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Capital City Bank Group, Inc. Reports Second Quarter 2016 Results

TALLAHASSEE, Fla., July 26, 2016 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (Nasdaq:CCBG) today reported net income of $3.9 million, or $0.22 per diluted share for the second quarter of 2016 compared to net income of $1.6 million, or $0.10 per diluted share for the first quarter of 2016, and $3.8 million, or $0.22 per diluted share, for the second quarter of 2015. For the first six months of 2016, net income totaled $5.6 million, or $0.32 per diluted share, compared to net income of $4.8 million, or $0.28 per diluted share for the same period in 2015.

HIGHLIGHTS

  • Continued broad based loan growth of 1.6% sequentially and 4.0% over prior year
  • Continued growth in net interest income of 0.9% sequentially and 2.9% year to date
  • Significant reduction in loan loss provision reflective of strong loan recoveries
  • Strong reduction in NPAs and classified assets – down sequentially by 14% and 11%, respectively
  • $10 million trust preferred securities (“TRUPs”) repurchased at a discount added $2.5 million pre-tax ($0.09 per share) to 2nd quarter earnings
  • Repurchased 432,000 shares of common stock during second quarter of 2016

“Our second quarter performance continued to show meaningful progress year over year,” said William G. Smith, Jr., Chairman, President and CEO. “A significant reduction in nonperforming assets, high level of loan loss recoveries and gain on the repurchase of $10 million in TRUPs all helped to headline the quarter. Despite a challenging environment, our strategies continue to produce positive results. Average loans grew at an annual pace of over 6%, and we remain dedicated to reducing our structural expenses and enhancing existing revenues while identifying new business opportunities. If done properly and prudently, it can take time for these strategies to produce the desired outcome, but we are making progress and remain steadfast in our decision to value long-term profitability over short-term gains.”

Compared to the first quarter of 2016, performance reflects higher net interest income of $0.2 million, a $2.5 million increase in noninterest income, lower noninterest expense of $0.2 million, and a $0.6 million reduction in the loan loss provision, partially offset by a $1.2 million increase in income taxes.

Compared to the second quarter of 2015, the increase in earnings reflects higher net interest income of $0.4 million, a $0.4 million increase in noninterest income, and a $0.5 million reduction in the loan loss provision, partially offset by a $0.3 million increase in noninterest expense and $0.9 million increase in income taxes.

The increase in earnings for the first six months of 2016 versus the comparable period in 2015 was attributable to higher net interest income of $1.1 million, a $0.3 million increase in noninterest income, lower noninterest expense of $0.2 million, and a $0.3 million reduction in the loan loss provision, partially offset by higher income taxes of $1.1 million.

The Return on Average Assets was 0.57% and the Return on Average Equity was 5.65% for the second quarter of 2016. These metrics were 0.24% and 2.39% for the first quarter of 2016, respectively, and 0.58% and 5.62% for the second quarter of 2015, respectively. For the first six months of 2016, the Return on Average Assets was 0.41% and the Return on Average Equity was 4.03% compared to 0.37% and 3.54%, respectively, for the first half of 2015.

Discussion of Operating Results

Tax equivalent net interest income for the second quarter of 2016 was $19.6 million compared to $19.4 million for the first quarter of 2016 and $19.1 million for the second quarter of 2015. The increase in tax equivalent net interest income compared to the first quarter of 2016 reflects a positive shift in earning asset mix due to growth in the loan and investment portfolios, partially offset by a decline in overnight funds. The increase in tax equivalent net interest income compared to the second quarter of 2015 reflects growth in the investment portfolio and a higher rate paid on overnight funds, partially offset by a decline in loan fees. For the six months ended June 30, 2016, tax equivalent net interest income totaled $39.0 million compared to $37.7 million for the comparable period in 2015. The year over year increase was driven by one additional calendar day, and growth in the loan and investment portfolios.

Although the low interest rate environment continues to put downward pressure on our net interest income, we have been successful in increasing our net interest income quarter-over-quarter. Additionally, aggressive lending competition in all markets has impacted the pricing for loans. Low rates and competition, collectively, continue to adversely impact our loan yields. Various loan strategies, which align with our overall risk appetite, continue to be reviewed and implemented to enhance our performance.

