)                               3,565                0.61%                               4,132                0.71%
                                                                                                                                                             
                           Net Interest Margin                             $24,738                4.26%                             $24,473                4.21%
                                                                                                                                                             
                                                                                                                                                             
                                                                                        (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.