Capital City Bank Group, Inc.
Reports Fourth Quarter and Full Year 2010 Results

TALLAHASSEE, Fla. (January 25, 2011) – Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income for the fourth quarter of 2010 totaling $1.9 million, or $0.12 per diluted share, compared to net income of $0.4 million, or $0.02 per diluted share, for the third quarter of 2010 and a net loss of $3.4 million, or $0.20 per diluted share, in the fourth quarter of 2009.  For the full year 2010, a net loss of $0.4 million, or $0.02 per diluted share was realized compared to a net loss of $3.5 million, or $0.20 per diluted share, in 2009.

Compared to the third quarter of 2010, net income reflects a lower loan loss provision of $1.9 million and higher noninterest income of $1.3 million, partially offset by a $0.4 million decline in net interest income, higher noninterest expense of $1.2 million, and a lower income tax benefit of $0.1 million.  Earnings for the fourth quarter of 2010 include the reversal of our Visa related litigation reserve of $0.8 million.  Compared to the fourth quarter of 2009, net income improved due to a lower loan loss provision of $7.0 million, higher noninterest income of $0.3 million, and lower noninterest expense of $1.8 million, which was partially offset by lower net interest income of $0.9 million and a lower income tax benefit of $2.9 million.
 
 
For the full year 2010, the improvement in earnings was due to a lower loan loss provision of $16.2 million, partially offset by an $8.4 million reduction in net interest income, lower noninterest income of $0.6 million, higher noninterest expense of $1.8 million, as well as a lower income tax benefit of $2.3 million.

“In the fourth quarter, Capital City reported its third consecutive quarter of positive earnings and improving credit quality.  Perhaps, more important is the Company’s momentum as we enter 2011”, said William G. Smith, Jr., Chairman, President and CEO.  “While we acknowledge the difficulties inherent in the current operating environment and expect our return to historical performance levels to be gradual, I remain excited about what I see for 2011. The inflow of non-performing loans has slowed and our ability to sell other real estate remains steady.  Despite the current economic conditions, which we expect to be choppy as the country emerges from this difficult period, I am confident in Capital City’s ability to resolve our problem assets and improve our overall performance.  Absent another economic event, I believe the worst is behind us.  A strong margin, lower credit costs, an incredible core deposit book and strong capital were the drivers in the fourth quarter and I believe will continue to produce good results in 2011”, said Smith.

The Return on Average Assets was 0.30% and the Return on Average Equity was 2.90% for the fourth quarter of 2010.  These metrics were 0.06% and 0.60% for the third quarter of 2010, and -0.52% and -5.03% for the fourth quarter of 2009, respectively.

For the full year 2010, the Return on Average Assets was -0.02% and the Return on Average Equity was -0.16% compared to -0.14% and -1.26%, respectively, for the full year of 2009.

Discussion of Financial Condition

Average earning assets were $2.218 billion for the fourth quarter of 2010, a decrease of $55.1 million, or 2.4% from the third quarter of 2010, and a decline of $19.5 million, or 0.9%, from the fourth quarter of 2009.  The decrease from the third quarter of 2010 is primarily attributable to a lower level of overnight funds of $79.7 million (partially reflecting a reduction in deposits), and problem loan resolutions, which have the effect of lowering the loan portfolio as loans are either charged off or transferred to the other real estate owned category, partially offset by a higher investment portfolio.  The lower earning asset total compared to the fourth quarter of 2009 is attributable to a decline in the loan portfolio of $162.0 million, partly offset by increases in overnight funds and investment securities of $59.9 million and $82.5 million, respectively. The favorable variances in overnight funds and investments were partially funded by an increase in average deposits of $25.9 million.  Average loans have declined throughout the portfolio, driven by reductions in the commercial real estate and construction loan categories.

 
 
 

 
The portfolio continues to be impacted by weak loan demand attributable to the sluggish economy, but not at the levels we have experienced in recent quarters.  In addition to lower production and normal amortization and payoffs, the reduction in the portfolio is also attributable to gross charge-offs and the transfer of loans to the other real estate owned category. On a linked quarter basis, problem loan resolutions accounted for $23.8 million, or 56%, of a net reduction in total loans of $42.6 million, and on a year over year basis, problem loan resolutions accounted for $85.0 million, or 54%, of the net reduction of $157.3 million1.

Nonperforming assets (including nonaccrual loans, restructured loans and other real estate owned) totaled $145.3 million at year-end 2010, a reduction of $8.4 million from our 2010 high of $153.7 million at the end of the first quarter.  Compared to the linked quarter, nonperforming assets have declined by $0.4 million and have increased $1.2 million from the fourth quarter of 2009.  Nonaccrual loans totaled $65.7 million at the end of the fourth quarter, a decline of $8.5 million from the linked quarter reflective of the migration of loans to the other real estate category.  Quarter over quarter, the other real estate owned (“OREO”) balance increased by $6.7 million and the restructured loan balance increased by $1.4 million.  Year over year, the slight increase in total nonperforming assets reflects a $20.6 million decline in the nonaccrual loan balance, reflective of an increased pace of problem loan resolutions flowing into the OREO category, which realized an increase of $21.8 million.  At year-end, nonperforming assets represented 8.00% of loans and OREO compared to 7.86% at the prior quarter-end and 7.38% at year-end 2009.  The change in this ratio from both the prior quarter and prior year-end reflects the impact of the aforementioned lower loan portfolio balances.