Our net interest margin for the second quarter of 2016 was 3.22%, an increase of two basis points over the first quarter of 2016 and a decrease of seven basis points from the second quarter of 2015. The increase in the margin compared to the first quarter of 2016 was primarily attributable to growth in our loan and investment portfolios. The decrease in the margin compared to the second quarter of 2015 was primarily attributable to lower loan yields. For the six months ended June 30, 2016, the net interest margin declined by seven basis points to 3.21% compared to the same period of 2015 for reasons mentioned above.

The provision for loan losses for the second quarter of 2016 was negative $0.1 million reflecting a higher level of loan recoveries as well as continued improvement in credit quality. This compares to a $0.5 million provision expense for the first quarter of 2016 and $0.4 million provision expense for the second quarter of 2015. For the first half of 2016, the loan loss provision totaled $0.4 million compared to $0.7 million for the same period of 2015. The decrease in the year-to-date provision reflects continued favorable problem loan migration and improvement in key credit metrics, partially offset by growth in the loan portfolio. We realized net loan recoveries of $0.2 million (consisting of recoveries of $1.3 million, less gross charge-offs of $1.1 million) for the second quarter of 2016. This compares to net charge-offs of $0.8 million, or 0.21% (annualized) of average loans for the first quarter of 2016 and $1.2 million, or 0.33% (annualized), for the second quarter of 2015. For the first half of 2016, net charge-offs totaled $0.6 million, or 0.08% (annualized) of average loans compared to $3.0 million, or 0.41% (annualized), for the same period of 2015. At quarter-end, the allowance for loan losses of $13.7 million was 0.89% of outstanding loans (net of overdrafts) and provided coverage of 167% of nonperforming loans compared to 0.90% and 150%, respectively, at March 31, 2016 and 0.93% and 135%, respectively, at December 31, 2015.

Noninterest income for the second quarter of 2016 totaled $15.2 million, an increase of $2.5 million, or 20.0%, over the first quarter of 2016 attributable to a $2.5 million gain from the repurchase of our TRUPs. This transaction is further detailed in our Current Report on Form 8-K filed with the SEC on April 18, 2016. Compared to the second quarter of 2015, noninterest income increased $0.4 million, or 2.8%, primarily attributable to higher other income of $0.8 million that was partially offset by lower deposit fees of $0.4 million. The increase in other income reflects the $2.5 million gain from the repurchase of TRUPs partially offset by lower bank owned life insurance (“BOLI”) income of $1.7 million. For the first half of 2016, noninterest income totaled $27.9 million, a $0.3 million, or 0.9%, increase over the same period of 2015, primarily attributable to higher other income of $0.9 million and mortgage banking fees of $0.1 million, partially offset by lower deposit fees of $0.5 million and wealth management fees of $0.3 million. The variance in other income was attributable to the same factors noted above for the second quarter. Continued strong residential home sales activity in our markets drove the improvement in mortgage banking fees. The reduction in deposit fees reflects lower overdraft service fees attributable to a reduction in accounts using this service as well as lower utilization by existing users. The reduction in wealth management fees generally reflects lower trading volume by our retail brokerage clients.

Noninterest expense for the second quarter of 2016 totaled $28.7 million, a decrease of $0.2 million, or 0.8%, from the first quarter of 2016 primarily attributable to lower other real estate owned (“OREO”) expense of $0.4 million reflective of lower property valuation adjustments and carrying costs. Compared to the second quarter of 2015, noninterest expense increased by $0.3 million, or 0.9%, due to higher occupancy costs, primarily attributable to higher maintenance costs for building and furniture/equipment and to a lesser extent higher depreciation expense from technology investments in our banking offices. For the first six months of 2016, noninterest expense totaled $57.6 million, a decrease of $0.2 million, or 0.3%, from the same period of 2015 attributable to lower compensation expense of $0.6 million that was partially offset by higher occupancy expense of $0.4 million. A higher level of deferred loan cost (which reduces salary expense), partially offset by higher pension plan expense drove the reduction in compensation. The variance in occupancy expense was attributable to the same aforementioned factors noted above for the second quarter.

