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Capital City Bank Group, Inc. Reports Third Quarter 2014 Results

HIGHLIGHTS:

  • Net income of $2.1 million - $0.12 diluted share.
  • Achieved positive operating leverage driven by 13 bp margin expansion to 3.42% and lower operating costs.
  • Loan balances grew for third consecutive quarter and more liquidity deployed in investment portfolio.
  • Credit quality continued to improve as nonperforming assets declined 4% sequentially and 23% year to date.
  • Tangible capital grew 3.7% sequentially to 8.22%.

TALLAHASSEE, Fla., Oct. 28, 2014 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (Nasdaq:CCBG) today reported net income of $2.1 million, or $0.12 per diluted share for the third quarter of 2014, compared to net income of $1.5 million, or $0.08 per diluted share for the second quarter of 2014, and $1.6 million, or $0.09 per diluted share, for the third quarter of 2013. For the first nine months of 2014, the Company reported net income of $7.3 million, or $0.42 per diluted share, compared to net income of $3.3 million, or $0.19 per diluted share for the same period in 2013.

Compared to the second quarter of 2014, performance reflects higher net interest income of $0.4 million, lower noninterest expense of $0.5 million, and a lower loan loss provision of $0.1 million, partially offset by higher income tax expense of $0.4 million.

Compared to the third quarter of 2013, the increase in earnings was due to lower noninterest expense of $1.5 million and loan loss provision of $0.2 million, partially offset by lower net interest income of $0.3 million, a decline in noninterest income of $0.7 million, and higher income tax expense of $0.2 million.

The increase in earnings for the first nine months of 2014 versus the comparable period in 2013 was attributable to lower noninterest expense of $5.7 million, a lower loan loss provision of $1.8 million, and lower income taxes of $1.4 million, partially offset by lower net interest income of $3.1 million and noninterest income of $1.8 million.

"Capital City Bank Group posted a solid performance in the third quarter, and our year-to-date numbers are strong," said William G. Smith, Jr., Chairman, President, and CEO of Capital City Bank Group. "We continue to see a strengthening economy and are encouraged by the loan growth we have experienced for the third consecutive quarter. Progress continues on right-sizing our expense base and we remain focused on improving our credit quality and identifying new revenue opportunities."

The Return on Average Assets was 0.33% and the Return on Average Equity was 2.95% for the third quarter of 2014. These metrics were 0.23% and 2.09% for the second quarter of 2014, and 0.25% and 2.51% for the third quarter of 2013, respectively.

For the first nine months of 2014, the Return on Average Assets was 0.38% and the Return on Average Equity was 3.48% compared to 0.17% and 1.75%, respectively, for the same period in 2013.

Discussion of Financial Condition

Average earning assets were $2.209 billion for the third quarter of 2014, a decrease of $51.5 million, or 2.3%, from the second quarter of 2014 and an increase of $3.1 million, or 0.1%, over the fourth quarter of 2013. The change in earning assets from the second quarter of 2014 reflects a lower level of overnight funds attributable to declining balances in both public fund deposits and repurchase agreements. The increase compared to the fourth quarter of 2013 reflects a higher level of investments and loans, which was funded through a reduction in overnight funds and growth in core deposits.

We maintained an average net overnight funds (deposits with banks plus fed funds sold less fed funds purchased) sold position of $317.6 million during the third quarter of 2014 compared to an average net overnight funds sold position of $408.7 million in the second quarter of 2014 and an average overnight funds sold position of $411.6 million in the fourth quarter of 2013. The lower balance when compared to the second quarter of 2014 and fourth quarter of 2013 primarily reflects higher loan and investment portfolios, and the lower level of public funds.

Slow economic growth continues to impact our markets and deleveraging by our clients has generated a historically high level of liquidity, which, given the current operating environment, is difficult to profitably deploy without taking inordinate risks. Although we have experienced loan growth in 2014, where practical, we are working to lower the level of overnight funds by adding to our investment portfolio with short-duration, high quality securities and reducing deposit balances. We continue to offer to our clients a fully-insured money market account which is provided by a third party and can serve as an alternative investment for some of our higher balance depositors while at the same time allowing us to maintain the account relationship. Until such time that attractive investment alternatives arise, we will continue to execute these strategies as well as seek other initiatives in an effort to lower our overnight fund balances.

Period end loans increased in each of the last three quarters and, when compared to the second quarter of 2014, average loans increased by $9.3 million, or 0.7%, which represents the second straight quarter-over-quarter increase in average loans. Average loans have increased by $6.4 million when compared to the fourth quarter of 2013. The improvement in loans when compared to both periods was attributable primarily to the consumer and commercial portfolios, while the commercial real estate portfolio continued to decline.