Average total deposits were $2.116 billion for the fourth quarter, a decrease of $56.3 million, or 2.6%, from the third quarter of 2010 and an increase of $25.9 million, or 1.2%, from the fourth quarter of 2009.  Deposit levels remain strong, but down slightly from the third quarter level, primarily attributable to lower money market account, certificates of deposit balances, and a decline in public funds.  Certificates of deposit declined primarily due to reductions in the number of single relationship, higher yielding certificates of deposit with the Bank.   Public funds balances have declined as anticipated from the linked quarter reflecting seasonality within this deposit category.  Money market balances declined as run-off continued in our promotional deposits as rates on these deposits were lowered to standard board rates during the third quarter.  To date, the bank has retained approximately $21 million in new deposits and this initiative served to support our core deposit growth strategy while succeeding in further strengthening the Bank’s overall liquidity position.  Our Absolutely Free Checking (“AFC”) products continue to be successful as both balances and the number of accounts increased quarter over quarter.  As anticipated, public funds, on average, declined from the prior quarter, but experienced significant growth late in the fourth quarter primarily reflecting the influx of tax receipts.  Pursuant to changes in the FDIC’s Temporary Liquidity Guarantee Program, our government guaranteed NOW product was discontinued during the fourth quarter.  Approximately $95 million in balances for this product remained in the NOW category, $95 million migrated to the noninterest bearing DDA category, and $60 million in balances moved to the Repo category as of the end of December.

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 increase from the fourth quarter of 2009 reflects higher public funds of $19.4 million and core deposits of $6.0 million, fueled primarily by the success of the AFC products.

We maintained an average net overnight funds (deposits with banks plus fed funds sold less fed funds purchased) sold position of $171.4 million during the fourth quarter of 2010 compared to an average net overnight funds sold position of $246.9 million in the prior quarter and an average overnight funds sold position of $112.8 million in the fourth quarter of 2009.  The lower balance when compared to the linked quarter primarily reflects the decline in deposits mentioned above and the increase in the investment portfolio, partially offset by the lower loan portfolio.  The favorable variance as compared to fourth quarter 2009 is primarily attributable to the growth in deposits and net reductions in the loan portfolio, partially offset by a higher balance in the investment portfolio.  A portion of the funds sold position was deployed into the investment portfolio during the third and fourth quarters of 2010.   We will continue to evaluate deploying the excess funds sold position into the investment portfolio during the first quarter of 2011.



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

 


Equity capital was $259.0 million as of December 31, 2010, compared to $260.7 million as of September 30, 2010 and $267.9 million as of December 31, 2009.  Our leverage ratio was 9.97%, 9.75%, and 10.39%, respectively, for the comparable periods.  Further, our risk-adjusted capital ratio of 14.50% at December 31, 2010 exceeds the 10.0% threshold to be designated as “well-capitalized” under the risk-based regulatory guidelines and reflects an improvement of 21 basis points over the linked quarter.  At December 31, 2010, our tangible common equity ratio was 6.82%, compared to 6.98% at September 30, 2010 and 6.84% at December 31, 2009.  The reduction as compared to the linked quarter is attributable to higher tangible assets, reflecting the influx of public funds late in the fourth quarter, which is seasonal in nature.

Discussion of Operating Results

Tax equivalent net interest income for the fourth quarter of 2010 was $24.6 million compared to $25.1 million for the third quarter of 2010 and $25.8 million for the fourth quarter of 2009.  For the twelve months of 2010, tax equivalent net interest income totaled $99.0 million compared to $108.2 million in 2009.

The decrease of $0.5 million in tax equivalent net interest income on a linked quarter basis was due to a reduction in loan income attributable to declining loan balances, and continued unfavorable asset repricing, partially offset by lower interest expense and a continued decrease in foregone interest on nonaccrual loans.  Lower interest expense reflects a reduction in deposit rates primarily in certificates of deposit.

The decrease of $9.2 million in tax equivalent net interest income for twelve months of 2010, as compared to the same period in 2009, resulted from a reduction in loans outstanding, lower earning assets yields reflecting unfavorable asset repricing, higher foregone interest and lower loan fees, partially offset by a reduction in interest expense.

The net interest margin in the fourth quarter of 2010 was 4.41%, an increase of 3 basis points over the linked quarter and a decline of 18 basis points from the fourth quarter of 2009.  The increase in the margin when compared to the linked quarter was a result of a 5 basis point reduction in the cost of funds, as the yield on earning assets declined 2 basis points.  The lower cost of funds resulted from a reduction in the rates on certificates of deposit which were significantly reduced in all markets, as well as a net reduction in the rates for our variable rate subordinated notes. The decline in the margin for the twelve months of 2010 is attributable to the shift in our earning asset mix and unfavorable asset repricing, partially offset by a favorable variance in our average cost of funds.

Strong deposit growth experienced in the fourth quarter of 2009 and the first half of 2010 improved our liquidity position, but has also adversely impacted our margin in the short term as a significant portion of this growth is currently invested in overnight funds.  
 
