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

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

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

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

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

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

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

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

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

Discussion of Financial Condition

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

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

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

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

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

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

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

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

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

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

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

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

About Capital City Bank Group, Inc.

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

FORWARD-LOOKING STATEMENTS

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

 
 
 

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

 
 
 

CAPITAL CITY BANK GROUP, INC.
                                        
CONSOLIDATED STATEMENT OF INCOME
                                      
Unaudited
                                          
                                           
                                 
Twelve Months Ended
  
                                 
December 31
  
(Dollars in thousands, except per share data)
  
2008
Fourth Quarter
    
2008
Third Quarter
    
2008
Second Quarter
    
2008
First Quarter
    
2007
Fourth Quarter
    
2008
    
2007
  
                                           
INTEREST INCOME
                                          
Interest and Fees on Loans
   $ 31,570     $ 32,435     $ 33,422     $ 35,255     $ 37,730     $ 132,682     $ 154,567  
Investment Securities
     1,627       1,744       1,810       1,894       1,992       7,075       7,843  
Funds Sold
     32       475       1,028       1,574       1,064       3,109       2,913  
Total Interest Income
     33,229       34,654       36,260       38,723       40,786       142,866       165,323  
                                                         
INTEREST EXPENSE
                                                        
Deposits
     3,848       5,815       7,162       10,481       11,323       27,306       44,687  
Short-Term Borrowings
     110       230       296       521       639       1,157       2,871  
Subordinated Notes Payable
     937       936       931       931       936       3,735       3,730  
Other Long-Term Borrowings
     587       488       396       331       343       1,802       1,794  
Total Interest Expense
     5,482       7,469       8,785       12,264       13,241       34,000       53,082  
Net Interest Income
     27,747       27,185       27,475       26,459       27,545       108,866       112,241  
Provision for Loan Losses
     12,497       10,425       5,432       4,142       1,699       32,496       6,163  
Net Interest Income after Provision for Loan Losses
     15,250       16,760       22,043       22,317       25,846       76,370       106,078  
                                                         
NONINTEREST INCOME
                                                        
Service Charges on Deposit Accounts
     6,807       7,110       7,060       6,765       7,256       27,742       26,130  
Data Processing Fees
     937       873       812       813       853       3,435       3,133  
Asset Management Fees
     935       1,025       1,125       1,150       1,100       4,235       4,700  
Retail Brokerage Fees
     630       565       735       469       619       2,399       2,510  
Gain on Sale of Investment Securities
     3       27       30       65       7       125       14  
Mortgage Banking Revenues
     292       331       506       494       425       1,623       2,596  
Merchant Fees
     650       616       2,074       2,208       1,743       5,548       7,257  
Interchange Fees
     1,007       1,073       1,076       1,009       962       4,165       3,757  
Gain on Sale of Portion of Merchant Services Portfolio
     0       6,250       0       0       0       6,250       0  
ATM/Debit Card Fees
     744       742       758       744       705       2,988       2,692  
Other
     1,306       1,600       1,542       4,082       2,153       8,530       6,511  
Total Noninterest Income
     13,311       20,212       15,718       17,799       15,823       67,040       59,300  
                                                         
NONINTEREST EXPENSE
                                                        
Salaries and Associate Benefits
     15,492       15,417       15,318       15,604       14,472       61,831       60,279  
Occupancy, Net
     2,503       2,373       2,491       2,362       2,378       9,729       9,347  
Furniture and Equipment
     2,368       2,369       2,583       2,582       2,534       9,902       9,890  
Intangible Amortization
     1,308       1,459       1,459       1,459       1,458       5,685       5,834  
Other
     9,331       8,298       8,905       7,791       10,772       34,325       36,642  
Total Noninterest Expense
     31,002       29,916       30,756       29,798       31,614       121,472       121,992  
                                                         
OPERATING PROFIT
     (2,441 )     7,056       7,005       10,318       10,055       21,938       43,386  
Provision for Income Taxes
     (738 )     2,218       2,195       3,038       2,391       6,713       13,703  
NET INCOME
   $ (1,703 )   $ 4,838     $ 4,810     $ 7,280     $ 7,664     $ 15,225     $ 29,683  
                                                         
PER SHARE DATA
                                                        
Basic Earnings
   $ (0.10 )   $ 0.29     $ 0.28     $ 0.42     $ 0.44     $ 0.89     $ 1.66  
Diluted Earnings
   $ (0.10 )   $ 0.29     $ 0.28     $ 0.42     $ 0.44     $ 0.89     $ 1.66  
Cash Dividends
     0.190       0.185       0.185       0.185       0.185       0.745       0.710  
AVERAGE SHARES
                                                        
Basic
     17,126       17,124       17,146       17,170       17,444       17,141       17,909  
Diluted
     17,135       17,128       17,147       17,178       17,445       17,147       17,912  

 
 
 

CAPITAL CITY BANK GROUP, INC.
                              
