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Capital City Bank Group, Inc. Reports Second Quarter 2015 Results

TALLAHASSEE, Fla., July 21, 2015 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (Nasdaq:CCBG) today reported net income of $3.8 million, or $0.22 per diluted share for the second quarter of 2015 compared to net income of $1.0 million, or $0.06 per diluted share for the first quarter of 2015, and $1.5 million, or $0.08 per diluted share, for the second quarter of 2014. For the first six months of 2015, net income of $4.8 million, or $0.28 per diluted share, compared to net income of $5.2 million, or $0.30 per diluted share for the same period in 2014.

HIGHLIGHTS

  • Continued loan growth - 1.8% sequentially and 3.3% year to date
  • Growth in tax-equivalent net interest income driven by improved earning asset mix – 2.7% sequentially and 2.0% over prior year
  • Strong fee income from residential mortgage loan sales, up 22% sequentially and 60% over prior year
  • BOLI proceeds added $0.10 per share to second quarter earnings
  • 10% reduction in nonperforming assets and 27% decline in total credit costs from linked quarter
  • Repurchased 393,000 shares during second quarter of 2015

“Loan growth, higher net interest income, expense management and improved credit quality contributed to a strong second quarter performance,” said William G. Smith, Jr., Chairman, President and CEO of Capital City Bank Group. “We have experienced six consecutive quarters of loan growth and our portfolio has grown by more than $85 million since the end of 2013. Growth in our loan and investment portfolios produced higher net interest income, and we remain focused on improving our operating efficiency by increasing revenues and lowering operating expenses. To date, we have repurchased 411,000 shares of our common stock with the majority being purchased in the second quarter.”

Compared to the first quarter of 2015, performance reflects higher net interest income of $0.5 million, a $1.9 million increase in noninterest income, and lower noninterest expense of $0.9 million, that was partially offset by a $0.1 million increase in the loan loss provision and higher income taxes of $0.4 million.

Compared to the second quarter of 2014, the increase in earnings reflects higher net interest income of $0.5 million, a $1.5 million increase in noninterest income, lower noninterest expense of $0.6 million, and a $0.1 million reduction in the loan loss provision, partially offset by higher income taxes of $0.4 million.

The increase in earnings for the first six months of 2015 versus the comparable period in 2014 was attributable to higher net interest income of $0.8 million, a $1.5 million increase in noninterest income, and a $0.2 million reduction in the loan loss provision, partially offset by higher noninterest expense of $0.4 million and income taxes of $2.5 million.

The Return on Average Assets was 0.58% and the Return on Average Equity was 5.62% for the second quarter of 2015. These metrics were 0.15% and 1.45% for the first quarter of 2015, and 0.23% and 2.09% for the second quarter of 2014, respectively. For the first six months of 2015, the Return on Average Assets was 0.37% and the Return on Average Equity was 3.54% compared to 0.41% and 3.75%, respectively, for the first half of 2014.

Discussion of Operating Results

Tax equivalent net interest income for the second quarter of 2015 was $19.1 million compared to $18.6 million for the first quarter of 2015 and $18.6 million for the second quarter of 2014. The increase in tax equivalent net interest income compared to the first quarter of 2015 reflects one additional calendar day and a positive shift in earning asset mix due to growth in the loan and investment portfolios, partially offset by unfavorable loan repricing. The increase in tax equivalent net interest income compared to the second quarter of 2014 reflects a positive shift in earning asset mix due to growth in the loan and investment portfolios and a slight reduction in interest expense. The lower interest expense is attributable to FHLB advance pay downs and favorable repricing on several non-maturity deposit products. For the six months ended June 30, 2015, tax equivalent net interest income totaled $37.7 million compared to $37.0 million for the comparable period in 2014. The year over year increase was driven by the same factors as noted above.

The extended low interest rate environment has put pressure on our net interest margin. However, our asset portfolios are relatively short in duration and we believe we are well positioned to capitalize as the interest rate environment improves.

The net interest margin for the second quarter of 2015 was 3.29%, an increase of two basis points over the first quarter of 2015 and unchanged from the second quarter of 2014. The increase in the margin compared to the first quarter was attributable to growth in our loan and investment portfolios. For the six months ended June 30, 2015, the net interest margin declined by one basis point to 3.28% compared to the same period of 2014, primarily attributable to unfavorable loan pricing. It is important to note that net interest income is growing period over period and the lack of improvement in the net interest margin percentage is primarily attributable to the continued growth in average deposits, which is generally invested in overnight funds.

