Market Overview

Capital City Bank Group, Inc. Reports Second Quarter 2018 Results

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TALLAHASSEE, Fla., July 24, 2018 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (NASDAQ:CCBG) today reported net income of $6.0 million, or $0.35 per diluted share for the second quarter of 2018 compared to net income of $5.8 million, or $0.34 per diluted share for the first quarter of 2018, and $3.6 million, or $0.21 per diluted share, for the second quarter of 2017.  For the first six months of 2018, net income totaled $11.8 million, or $0.69 per diluted share, compared to net income of $6.3 million, or $0.37 per diluted share for the same period of 2017.

Net income for the first six months of 2018 included tax benefits totaling $2.9 million, or $0.17 per diluted share (1Q - $1.5 million, or $0.09 per diluted share and 2Q - $1.4 million, or $0.08 per diluted share) related to 2017 plan year pension plan contributions.       

HIGHLIGHTS

  • Net interest income up 4.6% sequentially and 10.7% over prior year
  • Net interest margin of 3.58%, up 15 basis points over prior quarter
  • Period-end loan growth of $66 million, or 4.0% over prior quarter
  • Strong year over year growth in average deposit balances of $54 million, or 2.3%
  • Year-to-date net charge-offs at 16 basis points continues to reflect the quality of our loan portfolio
  • Common equity tier 1 ratio of 13.5% and total risk based capital ratio of 17.0%

"I am very encouraged by our results in the first half and particularly pleased with the loan growth and margin expansion achieved in the second quarter," said William G. Smith, Jr., Chairman, President and CEO. "Rising rates, loan growth and a phenomenal core deposit base are all contributing to higher net interest income. Credit quality continues to improve and the strength of our Florida and Georgia economies is driving continued improvement in our market demographics. Lowering our efficiency ratio is a top priority, and we have multiple strategies in place to grow revenues and manage expenses. There is more to be done, but I am pleased with our progress as we remain focused on strategies that produce long-term value for our shareowners."

Compared to the first quarter of 2018, the $0.5 million increase in operating profit reflected a $1.0 million increase in net interest income and higher noninterest income of $0.1 million, partially offset by higher noninterest expense of $0.5 million and a $0.1 million increase in the loan loss provision.

Compared to the second quarter of 2017, the $1.0 million increase in operating profit was attributable to higher net interest income of $2.3 million, partially offset by lower noninterest income of $0.6 million, a $ 0.5 million increase in noninterest expense, and a $0.2 million increase in the loan loss provision.

The increase in operating profit for the first six months of 2018 versus the comparable period of 2017 was attributable to higher net interest income of $4.3 million that was partially offset by lower noninterest income of $0.8 million, higher noninterest expense of $0.5 million, and $0.7 million increase in the loan loss provision.

Our return on average assets ("ROA") was 0.84% and our return on average equity ("ROE") was 8.25% for the second quarter of 2018.  These metrics were 0.81% and 8.14% for the first quarter of 2018, respectively, and 0.51% and 5.07% for the second quarter of 2017, respectively.  For the first six months of 2018, our ROA was 0.83% and our ROE was 8.20% compared to 0.45% and 4.54%, respectively, for the same period of 2017.

Discussion of Operating Results

Tax-equivalent net interest income for the second quarter of 2018 was $22.9 million compared to $21.9 million for the first quarter of 2018 and $20.8 million for the second quarter of 2017.  The increase in tax-equivalent net interest income compared to both prior periods reflected higher interest rates and a favorable shift in the earning asset mix. Higher rates were earned on overnight funds, investment securities, and variable rate loans, partially offset by a higher cost on our negotiated rate deposits.  For the first six months of 2018, tax-equivalent net interest income totaled $44.9 million compared to $40.8 million for the comparable period in 2017.  The year-over-year increase was driven by growth in the loan and investment portfolios, coupled with higher short-term rates, partially offset by a higher rate paid on negotiated rate deposits.

The federal funds target rate was increased seven times since December 2015 to 2.00% by the end of the second quarter of 2018, which positively affected our net interest income due to favorable repricing of our variable and adjustable rate earning assets. Although these increases have also resulted in higher rates paid on our negotiated rate deposit products, we continue to prudently manage our overall cost of funds, which was 26 basis points for the second quarter of 2018, and 23 basis points for the first quarter of 2018. Due to highly competitive fixed-rate loan pricing across most markets, we have continued to review our loan pricing and make adjustments where appropriate and prudent.   