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
                          
Unaudited
                              
                               
(Dollars in thousands, except per share data)
  
2008
Fourth Quarter
    
2008
Third Quarter
    
2008
Second Quarter
    
2008
First Quarter
    
2007
Fourth Quarter
  
                               
ASSETS
                              
Cash and Due From Banks
   $ 88,143     $ 71,062     $ 108,672     $ 97,525     $ 93,437  
Funds Sold and Interest Bearing Deposits
     6,806       27,419       192,786       241,202       166,260  
Total Cash and Cash Equivalents
     94,949       98,481       301,458       338,727       259,697  
                                         
Investment Securities, Available-for-Sale
     191,569       193,978       185,971       186,944       190,719  
                                         
Loans, Net of Unearned Interest
                                        
Commercial, Financial, & Agricultural
     206,230       189,676       196,075       202,238       208,864  
Real Estate - Construction
     141,973       148,160       150,907       152,060       142,248  
Real Estate - Commercial
     656,959       639,443       622,282       624,826       634,920  
Real Estate - Residential
     468,399       473,962       481,397       482,058       481,150  
Real Estate - Home Equity
     218,500       212,118       205,536       197,093       192,428  
Consumer
     246,973       252,743       244,071       238,663       243,415  
Other Loans
     15,838       7,378       9,436       10,506       7,222  
Overdrafts
     2,925       3,749       7,111       7,014       5,603  
Total Loans, Net of Unearned Interest
     1,957,797       1,927,229       1,916,815       1,914,458       1,915,850  
Allowance for Loan Losses
     (37,004 )     (30,544 )     (22,518 )     (20,277 )     (18,066 )
Loans, Net
     1,920,793       1,896,685       1,894,297       1,894,181       1,897,784  
                                         
Premises and Equipment, Net
     106,433       104,806       102,559       100,145       98,612  
Intangible Assets
     92,883       94,192       95,651       97,109       98,568  
Other Assets
     82,072       66,308       69,479       75,406       70,947  
Total Other Assets
     281,388       265,306       267,689       272,660       268,127  
                                         
Total Assets
   $ 2,488,699     $ 2,454,450     $ 2,649,415     $ 2,692,512     $ 2,616,327  
                                         
LIABILITIES
                                        
Deposits:
                                        
Noninterest Bearing Deposits
   $ 419,696     $ 382,878     $ 416,992     $ 432,904     $ 432,659  
NOW Accounts
     758,976       698,509       814,380       800,128       744,093  
Money Market Accounts
     324,646       368,453       387,011       381,474       386,619  
Regular Savings Accounts
     115,261       116,858       118,307       116,018       111,600  
Certificates of Deposit
     373,595       396,086       426,236       462,081       467,373  
Total Deposits
     1,992,174       1,962,784       2,162,926       2,192,605       2,142,344  
                                         
Short-Term Borrowings
     62,044       47,069       51,783       61,781       53,131  
Subordinated Notes Payable
     62,887       62,887       62,887       62,887       62,887  
Other Long-Term Borrowings
     51,470       53,074       36,857       29,843       26,731  
Other Liabilities
     41,294       29,841       38,382       47,723       38,559  
                                         
Total Liabilities
     2,209,869       2,155,655       2,352,835       2,394,839       2,323,652  
                                         
SHAREOWNERS' EQUITY
                                        
Common Stock
     171       171       171       172       172  
Additional Paid-In Capital
     36,783       36,681       36,382       38,042       38,243  
Retained Earnings
     262,890       267,853       266,171       264,538       260,325  
Accumulated Other Comprehensive Loss, Net of Tax
     (21,014 )     (5,910 )     (6,144 )     (5,079 )     (6,065 )
                                         
Total Shareowners' Equity
     278,830       298,795       296,580       297,673       292,675  
                                         
Total Liabilities and Shareowners' Equity
   $ 2,488,699     $ 2,454,450     $ 2,649,415     $ 2,692,512     $ 2,616,327  
                                         
