Financial News

Capital City Bank Group, Inc. Reports Third Quarter 2020 Results

TALLAHASSEE, Fla., Oct. 27, 2020 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income of $10.4 million, or $0.62 per diluted share for the third quarter of 2020 compared to net income of $9.1 million, or $0.55 per diluted share for the second quarter of 2020, and $8.5 million, or $0.50 per diluted share for the third quarter of 2019. For the first nine months of 2020, net income totaled $23.8 million, or $1.42 per diluted share, compared to net income of $22.2 million, or $1.32 per diluted share, for the same period of 2019.

QUARTER HIGHLIGHTS

  • Return on assets improved to 1.17% and return on equity to 12.16%
  • Diversified revenue and strong balance sheet continue to buffer impact of pandemic and lower interest rates
  • Strong performance by Capital City Home Loans (“CCHL”) contributed significantly ($0.23 per share)
  • 11% increase in other fee revenues (deposit, bankcard, and wealth management)
  • Credit quality remains strong with no significant problem loan migration
  • 88% of loan balances extended in the first and second quarter have resumed payments

“Although the environment remains challenging, Capital City reported a strong third quarter, up 12.7% over the second quarter,” said William G. Smith, Jr., Chairman, President and CEO. “I am proud of both our financial performance and how our team has responded to the COVID-19 pandemic. We continue to put the safety and well-being of our associates and clients first, as we reach out to assist our communities through the origination of SBA PPP loans, grants and volunteer hours, and endeavor to meet the needs of our clients through both in-person and virtual delivery channels. The mortgage market has been robust and we have benefitted from our alliance with CCHL, which contributed $0.23 per share in the third quarter – up from $0.20 per share in the second quarter. Earnings from CCHL and SBA PPP loan fees have helped to mitigate the adverse impacts of a lower interest rate environment and reserve build attributable to the adoption of CECL and COVID-19. Hopefully, we will continue to experience economic improvement during the fourth quarter and into 2021. I am proud of what our team has accomplished in a very difficult year, and I remain optimistic about the long-term outlook for Capital City. Thank you for your continued support.”

COVID-19 Update

  • Lobby access remains open for all of our banking offices and operations are subject to national guidelines and local safety ordinances to protect both clients and associates – we will continue to monitor changing conditions with the pandemic and its impact on client and associate interactions within our banking offices
  • Most operational associates returned to work in early June, but we have extended some remote work arrangements on a case-by-case basis
  • Enhanced digital access options are available for banking products and access to sales associates
  • We continue to monitor COVID-19 case count trends in our markets and respond appropriately to help ensure client and associate safety
  • We continue to support clients with the Small Business Administration Payment Protection Program (“SBA PPP”) by actively assisting with the forgiveness process

Discussion of Operating Results

Summary Overview

Compared to the second quarter of 2020, the $2.1 million increase in operating profit was attributable to a $4.7 million increase in noninterest income and a $0.7 million decrease in the provision for credit losses, partially offset by higher noninterest expense of $3.0 million and lower net interest income of $0.3 million.

Compared to the third quarter of 2019, the $7.0 million increase in operating profit was attributable to a $21.1 million increase in noninterest income, partially offset by higher noninterest expense of $12.5 million, a $0.5 million increase in the provision for credit losses and lower net interest income of $1.1 million.

The $10.4 million increase in operating profit for the first nine months of 2020 versus the comparable period of 2019 was attributable to higher noninterest income of $41.4 million, partially offset by higher noninterest expense of $24.2 million, a $6.1 million increase in the provision for credit losses and lower net interest income of $0.7 million.

The aforementioned period over period variances reflect the acquisition of a 51% membership interest and consolidation of CCHL late in the first quarter of 2020.

Our return on average assets (“ROA”) was 1.17% and our return on average equity (“ROE”) was 12.16% for the third quarter of 2020. These metrics were 1.10% and 11.03% for the second quarter of 2020, respectively, and 1.14% and 10.51% for the third quarter of 2019, respectively. For the first nine months of 2020, our ROA was 0.96% and our ROE was 9.50% compared to 1.00% and 9.48%, respectively, for the same period of 2019.

Net Interest Income/Net Interest Margin

Tax-equivalent net interest income for the third quarter of 2020 was $25.2 million compared to $25.6 million for the second quarter of 2020 and $26.3 million for the third quarter of 2019. For the first nine months of 2020, tax-equivalent net interest income totaled $76.7 million compared to $77.5 million in 2019. The decrease compared to all prior periods reflected lower rates earned on overnight funds, investment securities and variable rate loans, partially offset by lower cost for deposits.

The federal funds target rate has remained in the range of 0.00%-0.25% since March 2020 when the Fed reduced its overnight rate by 150 basis points, and as a result we continue to experience lower repricing of our variable/adjustable rate earning assets and investment securities. Our overall cost of funds remained low during the third quarter of 2020 at 0.13% compared to 0.14% for the second quarter of 2020. Due to highly competitive fixed-rate loan pricing in our markets, we continue to review our loan pricing and make adjustments where we believe appropriate and prudent.

Our net interest margin for the third quarter of 2020 was 3.12%, a decrease of 29 basis points from the second quarter of 2020 and 80 basis points from the third quarter of 2019. For the first nine months of 2020, the net interest margin decreased 42 basis points to 3.42%. The decrease compared to all prior periods was primarily attributable to considerable growth in overnight funds which reduced our margin. Our net interest margin for the third quarter of 2020, excluding the impact of SBA PPP loans, was 3.17%. We discuss the effect of the pandemic related stimulus programs on our balance sheet in more detail below under Discussion of Financial Condition.