Without compromising our credit standards or taking on inordinate interest rate risk, we have modified several lending programs in our business (commercial real estate and consumer portfolios) to try to mitigate the significant impact that consumer and business deleveraging is having on our portfolio. These programs have helped to increase overall production.

Nonperforming assets (nonaccrual loans and OREO) totaled $65.2 million at the end of the third quarter of 2014, a decrease of $3.0 million from the second quarter of 2014 and $19.8 million from the fourth quarter of 2013. Nonaccrual loans totaled $23.5 million at the end of the third quarter of 2014, a decrease of $2.2 million from the second quarter of 2014 and $13.5 million from the fourth quarter of 2013. Nonaccrual loan additions totaled $4.8 million in the third quarter of 2014 and $16.7 million for the first nine months of 2014, which compares to $29.6 million for the same period of 2013. The balance of OREO totaled $41.7 million at the end of the third quarter of 2014, representing decreases of $0.9 million from the second quarter of 2014 and $6.4 million from the fourth quarter of 2013. For the third quarter of 2014, we added properties totaling $2.9 million, sold properties totaling $2.7 million, recorded valuation adjustments totaling $0.7 million, and realized miscellaneous adjustments of $0.4 million. For the first nine months of 2014, we have added properties totaling $12.1 million, sold properties totaling $15.9 million, recorded valuation adjustments totaling $2.2 million, and realized miscellaneous adjustments of $0.4 million. Nonperforming assets represented 2.61% of total assets at September 30, 2014 compared to 2.66% at June 30, 2014 and 3.26% at December 31, 2013.

Average total deposits were $2.063 billion for the third quarter of 2014, a decrease of $46.7 million, or 2.2%, from the second quarter of 2014 and an increase of $12.0 million, or 0.59%, over the fourth quarter of 2013. The decrease in deposits when compared to the second quarter of 2014 resulted primarily from the reduction in the level of seasonal public funds and certificates of deposit. When compared to the fourth quarter of 2013, the increase was a result of higher noninterest bearing demand and savings accounts, partially offset by lower certificates of deposit and public funds.

Deposit levels remain strong and our mix of deposits continues to improve as higher cost certificates of deposit are replaced with lower rate non-maturity deposits and noninterest bearing demand accounts. Prudent pricing discipline will continue to be the key to managing our mix of deposits. Therefore, we do not attempt to compete with higher rate paying competitors for deposits.

Average borrowings when compared to the second quarter of 2014 and fourth quarter of 2013 decreased by $4.5 million and $24.2 million, respectively, resulting from payoff/amortization of FHLB advances and lower repurchase agreement balances.

Equity capital was $283.3 million as of September 30, 2014, compared to $281.6 million as of June 30, 2014 and $276.4 million as of December 31, 2013. Our leverage ratio was 10.97%, 10.70%, and 10.46%, respectively, for these periods. Further, our risk-adjusted capital ratio of 18.08% at September 30, 2014 compares to 18.10% at June 30, 2014 and 17.94% at December 31, 2013, and significantly exceeds the 10.0% threshold to be designated as "well-capitalized" under the risk-based regulatory guidelines. At September 30, 2014, our tangible common equity ratio was 8.22%, compared to 7.93% at June 30, 2014 and 7.58% at December 31, 2013. In the first quarter of 2014, our Board of Directors authorized the repurchase of up to 1,500,000 shares of our outstanding common stock. During the third quarter of 2014, we repurchased 19,600 shares of our common stock at an average price of $13.69 per share.

Discussion of Operating Results

Tax equivalent net interest income for the third quarter of 2014 was $19.0 million compared to $18.6 million for the second quarter of 2014 and $19.4 million for the third quarter of 2013. The increase in tax equivalent net interest income compared to the second quarter of 2014 reflects one additional calendar day, a positive shift in earning asset mix due to growth in the investment and loan portfolios and a slight reduction in interest expense, partially offset by unfavorable asset repricing. The lower net interest income when compared to the third quarter of 2013 reflects a reduction in loan income primarily attributable to unfavorable asset repricing, partially offset by a reduction in interest expense and a lower level of foregone interest on loans. For the nine months ended September 30, 2014, tax equivalent net interest income totaled $56.0 million compared to $59.1 million for the same period of 2013.

The company experienced higher net interest income for the quarter but pressure still remains on net interest income primarily as a result of the low rate environment. The low rate environment continues to negatively impact the loan portfolio and, going forward, will have minimal to no impact on deposits. Increased lending competition in all markets has also unfavorably impacted the pricing for loans.