OTHER BALANCE SHEET DATA
                                        
Earning Assets
   $ 2,156,172     $ 2,148,626     $ 2,295,572     $ 2,342,604     $ 2,272,829  
Intangible Assets
                                        
Goodwill
     84,811       84,811       84,811       84,811       84,811  
Deposit Base
     7,084       8,345       9,756       11,167       12,578  
Other
     988       1,036       1,084       1,131       1,179  
Interest Bearing Liabilities
     1,748,879       1,742,936       1,897,461       1,914,212       1,852,434  
                                         
Book Value Per Diluted Share
   $ 16.27     $ 17.45     $ 17.33     $ 17.33     $ 17.03  
Tangible Book Value Per Diluted Share
     10.85       11.94       11.74       11.67       11.30  
                                         
Actual Basic Shares Outstanding
     17,127       17,125       17,111       17,175       17,183  
Actual Diluted Shares Outstanding
     17,136       17,129       17,112       17,183       17,184  

 
 
 

CAPITAL CITY BANK GROUP, INC.
                              
ALLOWANCE FOR LOAN LOSSES
                              
AND NONPERFORMING ASSETS
                              
Unaudited
                              
   
2008
    
2008
    
2008
    
2008
    
2007
  
(Dollars in thousands)
  
Fourth Quarter
    
Third Quarter
    
Second Quarter
    
First Quarter
    
Fourth Quarter
  
                               
ALLOWANCE FOR LOAN LOSSES
                              
Balance at Beginning of Period
   $ 30,544     $ 22,518     $ 20,277     $ 18,066     $ 18,001  
Provision for Loan Losses
     12,497       10,425       5,432       4,142       1,699  
Net Charge-Offs
     6,037       2,399       3,191       1,931       1,634  
                                         
Balance at End of Period
   $ 37,004     $ 30,544     $ 22,518     $ 20,277     $ 18,066  
As a % of Loans
     1.89 %     1.59 %     1.18 %     1.06 %     0.95 %
As a % of Nonperforming Loans
     37.52 %     48.55 %     51.80 %     54.32 %     71.92 %
As a % of Nonperforming Assets
     34.31 %     45.10 %     47.12 %     49.34 %     64.15 %
                                         
CHARGE-OFFS
                                        
Commercial, Financial and Agricultural
   $ 331     $ 275     $ 407     $ 636     $ 370  
Real Estate - Construction
     1,774       77       158     $ 572       58  
Real Estate - Commercial
     293       (35 )     1,115       126       133  
Real Estate - Residential
     2,264       797       817       176       209  
Consumer
     1,993       1,797       1,232       1,170       1,302  
                                         
Total Charge-Offs
   $ 6,655     $ 2,911     $ 3,729     $ 2,680     $ 2,072  
                                         
RECOVERIES
                                        
Commercial, Financial and Agricultural
   $ 68     $ 68     $ 55     $ 139     $ 47  
Real Estate - Construction
     0       4       0       0       0  
Real Estate - Commercial
     0       1       13       1       2  
Real Estate - Residential
     128       6       24       3       5  
Consumer
     422       433       446       606       384  
                                         
Total Recoveries
   $ 618     $ 512     $ 538     $ 749     $ 438  
                                         
NET CHARGE-OFFS
   $ 6,037     $ 2,399     $ 3,191     $ 1,931     $ 1,634  
QTD Average Loans
     1,940,083       1,915,008       1,908,802       1,909,573       1,908,069  
Net Charge-Offs as a % of Average Loans(1)
     1.24 %     0.50 %     0.67 %     0.41 %     0.34 %
                                         
RISK ELEMENT ASSETS
                                        
Nonaccruing Loans
   $ 96,876     $ 61,509     $ 41,738     $ 35,352     $ 25,120  
Restructured Loans
     1,744       1,403       1,733       1,980       0  
Total Nonperforming Loans
     98,620       62,912       43,471       37,332       25,120  
Other Real Estate
     9,222       4,813       4,322       3,768       3,043  
Total Nonperforming Assets
   $ 107,842     $ 67,725     $ 47,793     $ 41,100     $ 28,163  
Capital
     315,834       329,339       319,098       317,949       310,741  
Past Due Loans 90 Days or More
   $ 88     $ 50     $ 896     $ 842     $ 416  
EOM Loans
     1,957,797       1,927,229       1,916,815       1,914,458       1,915,850  
Nonperforming Loans as a % of Loans
     5.04 %     3.26 %     2.27 %     1.95 %     1.31 %
Nonperforming Assets as a % of
                                        