Our net interest margin for the second quarter of 2018 was 3.58%, an increase of 15 basis points compared to the first quarter of 2018 and an increase of 25 basis points from the second quarter of 2017.  For the first six months of 2018, the net interest margin increased 24 basis points to 3.51% compared to the same period of 2017. The increase in the margin as compared to all respective periods reflected rising interest rates and a favorable shift in our earning asset mix, which has produced higher net interest income in each period. 

The provision for loan losses for the second quarter of 2018 was $0.8 million compared to $0.7 million for the first quarter of 2018 and $0.6 million for the second quarter of 2017.  For the six months ended June 30, 2018, the loan loss provision was $1.6 million compared to $0.9 million in 2017.  The higher provision in 2018 reflected growth in the loan portfolio.  At June 30, 2018, the allowance for loan losses of $13.6 million represented 0.78% of outstanding loans (net of overdrafts) and provided coverage of 236% of nonperforming loans compared to 0.80% and 181%, respectively, at March 31, 2018 and 0.80% and 186%, respectively, at December 31, 2017.

Noninterest income for the second quarter of 2018 totaled $12.5 million, an increase of $0.1 million, or 0.5%, over the first quarter of 2018 and a $0.6 million, or 4.5%, decrease from the second quarter of 2017.  For the first six months of 2018, noninterest income totaled $25.0 million, a $0.8 million, or 3.2%, decrease from the same period of 2017, primarily due to lower mortgage banking fees of $0.6 million and deposit fees of $0.4 million, partially offset by higher wealth management fees of $0.3 million.  The decrease from the second quarter of 2017 also reflected lower mortgage banking fees and deposit fees.  The lower level of mortgage banking fees was due to a slowdown in secondary market loan production as adjustable rate loan production has picked up momentum and is being booked into our loan portfolio.  Total (secondary market sales and portfolio) residential loan production during the first two quarters of 2018 was comparable to the prior year.  The decrease in deposit fees was attributable to lower overdraft fees and reflected a reduction in accounts utilizing our overdraft protection product.  The increase in wealth management fees over the first six months of 2017 was primarily due to higher trust fees and reflected growth in assets under management.                 

Noninterest expense for the second quarter of 2018 totaled $28.4 million, an increase of $0.5 million, or 1.7%, over the first quarter of 2018 and second quarter of 2017.  For the first six months of 2018, noninterest expense totaled $56.3 million, a $0.5 million, or 0.8%, increase over the same period of 2017.  The increase over the first quarter of 2018 primarily reflected higher professional fees of $0.2 million and a $0.2 million expense for our VISA Class B share swap contract related to VISA's funding of their litigation reserve.  Compared to the three and six month periods of 2017, the increase was primarily attributable to higher professional fees.    

We realized an income tax benefit of $0.1 million for the six months ended June 30, 2018 which reflected two discrete tax benefit items totaling $2.9 million resulting from the effect of federal tax reform, enacted in December 2017, on pension plan contributions made in 2018.  The discrete tax item for the first quarter of 2018 totaled $1.5 million and the item for the second quarter of 2018 totaled $1.4 million.  Absent these discrete items, our effective tax rate was approximately 24%. 

Discussion of Financial Condition

Average earning assets were $2.566 billion for the second quarter of 2018, a decrease of $26.5 million, or 1.0%, from the first quarter of 2018, and an increase of $54.0 million, or 2.2%, over the fourth quarter of 2017.  The change in average earning assets compared to the first quarter 2018 was attributable to decreases in our short-term investments, primarily due to a decline in our seasonal public fund balances.  The change in average earning assets over the fourth quarter 2017 was attributable to growth in our loan and investment portfolios primarily funded by increases in our noninterest bearing deposits and savings accounts.

We maintained an average net overnight funds (deposits with banks plus fed funds sold less fed funds purchased) sold position of $158.7 million during the second quarter of 2018 compared to an average net overnight funds sold position of $240.9 million in the first quarter of 2018 and $174.6 million in the fourth quarter of 2017.  The decrease in average net overnight funds compared to all prior periods reflected growth in our loan and investment portfolios.  Additionally, part of the decrease compared to the prior quarter was also attributable to the decline in our public deposits.  

Average loans increased $43.7 million, or 2.7% compared to the first quarter of 2018, and have grown $50.5 million, or 3.1% compared to the fourth quarter of 2017.  The increase compared to the prior quarter reflected growth in all loans types except home equity loans. Growth over the fourth quarter of 2017 was experienced in all loan products except for commercial and home equity loans. During 2018, we have purchased a $4.0 million pool of adjustable rate residential loans (late in first quarter) and an $11.9 million pool of fixed and adjustable rate commercial real estate loans (late in second quarter).

