updated 1/25/2011 7:16:55 AM ET 2011-01-25T12:16:55

TALLAHASSEE, Fla., Jan. 25, 2011 (GLOBE NEWSWIRE) -- 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," said William G. Smith, Jr., Chairman, President and CEO. Perhaps, more important is the Company's momentum as we enter 2011. 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."

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 million(1). 

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.

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 fundings 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. 

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

EARNINGS HIGHLIGHTS
  Three Months Ended 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
(Dollars in thousands) 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%
             
Investment Securities            
Taxable Investment Securities  178,926  799 1.78%  124,625  674 2.15%
Tax-Exempt Investment Securities  83,469  434 2.08%  88,656  521 2.35%
             
Total Investment Securities  262,395  1,233 1.87%  213,281  1,195 2.23%
             
Funds Sold  172,738  95 0.24%  252,434  144 0.22%
             
Total Earning Assets  2,218,049  $ 27,127 4.85%  2,273,198  $ 27,907 4.87%
             
Cash and Due From Banks  51,030      50,942    
Allowance for Loan Losses  (37,713)      (39,584)    
Other Assets  345,427      342,202    
             
Total Assets  $2,576,793      $2,626,758    
             
LIABILITIES:            
Interest Bearing Deposits            
NOW Accounts  $ 837,625  $ 296 0.14%  $ 871,158  $ 326 0.15%
Money Market Accounts  282,887  134 0.19%  293,424  145 0.20%
Savings Accounts  136,276  16 0.05%  133,690  17 0.05%
Time Deposits  382,870  1,078 1.12%  402,880  1,332 1.31%
Total Interest Bearing Deposits  1,639,658  1,524 0.37%  1,701,152  1,820 0.42%
             
Short-Term Borrowings  34,706  99 1.14%  23,388  31 0.54%
Subordinated Notes Payable  62,887  342 2.13%  62,887  376 2.34%
Other Long-Term Borrowings  50,097  508 4.02%  54,258  565 4.13%
             
Total Interest Bearing Liabilities  1,787,348  $ 2,473 0.55%  1,841,685  $ 2,792 0.60%
             
Noninterest Bearing Deposits  476,209      471,013    
Other Liabilities  50,614      50,318    
             
Total Liabilities  2,314,171      2,363,016    
             
SHAREOWNERS' EQUITY:  $ 262,622      $ 263,742    
             
Total Liabilities and Shareowners' Equity  $ 2,576,793      $ 2,626,758    
             
Interest Rate Spread    $ 24,654 4.30%    $ 25,115 4.27%
             
Interest Income and Rate Earned(1)    $ 27,127 4.85%    $ 27,907 4.87%
Interest Expense and Rate Paid(2)    2,473 0.44%    2,792 0.49%
             
Net Interest Margin    $ 24,654 4.41%    $ 25,115 4.38%
             
             
             
             
(1) Interest and average rates are calculated on a tax-equivalent basis using the 35% Federal tax rate.      
(2) Rate calculated based on average earning assets.          
             
AVERAGE BALANCE AND INTEREST RATES(1)            
Unaudited            
 
             
  Second Quarter 2010 First Quarter 2010
(Dollars in thousands) Average

Balance
Interest Average

Rate
Average

Balance
Interest Average

Rate
             
ASSETS:            
Loans, Net of Unearned Interest  $ 1,841,379  26,795 5.84%  $ 1,886,367  27,180 5.84%
             
Investment Securities            
Taxable Investment Securities  128,268  708 2.21%  71,325  500 2.81%
Tax-Exempt Investment Securities  92,140  624 2.71%  97,316  753 3.10%
             
Total Investment Securities  220,408  1,332 2.42%  168,641  1,253 2.98%
             
Funds Sold  267,578  176 0.26%  303,280  172 0.23%
             
Total Earning Assets  2,329,365  $28,303 4.87%  2,358,288  $ 28,605 4.92%
             
Cash and Due From Banks  50,739      54,873    
Allowance for Loan Losses  (41,074)      (44,584)    
Other Assets  339,458      329,842    
             
Total Assets  $ 2,678,488      $ 2,698,419    
             
LIABILITIES:            
Interest Bearing Deposits            
NOW Accounts  $ 879,329  $400 0.18%  $ 867,004  $ 384 0.18%
Money Market Accounts  333,976  331 0.40%  374,161  689 0.75%
Savings Accounts  131,333  17 0.05%  126,352  15 0.05%
Time Deposits  430,571  1,615 1.50%  438,112  1,850 1.71%
Total Interest Bearing Deposits  1,775,209  2,363 0.53%  1,805,629  2,938 0.66%
             
Short-Term Borrowings  22,694  12 0.20%  30,673  17 0.22%
Subordinated Notes Payable  62,887  639 4.02%  62,887  651 4.14%
Other Long-Term Borrowings  52,704  551 4.20%  49,981  526 4.27%
             
Total Interest Bearing Liabilities  1,913,494  $3,565 0.75%  1,949,170  $ 4,132 0.86%
             
Noninterest Bearing Deposits  458,969      443,131    
Other Liabilities  42,152      37,563    
             
Total Liabilities  2,414,615      2,429,864    
             
SHAREOWNERS' EQUITY:  $ 263,873      $ 268,555    
             
Total Liabilities and Shareowners' Equity  $ 2,678,488      $ 2,698,419    
             
Interest Rate Spread   $24,738 4.12%    $ 24,473 4.06%
             
Interest Income and Rate Earned(1)    $28,303 4.87%    $ 28,605 4.92%
Interest Expense and Rate Paid(2)    3,565 0.61%    4,132 0.71%
             
Net Interest Margin    $24,738 4.26%    $ 24,473 4.21%
             
             
             
             
(1) Interest and average rates are calculated on a tax-equivalent basis using the 35% Federal tax rate.      
(2) Rate calculated based on average earning assets.          
             