The provision for loan losses for the second quarter of 2015 was $0.4 million compared to $0.3 million for the first quarter of 2015 and $0.5 million for the second quarter of 2014. For the first half of 2015, the loan loss provision totaled $0.7 million compared to $0.9 million for the same period of 2014. The lower level of the year-to-date provision reflects continued favorable problem loan migration and improvement in key credit metrics. Net charge-offs for the second quarter of 2015 totaled $1.2 million, or 0.33% (annualized), of average loans compared to $1.7 million, or 0.49% (annualized), for the first quarter of 2015 and $2.1 million, or 0.59% (annualized), for the second quarter of 2014. For the first half of 2015, net charge-offs totaled $3.0 million, or 0.41% (annualized), of average loans compared to $3.4 million, or 0.49% (annualized), for the same period of 2014. At quarter-end, the allowance for loan losses of $15.2 million was 1.03% of outstanding loans (net of overdrafts) and provided coverage of 99% of nonperforming loans compared to 1.10% and 96%, respectively, at March 31, 2015 and 1.22% and 105%, respectively, at December 31, 2014.

Noninterest income for the second quarter of 2015 totaled $14.8 million, an increase of $1.9 million, or 15.1%, over the first quarter of 2015 and $1.5 million, or 10.8%, over the second quarter of 2014. The increase over the first quarter of 2015 was primarily attributable to bank owned life insurance (“BOLI”) proceeds of $1.7 million that is reflected in other income. Higher mortgage banking fees of $0.2 million, bank card fees of $0.1 million, and deposit fees of $0.2 million also contributed to the increase and were partially offset by lower wealth management fees of $0.3 million. The increase in mortgage fees was driven by continued strong new home purchase originations. The increase in bank card fees was attributable to higher card spend by our clients and the increase in deposit fees reflects higher overdraft fees. Wealth management fees declined due to lower trading volume by our clients. Compared to the second quarter of 2014, the increase reflects higher other income of $1.6 million and mortgage banking fees of $0.5 million that were partially offset by lower deposit fees of $0.5 million and wealth management fees of $0.1 million. The increase in other income, which was primarily due to the aforementioned BOLI proceeds, was partially offset by a lower level of miscellaneous recoveries. Strong new home purchase originations and a higher margin on sold loans drove the increase in mortgage banking fees. Deposit fees declined primarily due to lower overdraft fees and to a lesser extent maintenance fees. Lower client trading activity drove the reduction in wealth management fees.

For the first half of 2015, noninterest income totaled $27.6 million, a $1.5 million increase over the same period of 2014, primarily attributable to higher other income of $1.6 million and mortgage banking fees of $0.8 million, partially offset by lower deposit fees of $0.9 million. The year-to-date variances are attributable to the same factors as noted above for the second quarter.

Noninterest expense for the second quarter of 2015 totaled $28.4 million, a decrease of $0.9 million, or 3.2%, from the first quarter of 2015 attributable to lower other real estate owned (“OREO”) expense of $0.6 million, compensation expense of $0.1 million, occupancy expense of $0.1 million, and other expense of $0.1 million. A lower level of net losses from the sale of properties and to a lesser extent lower valuation adjustments drove the reduction in OREO expense. The decrease in occupancy expense was attributable to lower building and equipment maintenance costs. Other expense decreased due to lower processing fees which were higher than normal in the first quarter of 2015 due to the implementation of a new on-line/mobile banking platform. Compared to the second quarter of 2014, noninterest expense decreased by $0.6 million or 2.2% attributable to lower OREO expense of $1.3 million, occupancy expense of $0.2 million and other expense of $0.2 million, partially offset by higher compensation expense of $1.1 million. The reduction in OREO expense was driven by a lower level of net losses from the sale of properties. The lower level of occupancy expense primarily reflects non-routine maintenance expenses realized in the second quarter of 2014. Lower legal fees drove the decrease in other expense and reflect a lower level of support needed for problem loan resolutions. The increase in compensation expense reflects higher pension plan expense of $0.6 million, performance based pay (commissions and incentives) of $0.4 million, and associate salaries of $0.1 million.