Provision for Credit Loss

The provision for credit losses for the third quarter of 2020 was $1.3 million compared to $2.0 million for the second quarter of 2020 and $0.8 million for the third quarter of 2019. For the first nine months of 2020, the provision was $8.3 million compared to $2.2 million in 2019. The higher provision in 2020 reflected expected losses due to deterioration in economic conditions related to COVID-19. We discuss the allowance for credit losses and COVID-19 exposure further below.

Noninterest Income and Noninterest Expense

CCHL’s mortgage banking operations impacted our noninterest income and noninterest expense for the three and nine month periods ended September 30, 2020, and thus, the period over period comparisons reflect the impact of the CCHL consolidation, which occurred late in the first quarter 2020. The table below provides an overview of CCHL’s impact on our noninterest income and noninterest expense for 2020.

Noninterest income for the third quarter of 2020 totaled $35.0 million compared to $30.2 million for the second quarter of 2020 and $13.9 million for the third quarter of 2019. For the first nine months of 2020, noninterest income totaled $80.6 million compared to $39.2 million for same period of 2019. The improvement over all prior periods was primarily attributable to higher mortgage banking revenues at CCHL. Higher deposit fees, bank card fees, and wealth management fees contributed to the increase over the second quarter of 2020. Compared to both prior year periods, deposit fees declined primarily due to the impact of government stimulus during the second quarter related to the COVID-19 pandemic, but were partially offset by higher debit card activity which drove improvement in bank card fees. The downward trend in deposit fees we realized in the second quarter of 2020 reversed in the third quarter of 2020 reflecting higher utilization of our overdraft product.

Noninterest expense for the third quarter of 2020 totaled $40.3 million compared to $37.3 million for the second quarter of 2020 and $27.9 million for the third quarter of 2019. The increase over the second quarter of 2020 was primarily attributable to higher compensation expense of $2.5 million and other expense of $0.4 million. The increase in compensation reflected higher commission expense of $1.6 million related to higher mortgage production volume at CCHL and lower realized loan cost (credit offset to salary expense) of $1.0 million related to the high level of SBA PPP loan originations in the second quarter. Higher amortization expense for mortgage servicing rights at CCHL and Core CCBG expenses (debit card losses, activity based costs, and miscellaneous expenses) drove the increase in other expense.

For the first nine months of 2020, noninterest expense totaled $108.6 million, an increase of $24.2 million over the same period of 2019 primarily attributable to the addition of expenses at CCHL, including compensation expense of $21.8 million, occupancy expense of $1.8 million, and other expense of $3.0 million. Core CCBG noninterest expense decreased $2.6 million and reflected lower compensation expense of $1.2 million, ORE expense of $0.9 million, and other expense of $1.6 million, partially offset by higher occupancy expense of $1.1 million. The decrease in compensation expense was primarily attributable to higher realized loan cost of $0.6 million related to the aforementioned increase in SBA PPP loan originations and lower stock compensation expense of $0.5 million. A $1.0 million gain from the sale of a banking office in the first quarter of 2020 drove the reduction in ORE expense. The decline in other expense was primarily attributable to lower service cost expense for our pension plan. Higher expense for FF&E depreciation and maintenance agreements (related to technology investment and upgrades), deferred maintenance for premises, and pandemic related cleaning/supply costs drove the increase in occupancy. The same aforementioned factors drove the increase over the third quarter of 2019.

Overall, CCHL has contributed significantly to the improvement in our efficiency ratio for 2020.

                     
  Three Months Ended Nine Months Ended
  Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Sep 30, 2020 Sep 30, 2019
(Dollars in thousands) Core
CCBG
 CCHL Core
CCBG
 CCHL Core
CCBG
 CCHL Core
CCBG
 CCHL Core
CCBG
 CCHL
Deposit Fees$4,316 -$3,756$-$4,961$-$13,087$-$14,492$-
Bank Card Fees 3,389 - 3,142 - 2,972 - 9,582 - 8,863 -
Wealth Management Fees 2,808 - 2,554 - 2,992 - 7,966 - 7,719 -
Mortgage Banking Fees 208 22,775 241 19,156 1,587 - 1,587 44,046 3,779 -
Other 1,182 287 1,147 203 1,391 - 3,787 587 4,372 -
Total Noninterest Income$11,903$23,062$10,840$19,359$13,903$-$36,009$44,633$39,225$-
                     
Salaries$11,603$10,753$11,596$8,381$12,533$-$36,687$21,376$37,314$-
Other Associate Benefits 3,616 192 3,477 204 3,670 - 11,049 446 11,675 -
Total Compensation 15,219 10,945 15,073 8,585 16,203 - 47,736 21,822 48,989 -
                     
Occupancy, Net 5,061 845 5,030 768 4,710 - 14,839 1,844 13,756 -
Other 6,930 1,342 6,599 1,248 6,960 - 19,325 3,048 21,722 -
Total Noninterest Expense$27,210$13,132$26,702$10,601$27,873$-$81,900$26,714$84,467$-

Income Taxes

We realized income tax expense of $3.2 million (effective rate of 17%) for the third quarter of 2020 compared to $2.9 million (effective rate of 18%) for the second quarter of 2020 and $3.0 million (effective rate of 26%) for the third quarter of 2019. For the first nine months of 2020, we realized income tax expense of $7.4 million (effective rate of 18%) compared to $7.4 million (effective rate of 25%) for the same period of 2019. The decrease in our effective tax rate in 2020 reflected the impact of converting CCHL to a partnership for tax purposes in the second quarter of 2020. Absent discrete items, we expect our annual effective tax rate to approximate 18%-19% for the remainder of 2020. 