We realized income tax expense of $2.1 million (34% effective rate) for the second quarter of 2016 compared to $0.9 million (34% effective rate) for the first quarter of 2016 and $1.2 million (23% effective rate) for the second quarter of 2015. For the first six months of 2016, income tax expense totaled $2.9 million (34% effective rate) compared to $1.8 million (27% effective rate) for the comparable period of 2015. The receipt of $1.7 million in BOLI proceeds in the second quarter of 2015 was tax-free, therefore income tax expense for the three and six-months of 2015 was favorably impacted.

Discussion of Financial Condition

Average earning assets were $2.448 billion for the second quarter of 2016, an increase of $7.1 million, or 0.3%, over the first quarter of 2016, and an increase of $94.0 million, or 4.0%, over the fourth quarter of 2015. The change in earning assets over the first quarter of 2016 reflects growth in both the loan and investment portfolios, which was funded by a reduction in our funds sold position and growth in nonmaturity deposits, primarily noninterest bearing. The increase compared to the fourth quarter of 2015 reflects growth in the loan and investment portfolios, funded primarily by increases in noninterest bearing, NOW, and savings accounts.

We maintained an average net overnight funds (deposits with banks plus fed funds sold less fed funds purchased) sold position of $254.6 million during the second quarter of 2016 compared to an average net overnight funds sold position of $286.2 million in the first quarter of 2016 and $222.8 million in the fourth quarter of 2015. The decrease in net overnight funds compared to the first quarter of 2016 reflects an increase in both the investment and loan portfolios. The decline in interest bearing liabilities was nearly offset by the increase in noninterest bearing deposits. The increase in net overnight funds compared to the fourth quarter of 2015 primarily reflects higher levels of all deposit products other than money market accounts and certificates of deposit, partially offset by growth in both the investment and loan portfolios.

Average loans increased $24.3 million, or 1.6% when compared to the first quarter of 2016, and have grown $39.3 million, or 2.6% when compared to the fourth quarter of 2015. The increase compared to the prior quarter reflects growth primarily in institutional, commercial, and consumer loans. Growth over the fourth quarter of 2015 was experienced in all loan products, with the exception of commercial mortgages.

Without compromising our credit standards or taking on inordinate interest rate risk, we continue to make minor modifications on some of our lending programs to try to mitigate the 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 $22.8 million at the end of the second quarter of 2016, a decrease of $3.7 million, or 14%, from the first quarter of 2016 and $6.8 million, or 23%, from the fourth quarter of 2015. Nonaccrual loans totaled $8.2 million at the end of the second quarter of 2016, a decrease of $0.9 million from the first quarter of 2016 and $2.1 million from the fourth quarter of 2015. Nonaccrual loan additions totaled $2.5 million in the second quarter of 2016 and $6.3 million for the first six months of 2016, which compares to $10.3 million for the same six month period of 2015. The balance of OREO totaled $14.6 million at the end of the second quarter of 2016, a decrease of $2.8 million and $4.7 million, respectively, from the first quarter of 2016 and fourth quarter of 2015. For the second quarter of 2016, we added properties totaling $1.2 million, sold properties totaling $3.3 million, and recorded valuation adjustments totaling $0.7 million. For the first six months of 2016, we added properties totaling $2.4 million, sold properties totaling $5.6 million, and recorded valuation adjustments totaling $1.5 million. Nonperforming assets represented 0.83% of total assets at June 30, 2016 compared to 0.95% at March 31, 2016 and 1.06% at December 31, 2015.

Average total deposits were $2.277 billion for the second quarter of 2016, an increase of $18.0 million, or 0.8%, over the first quarter of 2016, and an increase of $101.8 million, or 4.7% over the fourth quarter of 2015. The increase in deposits when compared to the first quarter of 2016 reflects growth in all deposit products except public NOW deposits and certificates of deposit. Compared to the fourth quarter of 2015, growth was experienced in all product types except money market accounts and certificates of deposit. The seasonal inflows of public funds most likely peaked in the first quarter of 2016, and are expected to decline into the fourth quarter of 2016.