For the first six months of 2015, noninterest expense totaled $57.8 million, an increase of $0.4 million, or 0.7%, over the same period of 2014 attributable to higher compensation expense of $1.9 million that was partially offset by lower OREO expense of $1.2 million, occupancy expense of $0.1 million, and other expense of $0.2 million. The increase in compensation expense reflects higher pension plan expense of $1.3 million, performance based pay (commissions) of $0.3 million, and associate salaries of $0.3 million. The increase in our pension plan expense compared to both the three and six-month prior year periods is primarily attributable to the utilization of a lower discount rate in 2015 for determining plan liabilities reflective of a decrease in long-term bond interest rates. A revision to the mortality tables used to calculate pension liabilities also contributed to the increase, but to a lesser extent. The reduction in OREO expense was primarily attributable to lower net losses from the sale of properties and to a lesser extent lower property carrying costs and valuation adjustments. Lower technology equipment costs drove the decrease in occupancy expense. The decrease in other expense reflects lower legal fees, printing and supply costs, and postage costs.

We realized income tax expense of $1.1 million (23% effective rate) for the second quarter of 2015 compared to $0.7 million (41% effective rate) for the first quarter of 2015 and $0.7 million (33% effective rate) for the second quarter of 2014. For the first six months of 2015, income tax expense totaled $1.8 million (27% effective rate) compared to an income tax benefit of $0.7 million (-15% effective rate) for the comparable period of 2014. The aforementioned discrete BOLI transaction realized in the second quarter of 2015 was tax-free, therefore income tax expense for the three and six-months of 2015 were favorably impacted. Income taxes for the three and six-months of 2014 were 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. Absent future discrete events, we anticipate our effective income tax rate for the second half of 2015 will normalize within a range of 34%-35%.

Discussion of Financial Condition

Average earning assets were $2.328 billion for the second quarter of 2015, an increase of $21.5 million, or 0.9%, over the first quarter of 2015 and $115.2 million, or 5.2%, over the fourth quarter of 2014. The increase in earning assets from the first quarter 2015 reflects higher levels of noninterest bearing and savings accounts, partially offset by a lower level of public funds. The increase compared to the fourth quarter of 2014 reflects higher levels for all deposit products with the exception of money market accounts and certificates of deposit. Additionally, growth in both the loan and investment portfolios led to a more favorable earning asset mix.

We maintained an average net overnight funds (deposits with banks plus fed funds sold less fed funds purchased) sold position of $237.1 million during the second quarter of 2015 compared to an average net overnight funds sold position of $302.4 million in the first quarter of 2015 and an average overnight funds sold position of $288.6 million in the fourth quarter of 2014. The decrease in overnight funds compared to the prior quarter reflects growth in both the loan and investment portfolios. Partially offsetting this decline was an increase in average deposit balances despite a decline in public funds. The decrease relative to the fourth quarter of 2014 is primarily attributable to growth in both the loan and investment portfolios, partially offset by an increase in average deposits.

Although we have experienced loan growth for the last six quarters, we continue to work on lowering the level of overnight funds by adding to our investment portfolio with short-duration, high quality securities and reducing deposit balances. We 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 better deploy our overnight fund balances.

Average loans increased $25.3 million, or 1.8%, when compared to the first quarter of 2015, and have grown $47.2 million, or 3.3% compared to the fourth quarter of 2014. The improvement in loans was primarily driven by increases in the consumer portfolio, commercial loans, and commercial mortgages.

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, coupled with economic improvements in our anchor markets, have helped to increase overall production.

Nonperforming assets (nonaccrual loans and OREO) totaled $45.5 million at the end of the second quarter of 2015, a decrease of $5.1 million from the first quarter of 2015 and $7.0 million from the fourth quarter of 2014. Nonaccrual loans totaled $15.3 million at the end of the second quarter of 2015, a decrease of $1.5 million from both the first quarter of 2015 and fourth quarter of 2014. Nonaccrual loan additions totaled $4.5 million in the second quarter of 2015 and $10.3 million for the first six months of 2015, which compares to $11.9 million for the same period of 2014. The balance of OREO totaled $30.2 million at the end of the second quarter of 2015, a decrease of $3.6 million and $5.5 million, respectively, from the first quarter of 2015 and fourth quarter of 2014. For the second quarter of 2015, we added properties totaling $1.1 million, sold properties totaling $4.0 million, recorded valuation adjustments totaling $0.5 million, and realized miscellaneous adjustments of $0.2 million. For the first six months of 2015, we added properties totaling $2.8 million, sold properties totaling $6.8 million, recorded valuation adjustments totaling $1.3 million, and realized miscellaneous adjustments of $0.3 million. Nonperforming assets represented 1.71% of total assets at June 30, 2015 compared to 1.88% at March 31, 2015 and 2.00% at December 31, 2014.