We continue to make minor modifications on some of our lending programs to try to mitigate the impact that consumer and business deleveraging has had on our portfolio.  These programs, coupled with economic improvements in our anchor markets, have helped to increase overall loan growth.

Nonperforming assets (nonaccrual loans and OREO) totaled $9.1 million at June 30, 2018, a decrease of $1.5 million, or 14.4%, from March 31, 2018 and $2.0 million, or 17.9%, from December 31, 2017.  Nonaccrual loans totaled $5.7 million at June 30, 2018, a $1.6 million decrease from March 31, 2018 and a $1.4 million decrease from December 31, 2017.  Nonaccrual loan additions totaled $2.5 million for the second quarter of 2018 compared to $3.8 million for the first quarter of 2018 and $5.6 million for the fourth quarter of 2017.  The balance of OREO totaled $3.4 million at June 30, 2018, an increase of $0.1 million over March 31, 2018 and a decrease of $0.6 million from December 31, 2017.  For the second quarter of 2018, we added properties totaling $0.5 million, sold properties totaling $0.3 million, and recorded valuation adjustments totaling $0.1 million. 

Average total deposits were $2.432 billion for the second quarter of 2018, a decrease of $24.1 million, or 1.0%, from the first quarter of 2018, and an increase of $53.5 million, or 2.3% over the fourth quarter of 2017.  The decline in deposits compared to the first quarter of 2018 reflected lower public fund NOW accounts and certificates of deposit balances, partially offset by increases in all other deposit types.  The increase in deposits when compared to the fourth quarter of 2017 reflected growth in all deposit products except certificates of deposit.  Public fund accounts typically peak in the first quarter and trend downwards through the fourth quarter due to the cycle of tax receipts.

Deposit levels remain strong, particularly given the increases in the fed funds rate.  Average core deposits continue to experience growth.  We monitor deposit rates on an ongoing basis as a prudent pricing discipline remains the key to managing our mix of deposits.

Average borrowings for the second quarter 2018 decreased $2.9 million compared to the first quarter 2018, and declined $3.0 million compared to the fourth quarter of 2017. Decreases occurred in both short-term and long-term borrowings as we reduced our repurchase agreements and Federal Home Loan Bank pay-downs of match funded advances. 

Shareowners' equity was $293.6 million at June 30, 2018, compared to $288.4 million at March 31, 2018 and $284.2 million at December 31, 2017.  Our leverage ratio was 10.69%, 10.36%, and 10.47%, respectively, on these dates.  Further, at June 30, 2018, our risk-adjusted capital ratio was 17.00% compared to 17.05% and 17.10% at March 31, 2018 and December 31, 2017, respectively.  Our common equity tier 1 ratio was 13.46% at June 30, 2018, compared to 13.44% at March 31, 2018 and 13.42% at December 31, 2017.  All of our capital ratios exceeded the threshold to be designated as "well-capitalized" under the Basel III capital standards. 

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 $2.9 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 59 banking offices and 73 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 our future results to differ materially.  The following factors, among others, could cause our actual results to differ: the accuracy of the our financial statement estimates and assumptions; legislative or regulatory changes, and the ability to repay and qualified mortgage standards; 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; harsh weather conditions and man-made disasters; 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, including the long-term impact on our net interest margin from the repeal of Regulation Q; 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, 2017, 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 reconciliation is provided below.

(Dollars in Thousands)   Jun 30, 2018 Mar 31, 2018 Dec 31, 2017 Sep 30, 2017 Jun 30, 2017
Shareowners' Equity (GAAP)   $ 293,571   $ 288,360   $ 284,210   $ 285,201   $ 281,513  
Less: Goodwill (GAAP)     84,811     84,811     84,811     84,811     84,811  
Tangible Shareowners' Equity (non-GAAP) A   208,760     203,549     199,399     200,390     196,702  
Total Assets (GAAP)     2,880,278     2,924,832     2,898,794     2,790,842     2,814,843  
Less: Goodwill (GAAP)     84,811     84,811     84,811     84,811     84,811  
Tangible Assets (non-GAAP) B $ 2,795,467   $ 2,840,021   $ 2,813,983   $ 2,706,031   $ 2,730,032  
Tangible Common Equity Ratio (non-GAAP) A/B   7.47 %   7.17 %   7.09 %   7.41 %   7.21 %
Actual Diluted Shares Outstanding (GAAP) C   17,114,380     17,088,419     17,071,107     17,045,326     17,025,148  
Tangible Book Value per Diluted Share (non-GAAP) A/C $ 12.20   $ 11.91   $ 11.68   $ 11.76   $ 11.55  