The provision for loan losses for the fourth quarter of 2010 was $3.8 million compared to $5.7 million in the third quarter of 2010 and $10.8 million for the fourth quarter of 2009.  For the full year 2010, the loan loss provision totaled $23.8 million compared to $40.0 million for 2009.  The decline in the provision for all periods reflects lower impaired loan reserves as well as other stabilizing trends within the loan portfolio, including a lower level of past due loans and potential problem loans.  The balance of our impaired loans has declined for three consecutive quarters and totaled $87.8 million at year-end 2010 compared to $112.0 million at year-end 2009.  Inflow into the impaired loan category has also slowed significantly year over year.  Net charge-offs for the fourth quarter of 2010 totaled $6.1 million, or 1.35% of average loans, compared to $6.4 million, or 1.40%, in the third quarter of 2010, and $11.8 million, or 2.42%, in the fourth quarter of 2010.  For 2010, our net charge-offs totaled $32.4 million, or 1.77% of average loans, compared to $32.6 million, or 1.66%, for 2009. Over the last twelve quarters, we have recorded a cumulative loan loss provision totaling $96.3 million, or 5.0% of beginning loans and have recognized cumulative net charge-offs of $78.6 million, or 4.1%.  At year-end 2010, the allowance for loan losses of $35.4 million was 2.01% of outstanding loans (net of overdrafts) and provided coverage of 41% of nonperforming loans compared to 2.10% and 40%, respectively, at the end of the third quarter of 2010, and 2.30% and 41%, respectively, at year-end 2009.



 
 
 

Noninterest income for the fourth quarter of 2010 increased $1.3 million, or 9.6%, over the linked quarter attributable to higher mortgage banking fees of $0.3 million and other income of $1.0 million.  Compared to the fourth quarter of 2009, noninterest income increased $0.3 million, or 2.2%, primarily due to higher mortgage banking fees of $0.5 million, bank card fees totaling $0.3 million, and other income of $0.4 million, partially offset by lower deposit fees of $0.7 million and a decline in data processing fees of $0.1 million.  For both periods, the increase in mortgage banking fees reflects increased secondary market loan funding's driven by increased home purchase activity in our markets and to a lesser extent a higher level of loan refinance activity.  Improved margin realized on secondary market loan sales also contributed to the improvement.  Bank card fees increased from the linked quarter due to a seasonal increase in card utilization and over the prior year quarter due to a new rewards program as well as higher card activation and utilization.  Also, for both periods, other income increased due to gains realized from the sale of OREO properties.  The aforementioned reduction in deposit fees, relative to the fourth quarter of 2009, reflects a lower level of overdraft fees due to reduced activity reflective of current economic conditions and a higher level of consumer awareness that have both impacted consumer and business spending habits, as well as the recent 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.

For the full year 2010, noninterest income declined $0.6 million, or 1.0%, from 2009 attributable to lower deposit fees of $1.6 million and other income of $0.9 million, partially offset by higher asset management fees of $0.3 million, mortgage banking fees of $0.2 million, retail brokerage fees of $0.2 million, and bank card fees totaling $1.3 million.  Deposit fees have declined for the same aforementioned reasons and the decrease in other income reflects a reduced level of merchant fees - a substantial portion of our merchant portfolio was sold in July 2008 and over the course of 2009 our remaining merchants migrated to a new processor.  For 2010, we continued to service our largest remaining merchant who migrated to a new processor during the third quarter of 2010.  The reduction in this revenue source has been substantially offset by a reduction in processing costs which is reflected in noninterest expense (interchange fees).  The increase in asset management fees primarily reflects higher asset values on which our fee schedule is based and the higher level of retail brokerage fees is due to higher trading volume.  The increase in mortgage banking fees is attributable to the same aforementioned reasons.  Bank card fees increased due to a new rewards program implemented in early 2010 as well as a higher level of card activation and utilization.  For 2011, we expect our data processing revenue will be reduced due to the loss of two client banks that were taken into receivership by the FDIC during the later part of 2010.  We anticipate that the conversion of these two clients to a new processor will take place early in the second quarter of 2011 and that the annualized impact on our noninterest income will approximate $1.2 million.

Noninterest expense for the fourth quarter of 2010 increased $1.2 million, or 3.6%, over the linked quarter  primarily due to higher expense for OREO properties of $1.4 million and an increase in advertising expense of $0.6 million, partially offset by the reversal of our Visa litigation reserve which totaled $0.8 million.  The higher level of OREO expense primarily reflects higher carrying costs realized during the current quarter.  Higher advertising expense generally reflects an increased level of promotional activities during the fourth quarter.  Compared to the fourth quarter of 2009, noninterest expense decreased by $1.8 million, or 5.0%, due to lower compensation expense of $0.7 million, professional fees of $0.5 million, intangible amortization expense of $0.5 million, legal expense of $0.2 million, and interchange fees of $0.3 million.  The reversal of our Visa litigation reserve of $0.8 million also contributed to the reduction.  Higher expense for OREO properties of $1.2 million partially offset the aforementioned favorable variances.  The decline in compensation primarily reflects lower pension expense due to improved pension plan asset returns which impact our accounting expense.  The lower level of professional fees reflects a one-time payment made during the prior year quarter related to a contract review consulting engagement.  The reduction in intangible asset amortization expense reflects the full amortization of a core deposit intangible.  The lower level of legal expense generally reflects improvements made to our process for managing legal support needed for our problem loan work-outs and collections.  The decline in interchange fees reflects the migration of our last merchant services client to a new processor – this decline is substantially offset by a corresponding decline in merchant fee revenue.  The unfavorable variance in OREO expense reflects growth in the number of OREO properties and the associated carrying costs.