The net interest margin for the third quarter of 2014 at 3.42% represents an increase of 13 basis points from the second quarter of 2014 and represented a decline of 7 basis points from the third quarter of 2013. Growth in our investment and loan portfolios helped to improve our margin from the second to third quarter, while the decrease in the margin from the comparable prior year period was attributable to unfavorable asset repricing, partially offset by a lower average cost of funds.

The provision for loan losses for the third quarter of 2014 was $0.4 million compared to $0.5 million for the second quarter of 2014 and $0.6 million for the third quarter of 2013. For the first nine months of 2014, the loan loss provision totaled $1.3 million compared to $3.1 million for the same period of 2013. The lower level of provision reflects continued favorable problem loan migration and improvement in key credit metrics. Net charge-offs for the third quarter of 2014 totaled $1.9 million, or 0.52% (annualized), of average loans compared to $2.1 million, or 0.59% (annualized), for the second quarter of 2014 and $2.8 million, or 0.78% (annualized), for the third quarter of 2013. For the first nine months of 2014, net charge-offs totaled $5.3 million, or 0.50% (annualized), of average loans compared to $7.2 million, or 0.66%, for the same period of 2013. At September 30, 2014, the allowance for loan losses of $19.1 million was 1.34% of outstanding loans (net of overdrafts) and provided coverage of 81% of nonperforming loans compared to 1.45% and 80%, respectively, at June 30, 2014 and 1.65% and 62%, respectively, at December 31, 2013.

Noninterest income for the third quarter of 2014 totaled $13.4 million, comparable to the second quarter of 2014 and a decrease of $0.7 million, or 4.8%, from the third quarter of 2013. For the third quarter of 2014, higher wealth management fees of $0.2 million and mortgage banking fees of $0.2 million were offset by lower bank card fees of $0.1 million, data processing fees of $0.1 million, and other income of $0.2 million. Higher fees from retail brokerage drove the increase in wealth management and are reflective of new account openings as well as higher client trading activity. The increase in mortgage banking fees was primarily attributable to a higher margin realized on sold loans. Bank card fees decreased due to lower card spend. A lower level of miscellaneous recoveries contributed to the decline in other income. Compared to the third quarter of 2013, the decrease was driven by a $0.3 million reduction in deposit fees, a $0.3 million decline in data processing fees, and lower wealth management fees of $0.1 million. The decrease in deposit fees was attributable to a lower level of overdraft fees generally reflective of improved financial management by our clients, and to a lesser extent a higher level of charged off checking accounts. Data processing fees declined due to a lower level of fees from a government processing contract that ended early in the second quarter of 2014. The decrease in wealth management fees was attributable to lower fees from our retail brokerage business generally reflective of lower client trading activity.

For the first nine months of 2014, noninterest income totaled $39.5 million, a $1.8 million, or 4.4%, decrease from the same period of 2013 reflective of lower deposit fees of $0.6 million, mortgage banking fees of $0.6 million, wealth management fees of $0.1 million, and data processing fees of $0.7 million, partially offset by higher bank card fees of $0.1 million and other income of $0.1 million. The decrease in deposit fees was due to a lower level of overdraft fees generally reflective of improved financial management by our clients. A lower level of refinancing activity drove the reduction in mortgage banking fees. The lower level of wealth management fees was attributable to lower fees from our retail brokerage business generally reflective of lower client trading activity. Data processing fees declined due to the aforementioned government processing contract that ended during the second quarter of 2014. Higher card spend drove the increase in bank card fees. A higher level of miscellaneous recoveries drove the increase in other income.

Noninterest expense for the third quarter of 2014 totaled $28.6 million, a decrease of $0.5 million, or 1.6%, from the second quarter of 2014 reflective of lower OREO expense of $0.5 and other expense of $0.2 million, partially offset by a higher compensation expense of $0.2 million. The decline in OREO expense was attributable to a $0.3 million reduction in net losses from the sale of properties and a $0.2 million decrease in property valuation adjustments. Other expense decreased due to a decline in legal fees reflective of a lower level of legal support needed for problem loan resolutions during the quarter. The increase in compensation expense was driven by associate merit raises that were effective late in the second quarter of 2014. Compared to the third quarter of 2013, noninterest expense decreased by $1.5 million, or 5.1%, attributable to lower compensation expense of $0.8 million, other expense of $0.8 million, and OREO expense of $0.1 million, partially offset by higher occupancy expense of $0.2 million. The decline in compensation expense was due to lower pension costs and the decrease in other expense reflects lower professional fees of $0.3 million, FDIC insurance fees of $0.3 million, legal fees of $0.1 million, and postage expense of $0.1 million. Lower property carrying costs drove the decline in OREO expense. Higher building maintenance costs partially attributable to non-recurring expenditures drove the increase in occupancy expense.

