Capital City Bank Group, Inc.
Reports First Quarter 2008 Results
TALLAHASSEE, Fla. (April 22, 2008) – Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income for the first quarter of 2008 totaling $7.3 million ($0.42 per diluted share) compared to $7.7 million ($0.44 per diluted share) in the fourth quarter of 2007 and $7.0 million ($0.38 per diluted share) for the first quarter of 2007. Earnings for the first quarter include a $2.4 million pre-tax gain from the redemption of Visa, Inc. shares related to their initial public offering, the reversal of $1.1 million (pre-tax) in litigation reserves recorded in the previous quarter related to certain Visa litigation, which are referred to as “Covered” litigation, and an increase to the reserve for loan losses of $2.2 million.
“Given the current operating environment and economic conditions, our earnings have held up well over the past few quarters as we work our way through this economic cycle,” said William G. Smith, Jr., Chairman, President, and CEO of Capital City Bank Group, Inc. “Our markets have not been hit as hard as other areas of Florida, nor have our markets experienced as steep and rapid a decline in the leading local economic indicators, but nevertheless, the economic activity in our markets has softened and we anticipate this will persist through 2008.
“As evidenced by our increased nonperforming assets and provisioning for credit losses, we continue to recognize that credit quality and risk assessment are the most important issues to focus upon. Higher levels of impaired loans clearly impede revenue production and ultimately have an adverse impact on the net interest margin, although underlying credit quality across the various loan portfolios is fundamentally sound. Our main challenge will be to intensively manage our problem loans towards resolution as quickly as the market will allow.
“While new loan growth has not been exceptional, business is steady, and our markets offer a variety of quality lending opportunities and pipelines remain reasonably full.
“On the deposit side, during the quarter there was a noteworthy influx of over $155 million in average negotiated deposits, primarily public funds. These new deposits are a testament to our financial strength and stability in a market where there are few safe harbors elsewhere, but the relatively thin spreads on these negotiated deposits put pressure on our net interest margin, which fell to 4.73% for the quarter.
“Capital City continued to enjoy growth in core noninterest income and has contained its operating expenses. We expect to sustain our efforts in these areas. And finally, our capital levels remain quite strong and should enable us to take advantage of opportunities that naturally arise in a difficult economy,” said Smith.
The Return on Average Assets was 1.11% and the Return on Average Equity was 9.87% for the first quarter of 2008. These metrics were 1.11% and 8.91% for the comparable quarter in 2007 and 1.21% and 10.16% for the fourth quarter of 2007, respectively.
Discussion of Financial Condition
Average earning assets were $2.301 billion for the first quarter, an increase of $110.2 million, or 5.0% from the fourth quarter of 2007, and $89.9 million, or 4.1% from the first quarter of 2007. The increase over both prior periods was due to an increase in short-term investments reflective of an increase in our client deposit balances (see discussion below). Average loans increased $1.5 million, or .08% from the fourth quarter due to a steady pace of new loan production and a slowdown in the level of loan payoffs/pay-downs. Compared to the first quarter of 2007, average loans decreased $70.7 million, or 3.6% due to a high level of loan pay-offs/pay-downs many of which were tied to larger construction and permanent commercial real estate loans.
Nonperforming assets of $41.1 million increased from the linked fourth quarter by $12.9 million and from the first quarter of 2007 by $31.7 million. Nonaccrual loans increased $10.2 million and $27.1 million, respectively, from the same prior-year periods. The increase in nonaccrual loans in the first quarter primarily reflects the addition of three large real estate loan relationships totaling $9.8 million, which management believes have been adequately reserved for at quarter-end. These new nonaccrual loans are related to non-coastal residential real estate developments. Restructured loans totaled $2.0 million at the end of the first quarter. Other real estate owned totaled $3.8 million at the end of the quarter compared to $3.0 million at year-end 2007 and $1.2 million at the end of the first quarter of 2007. Nonperforming assets represented 2.14% of loans and other real estate at the end of the first quarter compared to 1.47% at year-end 2007 and ..48% at the end of the first quarter of 2007.
Average total deposits were $2.149 billion for the first quarter, an increase of $132.1 million, or 6.6%, over the fourth quarter and $145.1 million, or 7.2%, over the first quarter of 2007. The increase over both comparable periods was driven by strong growth in negotiated NOW accounts, primarily public funds deposits which began migrating late in the fourth quarter from the Florida State Board of Administration’s Local Government Investment Pool to Capital City Bank. Partially offsetting this increase were declines in noninterest bearing accounts, money market accounts, and certificates of deposit.
The Company had approximately $186.8 million in average net overnight funds sold for the first quarter of 2008 as compared to $84.1 million in average net overnight funds sold in the fourth quarter of 2007 and $21.9 million in the first quarter of 2007. The recent influx of public deposits contributed to the growth in overnight funds for the current quarter over both prior periods. Share repurchase activity throughout 2007, which totaled $43 million, also had an impact when compared to the first quarter of 2007.