 
 
 

For the full year 2010, noninterest expense increased $1.8 million, or 1.4%, due primarily to higher expense for OREO properties of $7.3 million and FDIC insurance costs of $1.2 million, which was partially offset by lower expense for compensation of $2.3 million, printing and supplies of $0.4 million, advertising of $0.4 million, intangible amortization expense of $1.4 million, professional fees of $0.2 million, interchange fees of $1.0 million, and the impact of the Visa litigation reserve reversal of $0.8 million.  Year over year, the increase in OREO expense primarily reflects growth in the number of OREO properties and the related carrying costs as well as property valuation write-downs.  Our FDIC insurance costs increased as a result of higher premium costs and higher deposit balances.  The decline in compensation cost primarily reflects lower pension expense driven by improved plan asset returns and to a lesser extent lower salary cost reflective of a reduction in headcount.  The reduction in printing and supplies expense and advertising expense reflect our efforts to improve control of discretionary costs.  The reduction in intangible asset amortization expense reflects the full amortization of two core deposit intangible assets.  The lower level of interchange fees reflects the migration of our last merchant services client to a new processor – this decline is substantially offset by a corresponding decline in merchant fee revenue which is reflected in other income.

We realized a tax benefit of $0.1 million in the fourth quarter of 2010 compared to a tax benefit of $0.2 million for the third quarter of 2010 and a tax benefit of $3.0 million for the fourth quarter of 2009.  For the full year 2010, we realized a tax benefit of $3.0 million compared to a tax benefit of $5.3 million for 2009.  We have substantial tax exempt income as well as a lower level of pre-tax income at our bank subsidiary due to higher loan loss provisions – both of these factors favorably impacted our tax provision for all of the aforementioned periods.
    
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 $2.6 billion in assets. The Company provides a full range of banking services, including traditional deposit and credit services, asset management, trust, mortgage banking, merchant services, bankcards, data processing and securities brokerage services.  The Company's bank subsidiary, Capital City Bank, was founded in 1895 and now has 70 banking offices and 79 ATMs in Florida, Georgia and Alabama.  For more information about Capital City Bank Group, Inc., visit www.ccbg.com.

FORWARD-LOOKING STATEMENTS

Forward-looking statements in this press release are based on current plans and expectations that are subject to uncertainties and risks, which could cause the Company’s future results to differ materially.  The following factors, among others, could cause the Company’s actual results to differ: 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 and the valuation allowance on deferred tax assets; restrictions on our operations, including the inability to pay dividends without our regulators’ consent; continued depression of the market value of the Company that could result in an impairment of goodwill; 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 and manmade disasters; 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, 2009, 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, 2010
    
Sep 30, 2010
    
Dec 31, 2009
    
Dec 31, 2010
    
Dec 31, 2009
  
EARNINGS
                              
Net Income(Loss)
   $ 1,918     $ 401     $ (3,407 )   $ (413 )   $ (3,471 )
Net Income(Loss) Per Common Share
   $ 0.12     $ 0.02     $ (0.20 )   $ (0.02 )   $ (0.20 )
PERFORMANCE
                                        
Return on Average Equity
     2.90 %     0.60 %     -5.03 %     -0.16 %     -1.26 %
Return on Average Assets
     0.30 %     0.06 %     -0.52 %     -0.02 %     -0.14 %
Net Interest Margin
     4.41 %     4.38 %     4.59 %     4.32 %     4.96 %
Noninterest Income as % of Operating Revenue
     37.69 %     35.17 %     36.30 %     36.81 %     35.14 %
Efficiency Ratio
     83.75 %     82.08 %     85.21 %     84.23 %     77.33 %
CAPITAL ADEQUACY
                                        
Tier 1 Capital Ratio
     13.14 %     12.93 %     12.76 %     13.14 %     12.76 %
Total Capital Ratio
     14.50 %     14.29 %     14.11 %     14.50 %     14.11 %
Tangible Capital Ratio
     6.82 %     6.98 %     6.84 %     6.82 %     6.84 %
Leverage Ratio
     9.97 %     9.75 %     10.39 %     9.97 %     10.39 %
Equity to Assets
     9.88 %     10.10 %     9.89 %     9.88 %     9.89 %
ASSET QUALITY
                                        
Allowance as % of Non-Performing Loans
     40.57 %     39.94 %     40.77 %     40.57 %     40.77 %
Allowance as a % of Loans
     2.01 %     2.10 %     2.30 %     2.01 %     2.30 %
Net Charge-Offs as % of Average Loans
     1.35 %     1.40 %     2.42 %     1.77 %     1.66 %
Nonperforming Assets as % of Loans and ORE
     8.00 %     7.86 %     7.38 %     8.00 %     7.38 %
STOCK PERFORMANCE
                                        
High
   $ 14.19     $ 14.24     $ 14.34     $ 18.25     $ 27.31  
Low
   $ 11.56     $ 10.76     $ 11.00     $ 10.76     $ 9.50  
Close
   $ 12.60     $ 12.14     $ 13.84     $ 12.60     $ 13.84  
Average Daily Trading Volume
     21,385       29,747       39,672       31,174       46,881  
                                         

 
 
 

CAPITAL CITY BANK GROUP, INC.
                                          
CONSOLIDATED STATEMENT OF OPERATIONS
                                      
Unaudited
                                          
                                           
                                 
Twelve Months Ended
  
                                 
December 31
  
(Dollars in thousands, except per share data)
  