Discussion of Financial Condition

Earning Assets

Average earning assets were $3.224 billion for the third quarter of 2020, an increase of $207.1 million, or 6.9% over the second quarter of 2020, and an increase of $529.1 million, or 19.6% over the fourth quarter of 2019. The increase over both prior periods was primarily driven by higher deposit balances which funded growth in the loan portfolio and overnight funds sold. Deposit balances increased as a result of strong core deposit growth, in addition to funding retained at the bank from SBA PPP loans, and various other stimulus programs.

We maintained an average net overnight funds (deposits with banks plus FED funds sold less FED funds purchased) sold position of $567.9 million during the third quarter of 2020 compared to an average net overnight funds sold position of $351.5 million in the second quarter of 2020 and $228.1 million in the fourth quarter of 2019. The increase compared to both prior periods was driven by strong core deposit growth, in addition to pandemic related stimulus programs (see below – Funding).

Average loans held for investment (“HFI”) increased $22.2 million, or 1.1%, over the second quarter of 2020 and $171.1 million, or 9.3%, over the fourth quarter of 2019. We originated SBA PPP loans totaling $190 million (reflected in the commercial loan category) which averaged $190 million in the third quarter and $134 million in the second quarter. Period-end HFI loans decreased $24.0, or 1.2%, from the second quarter of 2020 and increased $162.2 million, or 8.8%, over the fourth quarter of 2019. The decline in the core loan portfolio (ex-SBA PPP loans) has been driven by residential real estate loan run-off reflective of the lower rate environment and refinancing activity as well as lower utilization of commercial lines of credit reflective of the economic slowdown.

To date, our borrowers have submitted a nominal level of SBA PPP forgiveness applications, but these applications are expected to accelerate over the next six months. Amortized SBA PPP loan fees totaled approximately $0.6 million for the third quarter of 2020 and $0.4 million for the second quarter of 2020. At September 30, 2020, we had approximately $4.0 million (net) in deferred SBA PPP loan fees.

Allowance for Credit Losses

At September 30, 2020, the allowance for credit losses totaled $23.1 million compared to $22.5 million at June 30, 2020 and $13.9 million at December 31, 2019. At September 30, 2020, the allowance represented 1.16% of outstanding loans held for investment (HFI) and provided coverage of 420% of nonperforming loans compared to 1.11% and 322%, respectively, at June 30, 2020 and 0.75% and 311%, respectively, at December 31, 2019. At September 30, 2020, excluding SBA PPP loans (100% government guaranteed), the allowance represented 1.28% of loans held for investment.

The adoption of ASC 326 (“CECL”) on January 1, 2020 had an impact of $4.0 million ($3.3 million increase in the allowance for credit losses and $0.7 million increase in the allowance for unfunded loan commitments (other liability account)). The $6.4 million build (provision of $8.3 million less net charge-offs of $1.9 million) in the allowance for credit losses for the first nine months of 2020 was attributable to deterioration in economic conditions, primarily a higher rate of unemployment due to the COVID-19 pandemic and its potential effect on rates of default.

Credit Quality/COVID-19 Exposure

Nonperforming assets (nonaccrual loans and OREO) totaled $6.7 million at September 30, 2020, a $1.3 million decrease from June 30, 2020, and a $1.3 million increase over December 31, 2019. Nonaccrual loans totaled $5.5 million at September 30, 2020, a $1.5 million decrease from June 30, 2020 and a $1.0 million increase over December 31, 2019. The balance of OREO totaled $1.2 million at September 30, 2020, an increase of $0.2 million over June 30, 2020 and a $0.3 million increase over December 31, 2019.

We continue to analyze our loan portfolio for segments that have been affected by the stressed economic and business conditions caused by the pandemic. Certain at-risk segments total 8% of our loan balances at September 30, 2020, including hotel (3%), restaurant (1%), retail and shopping centers (3%), and other (1%). The other segment includes churches, non-profits, education, and recreational. To assist our clients, in mid-March of 2020, we began allowing short term 60 to 90 day loan extensions for affected borrowers. A roll-forward of loan extension activity is provided in the table below. Approximately 83% of the $325 million in loans extended were for commercial borrowers and 17% for consumer borrowers. Approximately $285 million, or 88% of the loan balances associated with these borrowers have resumed making regularly scheduled payments. Of the $40 million that remains on extension, approximately $2 million was classified at September 30, 2020 and $26 million is related to six hotel loans which were not classified, but continue to be monitored closely.