Discussion of Operating Results
Tax equivalent net interest income for the first quarter of 2008 was $27.1 million compared to $28.2 million for the fourth quarter of 2007 and $28.9 million for the first quarter of 2007. The decline in net interest income for each respective period is attributable to compression of our net interest margin. While we believe we have been successful in neutralizing the impact of reductions in the Federal Reserve’s target rate over the last two quarters, a rising level of foregone interest income associated with higher levels of nonperforming assets and the recent influx of higher cost negotiated deposits (primarily public funds) are the two primary factors producing a decline in the net interest margin of 37 basis points over fourth quarter 2007 and 56 basis points over first quarter 2007. Average negotiated deposits have grown from $275 million in the first quarter of 2007 to $538 million in the current quarter. Although this growth in deposits has had a positive impact on net interest income, it has had an adverse impact on our margin due to the relatively thin spreads on these deposits. See “Discussion of Financial Condition” for a more detailed analysis of nonperforming assets and deposit growth.
On a linked quarter basis, the average yield on earning assets declined 63 basis points and the average cost of funds fell 26 basis points producing a net reduction in the margin of 37 basis points from 5.10% to 4.73%. Year over year, the average yield on earning assets declined 84 basis points and the average cost of funds fell 28 basis points producing a net reduction in the margin of 56 basis points from 5.29% to 4.73%. Since September 2007, we have aggressively reduced our deposit rates in response to the rate reductions initiated by the Federal Reserve and believe we have been successful in neutralizing these rate reductions. However, the rapid growth in the higher cost negotiated deposits mitigated the full impact of lowering our deposit rates and, therefore, the decline in our average cost of funds was not commensurate with the decline in our average yield on earning assets.
The provision for loan losses for the current quarter was $4.1 million compared to $1.7 million in the fourth quarter of 2007 and $1.2 million for the first quarter of 2007. The increase in the provision for the current quarter is due to credit deterioration reflective of a higher level of impaired loan reserves and an increase in reserves allocated to consumer loans. These increases reflect the impact of the housing and real estate market slowdown, and the related stress on the consumer. For the quarter, net charge-offs totaled $1.9 million, or .41%, of average loans compared to $1.6 million, or .34% in the fourth quarter and $1.3 million, or ..28% in the first quarter of 2007. At quarter-end, the allowance for loan losses was 1.06% of outstanding loans (net of overdrafts) and provided coverage of 54% of nonperforming loans.
Noninterest income for the first quarter increased $2.0 million, or 12.5%, over the fourth quarter of 2007 and $3.8 million, or 27.5%, over the first quarter of 2007. Compared to the fourth quarter, the increase is attributable to a pre-tax gain of $2.4 million from the redemption of Visa, Inc. shares. An expected seasonal decline in deposit fees ($491,000) partially offset the aforementioned gain. Compared to the first quarter of 2007, the increase is also due to the Visa, Inc. share redemption gain, as well as higher deposit and bank card fees of $720,000 and $474,000, respectively.
Noninterest expense decreased $1.8 million, or 5.7%, from the fourth quarter and $764,000, or 2.5%, from the first quarter of 2007. A one-time entry of $1.1 million to reverse a portion of the Visa, Inc. litigation accrual was the primary reason for the decline. In addition, we reversed $577,000 in accrued expense for our 2011 Incentive Plan, which was terminated during the first quarter.
About Capital City Bank Group, Inc.
Capital City Bank Group, Inc. (NASDAQ: CCBG) is one of the largest publicly traded financial services companies headquartered in Florida and has approximately $2.7 billion in assets. The Company provides a full range of banking services, including traditional deposit and credit services, asset management, trust, mortgage banking, merchant services, bankcards, data processing and securities brokerage services. The Company's bank subsidiary, Capital City Bank, was founded in 1895 and now has 69 banking offices, two mortgage lending 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 Form 8-K 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 Form 8-K speak only as of the date of the Form 8-K, and the Company assumes no obligation to update forward-looking statements or the reasons why actual results could differ.