2010
Fourth Quarter
    
2010
Third Quarter
    
2010
Second Quarter
    
2010
First Quarter
    
2009
Fourth Quarter
    
2010
    
2009
  
                                           
INTEREST INCOME
                                          
Interest and Fees on Loans
   $ 25,656     $ 26,418     $ 26,644     $ 26,992     $ 28,582     $ 105,710     $ 117,324  
Investment Securities
     1,080       1,014       1,114       990       1,097       4,198       5,370  
Funds Sold
     95       144       176       172       77       587       82  
Total Interest Income
     26,831       27,576       27,934       28,154       29,756       110,495       122,776  
                                                         
INTEREST EXPENSE
                                                        
Deposits
     1,524       1,820       2,363       2,938       2,964       8,645       10,585  
Short-Term Borrowings
     99       31       12       17       22       159       291  
Subordinated Notes Payable
     342       376       639       651       936       2,008       3,730  
Other Long-Term Borrowings
     508       565       551       526       542       2,150       2,236  
Total Interest Expense
     2,473       2,792       3,565       4,132       4,464       12,962       16,842  
Net Interest Income
     24,358       24,784       24,369       24,022       25,292       97,533       105,934  
Provision for Loan Losses
     3,783       5,668       3,633       10,740       10,834       23,824       40,017  
Net Interest Income after Provision for Loan Losses
     20,575       19,116       20,736       13,282       14,458       73,709       65,917  
                                                         
NONINTEREST INCOME
                                                        
Service Charges on Deposit Accounts
     6,434       6,399       7,039       6,628       7,183       26,500       28,142  
Data Processing Fees
     880       911       919       900       948       3,610       3,628  
Asset Management Fees
     1,095       1,040       1,080       1,020       1,065       4,235       3,925  
Retail Brokerage Fees
     738       671       846       565       772       2,820       2,655  
Gain on Sale of Investment Securities
     -       3       -       5       -       8       10  
Mortgage Banking Fees
     1,027       772       641       508       550       2,948       2,699  
Interchange Fees (1)
     1,285       1,291       1,289       1,212       1,129       5,077       4,432  
ATM/Debit Card Fees (1)
     1,051       1,036       1,073       963       892       4,123       3,515  
Other
     2,225       1,326       1,787       2,166       1,872       7,504       8,385  
Total Noninterest Income
     14,735       13,449       14,674       13,967       14,411       56,825       57,391  
                                                         
NONINTEREST EXPENSE
                                                        
Salaries and Associate Benefits
     15,389       15,003       15,584       16,779       16,121       62,755       65,067  
Occupancy, Net
     2,406       2,611       2,585       2,408       2,458       10,010       9,798  
Furniture and Equipment
     2,268       2,288       2,192       2,181       2,261       8,929       9,096  
Intangible Amortization
     553       709       710       710       1,010       2,682       4,042  
Other
     12,924       11,752       13,558       11,306       13,463       49,540       44,112  
Total Noninterest Expense
     33,540       32,363       34,629       33,384       35,313       133,916       132,115  
                                                         
OPERATING PROFIT(LOSS)
     1,770       202       781       (6,135 )     (6,444 )     (3,382 )     (8,807 )
Provision for Income Taxes
     (148 )     (199 )     50       (2,672 )     (3,037 )     (2,969 )     (5,336 )
NET INCOME(LOSS)
   $ 1,918     $ 401     $ 731     $ (3,463 )   $ (3,407 )   $ (413 )   $ (3,471 )
                                                         
PER SHARE DATA
                                                        
Basic Earnings
   $ 0.12     $ 0.02     $ 0.04     $ (0.20 )   $ (0.20 )   $ (0.02 )   $ (0.20 )
Diluted Earnings
   $ 0.12     $ 0.02     $ 0.04     $ (0.20 )   $ (0.20 )   $ (0.02 )   $ (0.20 )
Cash Dividends
     0.100       0.100       0.100       0.190       0.190       0.490       0.760  
AVERAGE SHARES
                                                        
Basic
     17,095       17,087       17,063       17,057       17,034       17,076       17,044  
Diluted
     17,096       17,088       17,074       17,070       17,035       17,077       17,045  
                                                         
                                                         
(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)
  
2010
Fourth Quarter
    
2010
Third Quarter
    
2010
Second Quarter
    
2010
First Quarter
    
2009
Fourth Quarter
  
                               
ASSETS
                              
Cash and Due From Banks
   $ 35,410     $ 48,701     $ 52,380     $ 52,615     $ 57,877  
Funds Sold and Interest Bearing Deposits
     200,783       193,415       250,508       293,413       276,416  
Total Cash and Cash Equivalents
     236,193       242,116       302,888       346,028       334,293  
                                         
Investment Securities, Available-for-Sale
     309,731       231,303       218,785       217,606       176,673  
                                         
Loans, Net of Unearned Interest
                                        
Commercial, Financial, & Agricultural
     157,394       156,049       161,268       169,766       189,061  
Real Estate - Construction
     43,239       45,346       56,910       79,145       111,249  
Real Estate - Commercial
     671,702       680,639       676,516       729,011       716,791  
Real Estate - Residential
     420,604       448,704       450,997       394,132       406,262  
Real Estate - Home Equity
     251,565       250,795       247,726       245,185       246,722  
Consumer
     200,727       207,207       215,723       224,793       233,524  
Other Loans
     9,937       9,828       9,498       6,888       10,207  
Overdrafts
     3,503       2,669       3,144       2,701       2,124  
Total Loans, Net of Unearned Interest
     1,758,671       1,801,237       1,821,782       1,851,621       1,915,940  
Allowance for Loan Losses
     (35,436 )     (37,720 )     (38,442 )     (41,198 )     (43,999 )
Loans, Net
     1,723,235       1,763,517       1,783,340       1,810,423       1,871,941  
                                         