Loans and Other Real Estate
     5.48 %     3.51 %     2.49 %     2.14 %     1.47 %
Nonperforming Assets as a % of Capital(2)
     34.15 %     20.56 %     14.98 %     12.93 %     9.06 %
                                         
                                         
(1) Annualized
                                        
(2) Capital includes allowance for loan losses.
                                        

 
 
 

AVERAGE BALANCE AND INTEREST RATES(1)
                                                                                                                          
Unaudited
                                                                                                                              
                                                                                                                               
                                                                                                                               
   
Fourth Quarter 2008
    
Third Quarter 2008
    
Second Quarter 2008
    
First Quarter 2008
    
Fourth Quarter 2007
    
December 2008 YTD
    
December 2007 YTD
  
(Dollars in thousands)
  
Average
Balance
    
Interest
    
Average
Rate
    
Average
Balance
    
Interest
    
Average
Rate
    
Average
Balance
    
Interest
    
Average
Rate
    
Average
Balance
    
Interest
    
Average
Rate
    
Average
Balance
    
Interest
    
Average
Rate
    
Average
Balance
    
Interest
    
Average
Rate
    
Average
Balance
    
Interest
    
Average
Rate
  
                                                                                                                               
ASSETS:
                                                                                                                              
Loans, Net of Unearned Interest
   $ 1,940,083       31,772       6.52 %   $ 1,915,008       32,622       6.78 %   $ 1,908,802       33,610       7.08 %   $ 1,909,574       35,453       7.47 %   $ 1,908,069       37,969       7.89 %   $ 1,918,417       133,457       6.96 %   $ 1,934,850       155,434       8.03 %
                                                                                                                                                                         
Investment Securities
                                                                                                                                                                        
Taxable Investment Securities
     90,296       813       3.59 %     93,723       940       3.99 %     93,814       1,028       4.38 %     94,786       1,108       4.67 %     99,055       1,226       4.93 %     93,149       3,889       5.04 %     103,840       4,949       4.76 %
Tax-Exempt Investment Securities
     103,817       1,252       4.82 %     98,966       1,234       4.99 %     94,371       1,200       5.09 %     90,790       1,207       5.32 %     87,358       1,178       5.39 %     97,010       4,893       4.16 %     84,849       4,447       5.24 %
                                                                                                                                                                         
Total Investment Securities
     194,113       2,065       4.25 %     192,689       2,174       4.50 %     188,185       2,228       4.73 %     185,576       2,315       4.99 %     186,413       2,404       5.15 %     190,159       8,782       4.61 %     188,689       9,396       4.97 %
                                                                                                                                                                         
Funds Sold
     16,645       32       0.74 %     99,973       475       1.86 %     206,984       1,028       1.96 %     206,313       1,574       3.02 %     96,748       1,064       4.31 %     132,073       3,109       2.32 %     59,989       2,913       4.79 %
                                                                                                                                                                         
Total Earning Assets
     2,150,841     $ 33,869       6.27 %     2,207,670     $ 35,271       6.36 %     2,303,971     $ 36,866       6.43 %     2,301,463     $ 39,342       6.87 %     2,191,230     $ 41,437       7.50 %     2,240,649     $ 145,348       6.48 %     2,183,528     $ 167,743       7.68 %
                                                                                                                                                                         
Cash and Due From Banks
     76,027                       77,309                       82,182                       94,247                       85,598                       82,410                       86,692                  
Allowance for Loan Losses
     (30,347 )                     (22,851 )                     (20,558 )                     (18,227 )                     (18,127 )                     (23,015 )                     (17,535 )                
Other Assets
     266,797                       266,510                       269,176                       268,991                       260,981                       267,861                       254,532                  
                                                                                                                                                                         
Total Assets
   $ 2,463,318                     $ 2,528,638                     $ 2,634,771                     $ 2,646,474                     $ 2,519,682                     $ 2,567,905                     $ 2,507,217                  
                                                                                                                                                                         
LIABILITIES:
                                                                                                                                                                        