For the first nine months of 2014, noninterest expense totaled $86.0 million, a decrease of $5.7 million, or 6.2%, from the same period of 2013 attributable to lower compensation expense of $3.2 million, OREO expense of $1.5 million, other expense of $1.3 million, and intangible expense of $0.1 million, partially offset by higher occupancy expense of $0.4 million. The reduction in compensation expense was primarily attributable to lower pension plan expense reflective of the utilization of a higher discount rate for determining pension plan liabilities. Lower property carrying costs as well as a reduction in property valuation adjustments were the primary reasons for the reduction in OREO expense. The reduction in other expense was primarily attributable to lower FDIC insurance fees reflective of a favorable premium adjustment. The decline in intangible amortization expense reflects the full amortization of our remaining intangible in early 2014. The increase in occupancy expense primarily reflects higher maintenance contract costs reflective of security and technology upgrades. Higher building maintenance costs partially attributable to non-recurring expenditures also contributed to the increase, but to a lesser extent.

We realized income tax expense of $1.1 million for the third quarter of 2014 compared to $0.7 million for the second quarter of 2014 and $0.9 million for the third quarter of 2013. For the first nine months of 2014, we realized income tax expense of $0.4 million compared to income tax expense of $1.9 million for the same period of 2013. Income taxes for the nine-month period of 2014 was favorably impacted by a $2.2 million state tax benefit attributable to an adjustment in our reserve for uncertain tax positions associated with prior year matters.

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 $2.5 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 63 full-service offices and 71 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 Company's need and our ability to incur additional debt or equity financing; the accuracy of the Company's financial statement estimates and assumptions; legislative or regulatory changes, including the Dodd-Frank Act and Basel III; the strength of the U.S. economy and the local economies where the Company conducts operations; the effects of the Company's lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; harsh weather conditions and man-made disasters; fluctuations in inflation, interest rates, or monetary policies; 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; 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, 2013, 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.