Deposit levels remain strong, as the seasonal decline in public NOW accounts was more than offset by increases in all other nonmaturity deposits during the quarter. Average core deposits continue to experience growth in this low rate environment. Competitive rates continue to be monitored, as a prudent pricing discipline remains the key to managing our mix of deposits.

Compared to the first quarter of 2016, average borrowings decreased $22.9 million due to a decline in repurchase agreements and the retirement of $10 million in subordinated debt associated with the TRUPs repurchase. Compared to the fourth quarter of 2015, average borrowings decreased by $24.9 million due to the reasons stated above.

Equity capital was $274.8 million as of June 30, 2016, compared to $276.8 million as of March 31, 2016 and $274.4 million as of December 31, 2015. Our leverage ratio was 9.88%, 10.34%, and 10.65%, respectively, for these periods. Further, as of June 30, 2016, our risk-adjusted capital ratio was 16.44% compared to 17.20% and 17.25% at March 31, 2016 and December 31, 2015, respectively. Our common equity tier 1 ratio was 12.65% as of June 30, 2016, compared to 12.82% as of March 31, 2016 and 12.84% as of December 31, 2015. 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 the second quarter of 2016 reflects the repurchase of common stock (~ 38 basis point impact) and the repurchase of TRUPs (~ 50 basis point impact). During the second quarter of 2016 we repurchased approximately 432,000 shares of our common stock at an average price of $14.50 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 $2.8 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, data processing and securities brokerage services. Our bank subsidiary, Capital City Bank, was founded in 1895 and now has 61 banking 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; fluctuations in inflation, interest rates, or monetary policies; 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; 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; 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 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, 2015, 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, 2016 Mar 31, 2016 Jun 30, 2015 Jun 30, 2016 Jun 30, 2015
EARNINGS
Net Income$ 3,930 $ 1,647 $ 3,845 $ 5,577 $ 4,831
Net Income Per Common Share$ 0.22 $ 0.10 $ 0.22 $ 0.32 $ 0.28
PERFORMANCE
Return on Average Assets 0.57% 0.24% 0.58% 0.41% 0.37%
Return on Average Equity 5.65% 2.39% 5.62% 4.03% 3.54%
Net Interest Margin 3.22% 3.20% 3.29% 3.21% 3.28%
Noninterest Income as % of Operating Revenue 43.99% 39.76% 43.80% 41.96% 42.44%
Efficiency Ratio 82.40% 90.13% 83.85% 86.11% 88.46%
CAPITAL ADEQUACY
Tier 1 Capital Ratio 15.63% 16.39% 15.83% 15.63% 15.83%
Total Capital Ratio 16.44% 17.20% 16.72% 16.44% 16.72%
Tangible Common Equity Ratio 7.08% 7.09% 7.29% 7.08% 7.29%
Leverage Ratio 9.88% 10.34% 10.53% 9.88% 10.53%
Common Equity Tier 1 Ratio 12.65% 12.82% 12.34% 12.65% 12.34%
Equity to Assets 9.93% 9.91% 10.25% 9.93% 10.25%
ASSET QUALITY
Allowance as % of Non-Performing Loans 166.50% 150.44% 99.46% 166.50% 99.46%
Allowance as a % of Loans 0.89% 0.90% 1.03% 0.89% 1.03%
Net Charge-Offs as % of Average Loans (0.04)% 0.21% 0.33% 0.08% 0.41%
Nonperforming Assets as % of Loans and ORE 1.48% 1.73% 3.00% 1.48% 3.00%
Nonperforming Assets as % of Total Assets 0.83% 0.95% 1.71% 0.83% 1.71%
STOCK PERFORMANCE
High $ 15.96 $ 15.88 $ 16.32 $ 15.96 $ 16.33
Low 13.16 12.83 13.94 12.83 13.16
Close 13.92 14.59 15.27 13.92 15.27
Average Daily Trading Volume$ 20,192 $ 22,720 $ 33,514 $ 21,426 $ 24,435