| EARNINGS HIGHLIGHTS | | | | | | | | | |
| | | Three Months Ended | |
| (Dollars in thousands, except per share data.) | | Mar 31, 2008 | | | Dec 31, 2007 | | | Mar 31, 2007 | |
| EARNINGS | | | | | | | | | |
| Net Income | | $ | 7,280 | | | $ | 7,664 | | | $ | 6,957 | |
| Diluted Earnings Per Common Share | | $ | 0.42 | | | $ | 0.44 | | | $ | 0.38 | |
| PERFORMANCE | | | | | | | | | | | | |
| Return on Average Equity | | | 9.87 | % | | | 10.16 | % | | | 8.91 | % |
| Return on Average Assets | | | 1.11 | % | | | 1.21 | % | | | 1.11 | % |
| Net Interest Margin | | | 4.73 | % | | | 5.10 | % | | | 5.29 | % |
| Noninterest Income as % of Operating Revenue | | | 40.22 | % | | | 36.49 | % | | | 33.02 | % |
| Efficiency Ratio | | | 63.15 | % | | | 68.51 | % | | | 67.90 | % |
| CAPITAL ADEQUACY | | | | | | | | | | | | |
| Tier 1 Capital Ratio | | | 12.94 | % | | | 13.05 | % | | | 13.88 | % |
| Total Capital Ratio | | | 14.01 | % | | | 14.05 | % | | | 14.83 | % |
| Leverage Ratio | | | 10.32 | % | | | 10.41 | % | | | 11.22 | % |
| Equity to Assets | | | 11.06 | % | | | 11.19 | % | | | 12.04 | % |
| ASSET QUALITY | | | | | | | | | | | | |
| Allowance as % of Non-Performing Loans | | | 54.32 | % | | | 71.92 | % | | | 207.67 | % |
| Allowance as a % of Loans | | | 1.06 | % | | | 0.95 | % | | | 0.87 | % |
| Net Charge-Offs as % of Average Loans | | | 0.41 | % | | | 0.34 | % | | | 0.28 | % |
| Nonperforming Assets as % of Loans and ORE | | | 2.14 | % | | | 1.47 | % | | | 0.48 | % |
| STOCK PERFORMANCE | | | | | | | | | | | | |
| High | | $ | 29.99 | | | $ | 34.00 | | | $ | 35.91 | |
| Low | | $ | 24.76 | | | $ | 24.60 | | | $ | 29.79 | |
| Close | | $ | 29.00 | | | $ | 28.22 | | | $ | 33.30 | |
| Average Daily Trading Volume | | | 31,827 | | | | 52,489 | | | | 24,499 | |
| CAPITAL CITY BANK GROUP, INC. | | | | | | | | | | | |
| CONSOLIDATED STATEMENT OF INCOME | | | | | | | | | | | |
| Unaudited | | | | | | | | | | | |
| | | | | | | | | | | | |
| (Dollars in thousands, except per share data) | | 2008 First Quarter | | 2007 Fourth Quarter | | 2007 Third Quarter | | 2007 Second Quarter | | 2007 First Quarter | |
| | | | | | | | | | | | |
| INTEREST INCOME | | | | | | | | | | | |
| Interest and Fees on Loans | | $ | 35,255 | | $ | 37,730 | | $ | 38,692 | | $ | 39,092 | | $ | 39,053 | |
| Investment Securities | | | 1,893 | | | 1,992 | | | 1,968 | | | 1,943 | | | 1,940 | |
| Funds Sold | | | 1,575 | | | 1,064 | | | 639 | | | 689 | | | 521 | |
| Total Interest Income | | | 38,723 | | | 40,786 | | | 41,299 | | | 41,724 | | | 41,514 | |
| | | | | | | | | | | | | | | | | |
| INTEREST EXPENSE | | | | | | | | | | | | | | | | |
| Deposits | | | 10,481 | | | 11,323 | | | 11,266 | | | 11,098 | | | 11,000 | |
| Short-Term Borrowings | | | 521 | | | 639 | | | 734 | | | 737 | | | 761 | |
| Subordinated Notes Payable | | | 931 | | | 936 | | | 936 | | | 932 | | | 926 | |
| Other Long-Term Borrowings | | | 331 | | | 343 | | | 453 | | | 496 | | | 502 | |
| Total Interest Expense | | | 12,264 | | | 13,241 | | | 13,389 | | | 13,263 | | | 13,189 | |
| Net Interest Income | | | 26,459 | | | 27,545 | | | 27,910 | | | 28,461 | | | 28,325 | |
| Provision for Loan Losses | | | 4,142 | | | 1,699 | | | 1,552 | | | 1,675 | | | 1,237 | |
| Net Interest Income after Provision for Loan Losses | | | 22,317 | | | 25,846 | | | 26,358 | | | 26,786 | | | 27,088 | |
| | | | | | | | | | | | | | | | | |
| NONINTEREST INCOME | | | | | | | | | | | | | | | | |
| Service Charges on Deposit Accounts | | | 6,765 | | | 7,256 | | | 6,387 | �� | | 6,442 | | | 6,045 | |
| Data Processing | | | 813 | | | 853 | | | 775 | | | 790 | | | 715 | |
| Asset Management Fees | | | 1,150 | | | 1,100 | | | 1,200 | | | 1,175 | | | 1,225 | |
| Retail Brokerage Fees | | | 469 | | | 619 | | | 625 | | | 804 | | | 462 | |
| Gain on Sale of Investment Securities | | | 65 | | | 7 | | | - | | | - | | | 7 | |
| Mortgage Banking Revenues | | | 494 | | | 425 | | | 642 | | | 850 | | | 679 | |