CAPITAL CITY BANK GROUP, INC.
EARNINGS HIGHLIGHTS
Unaudited
Three Months Ended Nine Months Ended
(Dollars in thousands, except per share data) Sep 30, 2014 Jun 30, 2014 Sep 30, 2013 Sep 30, 2014 Sep 30, 2013
EARNINGS
Net Income $ 2,115 $ 1,473 $ 1,591 $ 7,339 $ 3,273
Net Income Per Common Share $ 0.12 $ 0.08 $ 0.09 $ 0.42 $ 0.19
PERFORMANCE
Return on Average Assets 0.33% 0.23% 0.25% 0.38% 0.17%
Return on Average Equity 2.95% 2.09% 2.51% 3.48% 1.75%
Net Interest Margin 3.42% 3.29% 3.49% 3.33% 3.57%
Noninterest Income as % of Operating Revenue 41.78% 42.31% 42.82% 42.04% 41.71%
Efficiency Ratio 88.44% 91.15% 90.42% 90.19% 91.39%
CAPITAL ADEQUACY
Tier 1 Capital Ratio 16.88% 16.85% 15.60% 16.88% 15.60%
Total Capital Ratio 18.08% 18.10% 16.97% 18.08% 16.97%
Tangible Common Equity Ratio 8.22% 7.93% 6.84% 8.22% 6.84%
Leverage Ratio 10.97% 10.70% 10.16% 10.97% 10.16%
Equity to Assets 11.33% 10.97% 9.99% 11.33% 9.99%
ASSET QUALITY
Allowance as % of Non-Performing Loans 81.31% 80.03% 60.00% 81.31% 60.00%
Allowance as a % of Loans 1.34% 1.45% 1.75% 1.34% 1.75%
Net Charge-Offs as % of Average Loans 0.52% 0.59% 0.78% 0.50% 0.66%
Nonperforming Assets as % of Loans and ORE 4.45% 4.67% 6.38% 4.45% 6.38%
Nonperforming Assets as % of Total Assets 2.61% 2.66% 3.77% 2.61% 3.77%
STOCK PERFORMANCE
High $ 14.98 $ 14.71 $ 13.08 $ 14.98 $ 13.08
Low 13.26 12.60 11.06 11.56 10.12
Close 13.54 14.53 11.78 13.54 11.78
Average Daily Trading Volume $ 16,889 $ 28,428 $ 18,380 $ 26,931 $ 19,334
CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
Unaudited
2014 2013
(Dollars in thousands) Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter
ASSETS
Cash and Due From Banks $ 50,049 $ 63,956 $ 59,288 $ 55,209 $ 51,136
Funds Sold and Interest Bearing Deposits 253,974 354,233 468,805 474,719 358,869
Total Cash and Cash Equivalents 304,023 418,189 528,093 529,928 410,005
Investment Securities - Available-for-Sale 322,297 275,082 229,615 251,420 271,838
Investment Securities - Held-to-Maturity 173,188 180,393 191,645 148,211 97,309
Total Investment Securities 495,485 455,475 421,260 399,631 369,147
Loans Held for Sale 8,700 13,040 12,313 11,065 13,822
Loans, Net of Unearned Interest
Commercial, Financial, & Agricultural 133,756 134,833 138,664 126,607 123,253
Real Estate - Construction 38,121 34,244 36,454 31,012 31,454
Real Estate - Commercial 501,863 518,580 522,019 533,871 570,736
Real Estate - Residential 302,791 298,647 297,842 303,618 305,811
Real Estate - Home Equity 228,968 228,232 226,411 227,922 230,212
Consumer 200,363 181,209 163,768 156,718 148,321
Other Loans 5,504 7,182 7,270 6,074 5,220
Overdrafts 3,009 2,664 2,349 2,782 2,835
Total Loans, Net of Unearned Interest 1,414,375 1,405,591 1,394,777 1,388,604 1,417,842
Allowance for Loan Losses (19,093) (20,543) (22,110) (23,095) (25,010)
Loans, Net 1,395,282 1,385,048 1,372,667 1,365,509 1,392,832
Premises and Equipment, Net 102,546 102,141 102,655 103,385 103,702
Intangible Assets 84,811 84,811 84,811 84,843 84,891
Other Real Estate Owned 41,726 42,579 44,036 48,071 53,018
Other Assets 67,044 66,209 67,205 69,471 87,055
Total Other Assets 296,127 295,740 298,707 305,770 328,666
Total Assets $ 2,499,617 $ 2,567,492 $ 2,633,040 $ 2,611,903 $ 2,514,472
LIABILITIES
Deposits:
Noninterest Bearing Deposits $ 667,616 $ 689,844 $ 657,548 $ 641,463 $ 626,114
NOW Accounts 665,493 712,385 775,439 794,746 668,240
Money Market Accounts 270,131 272,255 292,923 268,449 283,338
Regular Savings Accounts 231,301 227,470 225,481 211,668 211,174
Certificates of Deposit 199,037 206,496 212,322 219,922 228,020
Total Deposits 2,033,578 2,108,450 2,163,713 2,136,248 2,016,886