Interest Bearing Deposits
                                                                                                                                                                        
NOW Accounts
   $ 684,246     $ 636       0.37 %   $ 727,754     $ 1,443       0.79 %   $ 788,237     $ 1,935       0.99 %   $ 773,891     $ 3,440       1.79 %   $ 608,347     $ 2,980       1.94 %   $ 743,327     $ 7,454       1.00 %   $ 557,060     $ 10,748       1.93 %
Money Market Accounts
     360,940       716       0.79 %     369,544       1,118       1.20 %     376,996       1,210       1.29 %     389,828       2,198       2.27 %     404,406       3,217       3.16 %     374,278       5,242       1.40 %     397,193       13,667       3.44 %
Savings Accounts
     117,311       28       0.09 %     117,970       30       0.10 %     117,182       29       0.10 %     113,163       34       0.12 %     113,527       57       0.20 %     116,413       121       0.10 %     119,700       279       0.23 %
Time Deposits
     379,266       2,468       2.59 %     410,101       3,224       3.13 %     443,006       3,988       3.62 %     467,280       4,809       4.14 %     471,454       5,069       4.27 %     424,748       14,489       3.41 %     474,728       19,993       4.21 %
Total Interest Bearing Deposits
     1,541,763       3,848       0.99 %     1,625,369       5,815       1.42 %     1,725,421       7,162       1.67 %     1,744,162       10,481       2.42 %     1,597,734       11,323       2.81 %     1,658,766       27,306       1.65 %     1,548,681       44,687       2.89 %
                                                                                                                                                                         
Short-Term Borrowings
     69,079       110       0.62 %     51,738       230       1.76 %     55,830       296       2.13 %     68,095       521       3.06 %     64,842       639       3.89 %     61,181       1,157       1.88 %     66,397       2,871       4.31 %
Subordinated Notes Payable
     62,887       937       5.83 %     62,887       936       5.83 %     62,887       931       5.86 %     62,887       931       5.96 %     62,887       936       5.91 %     62,887       3,735       5.84 %     62,887       3,730       5.93 %
Other Long-Term Borrowings
     53,261       587       4.39 %     43,237       488       4.48 %     34,612       396       4.60 %     27,644       331       4.82 %     28,215       343       4.83 %     39,735       1,802       4.54 %     37,936       1,794       4.73 %
                                                                                                                                                                         
Total Interest Bearing Liabilities
     1,726,990     $ 5,482       1.26 %     1,783,231     $ 7,469       1.67 %     1,878,750     $ 8,785       1.88 %     1,902,788     $ 12,264       2.59 %     1,753,678     $ 13,241       3.00 %     1,822,569     $ 34,000       1.87 %     1,715,901     $ 53,082       3.09 %
                                                                                                                                                                         
Noninterest Bearing Deposits
     404,103                       405,314                       415,125                       404,712                       419,002                       407,299                       441,765                  
Other Liabilities
     29,998                       36,498                       40,006                       42,170                       47,660                       37,147                       42,934                  
                                                                                                                                                                         
Total Liabilities
     2,161,091                       2,225,043                       2,333,881                       2,349,670                       2,220,340                       2,267,015                       2,200,600                  
                                                                                                                                                                         
SHAREOWNERS' EQUITY:
   $ 302,227                     $ 303,595                     $ 300,890                     $ 296,804                     $ 299,342                     $ 300,890                     $ 306,617                  
                                                                                                                                                                         
Total Liabilities and Shareowners' Equity
   $ 2,463,318                     $ 2,528,638                     $ 2,634,771                     $ 2,646,474                     $ 2,519,682                     $ 2,567,905                     $ 2,507,217                  
                                                                                                                                                                         
Interest Rate Spread
           $ 28,387       5.01 %           $ 27,802       4.69 %           $ 28,081       4.55 %           $ 27,078       4.28 %           $ 28,196       4.50 %           $ 111,348       4.61 %           $ 114,661       4.59 %
                                                                                                                                                                         
Interest Income and Rate Earned(1)
     $ 33,869       6.27 %           $ 35,271       6.36 %           $ 36,866       6.43 %           $ 39,342       6.87 %           $ 41,437       7.50 %           $ 145,348       6.48 %           $ 167,743       7.68 %
Interest Expense and Rate Paid(2)
             5,482       1.01 %             7,469       1.35 %             8,785       1.53 %             12,264       2.14 %             13,241       2.40 %             34,000       1.52 %             53,082       2.43 %
                                                                                                                                                                         
Net Interest Margin
           $ 28,387       5.26 %           $ 27,802       5.01 %           $ 28,081       4.90 %           $ 27,078       4.73 %           $ 28,196       5.10 %           $ 111,348       4.96 %           $ 114,661       5.25 %
                                                                                                                                                                         
                                                                                                                                                                         
(1) Interest and average rates are calculated on a tax-equivalent basis using the 35% federal rate.
                                                                                                                  
(2) Rate calculated based on average earning assets.