Average total deposits were $2.178 billion for the second quarter of 2015, an increase of $15.0 million, or 0.7%, over the first quarter of 2015 and an increase of $101.0 million, or 4.9%, over the fourth quarter of 2014. The increase in deposits when compared to the first quarter of 2015 reflects higher levels of all non-maturity account types except NOW accounts, partially offset by declines in public fund deposits and certificates of deposit. The higher level of deposits when compared to the fourth quarter of 2014 is primarily attributable to increased balances of noninterest bearing, public NOW and savings accounts, partially offset by a decline in money market accounts and certificates of deposit. The seasonal inflows of public funds began in the fourth quarter of 2014, most likely peaked in the second quarter of 2015, and are expected to decline into the fourth quarter of 2015.

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.

When compared to the first quarter of 2015 and fourth quarter of 2014, average borrowings increased by $3.7 million and $6.7 million, respectively, attributable to higher levels of repurchase agreement balances, partially offset by FHLB advance pay downs.

Equity capital was $272.0 million as of June 30, 2015, compared to $274.1 million as of March 31, 2015 and $272.5 million as of December 31, 2014. Our leverage ratio was 10.57%, 10.73%, and 10.99%, respectively, for these periods. Further, as of June 30, 2015, our risk-adjusted capital ratio was 16.75% compared to 17.11% and 17.76% at March 31, 2015 and December 31, 2014, respectively. Our common equity tier 1 ratio was 12.31% as of June 30, 2015 compared to 12.57% as of March 31, 2015, which was the first reporting period this ratio was published under the Basel III capital standards. All of our capital ratios significantly exceed the threshold to be designated as “well-capitalized” under the Basel III capital standards. The reduction in our regulatory capital ratios in 2015 reflects the implementation of Basel III and the repurchase of common stock. During 2015, we have repurchased approximately 393,000 shares of our common stock at an average price of $14.72 per share.

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 $2.7 billion in assets. The Company provides a full range of banking services, including traditional deposit and credit services, mortgage banking, asset management, trust, 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 accuracy of the Company’s financial statement estimates and assumptions; legislative or regulatory changes, including the Dodd-Frank Act, Basel III, and the ability to repay and qualified mortgage standards; 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 or fraud related to debit card products; 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, 2014, 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
Six Months Ended
(Dollars in thousands, except per share data) Jun 30, 2015 Mar 31, 2015 Jun 30, 2014 Jun 30, 2015 Jun 30, 2014
EARNINGS
Net Income$ 3,845 $ 986 $ 1,473 $ 4,831 $ 5,224
Net Income Per Common Share$ 0.22 $ 0.06 $ 0.08 $ 0.28 $ 0.30
PERFORMANCE
Return on Average Assets 0.58% 0.15% 0.23% 0.37% 0.41%
Return on Average Equity 5.62% 1.45% 2.09% 3.54% 3.75%
Net Interest Margin 3.29% 3.27% 3.29% 3.28% 3.29%
Noninterest Income as % of Operating Revenue 43.80% 40.98% 41.99% 42.44% 41.57%
Efficiency Ratio 83.85% 93.42% 91.11% 88.46% 91.00%
CAPITAL ADEQUACY
Tier 1 Capital Ratio 15.86% 16.16% 16.85% 15.86% 16.85%
Total Capital Ratio 16.75% 17.11% 18.10% 16.75% 18.10%
Tangible Common Equity Ratio 7.29% 7.26% 7.93% 7.29% 7.93%
Leverage Ratio 10.57% 10.73% 10.70% 10.57% 10.70%
Common Equity Tier 1 Ratio 12.31% 12.57% - 12.31% -
Equity to Assets 10.25% 10.18% 10.97% 10.25% 10.97%
ASSET QUALITY
Allowance as % of Non-Performing Loans 99.46% 95.83% 80.03% 99.46% 80.03%
Allowance as a % of Loans 1.03% 1.10% 1.45% 1.03% 1.45%
Net Charge-Offs as % of Average Loans 0.33% 0.49% 0.59% 0.41% 0.49%
Nonperforming Assets as % of Loans and ORE 3.00% 3.38% 4.67% 3.00% 4.67%
Nonperforming Assets as % of Total Assets 1.71% 1.88% 2.66% 1.71% 2.66%
STOCK PERFORMANCE
High $ 16.32 $ 16.33 $ 14.71 $ 16.33 $ 14.71
Low 13.94 13.16 12.60 13.16 11.56
Close 15.27 16.25 14.53 15.27 14.53
Average Daily Trading Volume$ 33,514 $ 15,058 $ 28,428 $ 24,435 $ 32,114