       % Loans Extended
At October 2, 2020 (Dollars in thousands) # Loans  Loan Amount # Loans $ Loans
Loans Extended 2,333  $325,014     
Loans Resuming Payments (2,129)  (284,548) 91% 88%
Loans Still on Extension 204  $40,466  9% 12%

Funding (Deposits/Debt)

Average total deposits were $2.971 billion for the third quarter of 2020, an increase of $187.8 million, or 6.8% over the second quarter of 2020, and an increase of $446.3 million, or 17.7% over the fourth quarter of 2019. Period end deposit balances grew $54.4 million and $364.0 million over the second quarter of 2020 and fourth quarter of 2019, respectively, indicating strong growth in core deposit balances. The estimated deposit inflows related to the two pandemic related stimulus programs that occurred primarily during the second quarter were $179 million (SBA PPP) and $64 million (Economic Impact Payment stimulus checks). Given these large increases, the potential exists for our deposit levels to be volatile over the coming quarters due to the uncertain timing of the outflows of the stimulus related deposits and the economic recovery. It is anticipated that current liquidity levels will remain robust due to our strong overnight funds sold position. We monitor deposit rates on an ongoing basis and adjust if necessary, as a prudent pricing discipline remains the key to managing our mix of deposits.

Average borrowings increased $0.9 million over the second quarter of 2020 and $65.8 million over the fourth quarter of 2019 as short-term borrowings (warehouse lines used to support HFS loans) were added as part of the CCHL integration.

Capital

Shareowners’ equity was $339.4 million at September 30, 2020 compared to $335.1 million at June 30, 2020 and $327.0 million at December 31, 2019. For the first nine months of 2020, shareowners’ equity was positively impacted by net income of $23.8 million, a $2.4 million increase in the unrealized gain on investment securities, net adjustments totaling $0.9 million related to transactions under our stock compensation plans, and stock compensation accretion of $0.6 million. Shareowners’ equity was reduced by common stock dividends of $7.1 million ($0.42 per share), a $3.1 million (net of tax) adjustment to retained earnings for the adoption of CECL, reclassification of $3.1 million to temporary equity to increase the redemption value of the non-controlling interest in CCHL, and share repurchases of $2.0 million (99,952 shares).

At September 30, 2020, our total risk-based capital ratio was 17.88% compared to 17.60% at June 30, 2020 and 17.90% at December 31, 2019. Our common equity tier 1 capital ratio was 14.20%, 14.01%, and 14.47%, respectively, on these dates. Our leverage ratio was 9.64%, 10.12%, and 11.25%, respectively, on these dates. All of our regulatory capital ratios exceeded the threshold to be designated as “well-capitalized” under the Basel III capital standards. Further, our tangible common equity ratio was 7.16% at September 30, 2020 compared to 7.21% and 8.06% at June 30, 2020 and December 31, 2019, respectively.

About Capital City Bank Group, Inc.

Capital City Bank Group, Inc. (NASDAQ: CCBG) is one of the largest publicly traded financial holding companies headquartered in Florida and has approximately $3.6 billion in assets. We provide a full range of banking services, including traditional deposit and credit services, mortgage banking, asset management, trust, merchant services, bankcards and securities brokerage services. Our bank subsidiary, Capital City Bank, was founded in 1895 and now has 57 banking offices and 85 ATMs/ITMs 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 our future results to differ materially. The following factors, among others, could cause our actual results to differ: the magnitude and duration of the COVID-19 pandemic and its impact on the global economy and financial market conditions and our business, results of operations and financial condition, including the impact of our participation in government programs related to COVID-19; the accuracy of the our financial statement estimates and assumptions; legislative or regulatory changes; fluctuations in inflation, interest rates, or monetary policies; the effects of security breaches and computer viruses that may affect our computer systems or fraud related to debit card products; changes in consumer spending and savings habits; our growth and profitability; the strength of the U.S. economy and the local economies where we conduct operations; the effects of a non-diversified loan portfolio, including the risks of geographic and industry concentrations; natural disasters, widespread health emergencies, military conflict, terrorism or other geopolitical events; changes in the stock market and other capital and real estate markets; customer acceptance of third-party products and services; increased competition and its effect on pricing; negative publicity and the impact on our reputation; technological changes, especially changes that allow out of market competitors to compete in our markets; changes in accounting; and our ability to manage the risks involved in the foregoing. Additional factors can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and our 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 we assume no obligation to update forward-looking statements or the reasons why actual results could differ.

USE OF NON-GAAP FINANCIAL MEASURES

We present a tangible common equity ratio and a tangible book value per diluted share that removes the effect of goodwill resulting from merger and acquisition activity. We believe these measures are useful to investors because it allows investors to more easily compare our capital adequacy to other companies in the industry.

The GAAP to non-GAAP reconciliations are provided below.

(Dollars in Thousands, except per share data)Sep 30, 2020Jun 30, 2020Mar 31, 2020Dec 31, 2019Sep 30, 2019
Shareowners' Equity (GAAP) $339,425 $335,057 $328,507 $327,016 $321,562 
Less: Goodwill (GAAP)  89,095  89,095  89,275  84,811  84,811 
Tangible Shareowners' Equity (non-GAAP)A 250,330  245,962  239,232  242,205  236,751 
Total Assets (GAAP)  3,587,041  3,499,524  3,086,523  3,088,953  2,934,513 
Less: Goodwill (GAAP)  89,095  89,095  89,275  84,811  84,811 
Tangible Assets (non-GAAP)B$3,497,946 $3,410,429 $2,997,248 $3,004,142 $2,849,702 
Tangible Common Equity Ratio (non-GAAP)A/B 7.16% 7.21% 7.98% 8.06% 8.31%
Actual Diluted Shares Outstanding (GAAP)C 16,800,563  16,821,743  16,845,462  16,855,161  16,797,241 
Tangible Book Value per Diluted Share (non-GAAP)A/C$14.90 $14.62 $14.20 $14.37 $14.09 