AVERAGE BALANCE AND INTEREST RATES(1)            
Unaudited            
 
             
  Fourth Quarter 2009 December 2010 YTD
(Dollars in thousands) Average

Balance
Interest Average

Rate
Average

Balance
Interest Average

Rate
             
ASSETS:            
Loans, Net of Unearned Interest  $ 1,944,873  28,813 5.88%  $ 1,829,193  106,342 5.81%
             
Investment Securities            
Taxable Investment Securities  72,537  498 2.74%  126,078  2,681 2.12%
Tax-Exempt Investment Securities  107,361  921 3.43%  90,352  2,332 2.58%
             
Total Investment Securities  179,898  1,419 3.15%  216,430  5,013 2.31%
             
Funds Sold  112,790  77 0.27%  248,659  587 0.23%
             
Total Earning Assets  2,237,561  $ 30,309 5.38%  2,294,282  $ 111,942 4.88%
             
Cash and Due From Banks  69,687      51,883    
Allowance for Loan Losses  (46,468)      (40,717)    
Other Assets  314,470      339,283    
             
Total Assets  $ 2,575,250      $ 2,644,731    
             
LIABILITIES:            
Interest Bearing Deposits            
NOW Accounts  $ 740,550  $ 308 0.17%  $ 863,719  $ 1,406 0.16%
Money Market Accounts  361,104  625 0.69%  320,786  1,299 0.41%
Savings Accounts  122,158  16 0.05%  131,945  65 0.05%
Time Deposits  439,654  2,015 1.82%  413,428  5,875 1.42%
Total Interest Bearing Deposits  1,663,466  2,964 0.71%  1,729,878  8,645 0.50%
             
Short-Term Borrowings  47,114  22 0.18%  27,864  159 0.57%
Subordinated Notes Payable  62,887  936 5.83%  62,887  2,008 3.15%
Other Long-Term Borrowings  50,026  542 4.30%  51,767  2,150 4.15%
             
Total Interest Bearing Liabilities  1,823,493  $ 4,464 0.97%  1,872,396  $ 12,962 0.69%
             
Noninterest Bearing Deposits  426,542      462,445    
Other Liabilities  56,659      45,211    
             
Total Liabilities  2,306,694      2,380,052    
             
SHAREOWNERS' EQUITY:  $ 268,556      $ 264,679    
             
Total Liabilities and Shareowners' Equity  $ 2,575,250      $ 2,644,731    
             
Interest Rate Spread    $ 25,845 4.41%    $ 98,980 4.19%
             
Interest Income and Rate Earned(1)    $ 30,309 5.38%    $ 111,942 4.88%
Interest Expense and Rate Paid(2)    4,464 0.79%    12,962 0.56%
             
Net Interest Margin    $ 25,845 4.59%    $ 98,980.07 4.32%
             
             
             
             
(1) Interest and average rates are calculated on a tax-equivalent basis using the 35% Federal tax rate.      
(2) Rate calculated based on average earning assets.          
       
AVERAGE BALANCE AND INTEREST RATES(1)      
Unaudited      
 
       
  December 2009 YTD
(Dollars in thousands) Average

Balance
Interest Average

Rate
       
ASSETS:      
Loans, Net of Unearned Interest  $ 1,961,990  118,186 6.02%
       
Investment Securities      
Taxable Investment Securities  83,648  2,698 3.22%
Tax-Exempt Investment Securities  105,683  4,106 3.88%
       
Total Investment Securities  189,331  6,804 3.59%
       
Funds Sold  32,911  82 0.25%
       
Total Earning Assets  2,184,232  $ 125,072 5.73%
       
Cash and Due From Banks  76,107    
Allowance for Loan Losses  (42,331)    
Other Assets  298,807    
       
Total Assets  $ 2,516,815    
       
LIABILITIES:      
Interest Bearing Deposits      
NOW Accounts  $ 711,753  $ 1,039 0.15%
Money Market Accounts  320,531  1,288 0.40%
Savings Accounts  121,582  60 0.05%
Time Deposits  420,198  8,198 1.95%
Total Interest Bearing Deposits  1,574,064  10,585 0.67%
       
Short-Term Borrowings  79,321  291 0.36%
Subordinated Notes Payable  62,887  3,730 5.85%
Other Long-Term Borrowings  51,973  2,236 4.30%
       
Total Interest Bearing Liabilities  1,768,245  $ 16,842 0.95%
       
Noninterest Bearing Deposits  418,365    
Other Liabilities  54,660    
       
Total Liabilities  2,241,270    
       
SHAREOWNERS' EQUITY:  $ 275,545    
       
Total Liabilities and Shareowners' Equity  $ 2,516,815    
       
Interest Rate Spread    $ 108,230 4.78%
       
Interest Income and Rate Earned(1)    $ 125,072 5.73%
Interest Expense and Rate Paid(2)    16,842 0.77%
       
Net Interest Margin    $ 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.    
CONTACT: J. Kimbrough Davis
         Executive Vice President and Chief Financial Officer
         850.402.7820

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