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

TALLAHASSEE, Fla., Oct. 25, 2016 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (Nasdaq:CCBG) today reported net income of $2.9 million, or $0.17 per diluted share for the third quarter of 2016 compared to net income of $3.9 million, or $0.22 per diluted share for the second quarter of 2016, and $1.7 million, or $0.09 per diluted share, for the third quarter of 2015. For the first nine months of 2016, net income totaled $8.4 million, or $0.49 per diluted share, compared to net income of $6.5 million, or $0.37 per diluted share for the same period in 2015.

HIGHLIGHTS

  • Average loans grew 1.6% sequentially and 4.3% over prior year
  • No loan loss provision for Q3 reflective of second straight quarter of net loan recoveries
  • Continued progress in reducing noninterest expenses – down 2.4% sequentially and 1.5% from prior year
  • NPAs and classified assets both down sequentially by 6% and 44%/35%, respectively, from prior year

“I continue to be pleased with our progress; measured and prudent strategies are producing meaningful year-over-year improvement, albeit at a slower than desired pace,” said William G. Smith, Jr., Chairman, President and CEO. “Despite a challenging environment, loan growth, improving credit quality and expense management are all driving better performance. We remain dedicated to reducing our structural expenses and enhancing existing revenues, while identifying new business opportunities. Properly executing these strategies takes time, but can generate outcomes that produce long term value. We continue to value long-term profitability over short-term gains.”

Compared to the second quarter of 2016, performance reflects lower noninterest expense of $0.7 million and income taxes of $0.6 million partially offset by lower noninterest income of $2.2 million and a $0.1 million increase in the loan loss provision.

Compared to the third quarter of 2015, the increase in earnings reflects lower noninterest expense of $1.1 million, higher net interest income of $0.3 million, and a $0.4 million reduction in the loan loss provision, partially offset by a $0.2 million decrease in noninterest income and higher income taxes of $0.4 million.

The increase in earnings for the first nine months of 2016 versus the comparable period of 2015 was attributable to higher net interest income of $1.4 million, lower noninterest expense of $1.3 million, and a $0.7 million reduction in the loan loss provision, partially offset by higher income taxes of $1.5 million.

The Return on Average Assets was 0.42% and the Return on Average Equity was 4.12% for the third quarter of 2016. These metrics were 0.57% and 5.65% for the second quarter of 2016, respectively, and 0.25% and 2.43% for the third quarter of 2015, respectively. For the first nine months of 2016, the Return on Average Assets was 0.41% and the Return on Average Equity was 4.06% compared to 0.33% and 3.17%, respectively, for the same period of 2015.

Discussion of Operating Results

Tax equivalent net interest income for the third quarter of 2016 was $19.6 million compared to $19.6 million for the second quarter of 2016 and $19.3 million for the third quarter of 2015. During the third quarter, overnight funds were used to fund growth in the loan and investment portfolios resulting in a positive shift in our earning asset mix. This positive shift was partially offset by some one-time adjustments to interest income. The increase in tax equivalent net interest income compared to the third 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 first nine months of 2016, tax equivalent net interest income totaled $58.6 million compared to $57.0 million for the comparable period of 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 year-over-year. 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 third quarter of 2016 was 3.23%, an increase of one basis point over the second quarter of 2016 and a decrease of eight basis points from the third quarter of 2015. The increase in the margin compared to the second quarter of 2016 was primarily attributable to growth in our loan and investment portfolios. The decrease in the margin compared to the third quarter of 2015 was primarily attributable to lower loan yields. For the first nine months of 2016, the net interest margin declined seven basis points to 3.22% compared to the same period of 2015 for reasons mentioned above.