CAPITAL CITY BANK GROUP, INC.               
EARNINGS HIGHLIGHTS               
Unaudited               
                
  Three Months Ended  Nine Months Ended 
(Dollars in thousands, except per share data) Sep 30, 2020  Jun 30, 2020  Sep 30, 2019  Sep 30, 2020  Sep 30, 2019 
EARNINGS               
Net Income Attributable to Common Shareowners$10,397 $9,146 $8,481 $23,830 $22,242 
Diluted Net Income Per Share$0.62 $0.55 $0.50 $1.42 $1.32 
PERFORMANCE               
Return on Average Assets 1.17% 1.10% 1.14% 0.96% 1.00%
Return on Average Equity 12.16  11.03  10.51  9.50  9.48 
Net Interest Margin 3.12  3.41  3.92  3.42  3.84 
Noninterest Income as % of Operating Revenue 58.19  54.26  34.67  51.37  33.72 
Efficiency Ratio 67.01% 66.90% 69.27% 69.04% 72.37%
CAPITAL ADEQUACY               
Tier 1 Capital 16.77% 16.59% 16.83% 16.77% 16.83%
Total Capital 17.88  17.60  17.59  17.88  17.59 
Leverage 9.64  10.12  11.09  9.64  11.09 
Common Equity Tier 1 14.20  14.01  14.13  14.20  14.13 
Tangible Common Equity (1) 7.16  7.21  8.31  7.16  8.31 
Equity to Assets 9.46% 9.57% 10.96% 9.46% 10.96%
ASSET QUALITY               
Allowance as % of Non-Performing Loans 420.30% 322.37% 290.55% 420.30% 290.55%
Allowance as a % of Loans HFI 1.16  1.11  0.78  1.16  0.78 
Net Charge-Offs as % of Average Loans HFI 0.11  0.05  0.23  0.13  0.15 
Nonperforming Assets as % of Loans HFI and OREO0.34  0.40  0.30  0.34  0.30 
Nonperforming Assets as % of Total Assets 0.19% 0.23% 0.19% 0.19% 0.19%
STOCK PERFORMANCE               
High$21.71 $23.99 $28.00 $30.62 $28.00 
Low 17.55  16.16  23.70  15.61  21.04 
Close$18.79 $20.95 $27.45 $18.79 $27.45 
Average Daily Trading Volume 28,517  49,569  25,596  39,477  22,815 
                
(1) Tangible common equity ratio is a non-GAAP financial measure. For additional information, including a reconciliation to GAAP, refer to Page 6. 



CAPITAL CITY BANK GROUP, INC.          
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION      
Unaudited          
           
 2020  2019 
(Dollars in thousands)Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter
ASSETS          
Cash and Due From Banks$76,509 $75,155 $72,676 $60,087 $61,151 
Funds Sold and Interest Bearing Deposits 626,104  513,273  196,936  318,336  177,389 
Total Cash and Cash Equivalents 702,613  588,428  269,612  378,423  238,540 
           
Investment Securities Available for Sale 328,253  341,180  382,514  403,601  376,981 
Investment Securities Held to Maturity 202,593  232,178  251,792  239,539  240,303 
Total Investment Securities 530,846  573,358  634,306  643,140  617,284 
           
Loans Held for Sale ("HFS") 116,561  76,610  82,598  9,509  13,075 
           
Loans Held for Investment ("HFI"):          
Commercial, Financial, & Agricultural 402,997  421,270  249,020  255,365  259,870 
Real Estate - Construction 125,804  117,794  122,595  115,018  111,358 
Real Estate - Commercial 656,064  662,434  656,084  625,556  610,726 
Real Estate - Residential 335,713  353,831  354,150  353,642  354,545 
Real Estate - Home Equity 197,363  194,479  196,443  197,360  197,326 
Consumer 268,393  266,417  275,982  279,565  277,970 
Other Loans 10,488  4,883  6,580  7,808  14,248 
Overdrafts 1,339  1,069  1,533  1,615  1,710 
Total Loans Held for Investment 1,998,161  2,022,177  1,862,387  1,835,929  1,827,753 
Allowance for Credit Losses (23,137) (22,457) (21,083) (13,905) (14,319)
Loans Held for Investment, Net 1,975,024  1,999,720  1,841,304  1,822,024  1,813,434 
           
Premises and Equipment, Net 87,192  87,972  87,684  84,543  85,810 
Goodwill 89,095  89,095  89,275  84,811  84,811 
Other Real Estate Owned 1,227  1,059  1,463  953  526 
Other Assets 84,483  83,282  80,281  65,550  81,033 
Total Other Assets 261,997  261,408  258,703  235,857  252,180 
Total Assets$3,587,041 $3,499,524 $3,086,523 $3,088,953 $2,934,513 
           
LIABILITIES          
Deposits:          
Noninterest Bearing Deposits$1,378,314 $1,377,033 $1,066,607 $1,044,699 $1,022,774 
NOW Accounts 827,506  808,244  779,467  902,499  728,395 
Money Market Accounts 247,823  240,754  210,124  217,839  239,410 
Regular Savings Accounts 451,944  423,924  384,480  374,396  372,601 
Certificates of Deposit 103,859  105,041  104,907  106,021  109,827 
Total Deposits 3,009,446  2,954,996  2,545,585  2,645,454  2,473,007 
           