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
Unaudited
2015 2014
(Dollars in thousands) Second Quarter First
Quarter
Fourth Quarter Third Quarter Second Quarter
ASSETS
Cash and Due From Banks$ 61,484 $ 51,948 $ 55,467 $ 50,049 $ 63,956
Funds Sold and Interest Bearing Deposits 185,572 296,888 329,589 253,974 354,233
Total Cash and Cash Equivalents 247,056 348,836 385,056 304,023 418,189
Investment Securities Available for Sale 433,688 404,887 341,548 322,297 275,082
Investment Securities Held to Maturity 201,805 183,489 163,581 173,188 180,393
Total Investment Securities 635,493 588,376 505,129 495,485 455,475
Loans Held for Sale 10,991 13,334 10,688 8,700 13,040
Loans, Net of Unearned Interest
Commercial, Financial, & Agricultural 151,116 143,951 136,925 133,756 134,833
Real Estate - Construction 44,216 41,595 41,596 38,121 34,244
Real Estate - Commercial 510,962 507,681 510,120 501,863 518,580
Real Estate - Residential 284,333 287,481 289,952 302,791 298,647
Real Estate - Home Equity 230,388 228,171 229,572 228,968 228,232
Consumer 238,599 230,984 214,758 200,363 181,209
Other Loans 12,048 9,243 6,017 5,504 7,182
Overdrafts 2,603 2,348 2,434 3,009 2,664
Total Loans, Net of Unearned Interest 1,474,265 1,451,454 1,431,374 1,414,375 1,405,591
Allowance for Loan Losses (15,236) (16,090) (17,539) (19,093) (20,543)
Loans, Net 1,459,029 1,435,364 1,413,835 1,395,282 1,385,048
Premises and Equipment, Net 99,108 100,038 101,899 102,546 102,141
Goodwill 84,811 84,811 84,811 84,811 84,811
Other Real Estate Owned 30,167 33,835 35,680 41,726 42,579
Other Assets 87,489 89,121 90,071 67,044 66,209
Total Other Assets 301,575 307,805 312,461 296,127 295,740
Total Assets$ 2,654,144 $ 2,693,715 $ 2,627,169 $ 2,499,617 $ 2,567,492
LIABILITIES
Deposits:
Noninterest Bearing Deposits$ 723,866 $ 707,470 $ 659,115 $ 667,616 $ 689,844
NOW Accounts 734,237 801,037 804,337 665,493 712,385
Money Market Accounts 264,475 257,684 254,149 270,131 272,255
Regular Savings Accounts 255,185 250,862 233,612 231,301 227,470
Certificates of Deposit 186,881 192,961 195,581 199,037 206,496
Total Deposits 2,164,644 2,210,014 2,146,794 2,033,578 2,108,450
Short-Term Borrowings 53,698 49,488 49,425 42,586 36,732
Subordinated Notes Payable 62,887 62,887 62,887 62,887 62,887
Other Long-Term Borrowings 29,733 30,418 31,097 32,305 33,282
Other Liabilities 71,144 66,821 64,426 45,008 44,561
Total Liabilities 2,382,106 2,419,628 2,354,629 2,216,364 2,285,912
SHAREOWNERS' EQUITY
Common Stock 172 175 174 174 174
Additional Paid-In Capital 37,625 42,941 42,569 41,637 41,628
Retained Earnings 255,096 251,765 251,306 249,907 248,142
Accumulated Other Comprehensive Loss, Net of Tax (20,855) (20,794) (21,509) (8,465) (8,364)
Total Shareowners' Equity 272,038 274,087 272,540 283,253 281,580
Total Liabilities and Shareowners' Equity$ 2,654,144 $ 2,693,715 $ 2,627,169 $ 2,499,617 $ 2,567,492
OTHER BALANCE SHEET DATA
Earning Assets$ 2,306,322 $ 2,350,052 $ 2,276,781 $ 2,172,535 $ 2,228,339
Interest Bearing Liabilities 1,587,096 1,645,337 1,631,088 1,503,740 1,551,507
Book Value Per Diluted Share$ 15.80 $ 15.59 $ 15.53 $ 16.18 $ 16.08
Tangible Book Value Per Diluted Share 10.87 10.77 10.70 11.33 11.24
Actual Basic Shares Outstanding 17,154 17,533 17,447 17,433 17,449
Actual Diluted Shares Outstanding 17,216 17,579 17,544 17,512 17,510