A loan loss provision was not recorded for the third quarter of 2016 reflecting continued reduction in loan charge-offs as well as strong loan recoveries. This compares to a negative provision of $0.1 million for the second quarter of 2016 and a provision of $0.4 million for the third quarter of 2015. For the first nine months of 2016, the loan loss provision totaled $0.4 million compared to $1.1 million for the same period of 2015. The decrease in the year-to-date provision reflects continued favorable problem loan migration and lower net loan charge-offs, partially offset by growth in the loan portfolio. We realized net loan recoveries of $0.1 million (consisting of recoveries of $0.9 million, less gross charge-offs of $0.8 million) for the third quarter of 2016 compared to 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. Net loan charge-offs for the third quarter of 2015 totaled $0.9 million, or 0.24% (annualized) of average loans. For the first nine months of 2016, net loan charge-offs totaled $0.6 million, or 0.05% (annualized) of average loans compared to $3.9 million, or 0.35% (annualized), for the same period in 2015. At quarter-end, the allowance for loan losses of $13.7 million was 0.88% of outstanding loans (net of overdrafts) and provided coverage of 160% of nonperforming loans compared to 0.89% and 167%, respectively, at June 30, 2016 and 0.93% and 135%, respectively, at December 31, 2015.

Noninterest income for the third quarter of 2016 totaled $13.0 million, a decrease of $2.2 million, or 14.5%, from the second quarter of 2016 and a decrease of $0.2 million, or 1.6%, from the third quarter of 2015. The decrease from the second quarter of 2016 reflects higher other income attributable to a $2.5 million gain from the partial retirement of our trust preferred securities (“TRUPs”) in the second quarter of 2016, partially offset by higher mortgage banking fees of $0.2 million and wealth management fees of $0.1 million. Compared to the third quarter of 2015, noninterest income decreased $0.2 million, or 1.6%, attributable to lower deposit fees of $0.3 million and bank card fees of $0.1 million that was partially offset by higher mortgage banking fees of $0.2 million. For the first nine months of 2016, noninterest income totaled $40.9 million, unchanged from the prior year. Noninterest income for 2016 reflects a $1.0 million increase in other income and a $0.3 million increase in mortgage banking fees offset by lower deposit fees of $0.9 million and wealth management fees of $0.4 million. The favorable variance in other income primarily reflects the aforementioned $2.5 million TRUPs gain recognized in 2016 partially offset higher BOLI income of $1.7 million in 2015. 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 third quarter of 2016 totaled $28.0 million, a decrease of $0.7 million, or 2.4%, from the second quarter of 2016 primarily attributable to lower other real estate owned (“OREO”) expense of $0.2 million and other expense of $0.5 million. A lower level of property valuation adjustments drove the decline in OREO expense. The reduction in other expense reflects lower FDIC insurance fees of $0.2 million, legal expense of $0.2 million, and debit card losses of $0.1 million. Compared to the third quarter of 2015, noninterest expense decreased by $1.1 million or 3.9% attributable to lower compensation of $0.6 million, OREO expense of $0.5 million, and other expense of $0.3 million, partially offset by higher occupancy expense of $0.3 million. For the first nine months of 2016, noninterest expense totaled $85.7 million, a decrease of $1.3 million, or 1.5%, from the same period of 2015 reflective of lower compensation expense of $1.3 million, OREO expense of $0.4 million, and other expense of $0.3 million partially offset by higher occupancy expense of $0.7 million. Compared to the three and nine-month periods of 2015, the reduction in compensation reflects a higher level of deferred loan cost (which reduces salary expense) partially offset by higher pension plan expense. The decrease in OREO expense was driven by a lower level of property valuation adjustments and property carrying costs. Other expense declined primarily due to lower FDIC insurance fees and legal fees. The increase in occupancy expense reflects higher depreciation expense due to technology investments in our banking offices and security infrastructure and to a lesser extent higher maintenance costs for building and furniture/equipment.

We realized income tax expense of $1.4 million (33% effective rate) for the third quarter of 2016 compared to $2.0 million (34% effective rate) for the second quarter of 2016 and $1.0 million (38% effective rate) for the third quarter of 2015. For the first nine months of 2016, income tax expense totaled $4.3 million (34% effective rate) compared to $2.8 million (30% 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-exempt, therefore income tax expense for the nine-month period of 2015 was favorably impacted.

Discussion of Financial Condition

Average earning assets were $2.418 billion for the third quarter of 2016, a decrease of $29.8 million, or 1.2%, from the second quarter of 2016, and an increase of $64.2 million, or 2.7%, over the fourth quarter of 2015. The reduction in earning assets over the second quarter of 2016 was attributable to a reduction in interest bearing liabilities. The increase compared to the fourth quarter of 2015 reflects increases in noninterest bearing, NOW, and savings accounts which primarily funded the growth in the loan and investment portfolios.