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
Unaudited
2016 2015
(Dollars in thousands) Second Quarter First Quarter Fourth Quarter Third Quarter Second Quarter
ASSETS
Cash and Due From Banks$ 51,766 $ 45,914 $ 51,288 $ 42,917 $ 61,484
Funds Sold and Interest Bearing Deposits 220,719 304,908 327,617 167,787 185,572
Total Cash and Cash Equivalents 272,485 350,822 378,905 210,704 247,056
Investment Securities Available for Sale 485,848 462,444 451,028 444,071 433,688
Investment Securities Held to Maturity 204,474 187,079 187,892 193,964 201,805
Total Investment Securities 690,322 649,523 638,920 638,035 635,493
Loans Held for Sale 12,046 10,475 11,632 10,960 10,991
Loans, Net of Unearned Interest
Commercial, Financial, & Agricultural 207,105 183,681 179,816 169,588 151,116
Real Estate - Construction 46,930 42,538 46,484 49,475 44,216
Real Estate - Commercial 485,329 503,259 499,813 491,734 510,962
Real Estate - Residential 280,015 285,772 285,748 280,690 284,333
Real Estate - Home Equity 235,394 234,128 233,901 232,254 230,388
Consumer 252,347 245,197 240,434 238,884 238,599
Other Loans 11,177 10,297 4,837 10,094 12,048
Overdrafts 2,177 1,963 1,242 2,464 2,603
Total Loans, Net of Unearned Interest 1,520,474 1,506,835 1,492,275 1,475,183 1,474,265
Allowance for Loan Losses (13,677) (13,613) (13,953) (14,737) (15,236)
Loans, Net 1,506,797 1,493,222 1,478,322 1,460,446 1,459,029
Premises and Equipment, Net 97,313 98,029 98,819 98,218 99,108
Goodwill 84,811 84,811 84,811 84,811 84,811
Other Real Estate Owned 14,622 17,450 19,290 25,219 30,167
Other Assets 89,240 87,854 87,161 86,701 87,489
Total Other Assets 285,986 288,144 290,081 294,949 301,575
Total Assets$ 2,767,636 $ 2,792,186 $ 2,797,860 $ 2,615,094 $ 2,654,144
LIABILITIES
Deposits:
Noninterest Bearing Deposits$ 798,219 $ 790,040 $ 758,283 $ 720,824 $ 723,866
NOW Accounts 804,263 786,432 848,330 688,491 734,237
Money Market Accounts 259,813 254,682 248,367 261,050 264,475
Regular Savings Accounts 294,432 286,807 269,162 262,843 255,185
Certificates of Deposit 168,079 173,447 178,707 181,775 186,881
Total Deposits 2,324,806 2,291,408 2,302,849 2,114,983 2,164,644
Short-Term Borrowings 9,609 62,922 61,058 65,355 53,698
Subordinated Notes Payable 52,887 62,887 62,887 62,887 62,887
Other Long-Term Borrowings 26,401 27,062 28,265 29,042 29,733
Other Liabilities 79,109 71,074 68,449 69,168 71,144
Total Liabilities 2,492,812 2,515,353 2,523,508 2,341,435 2,382,106
SHAREOWNERS' EQUITY
Common Stock 168 172 172 171 172
Additional Paid-In Capital 32,855 38,671 38,256 37,738 37,625
Retained Earnings 262,380 259,139 258,181 256,265 255,096
Accumulated Other Comprehensive Loss, Net of Tax (20,579) (21,149) (22,257) (20,515) (20,855)
Total Shareowners' Equity 274,824 276,833 274,352 273,659 272,038
Total Liabilities and Shareowners' Equity$ 2,767,636 $ 2,792,186 $ 2,797,860 $ 2,615,094 $ 2,654,144
OTHER BALANCE SHEET DATA
Earning Assets$ 2,443,561 $ 2,471,741 $ 2,470,445 $ 2,291,966 $ 2,306,322
Interest Bearing Liabilities 1,615,484 1,654,239 1,696,776 1,551,443 1,587,096
Book Value Per Diluted Share$ 16.31 $ 16.04 $ 15.93 $ 15.91 $ 15.80
Tangible Book Value Per Diluted Share 11.27 11.13 11.00 10.98 10.87
Actual Basic Shares Outstanding 16,804 17,222 17,157 17,144 17,154
Actual Diluted Shares Outstanding 16,855 17,254 17,226 17,223 17,216