CAPITAL CITY BANK GROUP, INC.                    
EARNINGS HIGHLIGHTS                    
Unaudited                    
                     
    Three Months Ended   Six Months Ended
(Dollars in thousands, except per share data)   Jun 30, 2018   Mar 31, 2018   Jun 30, 2017   Jun 30, 2018   Jun 30, 2017
                     
EARNINGS                    
Net Income $ 6,003   $ 5,773   $ 3,561   $ 11,776   $ 6,305  
Net Income Per Common Share $ 0.35   $ 0.34   $ 0.21   $ 0.69   $ 0.37  
PERFORMANCE                    
Return on Average Assets   0.84 %   0.81 %   0.51 %   0.83 %   0.45 %
Return on Average Equity   8.25 %   8.14 %   5.07 %   8.20 %   4.54 %
Net Interest Margin   3.58 %   3.43 %   3.33 %   3.51 %   3.27 %
Noninterest Income as % of Operating Revenue   35.52 %   36.44 %   39.05 %   35.97 %   39.12 %
Efficiency Ratio   80.07 %   81.07 %   82.28 %   80.57 %   83.78 %
CAPITAL ADEQUACY                    
Tier 1 Capital Ratio   16.25 %   16.31 %   15.58 %   16.25 %   15.58 %
Total Capital Ratio   17.00 %   17.05 %   16.32 %   17.00 %   16.32 %
Tangible Common Equity Ratio   7.47 %   7.17 %   7.21 %   7.47 %   7.21 %
Leverage Ratio   10.69 %   10.36 %   10.20 %   10.69 %   10.20 %
Common Equity Tier 1 Ratio   13.46 %   13.44 %   12.72 %   13.46 %   12.72 %
Equity to Assets   10.19 %   9.86 %   10.00 %   10.19 %   10.00 %
ASSET QUALITY                    
Allowance as % of Non-Performing Loans   236.25 %   181.26 %   166.23 %   236.25 %   166.23 %
Allowance as a % of Loans   0.78 %   0.80 %   0.81 %   0.78 %   0.81 %
Net Charge-Offs as % of Average Loans   0.12 %   0.20 %   0.17 %   0.16 %   0.14 %
Nonperforming Assets as % of Loans and ORE   0.52 %   0.64 %   0.97 %   0.52 %   0.97 %
Nonperforming Assets as % of Total Assets   0.32 %   0.36 %   0.57 %   0.32 %   0.57 %
STOCK PERFORMANCE                    
High $ 25.99   $ 26.50   $ 22.39   $ 26.50   $ 22.39  
Low   22.28     22.80     17.68     22.28     17.68  
Close $ 23.63   $ 24.75   $ 20.42   $ 23.63   $ 20.42  
Average Daily Trading Volume   25,246     21,061     23,349     23,204     23,251  


CAPITAL CITY BANK GROUP, INC.                    
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION            
Unaudited                    
                     
    2018    2017 
(Dollars in thousands)   Second Quarter   First Quarter   Fourth Quarter   Third Quarter   Second Quarter
ASSETS                    
Cash and Due From Banks $ 56,573   $ 47,804   $ 58,419   $ 50,420   $ 72,801  
Funds Sold and Interest Bearing Deposits   107,066     250,821     227,023     140,694     162,377  
Total Cash and Cash Equivalents   163,639     298,625     285,442     191,114     235,178  
                     
Investment Securities Available for Sale   493,662     471,836     480,911     510,846     529,686  
Investment Securities Held to Maturity   236,764     225,552     216,679     184,262     157,074  
Total Investment Securities   730,426     697,388     697,590     695,108     686,760  
                     
Loans Held for Sale   8,246     4,845     4,817     7,800     8,213  
                     
Loans, Net of Unearned Interest                    
Commercial, Financial, & Agricultural   222,406     198,775     218,166     215,963     213,544  
Real Estate - Construction   88,169     80,236     77,966     67,813     67,331  
Real Estate - Commercial   575,993     551,309     535,707     527,331     519,140  
Real Estate - Residential   320,296     307,050     308,159     306,272     302,072  
Real Estate - Home Equity   218,851     223,994     229,513     228,499     230,995  
Consumer   285,599     284,356     278,622     273,670     269,539  
Other Loans   11,648     14,988     3,747     9,311     17,057  
Overdrafts   1,513     1,187     1,612     1,479     1,518  
Total Loans, Net of Unearned Interest   1,724,475     1,661,895     1,653,492     1,630,338     1,621,196  
Allowance for Loan Losses   (13,563 )   (13,258 )   (13,307 )   (13,339 )   (13,242 )
Loans, Net   1,710,912     1,648,637     1,640,185     1,616,999     1,607,954  
                     