| Merchant Fees | | | 2,208 | | | 1,743 | | | 1,686 | | | 1,892 | | | 1,936 | |
| Interchange Fees | | | 1,009 | | | 962 | | | 934 | | | 951 | | | 910 | |
| ATM/Debit Card Fees | | | 744 | | | 705 | | | 685 | | | 661 | | | 641 | |
| Other | | | 4,082 | | | 2,153 | | | 1,497 | | | 1,519 | | | 1,342 | |
| Total Noninterest Income | | | 17,799 | | | 15,823 | | | 14,431 | | | 15,084 | | | 13,962 | |
| | | | | | | | | | | | | | | | | |
| NONINTEREST EXPENSE | | | | | | | | | | | | | | | | |
| Salaries and Associate Benefits | | | 15,604 | | | 14,472 | | | 15,096 | | | 14,992 | | | 15,719 | |
| Occupancy, Net | | | 2,362 | | | 2,378 | | | 2,409 | | | 2,324 | | | 2,236 | |
| Furniture and Equipment | | | 2,582 | | | 2,534 | | | 2,513 | | | 2,494 | | | 2,349 | |
| Intangible Amortization | | | 1,459 | | | 1,458 | | | 1,459 | | | 1,458 | | | 1,459 | |
| Other | | | 7,791 | | | 10,772 | | | 8,442 | | | 8,629 | | | 8,799 | |
| Total Noninterest Expense | | | 29,798 | | | 31,614 | | | 29,919 | | | 29,897 | | | 30,562 | |
| | | | | | | | | | | | | | | | | |
| OPERATING PROFIT | | | 10,318 | | | 10,055 | | | 10,870 | | | 11,973 | | | 10,488 | |
| Provision for Income Taxes | | | 3,038 | | | 2,391 | | | 3,699 | | | 4,082 | | | 3,531 | |
| NET INCOME | | $ | 7,280 | | $ | 7,664 | | $ | 7,171 | | $ | 7,891 | | $ | 6,957 | |
| | | | | | | | | | | | | | | | | |
| PER SHARE DATA | | | | | | | | | | | | | | | | |
| Basic Earnings | | $ | 0.42 | | $ | 0.44 | | $ | 0.41 | | $ | 0.43 | | $ | 0.38 | |
| Diluted Earnings | | $ | 0.42 | | $ | 0.44 | | $ | 0.41 | | $ | 0.43 | | $ | 0.38 | |
| Cash Dividends | | | 0.185 | | | 0.185 | | | 0.175 | | | 0.175 | | | 0.175 | |
| AVERAGE SHARES | | | | | | | | | | | | | | | | |
| Basic | | | 17,170 | | | 17,444 | | | 17,709 | | | 18,089 | | | 18,409 | |
| Diluted | | | 17,178 | | | 17,445 | | | 17,719 | | | 18,089 | | | 18,420 | |
| CAPITAL CITY BANK GROUP, INC. | | | | | | | | | | | | | | | |
| CONSOLIDATED STATEMENT OF FINANCIAL CONDITION | | | | | | | | | | | | | |
| Unaudited | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| (Dollars in thousands, except per share data) | | 2008 First Quarter | | | 2007 Fourth Quarter | | | 2007 Third Quarter | | | 2007 Second Quarter | | | 2007 First Quarter | |
| | | | | | | | | | | | | | | | |
| ASSETS | | | | | | | | | | | | | | | |
| Cash and Due From Banks | | $ | 97,525 | | | $ | 93,437 | | | $ | 91,378 | | | $ | 95,573 | | | $ | 92,233 | |
| Funds Sold and Interest Bearing Deposits | | | 241,202 | | | | 166,260 | | | | 19,599 | | | | 77,297 | | | | 93,832 | |
| Total Cash and Cash Equivalents | | | 338,727 | | | | 259,697 | | | | 110,977 | | | | 172,870 | | | | 186,065 | |
| | | | | | | | | | | | | | | | | | | | | |
| Investment Securities, Available-for-Sale | | | 186,944 | | | | 190,719 | | | | 184,609 | | | | 189,680 | | | | 191,446 | |
| | | | | | | | | | | | | | | | | | | | | |
| Loans, Net of Unearned Interest | | | | | | | | | | | | | | | | | | | | |
| Commercial, Financial, & Agricultural | | | 202,238 | | | | 208,864 | | | | 205,628 | | | | 203,555 | | | | 205,048 | |
| Real Estate - Construction | | | 152,060 | | | | 142,248 | | | | 145,343 | | | | 159,751 | | | | 180,549 | |
| Real Estate - Commercial | | | 624,826 | | | | 634,920 | | | | 631,418 | | | | 640,172 | | | | 643,272 | |
| Real Estate - Residential | | | 482,058 | | | | 481,150 | | | | 480,488 | | | | 493,783 | | | | 509,040 | |
| Real Estate - Home Equity | | | 197,093 | | | | 192,428 | | | | 183,620 | | | | 175,781 | | | | 172,283 | |
| Consumer | | | 238,663 | | | | 243,415 | | | | 246,137 | | | | 240,110 | | | | 235,175 | |
| Other Loans | | | 10,506 | | | | 7,222 | | | | 8,739 | | | | 14,715 | | | | 14,899 | |
| Overdrafts | | | 7,014 | | | | 5,603 | | | | 2,515 | | | | 2,844 | | | | 5,575 | |
| Total Loans, Net of Unearned Interest | | | 1,914,458 | | | | 1,915,850 | | | | 1,903,888 | | | | 1,930,711 | | | | 1,965,841 | |
| Allowance for Loan Losses | | | (20,277 | ) | | | (18,066 | ) | | | (18,001 | ) | | | (17,469 | ) | | | (17,108 | ) |