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited
Six Months Ended
2016 2015 June 30,
(Dollars in thousands, except per share data) Second Quarter First Quarter Fourth Quarter Third Quarter Second Quarter 2016 2015
INTEREST INCOME
Interest and Fees on Loans$ 18,105 $18,045$18,861$18,214$18,231$36,150$36,094
Investment Securities 1,751 1,637 1,572 1,540 1,451 3,388 2,745
Funds Sold 318 362 169 123 151 680 340
Total Interest Income 20,174 20,044 20,602 19,877 19,833 40,218 39,179
INTEREST EXPENSE
Deposits 211 221 219 220 259 432 505
Short-Term Borrowings 38 10 9 14 15 48 36
Subordinated Notes Payable 343 387 354 344 338 730 670
Other Long-Term Borrowings 206 216 226 233 237 422 477
Total Interest Expense 798 834 808 811 849 1,632 1,688
Net Interest Income 19,376 19,210 19,794 19,066 18,984 38,586 37,491
Provision for Loan Losses (97) 452 513 413 375 355 668
Net Interest Income after Provision for Loan Losses 19,473 18,758 19,281 18,653 18,609 38,231 36,823
NONINTEREST INCOME
Deposit Fees 5,321 5,400 5,664 5,721 5,682 10,721 11,223
Bank Card Fees 2,855 2,853 2,866 2,826 2,844 5,708 5,586
Wealth Management Fees 1,690 1,792 1,893 1,818 1,776 3,482 3,822
Mortgage Banking Fees 1,267 1,030 1,043 1,306 1,203 2,297 2,190
Data Processing Fees 335 347 335 400 364 682 737
Other 3,747 1,255 1,420 1,157 2,925 5,002 4,084
Total Noninterest Income 15,215 12,677 13,221 13,228 14,794 27,892 27,642
NONINTEREST EXPENSE
Compensation 16,051 16,241 15,833 16,653 16,404 32,292 32,928
Occupancy, Net 4,584 4,459 4,638 4,446 4,258 9,043 8,654
Other Real Estate 1,060 1,425 1,241 1,302 931 2,485 2,428
Other 7,007 6,805 6,568 6,763 6,846 13,812 13,819
Total Noninterest Expense 28,702 28,930 28,280 29,164 28,439 57,632 57,829
OPERATING PROFIT 5,986 2,505 4,222 2,717 4,964 8,491 6,636
Income Tax Expense 2,056 858 1,620 1,034 1,119 2,914 1,805
NET INCOME$ 3,930 $1,647$2,602$1,683$3,845$5,577$4,831
PER SHARE DATA
Basic Income$ 0.22 $0.10$0.16$0.09$0.22$0.32$0.28
Diluted Income$ 0.22 $0.10$0.16$0.09$0.22$0.32$0.28
Cash Dividend $ 0.04 $0.04$0.04$0.03$0.03$0.08$0.06
AVERAGE SHARES
Basic 17,144 17,202 17,145 17,150 17,296 17,173 17,402
Diluted 17,196 17,235 17,214 17,229 17,358 17,215 17,456