Premises and Equipment, Net   90,000     90,939     91,698     92,345     92,495  
Goodwill   84,811     84,811     84,811     84,811     84,811  
Other Real Estate Owned   3,373     3,330     3,941     5,987     7,968  
Other Assets   88,871     96,257     90,310     96,678     91,464  
Total Other Assets   267,055     275,337     270,760     279,821     276,738  
                     
Total Assets $ 2,880,278   $ 2,924,832   $ 2,898,794   $ 2,790,842   $ 2,814,843  
                     
LIABILITIES                    
Deposits:                    
Noninterest Bearing Deposits $ 937,241   $ 890,482   $ 874,583   $ 870,644   $ 842,314  
NOW Accounts   778,131     859,704     877,820     749,816     787,090  
Money Market Accounts   257,965     257,422     239,212     249,964     265,032  
Regular Savings Accounts   354,156     353,996     335,140     329,742     327,560  
Certificates of Deposit   131,697     137,280     143,122     147,451     149,937  
Total Deposits   2,459,190     2,498,884     2,469,877     2,347,617     2,371,933  
                     
Short-Term Borrowings   7,021     4,893     7,480     6,777     6,105  
Subordinated Notes Payable   52,887     52,887     52,887     52,887     52,887  
Other Long-Term Borrowings   12,897     13,333     13,967     15,047     15,631  
Other Liabilities   54,712     66,475     70,373     83,313     86,774  
                     
Total Liabilities   2,586,707     2,636,472     2,614,584     2,505,641     2,533,330  
                     
SHAREOWNERS' EQUITY                    
Common Stock   171     171     170     170     170  
Additional Paid-In Capital   37,932     37,343     36,674     35,892     35,522  
Retained Earnings   288,800     283,990     279,410     275,013     271,646  
Accumulated Other Comprehensive Loss, Net of Tax   (33,332 )   (33,144 )   (32,044 )   (25,874 )   (25,825 )
                     
Total Shareowners' Equity   293,571     288,360     284,210     285,201     281,513  
                     
Total Liabilities and Shareowners' Equity $ 2,880,278   $ 2,924,832   $ 2,898,794   $ 2,790,842   $ 2,814,843  
                     
OTHER BALANCE SHEET DATA                    
Earning Assets $ 2,570,213   $ 2,614,949   $ 2,582,922   $ 2,473,940   $ 2,478,546  
Interest Bearing Liabilities   1,594,754     1,679,515     1,669,628     1,551,684     1,604,242  
                     
Book Value Per Diluted Share $ 17.15   $ 16.87   $ 16.65   $ 16.73   $ 16.54  
Tangible Book Value Per Diluted Share   12.20     11.91     11.68     11.76     11.55  
                     
Actual Basic Shares Outstanding   17,056     17,044     16,989     16,966     16,964  
Actual Diluted Shares Outstanding   17,114     17,088     17,071     17,045     17,025  


CAPITAL CITY BANK GROUP, INC.                            
CONSOLIDATED STATEMENT OF OPERATIONS                      
Unaudited                            
                             
                        Six Months Ended
    2018    2017   June 30,
(Dollars in thousands, except per share data)   Second Quarter   First Quarter   Fourth Quarter   Third Quarter   Second Quarter   2018     2017
                             
INTEREST INCOME                            
Interest and Fees on Loans $ 20,533 $ 19,535   $ 19,513 $ 19,479   $ 18,720 $ 40,068   $ 36,725
Investment Securities   3,156   2,762     2,520   2,416     2,169   5,918     4,211
Funds Sold   730   917     594   446     533   1,647     1,026
Total Interest Income   24,419   23,214     22,627   22,341     21,422   47,633     41,962
                             
INTEREST EXPENSE                            
Deposits   995   868     590   530     388   1,863     669
Short-Term Borrowings   8   8     5   15     17   16     62
Subordinated Notes Payable   552   475     431   420     404   1,027     783
Other Long-Term Borrowings   94   100     112   115     117   194     216
Total Interest Expense   1,649   1,451     1,138   1,080     926   3,100     1,730
Net Interest Income   22,770   21,763     21,489   21,261     20,496   44,533     40,232
Provision for Loan Losses   815   745     826   490     589   1,560     899
Net Interest Income after Provision for
  Loan Losses
  21,955   21,018     20,663   20,771     19,907   42,973     39,333
                             