| Loans, Net | | | 1,894,181 | | | | 1,897,784 | | | | 1,885,887 | | | | 1,913,242 | | | | 1,948,733 | |
| | | | | | | | | | | | | | | | | | | | | |
| Premises and Equipment, Net | | | 100,145 | | | | 98,612 | | | | 95,816 | | | | 92,656 | | | | 88,812 | |
| Intangible Assets | | | 97,109 | | | | 98,568 | | | | 100,026 | | | | 101,485 | | | | 102,944 | |
| Other Assets | | | 75,406 | | | | 70,947 | | | | 62,611 | | | | 60,815 | | | | 60,117 | |
| Total Other Assets | | | 272,660 | | | | 268,127 | | | | 258,453 | | | | 254,956 | | | | 251,873 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Assets | | $ | 2,692,512 | | | $ | 2,616,327 | | | $ | 2,439,926 | | | $ | 2,530,748 | | | $ | 2,578,117 | |
| | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES | | | | | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | | | | | |
| Noninterest Bearing Deposits | | $ | 432,904 | | | $ | 432,659 | | | $ | 419,242 | | | $ | 456,986 | | | $ | 467,875 | |
| NOW Accounts | | | 800,128 | | | | 744,093 | | | | 530,619 | | | | 559,050 | | | | 575,740 | |
| Money Market Accounts | | | 381,474 | | | | 386,619 | | | | 399,578 | | | | 401,415 | | | | 396,150 | |
| Regular Savings Accounts | | | 116,018 | | | | 111,600 | | | | 115,955 | | | | 119,585 | | | | 124,970 | |
| Certificates of Deposit | | | 462,081 | | | | 467,373 | | | | 472,019 | | | | 472,554 | | | | 477,327 | |
| Total Deposits | | | 2,192,605 | | | | 2,142,344 | | | | 1,937,413 | | | | 2,009,590 | | | | 2,042,062 | |
| | | | | | | | | | | | | | | | | | | | | |
| Short-Term Borrowings | | | 61,781 | | | | 53,131 | | | | 63,817 | | | | 74,307 | | | | 77,936 | |
| Subordinated Notes Payable | | | 62,887 | | | | 62,887 | | | | 62,887 | | | | 62,887 | | | | 62,887 | |
| Other Long-Term Borrowings | | | 29,843 | | | | 26,731 | | | | 29,725 | | | | 41,276 | | | | 42,879 | |
| Other Liabilities | | | 47,723 | | | | 38,559 | | | | 47,031 | | | | 41,251 | | | | 41,841 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Liabilities | | | 2,394,839 | | | | 2,323,652 | | | | 2,140,873 | | | | 2,229,311 | | | | 2,267,605 | |
| | | | | | | | | | | | | | | | | | | | | |
| SHAREOWNERS' EQUITY | | | | | | | | | | | | | | | | | | | | |
| Common Stock | | | 172 | | | | 172 | | | | 176 | | | | 179 | | | | 183 | |
| Additional Paid-In Capital | | | 38,042 | | | | 38,243 | | | | 50,789 | | | | 58,001 | | | | 71,366 | |
| Retained Earnings | | | 264,538 | | | | 260,325 | | | | 255,876 | | | | 251,838 | | | | 246,959 | |
| Accumulated Other Comprehensive Loss, Net of Tax | | | (5,079 | ) | | | (6,065 | ) | | | (7,788 | ) | | | (8,581 | ) | | | (7,996 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Total Shareowners' Equity | | | 297,673 | | | | 292,675 | | | | 299,053 | | | | 301,437 | | | | 310,512 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Liabilities and Shareowners' Equity | | $ | 2,692,512 | | | $ | 2,616,327 | | | $ | 2,439,926 | | | $ | 2,530,748 | | | $ | 2,578,117 | |
| | | | | | | | | | | | | | | | | | | | | |
| OTHER BALANCE SHEET DATA | | | | | | | | | | | | | | | | | | | | |
| Earning Assets | | $ | 2,342,604 | | | $ | 2,272,829 | | | $ | 2,108,096 | | | $ | 2,197,688 | | | $ | 2,251,119 | |
| Intangible Assets | | | | | | | | | | | | | | | | | | | | |
| Goodwill | | | 84,811 | | | | 84,811 | | | | 84,811 | | | | 84,811 | | | | 84,811 | |
| Deposit Base | | | 11,167 | | | | 12,578 | | | | 13,988 | | | | 15,399 | | | | 16,810 | |
| Other | | | 1,131 | | | | 1,179 | | | | 1,227 | | | | 1,275 | | | | 1,323 | |
| Interest Bearing Liabilities | | | 1,914,212 | | | | 1,852,434 | | | | 1,674,600 | | | | 1,731,074 | | | | 1,757,889 | |
| | | | | | | | | | | | | | | | | | | | | |
| Book Value Per Diluted Share | | $ | 17.33 | | | $ | 17.03 | | | $ | 16.95 | | | $ | 16.87 | | | $ | 16.97 | |
| Tangible Book Value Per Diluted Share | | | 11.67 | | | | 11.30 | | | | 11.28 | | | | 11.19 | | | | 11.34 | |