Short-Term Borrowings 42,586 36,732 48,733 51,321 51,918
Subordinated Notes Payable 62,887 62,887 62,887 62,887 62,887
Other Long-Term Borrowings 32,305 33,282 33,971 38,043 40,244
Other Liabilities 45,008 44,561 43,856 47,004 91,369
Total Liabilities 2,216,364 2,285,912 2,353,160 2,335,503 2,263,304
SHAREOWNERS' EQUITY
Common Stock 174 174 174 174 173
Additional Paid-In Capital 41,637 41,628 41,220 41,152 40,481
Retained Earnings 249,907 248,142 247,017 243,614 240,842
Accumulated Other Comprehensive Loss, Net of Tax (8,465) (8,364) (8,531) (8,540) (30,328)
Total Shareowners' Equity 283,253 281,580 279,880 276,400 251,168
Total Liabilities and Shareowners' Equity $ 2,499,617 $ 2,567,492 $ 2,633,040 $ 2,611,903 $ 2,514,472
OTHER BALANCE SHEET DATA
Earning Assets $ 2,172,535 $ 2,228,339 $ 2,297,154 $ 2,274,019 $ 2,159,680
Intangible Assets
Goodwill 84,811 84,811 84,811 84,811 84,811
Core Deposits 0 0 0 0 0
Other 0 0 0 32 80
Interest Bearing Liabilities 1,503,740 1,551,507 1,651,755 1,647,036 1,545,821
Book Value Per Diluted Share $ 16.18 $ 16.08 $ 16.02 $ 15.85 $ 14.44
Tangible Book Value Per Diluted Share 11.33 11.24 11.17 10.98 9.56
Actual Basic Shares Outstanding 17,433 17,449 17,427 17,361 17,336
Actual Diluted Shares Outstanding 17,512 17,510 17,466 17,443 17,396
CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
Nine Months Ended
2014 2013 September 30,
(Dollars in thousands, except per share data) Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter 2014 2013
INTEREST INCOME
Interest and Fees on Loans $ 18,528 $ 18,152 $ 18,098 $ 19,057 $ 19,264 $ 54,778 $ 59,127
Investment Securities 1,034 939 847 760 717 2,820 2,131
Funds Sold 204 257 291 259 269 752 818
Total Interest Income 19,766 19,348 19,236 20,076 20,250 58,350 62,076
INTEREST EXPENSE
Deposits 255 293 308 314 335 856 1,117
Short-Term Borrowings 17 17 20 46 46 54 189
Subordinated Notes Payable 333 331 331 400 339 995 1,020
Other Long-Term Borrowings 263 269 291 320 330 823 1,010
Total Interest Expense 868 910 950 1,080 1,050 2,728 3,336
Net Interest Income 18,898 18,438 18,286 18,996 19,200 55,622 58,740
Provision for Loan Losses 424 499 359 397 555 1,282 3,075
Net Interest Income after Provision for Loan Losses 18,474 17,939 17,927 18,599 18,645 54,340 55,665
NONINTEREST INCOME
Deposit Fees 6,211 6,213 5,869 6,398 6,474 18,293 18,856
Bank Card Fees 2,707 2,820 2,707 2,656 2,715 8,234 8,130
Wealth Management Fees 2,050 1,852 1,918 2,233 2,130 5,820 5,946
Mortgage Banking Fees 911 738 625 654 869 2,274 2,880
Data Processing Fees 336 388 541 689 662 1,265 1,985
Securities Transactions -- -- -- 3 -- -- --
Other 1,136 1,336 1,125 1,192 1,176 3,597 3,487
Total Noninterest Income 13,351 13,347 12,785 13,825 14,026 39,483 41,284
NONINTEREST EXPENSE
Compensation 15,378 15,206 15,781 16,583 16,158 46,365 49,544
Occupancy, Net 4,575 4,505 4,298 4,349 4,403 13,378 12,982
Intangible Amortization 0 -- 32 48 46 32 162
Other Real Estate 1,783 2,276 1,399 1,251 1,868 5,458 6,981
Other 6,871 7,089 6,856 7,416 7,678 20,816 22,087
Total Noninterest Expense 28,607 29,076 28,366 29,647 30,153 86,049 91,756
OPERATING PROFIT 3,218 2,210 2,346 2,777 2,518 7,774 5,193
Income Tax Expense (Benefit) 1,103 737 (1,405) 5 927 435 1,920
NET INCOME $ 2,115 $ 1,473 $ 3,751 $ 2,772 $ 1,591 $ 7,339 $ 3,273
PER SHARE DATA
Basic Income $ 0.12 $ 0.08 $ 0.22 $ 0.16 $ 0.09 $ 0.42 $ 0.19
Diluted Income 0.12 0.08 0.22 0.16 0.09 0.42 0.19
Cash Dividend $ 0.02 $ 0.02 $ 0.02 $ -- $ -- $ 0.06 $ --
AVERAGE SHARES
Basic 17,440 17,427 17,399 17,341 17,336 17,422 17,319
Diluted 17,519 17,488 17,439 17,423 17,396 17,482 17,381
CAPITAL CITY BANK GROUP, INC.