We maintained an average net overnight funds (deposits with banks plus fed funds sold less fed funds purchased) sold position of $166.2 million during the third quarter of 2016 compared to an average net overnight funds sold position of $254.6 million in the second quarter of 2016 and $222.8 million in the fourth quarter of 2015. The decrease in net overnight funds compared to the second quarter of 2016 reflects an increase in both the investment and loan portfolios, in conjunction with a decline in repurchase agreements. The decrease in net overnight funds compared to the fourth quarter of 2015 primarily reflects growth in the loan and investment portfolios, and a reduction in short-term borrowings, partially offset by growth in deposit balances.

Average loans increased $24.1 million, or 1.6% when compared to the second quarter of 2016, and have grown $63.4 million, or 4.3% when compared to the fourth quarter of 2015. The increase compared to the second quarter of 2016 reflects growth primarily in institutional, consumer, and construction 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 has had 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 $21.4 million at the end of the third quarter of 2016, a decrease of $1.4 million, or 6%, from the second quarter of 2016 and $8.2 million, or 28%, from the fourth quarter of 2015. Nonaccrual loans totaled $8.6 million at the end of the third quarter of 2016, an increase of $0.4 million over the second quarter of 2016 and a decrease of $1.7 million from the fourth quarter of 2015. Nonaccrual loan additions totaled $2.8 million in the third quarter of 2016 and $9.1 million for the first nine months of 2016, which compares to $12.1 million for the same nine month period of 2015. The balance of OREO totaled $12.8 million at the end of the third quarter of 2016, a decrease of $1.8 million and $6.5 million, respectively, from the second quarter of 2016 and fourth quarter of 2015. For the third quarter of 2016, we added properties totaling $0.9 million, sold properties totaling $2.3 million, and recorded valuation adjustments totaling $0.4 million. For the first nine months of 2016, we added properties totaling $3.3 million, sold properties totaling $7.9 million, and recorded valuation adjustments totaling $1.9 million. Nonperforming assets represented 0.78% of total assets at September 30, 2016 compared to 0.83% at June 30, 2016 and 1.06% at December 31, 2015.

Average total deposits were $2.289 billion for the third quarter of 2016, an increase of $12.2 million, or 0.5%, over the second quarter of 2016, and an increase of $114.0 million, or 5.2% over the fourth quarter of 2015. The increase in deposits when compared to the second quarter of 2016 reflects growth in all deposit products except noninterest bearing checking accounts (primarily due to one large, non-core client) 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. Seasonal public funds balances are expected to reach the low point of this cycle mid-way through the fourth quarter, and increase late in the fourth quarter 2016.

Deposit levels remain strong, as the seasonal decline in public NOW accounts was more than offset by increases in high performance checking accounts and savings accounts. 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 second quarter of 2016, average borrowings decreased $46.0 million primarily due to a decline in repurchase agreements. Compared to the fourth quarter of 2015, average borrowings decreased by $70.9 million due to a partial redemption of subordinated debt and a decline in repurchase agreements.

Equity capital was $276.6 million as of September 30, 2016, compared to $274.8 million as of June 30, 2016 and $274.4 million as of December 31, 2015. Our leverage ratio was 10.12%, 9.98%, and 10.65%, respectively, for these periods. Further, as of September 30, 2016, our risk-adjusted capital ratio was 16.28% compared to 16.44% and 17.25% at June 30, 2016 and December 31, 2015, respectively. Our common equity tier 1 ratio was 12.55% as of September 30, 2016, compared to 12.65% as of June 30, 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. During the second quarter of 2016 we repurchased 432,000 shares of our common stock at an average price of $14.50 per share and redeemed $10 million of our outstanding TRUPs. These transactions unfavorably impacted our regulatory capital ratios by approximately 38 basis points and approximately 50 basis points, respectively.

About Capital City Bank Group, Inc.