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited
Six Months Ended
2015 2014 June 30,
(Dollars in thousands, except per share data) Second Quarter First Quarter Fourth Quarter Third Quarter Second Quarter 2015 2014
INTEREST INCOME
Interest and Fees on Loans$18,231 $ 17,863 $ 18,624 $ 18,528 $ 18,152 $ 36,094 $ 36,250
Investment Securities 1,451 1,294 1,066 1,034 939 2,745 1,786
Funds Sold 151 189 181 204 257 340 548
Total Interest Income 19,833 19,346 19,871 19,766 19,348 39,179 38,584
INTEREST EXPENSE
Deposits 259 246 243 255 293 505 601
Short-Term Borrowings 15 21 24 17 17 36 37
Subordinated Notes Payable 338 332 333 333 331 670 662
Other Long-Term Borrowings 237 240 252 263 269 477 560
Total Interest Expense 849 839 852 868 910 1,688 1,860
Net Interest Income 18,984 18,507 19,019 18,898 18,438 37,491 36,724
Provision for Loan Losses 375 293 623 424 499 668 858
Net Interest Income after Provision for Loan Losses 18,609 18,214 18,396 18,474 17,939 36,823 35,866
NONINTEREST INCOME
Deposit Fees 5,682 5,541 6,027 6,211 6,213 11,223 12,082
Bank Card Fees 2,844 2,742 2,658 2,707 2,820 5,586 5,527
Wealth Management Fees 1,776 2,046 1,988 2,050 1,852 3,822 3,770
Mortgage Banking Fees 1,203 987 808 911 738 2,190 1,363
Data Processing Fees 364 373 278 336 388 737 929
Other 2,925 1,159 1,294 1,136 1,336 4,084 2,461
Total Noninterest Income 14,794 12,848 13,053 13,351 13,347 27,642 26,132
NONINTEREST EXPENSE
Compensation 16,404 16,524 15,850 15,378 15,206 32,928 30,987
Occupancy, Net 4,258 4,396 4,440 4,575 4,505 8,654 8,803
Other Real Estate 931 1,497 1,353 1,783 2,276 2,428 3,675
Other 6,846 6,973 6,666 6,871 7,089 13,819 13,977
Total Noninterest Expense 28,439 29,390 28,309 28,607 29,076 57,829 57,442
OPERATING PROFIT 4,964 1,672 3,140 3,218 2,210 6,636 4,556
Income Tax Expense (Benefit) 1,119 686 1,219 1,103 737 1,805 (668)
NET INCOME$ 3,845 $ 986 $ 1,921 $ 2,115 $ 1,473 $ 4,831 $ 5,224
PER SHARE DATA
Basic Income$0.22$0.06$0.11$0.12$0.08$0.28$ 0.30
Diluted Income$0.22$0.06$0.11$0.12$0.08$0.28$ 0.30
Cash Dividend $0.03$0.03$0.03$0.02$0.02$0.06$ 0.04
AVERAGE SHARES
Basic 17,296 17,508 17,433 17,440 17,427 17,402 17,413
Diluted 17,358 17,555 17,530 17,519 17,488 17,456 17,463