ALLOWANCE FOR LOAN LOSSES
AND NONPERFORMING ASSETS
Unaudited
2014 2014 2014 2013 2013
(Dollars in thousands, except per share data) Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter
ALLOWANCE FOR LOAN LOSSES
Balance at Beginning of Period $ 20,543 $ 22,110 $ 23,095 $ 25,010 $ 27,294
Provision for Loan Losses 424 499 359 397 555
Net Charge-Offs 1,874 2,066 1,344 2,312 2,839
Balance at End of Period $ 19,093 $ 20,543 $ 22,110 $ 23,095 $ 25,010
As a % of Loans 1.34% 1.45% 1.57% 1.65% 1.75%
As a % of Nonperforming Loans 81.31% 80.03% 63.98% 62.48% 60.00%
CHARGE-OFFS
Commercial, Financial and Agricultural $ 86 $ 86 $ 11 $ 337 $ 138
Real Estate - Construction -- -- -- 72 278
Real Estate - Commercial 1,208 1,029 594 676 882
Real Estate - Residential 212 695 731 921 1,178
Real Estate - Home Equity 621 375 403 362 362
Consumer 386 421 405 430 674
Total Charge-Offs $ 2,513 $ 2,606 $ 2,144 $ 2,798 $ 3,512
RECOVERIES
Commercial, Financial and Agricultural $ 28 $ 45 $ 75 $ 33 $ 87
Real Estate - Construction 2 1 4 -- 1
Real Estate - Commercial 213 152 27 14 167
Real Estate - Residential 93 52 395 179 167
Real Estate - Home Equity 37 65 11 39 13
Consumer 266 225 288 221 238
Total Recoveries $ 639 $ 540 $ 800 $ 486 $ 673
NET CHARGE-OFFS $ 1,874 $ 2,066 $ 1,344 $ 2,312 $ 2,839
Net Charge-Offs as a % of Average Loans(1) 0.52% 0.59% 0.39% 0.65% 0.78%
RISK ELEMENT ASSETS
Nonaccruing Loans $ 23,482 $ 25,670 $ 34,558 $ 36,964 $ 41,682
Other Real Estate Owned 41,726 42,579 44,036 48,071 53,018
Total Nonperforming Assets $ 65,208 $ 68,249 $ 78,594 $ 85,035 $ 94,700
Past Due Loans 30-89 Days $ 4,726 $ 5,092 $ 4,902 $ 7,746 $ 8,427
Past Due Loans 90 Days or More 62 -- -- -- --
Classified Loans 89,850 95,037 107,420 115,630 128,190
Performing Troubled Debt Restructuring's $ 43,578 $ 45,440 $ 46,249 $ 44,764 $ 50,692
Nonperforming Loans as a % of Loans 1.65% 1.81% 2.46% 2.64% 2.91%
Nonperforming Assets as a % of Loans and Other Real Estate 4.45% 4.67% 5.42% 5.87% 6.38%
Nonperforming Assets as a % of Total Assets 2.61% 2.66% 2.98% 3.26% 3.77%
(1) Annualized
CAPITAL CITY BANK GROUP, INC.
AVERAGE BALANCES AND INTEREST RATES(1)
Unaudited
Third Quarter 2014 Second Quarter 2014 First Quarter 2014 Fourth Quarter 2013 Third Quarter 2013
(Dollars in thousands) Average
Balance
Interest Average
Rate
Average
Balance
Interest Average
Rate
Average
Balance
Interest Average
Rate
Average
Balance
Interest Average
Rate
Average
Balance
Interest Average
Rate
ASSETS:
Loans, Net of Unearned Interest $ 1,421,327 18,590 5.19 % $ 1,411,988 18,216 5.17 % $ 1,395,506 18,161 5.28 % $ 1,414,909 19,121 5.36 % $ 1,436,039 19,345 5.34 %
Investment Securities
Taxable Investment Securities 386,970 921 0.88 345,419 816 0.87 290,942 703 0.88 255,298 608 0.86 232,094 568 0.95
Tax-Exempt Investment Securities 83,579 173 0.79 94,810 188 0.77 114,542 219 0.74 124,501 233 0.74 121,119 223 0.73
Total Investment Securities 470,549 1,094 0.92 440,229 1,004 0.91 405,484 922 0.91 379,799 841 0.88 353,213 791 0.89
Funds Sold 317,553 204 0.25 408,668 257 0.25 467,330 291 0.25 411,578 259 0.25 412,138 269 0.26
Total Earning Assets 2,209,429 $ 19,888 3.57 % 2,260,885 $ 19,477 3.46 % 2,268,320 $ 19,374 3.46 % 2,206,286 $ 20,221 3.64 % 2,201,390 $ 20,405 3.68 %
Cash and Due From Banks 44,139 44,115 48,084 48,519 51,640
Allowance for Loan Losses (20,493) (22,255) (23,210) (25,612) (27,636)
Other Assets 297,496 296,248 305,113 324,460 333,001
Total Assets $ 2,530,571 $ 2,578,993 $ 2,598,307 $ 2,553,653 $ 2,558,395
LIABILITIES:
Interest Bearing Deposits
NOW Accounts $ 680,154 $ 66 0.04 % $ 724,635 $ 91 0.05 % $ 770,302 $ 104 0.05 % $ 697,468 $ 95 0.05 % $ 676,855 $ 107 0.06 %