NONINTEREST INCOME                            
Deposit Fees   4,842   4,872     5,040   5,153     5,052   9,714     10,142
Bank Card Fees   2,909   2,811     2,830   2,688     2,870   5,720     5,673
Wealth Management Fees   2,037   2,173     2,172   2,197     2,073   4,210     3,915
Mortgage Banking Fees   1,206   1,057     1,410   1,480     1,556   2,263     2,864
Other   1,548   1,564     1,445   1,478     1,584   3,112     3,259
Total Noninterest Income   12,542   12,477     12,897   12,996     13,135   25,019     25,853
                             
NONINTEREST EXPENSE                            
Compensation   15,797   15,911     15,102   15,711     15,641   31,708     31,500
Occupancy, Net   4,503   4,551     4,400   4,501     4,555   9,054     8,936
Other Real Estate, Net   248   626     355   (118 )   315   874     898
Other   7,845   6,818     7,040   6,613     7,410   14,663     14,509
Total Noninterest Expense   28,393   27,906     26,897   26,707     27,921   56,299     55,843
                             
OPERATING PROFIT   6,104   5,589     6,663   7,060     5,121   11,693     9,343
Income Tax Expense (Benefit)   101   (184 )   6,660   2,505     1,560   (83 )   3,038
NET INCOME $ 6,003 $ 5,773   $ 3 $ 4,555   $ 3,561 $ 11,776   $ 6,305
                             
PER SHARE DATA                            
Basic Net Income $ 0.35 $ 0.34   $ 0.00 $ 0.27   $ 0.21 $ 0.69   $ 0.37
Diluted Net Income   0.35   0.34     0.00   0.27     0.21   0.69     0.37
Cash Dividend $ 0.07 $ 0.07   $ 0.07 $ 0.07   $ 0.05 $ 0.14   $ 0.10
AVERAGE SHARES                            
Basic   17,045   17,028     16,967   16,965     16,955   17,037     16,937
Diluted   17,104   17,073     17,050   17,044     17,016   17,089     16,993


CAPITAL CITY BANK GROUP, INC.                            
ALLOWANCE FOR LOAN LOSSES                            
AND RISK ELEMENT ASSETS                            
Unaudited                            
                             
                        Six Months Ended
    2018
  2017
  June 30,
(Dollars in thousands, except per share data)   Second Quarter   First Quarter   Fourth Quarter   Third Quarter   Second Quarter   2018     2017  
                             
ALLOWANCE FOR LOAN LOSSES                            
Balance at Beginning of Period $ 13,258   $ 13,307   $ 13,339   $ 13,242   $ 13,335   $ 13,307   $ 13,431  
Provision for Loan Losses   815     745     826     490     589     1,560     899  
Net Charge-Offs   510     794     858     393     682     1,304     1,088  
Balance at End of Period $ 13,563   $ 13,258   $ 13,307   $ 13,339   $ 13,242   $ 13,563   $ 13,242  
As a % of Loans   0.78 %   0.80 %   0.80 %   0.82 %   0.81 %   0.78 %   0.81 %
As a % of Nonperforming Loans   236.25 %   181.26 %   185.87 %   203.39 %   166.23 %   236.25 %   166.23 %
                             
CHARGE-OFFS                            
Commercial, Financial and Agricultural $ 141   $ 182   $ 664   $ 276   $ 324   $ 323   $ 417  
Real Estate - Construction   -     7     -     -     -     7     -  
Real Estate - Commercial   -     290     42     94     478     290     549  
Real Estate - Residential   456     107     126     125     44     563     160  
Real Estate - Home Equity   157     158     48     50     -     315     92  
Consumer   509     695     577     455     537     1,204     1,161  
Total Charge-Offs $ 1,263   $ 1,439   $ 1,457   $ 1,000   $ 1,383   $ 2,702   $ 2,379  
                             
RECOVERIES                            
Commercial, Financial and Agricultural $ 87   $ 166   $ 113   $ 79   $ 40   $ 253   $ 121  
Real Estate - Construction   -     1     -     50     -     1     -  
Real Estate - Commercial   15     123     24     69     58     138     81  
Real Estate - Residential   346     84     141     60     202     430     415  
Real Estate - Home Equity   22     61     67     84     39     83     68  
Consumer   283     210     254     265     362     493     606  
Total Recoveries $ 753   $ 645   $ 599   $ 607   $ 701   $ 1,398   $ 1,291  
                             