CAPITAL CITY BANK GROUP, INC.
ALLOWANCE FOR LOAN LOSSES
AND RISK ELEMENT ASSETS
Unaudited
Six Months Ended
2016 2016 2015 2015 2015 June 30,
(Dollars in thousands, except per share data) Second Quarter First Quarter Fourth Quarter Third Quarter Second Quarter 2016 2015
ALLOWANCE FOR LOAN LOSSES
Balance at Beginning of Period$ 13,613 $ 13,953 $ 14,737 $ 15,236 $ 16,090 $ 13,953 $ 17,539
Provision for Loan Losses (97) 452 513 413 375 355 668
Net Charge-Offs (161) 792 1,297 912 1,229 631 2,971
Balance at End of Period$ 13,677 $ 13,613 $ 13,953 $ 14,737 $ 15,236 $ 13,677 $ 15,236
As a % of Loans 0.89% 0.90% 0.93% 0.99% 1.03% 0.89% 1.03%
As a % of Nonperforming Loans 166.50% 150.44% 135.40% 112.17% 99.46% 166.50% 99.46%
CHARGE-OFFS
Commercial, Financial and Agricultural$ 304 $ 37 $ 135 $ 365 $ 239 $ 341 $ 529
Real Estate - Construction - - - - - - -
Real Estate - Commercial - 274 87 (26) 285 274 1,189
Real Estate - Residential 205 478 587 476 484 683 789
Real Estate - Home Equity 146 215 397 370 454 361 636
Consumer 438 439 656 318 351 877 927
Total Charge-Offs$ 1,093 $ 1,443 $ 1,862 $ 1,503 $ 1,813 $ 2,536 $ 4,070
RECOVERIES
Commercial, Financial and Agricultural$ 49 $ 39 $ 57 $ 45 $ 82 $ 88 $ 137
Real Estate - Construction - - - - - - -
Real Estate - Commercial 237 81 13 86 54 318 84
Real Estate - Residential 579 236 264 193 200 815 248
Real Estate - Home Equity 81 59 37 42 33 140 57
Consumer 308 236 194 225 215 544 573
Total Recoveries$ 1,254 $ 651 $ 565 $ 591 $ 584 $ 1,905 $ 1,099
NET CHARGE-OFFS$ (161)$ 792 $ 1,297 $ 912 $ 1,229 $ 631 $ 2,971
Net Charge-Offs as a % of Average Loans(1) (0.04)% 0.21% 0.34% 0.24% 0.33% 0.08% 0.41%
RISK ELEMENT ASSETS
Nonaccruing Loans$ 8,214 $ 9,049 $ 10,305 $ 13,138 $ 15,320
Other Real Estate Owned 14,622 17,450 19,290 25,219 30,167
Total Nonperforming Assets$ 22,836 $ 26,499 $ 29,595 $ 38,357 $ 45,487
Past Due Loans 30-89 Days $ 3,872 $ 3,599 $ 5,775 $ 4,335 $ 5,858
Past Due Loans 90 Days or More - - - - -
Classified Loans 45,058 49,780 53,551 61,411 69,152
Performing Troubled Debt Restructuring's$ 35,526 $ 36,700 $ 35,634 $ 35,961 $ 41,632
Nonperforming Loans as a % of Loans 0.54% 0.60% 0.69% 0.88% 1.03%
Nonperforming Assets as a % of
Loans and Other Real Estate 1.48% 1.73% 1.94% 2.54% 3.00%
Nonperforming Assets as a % of Total Assets 0.83% 0.95% 1.06% 1.47% 1.71%
(1) Annualized