CAPITAL CITY BANK GROUP, INC.
ALLOWANCE FOR LOAN LOSSES
AND RISK ELEMENT ASSETS
Unaudited
2015 2015 2014 2014 2014
(Dollars in thousands, except per share data) Second Quarter First Quarter Fourth Quarter Third Quarter Second Quarter
ALLOWANCE FOR LOAN LOSSES
Balance at Beginning of Period$ 16,090 $ 17,539 $ 19,093 $ 20,543 $ 22,110
Provision for Loan Losses 375 293 623 424 499
Net Charge-Offs 1,229 1,742 2,177 1,874 2,066
Balance at End of Period$ 15,236 $ 16,090 $ 17,539 $ 19,093 $ 20,543
As a % of Loans 1.03% 1.10% 1.22% 1.34% 1.45%
As a % of Nonperforming Loans 99.46% 95.83% 104.60% 81.31% 80.03%
CHARGE-OFFS
Commercial, Financial and Agricultural$ 239 $ 290 $ 688 $ 86 $ 86
Real Estate - Construction - - 28 - -
Real Estate - Commercial 285 904 957 1,208 1,029
Real Estate - Residential 484 305 522 212 695
Real Estate - Home Equity 454 182 (20) 621 375
Consumer 351 576 608 386 421
Total Charge-Offs$ 1,813 $ 2,257 $ 2,783 $ 2,513 $ 2,606
RECOVERIES
Commercial, Financial and Agricultural$ 82 $ 55 $ 66 $ 28 $ 45
Real Estate - Construction - - 2 2 1
Real Estate - Commercial 54 30 76 213 152
Real Estate - Residential 200 48 212 93 52
Real Estate - Home Equity 33 24 28 37 65
Consumer 215 358 222 266 225
Total Recoveries$ 584 $ 515 $ 606 $ 639 $ 540
NET CHARGE-OFFS$ 1,229 $ 1,742 $ 2,177 $ 1,874 $ 2,066
Net Charge-Offs as a % of Average Loans(1) 0.33% 0.49% 0.61% 0.52% 0.59%
RISK ELEMENT ASSETS
Nonaccruing Loans$ 15,320 $ 16,790 $ 16,769 $ 23,482 $ 25,670
Other Real Estate Owned 30,167 33,835 35,680 41,726 42,579
Total Nonperforming Assets$ 45,487 $ 50,625 $ 52,449 $ 65,208 $ 68,249
Past Due Loans 30-89 Days $ 5,858 $ 3,689 $ 6,792 $ 4,726 $ 5,092
Past Due Loans 90 Days or More - - - 62 -
Classified Loans 69,152 74,247 83,137 89,850 95,037
Performing Troubled Debt Restructuring's$ 41,632 $ 42,590 $ 44,409 $ 43,578 $ 45,440
Nonperforming Loans as a % of Loans 1.03% 1.15% 1.16% 1.65% 1.81%
Nonperforming Assets as a % of
Loans and Other Real Estate 3.00% 3.38% 3.55% 4.45% 4.67%
Nonperforming Assets as a % of Total Assets 1.71% 1.88% 2.00% 2.61% 2.66%
(1) Annualized