Premises and Equipment, Net
     115,356       115,689       116,802       117,055       115,439  
Intangible Assets
     86,159       86,712       87,421       88,131       88,841  
Other Real Estate Owned
     57,937       51,208       48,110       46,444       36,134  
Other Assets
     93,442       89,451       93,398       89,416       85,003  
Total Other Assets
     352,894       343,060       345,731       341,046       325,417  
                                         
Total Assets
   $ 2,622,053     $ 2,579,996     $ 2,650,744     $ 2,715,103     $ 2,708,324  
                                         
LIABILITIES
                                        
Deposits:
                                        
Noninterest Bearing Deposits
   $ 546,257     $ 479,887     $ 460,168     $ 446,855     $ 427,791  
NOW Accounts
     770,149       830,297       891,636       890,570       899,649  
Money Market Accounts
     275,416       282,848       303,369       376,091       373,105  
Regular Savings Accounts
     139,888       135,143       132,174       130,936       122,370  
Certificates of Deposit
     372,266       393,268       412,964       438,488       435,319  
Total Deposits
     2,103,976       2,121,443       2,200,311       2,282,940       2,258,234  
                                         
Short-Term Borrowings
     92,928       38,138       21,376       18,900       35,841  
Subordinated Notes Payable
     62,887       62,887       62,887       62,887       62,887  
Other Long-Term Borrowings
     50,101       46,456       55,605       50,679       49,380  
Other Liabilities
     53,142       50,383       48,885       37,738       34,083  
                                         
Total Liabilities
     2,363,034       2,319,307       2,389,064       2,453,144       2,440,425  
                                         
SHAREOWNERS' EQUITY
                                        
Common Stock
     171       171       171       171       170  
Additional Paid-In Capital
     36,920       36,864       36,633       36,816       36,099  
Retained Earnings
     237,679       237,471       238,779       239,755       246,460  
Accumulated Other Comprehensive Loss, Net of Tax
     (15,751 )     (13,817 )     (13,903 )     (14,783 )     (14,830 )
                                         
Total Shareowners' Equity
     259,019       260,689       261,680       261,959       267,899  
                                         
Total Liabilities and Shareowners' Equity
   $ 2,622,053     $ 2,579,996     $ 2,650,744     $ 2,715,103     $ 2,708,324  
                                         
OTHER BALANCE SHEET DATA
                                        
Earning Assets
   $ 2,269,185     $ 2,225,955     $ 2,291,075     $ 2,362,640     $ 2,369,029  
Intangible Assets
                                        
Goodwill
     84,811       84,811       84,811       84,811       84,811  
Core Deposits
     742       1,248       1,910       2,572       3,233  
Other
     606       653       700       748       797  
Interest Bearing Liabilities
     1,763,635       1,789,037       1,880,011       1,968,551       1,978,551  
                                         
Book Value Per Diluted Share
   $ 15.15     $ 15.25     $ 15.32     $ 15.34     $ 15.72  
Tangible Book Value Per Diluted Share
     10.11       10.18       10.21       10.18       10.51  
                                         
Actual Basic Shares Outstanding
     17,100       17,095       17,067       17,063       17,036  
Actual Diluted Shares Outstanding
     17,101       17,096       17,078       17,076       17,037  
                                         


 
 
 


CAPITAL CITY BANK GROUP, INC.
                                
ALLOWANCE FOR LOAN LOSSES
                                
AND NONPERFORMING ASSETS
                                
Unaudited
                                
     
2010
    
2010
    
2010
    
2010
    
2009
  
(Dollars in thousands)
    
Fourth Quarter
  
Third Quarter
    
Second Quarter
    
First Quarter
    
Fourth Quarter
  
                                 
ALLOWANCE FOR LOAN LOSSES
                                
Balance at Beginning of Period
   $
37,720
   $
                     38,442
   $ 
                 41,199
   $ 
 $                    43,999
   $ 
                  45,401
  
Provision for Loan Losses
    
                      3,783
    
                           5,668
    
                      3,633
    
                       10,740
    
                    10,834
  
Transfer of Unfunded Reserve to Other Liability
                               -
    
                                    -
    
                               -
    
                                  -
    
                          392
  
Net Charge-Offs
    
                      6,067
    
                           6,390
    
                      6,390
    
                       13,540
    
                    11,844
  
                                 
Balance at End of Period
   $
35,436
   $ 
                       37,720
   $ 
                38,442
   $ 
 $                    41,199
   $ 
                  43,999
  
As a % of Loans
    
2.01
 %  
2.10
 %   
2.11
 %   
2.23%
  %  
2.30
 % 
As a % of Nonperforming Loans
    
40.57
 %   
39.94
 %   
37.80
 %   
38.42
 %   
40.77
 % 
As a % of Nonperforming Assets
    
24.39
 %   
25.90
 %   
25.66
 %   
26.81%
 %   
30.54
 % 
                                 
CHARGE-OFFS
                                
Commercial, Financial and Agricultural
 $
629
   $ 
                           242
   $ 
                       405
   $ 
                          842
   $ 
                        712
  