CAPITAL CITY BANK GROUP, INC.
AVERAGE BALANCE AND INTEREST RATES(1)
Unaudited
Second Quarter 2016 First Quarter 2016 Fourth Quarter 2015 Third Quarter 2015 Second Quarter 2015 Jun 2016 YTD
Jun 2015 YTD
(Dollars in thousands) Average
Balance
Interest Average
Rate
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Balance
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ASSETS:
Loans, Net of Unearned Interest$ 1,531,777 18,233 4.79%$ 1,507,508 18,141 4.84%$ 1,492,521 18,952 5.04%$ 1,483,657 18,290 4.89%$ 1,473,954 18,285 4.98%$ 1,519,642 36,374 4.81%$ 1,461,356 36,194 4.99%
Investment Securities
Taxable Investment Securities 571,343 1,539 1.08 552,092 1,420 1.03 544,542 1,365 0.99 543,550 1,347 0.98 540,735 1,313 0.97 561,718 2,959 1.03 516,321 2,511 0.95
Tax-Exempt Investment Securities 90,030 325 1.44 94,951 332 1.40 93,838 328 1.40 92,685 304 1.31 76,191 219 1.15 92,490 657 1.42 70,043 373 1.06
Total Investment Securities 661,373 1,864 1.13 647,043 1,752 1.09 638,380 1,693 1.05 636,235 1,651 1.03 616,926 1,532 0.99 654,208 3,616 1.11 586,364 2,884 0.99
Funds Sold 254,627 318 0.50 286,167 362 0.51 222,828 169 0.30 190,931 123 0.26 237,132 151 0.26 270,397 680 0.51 269,588 340 0.25
Total Earning Assets 2,447,777 $20,415 3.35% 2,440,718 $20,255 3.34% 2,353,729 $20,814 3.51% 2,310,823 $20,064 3.45% 2,328,012 $19,968 3.44% 2,444,247 $40,670 3.35% 2,317,308 $39,418 3.43%
Cash and Due From Banks 46,605 47,834 45,875 45,872 52,473 47,220 50,555
Allowance for Loan Losses (14,254) (13,999) (14,726) (15,403) (16,070) (14,127) (16,702)
Other Assets 287,726 289,193 293,336 298,400 306,286 288,460 308,526
Total Assets$ 2,767,854 $ 2,763,746 $ 2,678,214 $ 2,639,692 $ 2,670,701 $ 2,765,800 $ 2,659,687
LIABILITIES:
Interest Bearing Deposits
NOW Accounts$ 762,667 $ 67 0.04%$ 798,996 $ 69 0.03%$ 725,538 $ 62 0.03%$ 709,130 $ 60 0.03%$ 761,388 $ 64 0.03%$ 780,832 $ 136 0.03%$ 777,757 $ 132 0.03%
Money Market Accounts 257,000 30 0.05 252,446 29 0.05 259,091 30 0.05 261,749 31 0.05 256,265 32 0.05 254,723 59 0.05 255,378 73 0.06
Savings Accounts 291,210 36 0.05 277,745 34 0.05 266,468 33 0.05 258,752 32 0.05 253,808 31 0.05 284,477 70 0.05 248,064 61 0.05
Time Deposits 170,837 78 0.19 177,057 89 0.20 180,124 94 0.21 183,976 97 0.21 189,213 132 0.28 173,947 167 0.19 191,919 239 0.25
Total Interest Bearing Deposits 1,481,714 211 0.06% 1,506,244 221 0.06% 1,431,221 219 0.06% 1,413,607 220 0.06% 1,460,674 259 0.07% 1,493,979 432 0.06% 1,473,118 505 0.07%
Short-Term Borrowings 53,691 38 0.28% 66,938 10 0.06% 68,093 9 0.06% 61,548 14 0.09% 54,237 15 0.11% 60,315 48 0.16% 52,035 36 0.14%
Subordinated Notes Payable 54,316 343 2.50 62,887 387 2.43 62,887 354 2.20 62,887 344 2.14 62,887 338 2.13 58,601 730 2.47 62,887 670 2.12
Other Long-Term Borrowings 26,721 206 3.11 27,769 216 3.12 28,618 226 3.14 29,383 233 3.15 30,067 237 3.16 27,245 422 3.11 30,407 477 3.16
Total Interest Bearing Liabilities 1,616,442 $798 0.20% 1,663,838 $834 0.20% 1,590,819 $808 0.20% 1,567,425 $811 0.21% 1,607,865 $849 0.21% 1,640,140 $1,632 0.20% 1,618,447 $1,688 0.21%
Noninterest Bearing Deposits 794,839 752,356 743,497 723,826 717,725 773,597 697,811
Other Liabilities 77,041 70,088 68,005 73,485 70,690 73,565 68,569
Total Liabilities 2,488,322 2,486,282 2,402,321 2,364,736 2,396,280 2,487,302 2,384,827
SHAREOWNERS' EQUITY: 279,532 277,464 275,893 274,956 274,421 278,498 274,860
Total Liabilities and Shareowners' Equity$ 2,767,854 $ 2,763,746 $ 2,678,214 $ 2,639,692 $ 2,670,701 $ 2,765,800 $ 2,659,687
Interest Rate Spread $19,617 3.15% $19,421 3.14% $20,006 3.31% $19,253 3.24% $19,119 3.23% $39,038 3.14% $37,730 3.22%
Interest Income and Rate Earned(1) 20,415 3.35 20,255 3.34 20,814 3.51 20,064 3.45 19,968 3.44 40,670 3.35 39,418 3.43
Interest Expense and Rate Paid(2) 798 0.13 834 0.14 808 0.14 811 0.14 849 0.15 1,632 0.13 1,688 0.15
Net Interest Margin $19,617 3.22% $19,421 3.20% $20,006 3.37% $19,253 3.31% $19,119 3.29% $39,038 3.21% $37,730 3.28%
(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.