| | | | | | | | | | | | | | | | | | | | | |
| Actual Basic Shares Outstanding | | | 17,175 | | | | 17,183 | | | | 17,628 | | | | 17,869 | | | | 18,287 | |
| Actual Diluted Shares Outstanding | | | 17,183 | | | | 17,184 | | | | 17,639 | | | | 17,869 | | | | 18,297 | |
| CAPITAL CITY BANK GROUP, INC. | | | | | | | | | | | | | | | |
| ALLOWANCE FOR LOAN LOSSES | | | | | | | | | | | | | | | |
| AND NONPERFORMING ASSETS | | | | | | | | | | | | | | | |
| Unaudited | | | | | | | | | | | | | | | |
| | | 2008 | | | 2007 | | | 2007 | | | 2007 | | | 2007 | |
| (Dollars in thousands) | | First Quarter | | | Fourth Quarter | | | Third Quarter | | | Second Quarter | | | First Quarter | |
| | | | | | | | | | | | | | | | |
| ALLOWANCE FOR LOAN LOSSES | | | | | | | | | | | | | | | |
| Balance at Beginning of Period | | $ | 18,066 | | | $ | 18,001 | | | $ | 17,469 | | | $ | 17,108 | | | $ | 17,217 | |
| Provision for Loan Losses | | | 4,142 | | | | 1,699 | | | | 1,552 | | | | 1,675 | | | | 1,237 | |
| Net Charge-Offs | | | 1,931 | | | | 1,634 | | | | 1,020 | | | | 1,314 | | | | 1,346 | |
| | | | | | | | | | | | | | | | | | | | | |
| Balance at End of Period | | $ | 20,277 | | | $ | 18,066 | | | $ | 18,001 | | | $ | 17,469 | | | $ | 17,108 | |
| As a % of Loans | | | 1.06 | % | | | 0.95 | % | | | 0.95 | % | | | 0.91 | % | | | 0.87 | % |
| As a % of Nonperforming Loans | | | 54.32 | % | | | 71.92 | % | | | 145.49 | % | | | 193.69 | % | | | 207.67 | % |
| As a % of Nonperforming Assets | | | 49.34 | % | | | 64.15 | % | | | 128.05 | % | | | 172.61 | % | | | 181.23 | % |
| | | | | | | | | | | | | | | | | | | | | |
| CHARGE-OFFS | | | | | | | | | | | | | | | | | | | | |
| Commercial, Financial and Agricultural | | $ | 636 | | | $ | 370 | | | $ | 279 | | | $ | 253 | | | $ | 560 | |
| Real Estate - Construction | | | 572 | | | | 58 | | | | - | | | | - | | | | 108 | |
| Real Estate - Commercial | | | 126 | | | | 133 | | | | 245 | | | | 5 | | | | 326 | |
| Real Estate - Residential | | | 176 | | | | 209 | | | | 161 | | | | 992 | | | | 67 | |
| Consumer | | | 1,170 | | | | 1,302 | | | | 854 | | | | 534 | | | | 761 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Charge-Offs | | $ | 2,680 | | | $ | 2,072 | | | $ | 1,539 | | | $ | 1,784 | | | $ | 1,822 | |
| | | | | | | | | | | | | | | | | | | | | |
| RECOVERIES | | | | | | | | | | | | | | | | | | | | |
| Commercial, Financial and Agricultural | | $ | 139 | | | $ | 47 | | | $ | 44 | | | $ | 47 | | | $ | 36 | |
| Real Estate - Construction | | | - | | | | - | | | | - | | | | - | | | | - | |
| Real Estate - Commercial | | | 1 | | | | 2 | | | | 2 | | | | 5 | | | | 5 | |
| Real Estate - Residential | | | 3 | | | | 5 | | | | 2 | | | | 26 | | | | 3 | |
| Consumer | | | 606 | | | | 384 | | | | 471 | | | | 392 | | | | 432 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Recoveries | | $ | 749 | | | $ | 438 | | | $ | 519 | | | $ | 470 | | | $ | 476 | |
| | | | | | | | | | | | | | | | | | | | | |
| NET CHARGE-OFFS | | $ | 1,931 | | | $ | 1,634 | | | $ | 1,020 | | | $ | 1,314 | | | $ | 1,346 | |
| QTD Average Loans | | | 1,909,573 | | | | 1,908,069 | | | | 1,907,235 | | | | 1,944,969 | | | | 1,980,224 | |
Net Charge-Offs as a % of Average Loans(1) | | | 0.41 | % | | | 0.34 | % | | | 0.21 | % | | | 0.27 | % | | | 0.28 | % |
| | | | | | | | | | | | | | | | | | | | | |
| RISK ELEMENT ASSETS | | | | | | | | | | | | | | | | | | | | |
| Nonaccruing Loans | | $ | 35,352 | | | $ | 25,120 | | | $ | 12,373 | | | $ | 9,019 | | | $ | 8,238 | |
| Restructured Loans | | | 1,980 | | | | - | | | | - | | | | - | | | | - | |
| Total Nonperforming Loans | | | 37,332 | | | | 25,120 | | | | 12,373 | | | | 9,019 | | | | 8,238 | |
| Other Real Estate | | | 3,768 | | | | 3,043 | | | | 1,685 | | | | 1,102 | | | | 1,202 | |
| Total Nonperforming Assets | | $ | 41,100 | | | $ | 28,163 | | | $ | 14,058 | | | $ | 10,121 | | | $ | 9,440 | |
| Capital | | | 317,949 | | | | 310,741 | | | | 317,054 | | | | 318,906 | | | | 327,620 | |