CAPITAL CITY BANK GROUP, INC.
AVERAGE BALANCE AND INTEREST RATES(1)
Unaudited
Second Quarter 2015 First Quarter 2015 Fourth Quarter 2014 Third Quarter 2014 Second Quarter 2014 Jun 2015 YTD
Jun 2014 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$ 1,473,954 18,285 4.98%$ 1,448,617 17,909 5.01%$ 1,426,756 18,670 5.19%$ 1,421,327 18,590 5.19%$ 1,411,988 18,216 5.17% 1,461,356 36,194 4.99%$ 1,403,793 36,377 5.23%
Investment Securities
Taxable Investment Securities 540,735 1,313 0.97 491,637 1,198 0.98 423,136 964 0.90 387,966 929 0.95 345,798 822 0.95 516,321 2,511 0.95 318,521 1,530 0.93
Tax-Exempt Investment Securities 76,191 219 1.15 63,826 154 0.96 74,276 161 0.87 82,583 165 0.80 94,431 182 0.77 70,043 373 1.06 104,431 396 0.76
Total Investment Securities 616,926 1,532 0.99 555,463 1,352 0.98 497,412 1,125 0.90 470,549 1,094 0.92 440,229 1,004 0.91 586,364 2,884 0.99 422,952 1,926 0.91
Funds Sold 237,132 151 0.26 302,405 189 0.25 288,613 181 0.25 317,553 204 0.25 408,668 257 0.25 269,588 340 0.25 437,837 548 0.25
Total Earning Assets 2,328,012 $19,968 3.44% 2,306,485 $19,450 3.42% 2,212,781 $19,976 3.58% 2,209,429 $19,888 3.57% 2,260,885 $19,477 3.46% 2,317,308 $39,418 3.43% 2,264,582 $38,851 3.46%
Cash and Due From Banks 52,473 48,615 45,173 44,139 44,115 50,555 46,089
Allowance for Loan Losses (16,070) (17,340) (19,031) (20,493) (22,255) (16,702) (22,730)
Other Assets 306,286 310,791 310,813 297,496 296,248 308,526 300,656
Total Assets$ 2,670,701 $ 2,648,551 $ 2,549,736 $ 2,530,571 $ 2,578,993 2,659,687 $ 2,588,597
LIABILITIES:
Interest Bearing Deposits
NOW Accounts$ 761,388 $ 64 0.03%$ 794,308 $ 68 0.03%$ 689,572 $ 57 0.03%$ 680,154 $ 66 0.04%$ 724,635 $ 91 0.05% 777,757 $ 132 0.03%$ 747,343 $ 195 0.05%
Money Market Accounts 256,265 32 0.05 254,483 41 0.07 267,703 46 0.07 270,133 46 0.07 280,619 50 0.07 255,378 73 0.06 277,335 98 0.07
Savings Accounts 253,808 31 0.05 242,256 30 0.05 233,161 29 0.05 228,741 29 0.05 227,960 28 0.05 248,064 61 0.05 223,418 54 0.05
Time Deposits 189,213 132 0.28 194,655 107 0.22 197,129 111 0.22 202,802 114 0.22 209,558 124 0.24 191,919 239 0.25 212,408 254 0.24
Total Interest Bearing Deposits 1,460,674 259 0.07% 1,485,702 246 0.07% 1,387,565 243 0.07% 1,381,830 255 0.07% 1,442,772 293 0.08% 1,473,118 505 0.07% 1,460,504 601 0.08%
Short-Term Borrowings 54,237 15 0.11% 49,809 21 0.17% 46,055 24 0.21% 40,782 17 0.17% 44,473 17 0.15% 52,035 36 0.14% 45,402 37 0.16%
Subordinated Notes Payable 62,887 338 2.13 62,887 332 2.11 62,887 333 2.07 62,887 333 2.07 62,887 331 2.08 62,887 670 2.12 62,887 662 2.09
Other Long-Term Borrowings 30,067 237 3.16 30,751 240 3.16 31,513 252 3.17 32,792 263 3.20 33,619 269 3.21 30,407 477 3.16 35,328 560 3.19
Total Interest Bearing Liabilities 1,607,865 $849 0.21% 1,629,149 $839 0.21% 1,528,020 $852 0.22% 1,518,291 $868 0.23% 1,583,751 $910 0.23% 1,618,447 $1,688 0.21% 1,604,121 $1,860 0.23%
Noninterest Bearing Deposits 717,725 677,674 689,800 681,051 666,791 697,811 656,715
Other Liabilities 70,690 66,424 45,887 47,099 46,105 68,569 46,716
Total Liabilities 2,396,280 2,373,247 2,263,707 2,246,441 2,296,647 2,384,827 2,307,552
SHAREOWNERS' EQUITY: 274,421 275,304 286,029 284,130 282,346 274,860 281,045
Total Liabilities and Shareowners' Equity$ 2,670,701 $ 2,648,551 $ 2,549,736 $ 2,530,571 $ 2,578,993 2,659,687 $ 2,588,597
Interest Rate Spread $19,119 3.23% $18,611 3.21% $19,124 3.36% $19,020 3.34% $18,567 3.22% $37,730 3.22% $36,991 3.23%
Interest Income and Rate Earned(1) 19,968 3.44 19,450 3.42 19,976 3.58 19,888 3.57 19,477 3.46 39,418 3.43 38,851 3.46
Interest Expense and Rate Paid(2) 849 0.15 839 0.15 852 0.15 868 0.16 910 0.16 1,688 0.15 1,860 0.17
Net Interest Margin $19,119 3.29% $18,611 3.27% $19,124 3.43% $19,020 3.42% $18,567 3.29% $37,730 3.28% $36,991 3.29%
(1) Interest and average rates are calculated on a tax-equivalent basis using the 35% Federal tax rate.
(2) Rate calculated based on average earning assets.

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

Source:Capital City Bank Group, Inc.