Money Market Accounts 270,133 46 0.07 280,619 50 0.07 274,015 48 0.07 279,608 50 0.07 284,920 53 0.07
Savings Accounts 228,741 29 0.05 227,960 28 0.05 218,825 26 0.05 211,761 27 0.05 207,631 26 0.05
Time Deposits 202,802 114 0.22 209,558 124 0.24 215,291 130 0.24 224,500 142 0.25 231,490 149 0.26
Total Interest Bearing Deposits 1,381,830 255 0.07 % 1,442,772 293 0.08 % 1,478,433 308 0.08 % 1,413,337 314 0.09 % 1,400,896 335 0.09 %
Short-Term Borrowings 40,782 17 0.17 % 44,473 17 0.15 % 46,343 20 0.18 % 58,126 46 0.31 49,919 46 0.37 %
Subordinated Notes Payable 62,887 333 2.07 62,887 331 2.08 62,887 331 2.10 62,887 400 2.49 62,887 339 2.11
Other Long-Term Borrowings 32,792 263 3.20 33,619 269 3.21 37,055 291 3.18 39,676 320 3.19 40,832 330 3.21
Total Interest Bearing Liabilities 1,518,291 $ 868 0.23 % 1,583,751 $ 910 0.23 % 1,624,718 $ 950 0.24 % 1,574,026 $ 1,080 0.27 % 1,554,534 $ 1,050 0.27 %
Noninterest Bearing Deposits 681,051 666,791 646,527 637,533 658,602
Other Liabilities 47,099 46,105 47,333 88,095 93,642
Total Liabilities 2,246,441 2,296,647 2,318,578 2,299,654 2,306,778
SHAREOWNERS' EQUITY: 284,130 282,346 279,729 253,999 251,617
Total Liabilities and Shareowners' Equity $ 2,530,571 $ 2,578,993 $ 2,598,307 $ 2,553,653 $ 2,558,395
Interest Rate Spread $ 19,020 3.34 % $ 18,567 3.22 % $ 18,424 3.23 % $ 19,141 3.36 % $ 19,355 3.41 %
Interest Income and Rate Earned(1) 19,888 3.57 19,477 3.46 19,374 3.46 20,221 3.64 20,405 3.68
Interest Expense and Rate Paid(2) 868 0.16 910 0.16 950 0.18 1,080 0.19 1,050 0.19
Net Interest Margin $ 19,020 3.42 % $ 18,567 3.29 % $ 18,424 3.29 % $ 19,141 3.45 % $ 19,355 3.49 %
(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.
CAPITAL CITY BANK GROUP, INC.
AVERAGE BALANCES AND INTEREST RATES(1)
Unaudited
Sept 2014 YTD Sept 2013 YTD
(Dollars in thousands) Average
Balance
Interest Average
Rate
Average
Balance
Interest Average
Rate
ASSETS:
Loans, Net of Unearned Interest $ 1,409,701 $ 54,967 5.21 % $ 1,462,904 $ 59,361 5.43 %
Investment Securities
Taxable Investment Securities 341,462 2,440 0.84 224,379 1,739 0.99
Tax-Exempt Investment Securities 97,530 580 0.77 102,496 596 0.77
Total Investment Securities 438,992 3,020 0.92 326,875 2,335 0.95
Funds Sold 397,302 752 0.25 426,401 818 0.26
Total Earning Assets 2,245,995 $ 58,739 3.50 % 2,216,180 $ 62,514 3.77 %
Cash and Due From Banks 45,432 50,470
Allowance for Loan Losses (21,976) (29,028)
Other Assets 299,591 336,098
Total Assets $ 2,569,042 $ 2,573,720
LIABILITIES:
Interest Bearing Deposits
NOW Accounts $ 724,700 $ 261 0.05 % $ 726,915 $ 388 0.07 %
Money Market Accounts 274,908 144 0.07 285,809 161 0.08
Savings Accounts 225,212 83 0.05 201,203 74 0.05
Time Deposits 209,171 368 0.24 233,663 494 0.28
Total Interest Bearing Deposits 1,433,991 856 0.08 % 1,447,590 1,117 0.10 %
Short-Term Borrowings 43,846 54 0.17 % 52,505 189 0.48 %
Subordinated Notes Payable 62,887 995 2.09 62,887 1,020 2.14
Other Long-Term Borrowings 34,473 823 3.19 41,550 1,010 3.25
Total Interest Bearing Liabilities 1,575,197 $ 2,728 0.23 % 1,604,532 $ 3,336 0.28 %
Noninterest Bearing Deposits 664,916 628,955
Other Liabilities 46,844 89,673
Total Liabilities 2,286,957 2,323,160
SHAREOWNERS' EQUITY: 282,085 250,560
Total Liabilities and Shareowners' Equity $ 2,569,042 $ 2,573,720
Interest Rate Spread $ 56,011 3.26 % $ 59,178 3.49 %
Interest Income and Rate Earned(1) 58,739 3.50 62,514 3.77
Interest Expense and Rate Paid(2) 2,728 0.16 3,336 0.20
Net Interest Margin $ 56,011 3.33 % $ 59,178 3.57 %
(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 850.402.7820Source:Capital City Bank Group, Inc.