| Past Due Loans 90 Days or More | | $ | 842 | | | $ | 416 | | | $ | 874 | | | $ | 332 | | | $ | 860 | |
| EOM Loans | | | 1,914,458 | | | | 1,915,850 | | | | 1,903,888 | | | | 1,930,711 | | | | 1,965,841 | |
| Nonperforming Loans as a % of Loans | | | 1.95 | % | | | 1.31 | % | | | 0.65 | % | | | 0.47 | % | | | 0.42 | % |
| Nonperforming Assets as a % of | | | | | | | | | | | | | | | | | | | | |
| Loans and Other Real Estate | | | 2.14 | % | | | 1.47 | % | | | 0.74 | % | | | 0.52 | % | | | 0.48 | % |
Nonperforming Assets as a % of Capital(2) | | | 12.93 | % | | | 9.06 | % | | | 4.43 | % | | | 3.17 | % | | | 2.88 | % |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| (1) Annualized | | | | | | | | | | | | | | | | | | | | |
| (2) Capital includes allowance for loan losses. | | | | | | | | | | | | | | | | | | | | |
AVERAGE BALANCE AND INTEREST RATES(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Unaudited | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | First Quarter 2008 | | | Fourth Quarter 2007 | | | Third Quarter 2007 | | | Second Quarter 2007 | | | First Quarter 2007 | |
| (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 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ASSETS: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loans, Net of Unearned Interest | | $ | 1,909,574 | | | 35,452 | | | 7.47 | % | | $ | 1,908,069 | | | 37,969 | | | 7.89 | % | | $ | 1,907,235 | | | 38,901 | | | 8.09 | % | | $ | 1,944,969 | | | 39,300 | | | 8.10 | % | | $ | 1,980,224 | | | 39,264 | | | 8.04 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investment Securities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Taxable Investment Securities | | | 94,786 | | | 1,108 | | | 4.67 | % | | | 99,055 | | | 1,226 | | | 4.93 | % | | | 102,618 | | | 1,224 | | | 4.75 | % | | | 105,425 | | | 1,236 | | | 4.68 | % | | | 108,377 | | | 1,263 | | | 4.67 | % |
| Tax-Exempt Investment Securities | | | 90,790 | | | 1,207 | | | 5.32 | % | | | 87,358 | | | 1,178 | | | 5.39 | % | | | 85,446 | | | 1,142 | | | 5.35 | % | | | 83,907 | | | 1,088 | | | 5.19 | % | | | 82,627 | | | 1,039 | | | 5.03 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Investment Securities | | | 185,576 | | | 2,315 | | | 4.99 | % | | | 186,413 | | | 2,404 | | | 5.15 | % | | | 188,064 | | | 2,366 | | | 5.02 | % | | | 189,332 | | | 2,324 | | | 4.91 | % | | | 191,004 | | | 2,302 | | | 4.82 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Funds Sold | | | 206,313 | | | 1,574 | | | 3.02 | % | | | 96,748 | | | 1,064 | | | 4.31 | % | | | 49,438 | | | 639 | | | 5.06 | % | | | 52,935 | | | 689 | | | 5.15 | % | | | 40,332 | | | 521 | | | 5.17 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Earning Assets | | | 2,301,463 | | $ | 39,341 | | | 6.87 | % | | | 2,191,230 | | $ | 41,437 | | | 7.50 | % | | | 2,144,737 | | $ | 41,906 | | | 7.75 | % | | | 2,187,236 | | $ | 42,313 | | | 7.76 | % | | | 2,211,560 | | $ | 42,087 | | | 7.71 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and Due From Banks | | | 94,247 | | | | | | | | | | 85,598 | | | | | | | | | | 84,477 | | | | | | | | | | 88,075 | | | | | | | | | | 88,679 | | | | | | | |
| Allowance for Loan Losses | | | (18,227 | ) | | | | | | | | | (18,127 | ) | | | | | | | | | (17,664 | ) | | | | | | | | | (17,263 | ) | | | | | | | | | (17,073 | ) | | | | | | |
| Other Assets | | | 268,991 | | | | | | | | | | 260,981 | | | | | | | | | | 256,153 | | | | | | | | | | 253,204 | | | | | | | | | | 247,624 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Assets | | $ | 2,646,474 | | | | | | | | | $ | 2,519,682 | | | | | | | | | $ | 2,467,703 | | | | | | | | | $ | 2,511,252 | | | | | | | | | $ | 2,530,790 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest Bearing Deposits | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| NOW Accounts | | $ | 773,891 | | $ | 3,440 | | | 1.79 | % | | $ | 608,347 | | $ | 2,980 | | | 1.94 | % | | $ | 525,795 | | $ | 2,531 | | | 1.91 | % | | $ | 541,525 | | $ | 2,611 | | | 1.93 | % | | $ | 552,303 | | $ | 2,626 | | | 1.93 | % |