Short-Term Borrowings 90,936  63,958  76,516  6,404  10,622 
Subordinated Notes Payable 52,887  52,887  52,887  52,887  52,887 
Other Long-Term Borrowings 5,268  5,583  5,896  6,514  6,963 
Other Liabilities 71,880  75,702  70,044  50,678  69,472 
Total Liabilities 3,230,417  3,153,126  2,750,928  2,761,937  2,612,951 
           
Temporary Equity 17,199  11,341  7,088  -  - 
           
SHAREOWNERS' EQUITY          
Common Stock 168  168  168  168  167 
Additional Paid-In Capital 31,425  31,575  32,100  32,092  31,075 
Retained Earnings 333,545  328,570  321,772  322,937  316,551 
Accumulated Other Comprehensive Loss, Net of Tax (25,713) (25,256) (25,533) (28,181) (26,231)
Total Shareowners' Equity 339,425  335,057  328,507  327,016  321,562 
Total Liabilities, Temporary Equity and Shareowners' Equity$3,587,041 $3,499,524 $3,086,523 $3,088,953 $2,934,513 
           
OTHER BALANCE SHEET DATA          
Earning Assets$3,271,672 $3,185,418 $2,776,228 $2,806,913 $2,635,501 
Interest Bearing Liabilities 1,780,223  1,700,391  1,614,277  1,666,560  1,520,705 
Book Value Per Diluted Share$20.20 $19.92 $19.50 $19.40 $19.14 
Tangible Book Value Per Diluted Share(1) 14.90  14.62  14.20  14.37  14.09 
Actual Basic Shares Outstanding 16,761  16,780  16,812  16,772  16,749 
Actual Diluted Shares Outstanding 16,801  16,822  16,845  16,855  16,797 
(1) Tangible book value per diluted share is a non-GAAP financial measure. For additional information, including a reconciliation to GAAP, refer to Page 6.



CAPITAL CITY BANK GROUP, INC.              
CONSOLIDATED STATEMENT OF OPERATIONS           
Unaudited              
               
            Nine Months Ended
  2020  2019 September 30,
(Dollars in thousands, except per share data) Third
Quarter
 Second
Quarter
 First
Quarter
 Fourth
Quarter
 Third
Quarter
 2020  2019
               
INTEREST INCOME              
Interest and Fees on Loans$23,594 $23,687 $23,593 $23,842 $23,992$70,874 $70,373
Investment Securities 2,426  2,737  3,015  3,221  3,307 8,178  10,213
Funds Sold 146  88  757  945  1,142 991  4,242
Total Interest Income 26,166  26,512  27,365  28,008  28,441 80,043  84,828
               
INTEREST EXPENSE              
Deposits 190  218  939  1,157  1,596 1,347  5,683
Short-Term Borrowings 498  421  132  16  27 1,051  93
Subordinated Notes Payable 316  374  471  525  558 1,161  1,762
Other Long-Term Borrowings 40  41  50  56  63 131  201
Total Interest Expense 1,044  1,054  1,592  1,754  2,244 3,690  7,739
Net Interest Income 25,122  25,458  25,773  26,254  26,197 76,353  77,089
Provision for Credit Losses 1,308  2,005  4,990  (162) 776 8,303  2,189
Net Interest Income after Provision for
  Credit Losses
 23,814  23,453  20,783  26,416  25,421 68,050  74,900
               
NONINTEREST INCOME              
Deposit Fees 4,316  3,756  5,015  4,980  4,961 13,087  14,492
Bank Card Fees 3,389  3,142  3,051  3,131  2,972 9,582  8,863
Wealth Management Fees 2,808  2,554  2,604  2,761  2,992 7,966  7,719
Mortgage Banking Fees 22,983  19,397  3,253  1,542  1,587 45,633  3,779
Other 1,469  1,350  1,555  1,414  1,391 4,374  4,372
Total Noninterest Income 34,965  30,199  15,478  13,828  13,903 80,642  39,225
               
NONINTEREST EXPENSE              
Compensation 26,164  23,658  19,736  17,363  16,203 69,558  48,989
Occupancy, Net 5,906  5,798  4,979  4,680  4,710 16,683  13,756
Other Real Estate, Net 219  116  (798) 102  6 (463) 444
Other 8,053  7,731  7,052  6,997  6,954 22,836  21,278
Total Noninterest Expense 40,342  37,303  30,969  29,142  27,873 108,614  84,467
               
OPERATING PROFIT 18,437  16,349  5,292  11,102  11,451 40,078  29,658
Income Tax Expense 3,165  2,950  1,282  2,537  2,970 7,397  7,416
Net Income 15,272  13,399  4,010  8,565  8,481 32,681  22,242
Pre-Tax Income Attributable to Noncontrolling Interest(4,875) (4,253) 277  -  - (8,851) -
NET INCOME ATTRIBUTABLE TO
COMMON SHAREOWNERS
$10,397 $9,146 $4,287 $8,565 $8,481$23,830 $22,242
               