Real Estate - Construction
    
                          234
    
                               701
    
                      1,220
    
                         3,722
    
                       2,040
  
Real Estate - Commercial
    
                      1,469
    
                           1,741
    
                         920
    
                         4,631
    
                       1,584
  
Real Estate - Residential
    
                      3,629
    
                           3,175
    
                      4,725
    
                         3,727
    
                       7,377
  
Consumer
    
                          582
    
                           1,057
    
                         360
    
                         1,507
    
                       1,324
  
                                 
Total Charge-Offs
   $
6,543
   $ 
                         6,916
   $ 
                  7,630
   $ 
                     14,429
   $ 
                  13,037
  
                                 
RECOVERIES
                                
Commercial, Financial and Agricultural
 $
48
   $ 
                               65
   $ 
                      181
   $ 
                             77
   $ 
                        343
  
Real Estate - Construction
    
                               -
    
                                    -
    
                              8
    
                                  -
    
                               5
  
Real Estate - Commercial
    
                            55
    
                                   6
    
                           43
    
                             157
    
                            43
  
Real Estate - Residential
    
                              7
    
                               181
    
                         638
    
                             114
    
                          331
  
Consumer
    
                          366
    
                               274
    
                         370
    
                             541
    
                          471
  
                                 
Total Recoveries
   $
476
   $ 
                            526
   $ 
                   1,240
   $ 
                          889
   $ 
                    1,193
  
                                 
NET CHARGE-OFFS
   $
6,067
   $ 
                        6,390
   $ 
                   6,390
   $ 
                     13,540
   $ 
                  11,844
  
                                 
Net Charge-Offs as a % of Average Loans(1)
1.35%
    
1.40%
    
1.39%
    
2.91%
    
2.42%
  
                                 
RISK ELEMENT ASSETS
                                
Nonaccruing Loans
   $
65,700
   $ 
                       74,168
   $ 
                 74,504
   $ 
                     76,382
   $ 
                  86,274
  
Restructured Loans
    
                    21,649
    
                         20,267
    
                   27,200
    
                       30,843
    
                    21,644
  
Total Nonperforming Loans
    
                    87,349
    
                         94,435
    
                 101,704
    
                     107,225
    
                  107,918
  
Other Real Estate
    
                    57,937
    
                         51,208
    
                   48,110
    
                       46,444
    
                    36,134
  
Total Nonperforming Assets
   $
145,286
   $ 
                    145,643
   $ 
               149,814
   $ 
                  153,669
   $ 
                144,052
  
                                 
Past Due Loans 30-89 Days
   $
24,193
   $ 
                       24,904
   $ 
                 21,192
    $
                     18,768
   $ 
                  36,501
  
Past Due Loans 90 Days or More
   $
159
   $ 
                                  -
   $ 
                            -
   $ 
                                -
   $ 
                             -
  
                                 
Nonperforming Loans as a % of Loans
  
4.97
 %  
5.24%
 %   
5.58
 %   
5.79
 %   
5.63
 % 
Nonperforming Assets as a % of
                                
Loans and Other Real Estate
    
8.00
 %  
7.86
 %   
8.01
 %   
8.10
 %   
7.38
 % 
Nonperforming Assets as a % of Capital(2)
49.34
 %  
48.81
 %  
49.92
 %   
50.69
 %   
46.19
 % 
                                 
                                 
(1) Annualized
                                
(2) Capital includes allowance for loan losses.
                          
                                 

 
 
 


AVERAGE BALANCE AND INTEREST RATES(1)
                                                                                                              
Unaudited
                                                                                                                              
                                                                                                                               
                                                                                                                               
   
Fourth Quarter 2010
    
Third Quarter 2010
    
Second Quarter 2010
    
First Quarter 2010
    
Fourth Quarter 2009
    
December 2010 YTD
    
December 2009 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
   $ 1,782,916       25,799       5.74 %   $ 1,807,483       26,568       5.83 %   $ 1,841,379       26,795       5.84 %   $ 1,886,367       27,180       5.84 %   $ 1,944,873       28,813       5.88 %   $ 1,829,193       106,342       5.81 %   $ 1,961,990       118,186       6.02 %
                                                                                                                                                                         
Investment Securities
                                                                                                                                                                        
Taxable Investment Securities
     178,926       799       1.78 %     124,625       674       2.15 %     128,268       708       2.21 %     71,325       500       2.81 %     72,537       498       2.74 %     126,078       2,681       2.12 %     83,648       2,698       3.22 %
Tax-Exempt Investment Securities
     83,469       434       2.08 %     88,656       521       2.35 %     92,140       624       2.71 %     97,316       753       3.10 %     107,361       921       3.43 %     90,352       2,332       2.58 %     105,683       4,106       3.88 %
                                                                                                                                                                         
Total Investment Securities
     262,395       1,233       1.87 %     213,281       1,195       2.23 %     220,408       1,332       2.42 %     168,641       1,253       2.98 %     179,898       1,419       3.15 %     216,430       5,013       2.31 %     189,331       6,804       3.59 %
                                                                                                                                                                         
Funds Sold
     172,738       95       0.24 %     252,434       144       0.22 %     267,578       176       0.26 %     303,280       172       0.23 %     112,790       77       0.27 %     248,659       587       0.23 %     32,911       82       0.25 %
                                                                                                                                                                         
Total Earning Assets
     2,218,049     $ 27,127       4.85 %     2,273,198     $ 27,907       4.87 %     2,329,365     $ 28,303       4.87 %     2,358,288     $ 28,605       4.92 %     2,237,561     $ 30,309       5.38 %     2,294,282     $ 111,942       4.88 %     2,184,232     $ 125,072       5.73 %
                                                                                                                                                                         