| Money Market Accounts | | | 389,828 | | | 2,198 | | | 2.27 | % | | | 404,406 | | | 3,217 | | | 3.16 | % | | | 403,957 | | | 3,565 | | | 3.50 | % | | | 393,403 | | | 3,458 | | | 3.53 | % | | | 386,736 | | | 3,427 | | | 3.59 | % |
| Savings Accounts | | | 113,163 | | | 34 | | | 0.12 | % | | | 113,527 | | | 57 | | | 0.20 | % | | | 117,451 | | | 70 | | | 0.24 | % | | | 122,560 | | | 74 | | | 0.24 | % | | | 125,419 | | | 78 | | | 0.25 | % |
| Time Deposits | | | 467,280 | | | 4,809 | | | 4.14 | % | | | 471,454 | | | 5,069 | | | 4.27 | % | | | 471,868 | | | 5,100 | | | 4.29 | % | | | 474,761 | | | 4,955 | | | 4.19 | % | | | 480,964 | | | 4,869 | | | 4.11 | % |
| Total Interest Bearing Deposits | | | 1,744,162 | | | 10,481 | | | 2.42 | % | | | 1,597,734 | | | 11,323 | | | 2.81 | % | | | 1,519,071 | | | 11,266 | | | 2.94 | % | | | 1,532,249 | | | 11,098 | | | 2.91 | % | | | 1,545,422 | | | 11,000 | | | 2.89 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Short-Term Borrowings | | | 68,095 | | | 521 | | | 3.06 | % | | | 64,842 | | | 639 | | | 3.89 | % | | | 65,130 | | | 734 | | | 4.45 | % | | | 66,764 | | | 737 | | | 4.41 | % | | | 68,911 | | | 761 | | | 4.46 | % |
| Subordinated Notes Payable | | | 62,887 | | | 931 | | | 5.96 | % | | | 62,887 | | | 936 | | | 5.91 | % | | | 62,887 | | | 936 | | | 5.91 | % | | | 62,887 | | | 932 | | | 5.94 | % | | | 62,887 | | | 926 | | | 5.97 | % |
| Other Long-Term Borrowings | | | 27,644 | | | 331 | | | 4.82 | % | | | 28,215 | | | 343 | | | 4.83 | % | | | 38,269 | | | 453 | | | 4.70 | % | | | 42,284 | | | 496 | | | 4.71 | % | | | 43,137 | | | 502 | | | 4.72 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Interest Bearing Liabilities | | | 1,902,788 | | $ | 12,264 | | | 2.59 | % | | | 1,753,678 | | $ | 13,241 | | | 3.00 | % | | | 1,685,357 | | $ | 13,389 | | | 3.15 | % | | | 1,704,184 | | $ | 13,263 | | | 3.12 | % | | | 1,720,357 | | $ | 13,189 | | | 3.11 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest Bearing Deposits | | | 404,712 | | | | | | | | | | 419,002 | | | | | | | | | | 435,089 | | | | | | | | | | 455,169 | | | | | | | | | | 458,304 | | | | | | | |
| Other Liabilities | | | 42,170 | | | | | | | | | | 47,660 | | | | | | | | | | 45,721 | | | | | | | | | | 42,547 | | | | | | | | | | 35,645 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Liabilities | | | 2,349,670 | | | | | | | | | | 2,220,340 | | | | | | | | | | 2,166,167 | | | | | | | | | | 2,201,900 | | | | | | | | | | 2,214,306 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| SHAREOWNERS' EQUITY: | | $ | 296,804 | | | | | | | | | $ | 299,342 | | | | | | | | | $ | 301,536 | | | | | | | | | $ | 309,352 | | | | | | | | | $ | 316,484 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Liabilities and Shareowners' Equity | | $ | 2,646,474 | | | | | | | | | $ | 2,519,682 | | | | | | | | | $ | 2,467,703 | | | | | | | | | $ | 2,511,252 | | | | | | | | | $ | 2,530,790 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest Rate Spread | | | | | $ | 27,077 | | | 4.28 | % | | | | | $ | 28,195 | | | 4.50 | % | | | | | $ | 28,517 | | | 4.60 | % | | | | | $ | 29,050 | | | 4.64 | % | | | | | $ | 28,898 | | | 4.60 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest Income and Rate Earned(1) | | $ | 39,341 | | | 6.87 | % | | | | | $ | 41,437 | | | 7.50 | % | | | | | $ | 41,906 | | | 7.75 | % | | | | | $ | 42,313 | | | 7.76 | % | | | | | $ | 42,087 | | | 7.71 | % |
Interest Expense and Rate Paid(2) | | | | | | 12,264 | | | 2.14 | % | | | | | | 13,242 | | | 2.40 | % | | | | | | 13,389 | | | 2.48 | % | | | | | | 13,263 | | | 2.43 | % | | | | | | 13,189 | | | 2.42 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Interest Margin | | | | | $ | 27,077 | | | 4.73 | % | | | | | $ | 28,195 | | | 5.10 | % | | | | | $ | 28,517 | | | 5.27 | % | | | | | $ | 29,050 | | | 5.33 | % | | | | | $ | 28,898 | | | 5.29 | % |
(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.