PER COMMON SHARE              
Basic Net Income$0.62 $0.55 $0.25 $0.51 $0.51$1.42 $1.33
Diluted Net Income 0.62  0.55  0.25  0.51  0.50 1.42  1.32
Cash Dividend$0.14 $0.14 $0.14 $0.13 $0.13$0.42 $0.35
AVERAGE SHARES              
Basic 16,771  16,797  16,808  16,750  16,747 16,792  16,776
Diluted 16,810  16,839  16,842  16,834  16,795 16,823  16,810



CAPITAL CITY BANK GROUP, INC.               
ALLOWANCE FOR CREDIT LOSSES                
AND RISK ELEMENT ASSETS               
Unaudited               
                
             Nine Months Ended
  2020  2019   September 30,
(Dollars in thousands, except per share data) Third
Quarter
 Second
Quarter
 First
Quarter
 Fourth
Quarter
 Third
Quarter
  2020  2019 
                
ALLOWANCE FOR CREDIT LOSSES               
Balance at Beginning of Period$22,457 $21,083 $13,905 $14,319 $14,593  $13,905 $14,210 
Impact of Adopting ASC 326 (CECL) -  -  3,269  -  -   3,269  - 
Provision for Credit Losses - HFI 1,265  1,615  4,990  (162) 776   7,870  2,189 
Net Charge-Offs 585  241  1,081  252  1,050   1,907  2,080 
Balance at End of Period(2)$23,137 $22,457 $21,083 $13,905 $14,319  $23,137 $14,319 
As a % of Loans HFI 1.16% 1.11% 1.13% 0.75% 0.78%  1.16% 0.78%
As a % of Nonperforming Loans 420.30% 322.37% 432.61% 310.99% 290.55%  420.30% 290.55%
                
CHARGE-OFFS               
Commercial, Financial and Agricultural$137 $186 $362 $149 $289  $685 $619 
Real Estate - Construction -  -  0  58  223   -  223 
Real Estate - Commercial 17  -  11  33  26   28  181 
Real Estate - Residential 1  1  110  27  44   112  373 
Real Estate - Home Equity 58  52  31  0  333   141  430 
Consumer 619  634  864  819  744   2,117  2,059 
Overdrafts(3) 450  541  702  -  -   1,693  - 
Total Charge-Offs$1,282 $1,414 $2,080 $1,086 $1,659  $4,776 $3,885 
                
RECOVERIES               
Commercial, Financial and Agricultural$74 $74 $40 $127 $86  $188 $218 
Real Estate - Construction -  -  -  -  -   -  - 
Real Estate - Commercial 30  70  191  266  142   291  312 
Real Estate - Residential 35  51  40  116  46   126  313 
Real Estate - Home Equity 41  64  33  25  58   138  150 
Consumer 280  365  268  300  277   913  812 
Overdrafts(3) 237  549  427  -  -   1,213  - 
Total Recoveries$697 $1,173 $999 $834 $609  $2,869 $1,805 
                
NET CHARGE-OFFS$585 $241 $1,081 $252 $1,050  $1,907 $2,080 
                
Net Charge-Offs as a % of Average Loans HFI(1) 0.11% 0.05% 0.23% 0.05% 0.23%  0.13% 0.15%
                
RISK ELEMENT ASSETS               
Nonaccruing Loans$5,505 $6,966 $4,874 $4,472 $4,928      
Other Real Estate Owned 1,227  1,059  1,463  953  526      
Total Nonperforming Assets ("NPAs")$6,732 $8,025 $6,337 $5,425 $5,454      
                
Past Due Loans 30-89 Days$3,191 $2,948 $5,077 $4,871 $5,120      
Past Due Loans 90 Days or More -  -  -  -  -      
Classified Loans 16,772  17,091  16,548  20,847  21,323      
Performing Troubled Debt Restructuring's$14,693 $15,133 $15,934 $16,888 $18,284      
                
Nonperforming Loans as a % of Loans HFI 0.28% 0.34% 0.26% 0.24% 0.27%     
NPAs as a % of Loans HFI and Other Real Estate0.34% 0.40% 0.34% 0.29% 0.30%     
NPAs as a % of Total Assets 0.19% 0.23% 0.21% 0.18% 0.19%     
                
(1) Annualized               
(2) Does not include $1.5 million for unfunded commitments recorded in other liabilities at 9/30/2020.       
(3) Prior to the first quarter 2020, overdraft losses were reflected in noninterest income (deposit fees).     



CAPITAL CITY BANK GROUP, INC.                                           
AVERAGE BALANCE AND INTEREST RATES(1)                                             
Unaudited                                                 
                                                  
  Third Quarter 2020  Second Quarter 2020  First Quarter 2020  Fourth Quarter 2019  Third Quarter 2019  Sep 2020 YTD  Sep 2019 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 HFI and HFS$2,097,700 $23,698 4.50%$2,057,925 $23,785 4.65%$1,882,703 $23,692 5.06%$1,846,190  23,958 5.15%$1,837,548 $24,113 5.21%$2,013,243 $71,175 4.73%$1,813,964 $70,705 5.21%
                                                  
Investment Securities                                                 
Taxable Investment Securities 553,395  2,401 1.73  601,509  2,708 1.80  629,512  2,995 1.91  610,046  3,186 2.08  607,363  3,249 2.13  594,654  8,104 1.82  613,382  9,936 2.16 
Tax-Exempt Investment Securities 4,860  32 2.66  5,865  37 2.51  5,293  25 1.86  10,327  43 1.67  18,041  73 1.63  5,338  94 2.34  29,237  347 1.59 
                                                  