Cash and Due From Banks
     51,030                       50,942                       50,739                       54,873                       69,687                       51,883                       76,107                  
Allowance for Loan Losses
     (37,713 )                     (39,584 )                     (41,074 )                     (44,584 )                     (46,468 )                     (40,717 )                     (42,331 )                
Other Assets
     345,427                       342,202                       339,458                       329,842                       314,470                       339,283                       298,807                  
                                                                                                                                                                         
Total Assets
   $ 2,576,793                     $ 2,626,758                     $ 2,678,488                     $ 2,698,419                     $ 2,575,250                     $ 2,644,731                     $ 2,516,815                  
                                                                                                                                                                         
LIABILITIES:
                                                                                                                                                                        
Interest Bearing Deposits
                                                                                                                                                                        
NOW Accounts
   $ 837,625     $ 296       0.14 %   $ 871,158     $ 326       0.15 %   $ 879,329     $ 400       0.18 %   $ 867,004     $ 384       0.18 %   $ 740,550     $ 308       0.17 %   $ 863,719     $ 1,406       0.16 %   $ 711,753     $ 1,039       0.15 %
Money Market Accounts
     282,887       134       0.19 %     293,424       145       0.20 %     333,976       331       0.40 %     374,161       689       0.75 %     361,104       625       0.69 %     320,786       1,299       0.41 %     320,531       1,288       0.40 %
Savings Accounts
     136,276       16       0.05 %     133,690       17       0.05 %     131,333       17       0.05 %     126,352       15       0.05 %     122,158       16       0.05 %     131,945       65       0.05 %     121,582       60       0.05 %
Time Deposits
     382,870       1,078       1.12 %     402,880       1,332       1.31 %     430,571       1,615       1.50 %     438,112       1,850       1.71 %     439,654       2,015       1.82 %     413,428       5,875       1.42 %     420,198       8,198       1.95 %
Total Interest Bearing Deposits
     1,639,658       1,524       0.37 %     1,701,152       1,820       0.42 %     1,775,209       2,363       0.53 %     1,805,629       2,938       0.66 %     1,663,466       2,964       0.71 %     1,729,878       8,645       0.50 %     1,574,064       10,585       0.67 %
                                                                                                                                                                         
Short-Term Borrowings
     34,706       99       1.14 %     23,388       31       0.54 %     22,694       12       0.20 %     30,673       17       0.22 %     47,114       22       0.18 %     27,864       159       0.57 %     79,321       291       0.36 %
Subordinated Notes Payable
     62,887       342       2.13 %     62,887       376       2.34 %     62,887       639       4.02 %     62,887       651       4.14 %     62,887       936       5.83 %     62,887       2,008       3.15 %     62,887       3,730       5.85 %
Other Long-Term Borrowings
     50,097       508       4.02 %     54,258       565       4.13 %     52,704       551       4.20 %     49,981       526       4.27 %     50,026       542       4.30 %     51,767       2,150       4.15 %     51,973       2,236       4.30 %
                                                                                                                                                                         
Total Interest Bearing Liabilities
     1,787,348     $ 2,473       0.55 %     1,841,685     $ 2,792       0.60 %     1,913,494     $ 3,565       0.75 %     1,949,170     $ 4,132       0.86 %     1,823,493     $ 4,464       0.97 %     1,872,396     $ 12,962       0.69 %     1,768,245     $ 16,842       0.95 %
                                                                                                                                                                         
Noninterest Bearing Deposits
     476,209                       471,013                       458,969                       443,131                       426,542                       462,445                       418,365                  
Other Liabilities
     50,614                       50,318                       42,152                       37,563                       56,659                       45,211                       54,660                  
                                                                                                                                                                         
Total Liabilities
     2,314,171                       2,363,016                       2,414,615                       2,429,864                       2,306,694                       2,380,052                       2,241,270                  
                                                                                                                                                                         
SHAREOWNERS' EQUITY:
   $ 262,622                     $ 263,742                     $ 263,873                     $ 268,555                     $ 268,556                     $ 264,679                     $ 275,545                  
                                                                                                                                                                         
Total Liabilities and Shareowners' Equity
   $ 2,576,793                     $ 2,626,758                     $ 2,678,488                     $ 2,698,419                     $ 2,575,250                     $ 2,644,731                     $ 2,516,815                  
                                                                                                                                                                         
Interest Rate Spread
           $ 24,654       4.30 %           $ 25,115       4.27 %           $ 24,738       4.12 %           $ 24,473       4.06 %           $ 25,845       4.41 %           $ 98,980       4.19 %           $ 108,230       4.78 %
                                                                                                                                                                         
Interest Income and Rate Earned(1)
     $ 27,127       4.85 %           $ 27,907       4.87 %           $ 28,303       4.87 %           $ 28,605       4.92 %           $ 30,309       5.38 %           $ 111,942       4.88 %           $ 125,072       5.73 %
Interest Expense and Rate Paid(2)
       2,473       0.44 %             2,792       0.49 %             3,565       0.61 %             4,132       0.71 %             4,464       0.79 %             12,962       0.56 %             16,842       0.77 %
                                                                                                                                                                         
Net Interest Margin
           $ 24,654       4.41 %           $ 25,115       4.38 %           $ 24,738       4.26 %           $ 24,473       4.21 %           $ 25,845       4.59 %           $ 98,980       4.32 %           $ 108,230       4.96 %
                                                                                                                                                                         
                                                                                                                                                                         
                                                                                                                                                                         
                                                                                                                                                                         
(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.