NET CHARGE-OFFS $ 510   $ 794   $ 858   $ 393   $ 682   $ 1,304   $ 1,088  
                             
Net Charge-Offs as a % of Average Loans (1)   0.12 %   0.20 %   0.21 %   0.10 %   0.17 %   0.16 %   0.14 %
                             
RISK ELEMENT ASSETS                            
Nonaccruing Loans $ 5,741   $ 7,314   $ 7,159   $ 6,558   $ 7,966          
Other Real Estate Owned   3,373     3,330     3,941     5,987     7,968          
Total Nonperforming Assets $ 9,114   $ 10,644   $ 11,100   $ 12,545   $ 15,934          
                             
Past Due Loans 30-89 Days $ 3,472   $ 4,268   $ 4,543   $ 5,687   $ 3,789          
Past Due Loans 90 Days or More   -     -     36     -     -          
Classified Loans   29,583     31,709     31,002     36,545     41,322          
Performing Troubled Debt Restructuring's $ 29,981   $ 31,472   $ 32,164   $ 33,427   $ 35,436          
                             
Nonperforming Loans as a % of Loans   0.33 %   0.44 %   0.43 %   0.40 %   0.49 %        
Nonperforming Assets as a % of Loans and                            
Other Real Estate   0.52 %   0.64 %   0.67 %   0.76 %   0.97 %        
Nonperforming Assets as a % of Total Assets   0.32 %   0.36 %   0.38 %   0.45 %   0.57 %        
                             
(1) Annualized                            


CAPITAL CITY BANK GROUP, INC.                                                                                      
AVERAGE BALANCE AND INTEREST RATES(1)                                                                                          
Unaudited                                                                                                  
                                                                                                   
    Second Quarter 2018     First Quarter 2018     Fourth Quarter 2017     Third Quarter 2017     Second Quarter 2017     Jun 2018 YTD     Jun 2017 YTD  
(Dollars in thousands)   Average
Balance
  Interest   Average
Rate
    Average
Balance
  Interest   Average
Rate
    Average
Balance
  Interest   Average
Rate
    Average
Balance
  Interest   Average
Rate
    Average
Balance
  Interest   Average
Rate
    Average
Balance
  Interest   Average
Rate
    Average
Balance
  Interest   Average
Rate
 
ASSETS:                                                                                                  
Loans, Net of Unearned Interest $ 1,691,287     20,625   4.89 % $ 1,647,612     19,636   4.83 % $ 1,640,738     19,696   4.76 % $ 1,638,578     19,672   4.76 % $ 1,608,629     18,880   4.71 % $ 1,669,571     40,261   4.86 % $ 1,597,159     37,017   4.67 %
                                                                                                   
Investment Securities                                                                                                  
Taxable Investment Securities   643,516     2,945   1.83     619,137     2,523   1.64     602,353     2,263   1.50     588,518     2,150   1.45     591,825     1,898   1.28     631,394     5,468   1.74     596,153     3,682   1.24  
Tax-Exempt Investment Securities   72,478     266   1.47     84,800     318   1.50     94,329     393   1.67     98,463     407   1.65     100,742     414   1.64     78,605     584   1.49     99,361     810   1.63  
                                                                                                   
Total Investment Securities   715,994     3,211   1.79     703,937     2,841   1.62     696,682     2,656   1.52     686,981     2,557   1.48     692,567     2,312   1.34     709,999     6,052   1.71     695,514     4,492   1.30  
                                                                                                   
Funds Sold   158,725     730   1.84     240,916     917   1.54     174,565     594   1.35     140,728     446   1.26     200,834     533   1.06     199,593     1,647   1.66     222,871     1,026   0.93  
                                                                                                   
Total Earning Assets   2,566,006   $ 24,566   3.84 %   2,592,465   $ 23,394   3.66 %   2,511,985   $ 22,946   3.63 %   2,466,287   $ 22,675   3.65 %   2,502,030   $ 21,725   3.48 %   2,579,163   $ 47,960   3.75 %   2,515,544   $ 42,535   3.41 %
                                                                                                   
Cash and Due From Banks   50,364               52,711               51,235               51,880               52,312               51,531               50,618            
Allowance for Loan Losses   (13,521 )             (13,651 )             (13,524 )             (13,542 )             (13,662 )             (13,586 )             (13,550 )          
Other Assets   258,255               260,595               272,755               275,335               276,799               259,418               278,621            
                                                                                                   