Total Investment Securities 558,255  2,433 1.74  607,374  2,745 1.81  634,805  3,020 1.91  620,373  3,229 2.08  625,404  3,322 2.12  599,992  8,198 1.82  642,619  10,283 2.13 
                                                  
Funds Sold 567,883  146 0.10  351,473  88 0.10  234,372  757 1.30  228,137  945 1.64  207,129  1,142 2.19  385,245  991 0.34  241,323  4,242 2.35 
                                                  
Total Earning Assets 3,223,838 $26,277 3.25% 3,016,772 $26,618 3.55% 2,751,880 $27,469 4.01% 2,694,700 $28,132 4.14% 2,670,081 $28,577 4.25% 2,998,480 $80,364 3.58% 2,697,906 $85,230 4.22%
                                                  
Cash and Due From Banks 69,893       72,647       56,958       53,174       50,981       66,512       52,210      
Allowance for Loan Losses (22,948)      (21,642)      (14,389)      (14,759)      (14,863)      (19,672)      (14,576)     
Other Assets 268,549       261,449       244,339       249,089       253,111       257,993       253,152      
                                                  
Total Assets$3,539,332      $3,329,226      $3,038,788      $2,982,204      $2,959,310      $3,303,313      $2,988,692      
                                                  
LIABILITIES:                                                 
Interest Bearing Deposits                                                 
NOW Accounts$826,776 $61 0.03%$789,378 $78 0.04%$808,811 $725 0.36%$755,625 $889 0.47%$749,678 $1,235 0.65%$808,389 $864 0.14%$821,819 $4,613 0.75%
Money Market Accounts 247,185  32 0.05  222,377  40 0.07  212,211  117 0.22  227,479  170 0.30  238,565  264 0.44  227,331  189 0.11  238,664  775 0.43 
Savings Accounts 438,762  54 0.05  409,366  50 0.05  379,237  46 0.05  372,518  46 0.05  372,593  46 0.05  409,230  150 0.05  369,726  136 0.05 
Time Deposits 104,522  43 0.16  104,718  50 0.19  105,542  51 0.19  108,407  52 0.19  111,447  51 0.18  104,925  144 0.18  115,215  159 0.18 
Total Interest Bearing Deposits 1,617,245  190 0.05% 1,525,839  218 0.06% 1,505,801  939 0.25% 1,464,029  1,157 0.31% 1,472,283  1,596 0.43% 1,549,875  1,347 0.12% 1,545,424  5,683 0.49%
                                                  
Short-Term Borrowings 74,557  498 2.66% 73,377  421 2.31% 32,915  132 1.61% 7,448  16 0.87% 8,697  27 1.24% 60,335  1,051 2.33% 9,890  93 1.27%
Subordinated Notes Payable 52,887  316 2.34  52,887  374 2.80  52,887  471 3.52  52,887  525 3.88  52,887  558 4.13  52,887  1,161 2.89  52,887  1,762 4.39 
Other Long-Term Borrowings 5,453  40 2.91  5,766  41 2.84  6,312  50 3.21  6,723  56 3.33  7,158  63 3.47  5,842  131 3.00  7,619  201 3.52 
                                                  
Total Interest Bearing Liabilities 1,750,142 $1,044 0.24% 1,657,869 $1,054 0.26% 1,597,915 $1,592 0.40% 1,531,087 $1,754 0.45% 1,541,025 $2,244 0.58% 1,668,939 $3,690 0.30% 1,615,820 $7,739 0.64%
                                                  
Noninterest Bearing Deposits 1,354,032       1,257,614       1,046,889       1,060,922       1,023,472       1,220,002       996,290      
Other Liabilities 83,192       72,073       59,587       63,291       74,540       71,661       62,823      
                                                  
Total Liabilities 3,187,366       2,987,556       2,704,391       2,655,300       2,639,037       2,960,602       2,674,933      
Temporary Equity 11,893       8,155       2,506       -       -       7,534       -      
                                                  
SHAREOWNERS' EQUITY: 340,073       333,515       331,891       326,904       320,273       335,177       313,759      
                                                  
Total Liabilities, Temporary Equity and Shareowners' Equity$3,539,332      $3,329,226      $3,038,788      $2,982,204      $2,959,310      $3,303,313      $2,988,692      
                                                  
Interest Rate Spread  $25,233 3.01%  $25,564 3.30%  $25,877 3.61%  $26,378 3.69%  $26,333 3.67%  $76,674 3.29%  $77,491 3.58%
                                                  
Interest Income and Rate Earned(1)   26,277 3.25    26,618 3.55    27,469 4.01    28,132 4.14    28,577 4.25    80,364 3.58    85,230 4.22 
Interest Expense and Rate Paid(2)   1,044 0.13    1,054 0.14    1,592 0.23    1,754 0.26    2,244 0.33    3,690 0.16    7,739 0.38 
                                                  
Net Interest Margin  $25,233 3.12%  $25,564 3.41%  $25,877 3.78%  $26,378 3.89%  $26,333 3.92%  $76,674 3.42%  $77,491 3.84%
                                                  
(1) Interest and average rates are calculated on a tax-equivalent basis using a 21% Federal tax rate.                                
(2) Rate calculated based on average earning assets.                                             


For Information Contact:
J. Kimbrough Davis
Executive Vice President and Chief Financial Officer
850.402.7820

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