Total Assets $ 2,861,104             $ 2,892,120             $ 2,822,451             $ 2,779,960             $ 2,817,479             $ 2,876,526             $ 2,831,233            
                                                                                                   
LIABILITIES:                                                                                                  
Interest Bearing Deposits                                                                                                  
NOW Accounts $ 790,335   $ 725   0.37 % $ 863,175   $ 659   0.31 % $ 782,133   $ 400   0.20 % $ 755,620   $ 339   0.18 % $ 806,621   $ 222   0.11 % $ 826,554   $ 1,384   0.34 % $ 843,459   $ 356   0.09 %
Money Market Accounts   255,143     166   0.26     246,576     103   0.17     249,953     80   0.13     262,486     80   0.12     261,726     57   0.09     250,883     269   0.22     260,423     92   0.07  
Savings Accounts   351,664     43   0.05     343,987     42   0.05     333,703     41   0.05     327,675     40   0.05     322,833     39   0.05     347,847     85   0.05     317,055     77   0.05  
Time Deposits   134,171     61   0.18     140,359     64   0.18     145,622     69   0.19     148,652     71   0.19     152,811     70   0.18     137,248     125   0.18     155,535     144   0.19  
Total Interest Bearing Deposits   1,531,313     995   0.27 %   1,594,097     868   0.23 %   1,511,411     590   0.16 %   1,494,433     530   0.14 %   1,543,991     388   0.10 %   1,562,532     1,863   0.25 %   1,576,472     669   0.09 %
                                                                                                   
Short-Term Borrowings   6,633     8   0.49 %   8,869     8   0.37 %   8,074     5   0.25 %   9,920     15   0.59 %   8,957     17   0.75 %   7,745     16   0.42 %   10,873     62   1.15 %
Subordinated Notes Payable   52,887     552   4.13     52,887     475   3.60     52,887     431   3.19     52,887     420   3.11     52,887     404   3.02     52,887     1,027   3.86     52,887     783   2.94  
Other Long-Term Borrowings   13,151     94   2.88     13,787     100   2.93     14,726     112   3.01     15,427     115   2.95     16,065     117   2.93     13,467     194   2.91     15,271     216   2.85  
                                                                                                   
Total Interest Bearing Liabilities   1,603,984   $ 1,649   0.43 %   1,669,640   $ 1,451   0.37 %   1,587,098   $ 1,138   0.29 %   1,572,667   $ 1,080   0.28 %   1,621,900   $ 926   0.23 %   1,636,631   $ 3,100   0.40 %   1,655,503   $ 1,730   0.22 %
                                                                                                   
Noninterest Bearing Deposits   900,643               862,009               867,000               834,729               829,432               881,433               813,785            
Other Liabilities   64,671               72,969               80,309               87,268               84,486               68,796               81,861            
                                                                                                   
Total Liabilities   2,569,298               2,604,618               2,534,407               2,494,664               2,535,818               2,586,860               2,551,149            
                                                                                                   
SHAREOWNERS' EQUITY:   291,806               287,502               288,044               285,296               281,661               289,666               280,084            
                                                                                                   
Total Liabilities and Shareowners' Equity $ 2,861,104             $ 2,892,120             $ 2,822,451             $ 2,779,960             $ 2,817,479             $ 2,876,526             $ 2,831,233            
                                                                                                   
Interest Rate Spread     $ 22,917   3.41 %     $ 21,943   3.29 %     $ 21,808   3.33 %     $ 21,595   3.37 %     $ 20,799   3.25 %     $ 44,860   3.35 %     $ 40,805   3.19 %
                                                                                                   
Interest Income and Rate Earned(1)       24,566   3.84         23,394   3.66         22,946   3.63         22,675   3.65         21,725   3.48         47,960   3.75         42,535   3.41  
Interest Expense and Rate Paid(2)       1,649   0.26         1,451   0.23         1,138   0.18         1,080   0.17         926   0.15         3,100   0.24         1,730   0.14  
                                                                                                   
Net Interest Margin     $ 22,917   3.58 %     $ 21,943   3.43 %     $ 21,808   3.45 %     $ 21,595   3.48 %     $ 20,799   3.33 %     $ 44,860   3.51 %     $ 40,805   3.27 %
                                                                                                   
(1)  Interest and average rates are calculated on a tax-equivalent basis using a 21% Federal tax rate for 2018 and a 35% Federal tax rate for 2017.                                                          
(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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