Capital City Bank Group, Inc. (Nasdaq: CCBG) is one of the largest publicly traded financial holding companies headquartered in Florida and has approximately $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 60 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.

USE OF NON-GAAP FINANCIAL MEASURE

We present a tangible common equity ratio that removes the effect of goodwill resulting from merger and acquisition activity. We believe this measure is useful to investors because it allows investors to more easily compare our capital adequacy to other companies in the industry. The GAAP to non-GAAP reconciliation is provided below.

(Dollars in Thousands) Sep 30, 2016 Jun 30, 2016 Sep 30, 2015
TANGIBLE COMMON EQUITY RATIO
Shareowners' Equity (GAAP) $ 276,624 $ 274,824 $ 273,659
Less: Goodwill (GAAP) 84,811 84,811 84,811
Tangible Shareowners' Equity (non-GAAP)A 191,813 190,013 188,848
Total Assets (GAAP) 2,753,154 2,767,636 2,615,094
Less: Goodwill (GAAP) 84,811 84,811 84,811
Tangible Assets (non-GAAP)B$ 2,668,343 $ 2,682,825 $ 2,530,283
Tangible Common Equity RatioA/B 7.19% 7.08% 7.46%


CAPITAL CITY BANK GROUP, INC.
EARNINGS HIGHLIGHTS
Unaudited
Three Months Ended Nine Months Ended
(Dollars in thousands, except per share data) Sep 30, 2016 Jun 30, 2016 Sep 30, 2015 Sep 30, 2016 Sep 30, 2015
EARNINGS
Net Income$ 2,873 $ 3,930 $ 1,683 $ 8,450 $ 6,514
Diluted Net Income Per Share$ 0.17 $ 0.22 $ 0.09 $ 0.49 $ 0.37
PERFORMANCE
Return on Average Assets 0.42% 0.57% 0.25% 0.41% 0.33%
Return on Average Equity 4.12% 5.65% 2.43% 4.06% 3.17%
Net Interest Margin 3.23% 3.22% 3.31% 3.22% 3.29%
Noninterest Income as % of Operating Revenue 40.24% 43.99% 40.96% 41.40% 41.95%
Efficiency Ratio 85.92% 82.40% 89.79% 86.05% 88.90%
CAPITAL ADEQUACY
Tier 1 Capital Ratio 15.48% 15.63% 16.36% 15.48% 16.36%
Total Capital Ratio 16.28% 16.44% 17.24% 16.28% 17.24%
Tangible Common Equity Ratio(1) 7.19% 7.08% 7.46% 7.19% 7.46%
Leverage Ratio 10.12% 9.98% 10.71% 10.12% 10.71%
Common Equity Tier 1 Ratio 12.55% 12.65% 12.76% 12.55% 12.76%
Equity to Assets 10.05% 9.93% 10.46% 10.05% 10.46%
ASSET QUALITY
Allowance as % of Non-Performing Loans 159.56% 166.50% 112.17% 159.56% 112.17%
Allowance as a % of Loans 0.88% 0.89% 0.99% 0.88% 0.99%
Net Charge-Offs as % of Average Loans (0.02)% (0.04)% 0.24% 0.05% 0.35%
Nonperforming Assets as % of Loans and ORE 1.35% 1.48% 2.54% 1.35% 2.54%
Nonperforming Assets as % of Total Assets 0.78% 0.83% 1.47% 0.78% 1.47%
STOCK PERFORMANCE
High$ 15.35 $ 15.96 $ 15.75 $ 15.96 $ 16.33
Low 13.32 13.16 14.39 12.83 13.16
Close$ 14.77 $ 13.92 $ 14.92 $ 14.77 $ 14.92
Average Daily Trading Volume 19,696 20,192 16,134 20,840 21,609
(1) Tangible common equity ratio is a non-GAAP financial measure. For additional information, including a reconciliation to GAAP, refer to
page 4.


CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
Unaudited
2016 2015
(Dollars in thousands) Third Quarter Second Quarter First Quarter
Fourth Quarter Third Quarter
ASSETS
Cash and Due From Banks$ 79,608 $ 51,766 $ 45,914 $ 51,288 $ 42,917
Funds Sold and Interest Bearing Deposits 144,576 220,719 304,908 327,617 167,787
Total Cash and Cash Equivalents 224,184 272,485 350,822 378,905 210,704
Investment Securities Available for Sale 500,139 485,848 462,444 451,028 444,071
Investment Securities Held to Maturity 189,928 204,474 187,079 187,892 193,964
Total Investment Securities 690,067 690,322 649,523 638,920 638,035
Loans Held for Sale 10,510 12,046 10,475 11,632 10,960
Loans, Net of Unearned Interest
Commercial, Financial, & Agricultural 223,278 207,105 183,681 179,816 169,588
Real Estate - Construction 54,107 46,930 42,538 46,484 49,475
Real Estate - Commercial 497,775 485,329 503,259 499,813 491,734
Real Estate - Residential 276,193 280,015 285,772 285,748 280,690
Real Estate - Home Equity 235,433 235,394 234,128 233,901 232,254
Consumer 258,173 252,347 245,197 240,434 238,884
Other Loans 10,875 11,177 10,297 4,837 10,094
Overdrafts 1,678 2,177 1,963 1,242 2,464
Total Loans, Net of Unearned Interest 1,557,512 1,520,474 1,506,835 1,492,275 1,475,183
Allowance for Loan Losses (13,744) (13,677) (13,613) (13,953) (14,737)
Loans, Net 1,543,768 1,506,797 1,493,222 1,478,322 1,460,446
Premises and Equipment, Net 96,499 97,313 98,029 98,819 98,218
Goodwill 84,811 84,811 84,811 84,811 84,811
Other Real Estate Owned 12,738 14,622 17,450 19,290 25,219
Other Assets 90,577 89,240 87,854 87,161 86,701
Total Other Assets 284,625 285,986 288,144 290,081 294,949
Total Assets$ 2,753,154 $ 2,767,636 $ 2,792,186 $ 2,797,860 $ 2,615,094
LIABILITIES
Deposits:
Noninterest Bearing Deposits$ 801,671 $ 798,219 $ 790,040 $ 758,283 $ 720,824
NOW Accounts 793,363 804,263 786,432 848,330 688,491
Money Market Accounts 257,004 259,813 254,682 248,367 261,050
Regular Savings Accounts 298,682 294,432 286,807 269,162 262,843
Certificates of Deposit 164,387 168,079 173,447 178,707 181,775
Total Deposits 2,315,107 2,324,806 2,291,408 2,302,849 2,114,983
Short-Term Borrowings 12,113 9,609 62,922 61,058 65,355
Subordinated Notes Payable 52,887 52,887 62,887 62,887 62,887
Other Long-Term Borrowings 21,368 26,401 27,062 28,265 29,042
Other Liabilities 75,055 79,109 71,074 68,449 69,168
Total Liabilities 2,476,530 2,492,812 2,515,353 2,523,508 2,341,435
SHAREOWNERS' EQUITY
Common Stock 168 168 172 172 171
Additional Paid-In Capital 33,152 32,855 38,671 38,256 37,738
Retained Earnings 264,581 262,380 259,139 258,181 256,265
Accumulated Other Comprehensive Loss, Net of Tax (21,277) (20,579) (21,149) (22,257) (20,515)
Total Shareowners' Equity 276,624 274,824 276,833 274,352 273,659
Total Liabilities and Shareowners' Equity$ 2,753,154 $ 2,767,636 $ 2,792,186 $ 2,797,860 $ 2,615,094
OTHER BALANCE SHEET DATA
Earning Assets$ 2,402,664 $ 2,443,561 $ 2,471,741 $ 2,470,445 $ 2,291,966
Interest Bearing Liabilities 1,599,804 1,615,484 1,654,239 1,696,776 1,551,443
Book Value Per Diluted Share$ 16.39 $ 16.31 $ 16.04 $ 15.93 $ 15.91
Tangible Book Value Per Diluted Share 11.37 11.27 11.13 11.00 10.98
Actual Basic Shares Outstanding 16,807 16,804 17,222 17,157 17,144
Actual Diluted Shares Outstanding 16,874 16,855 17,254 17,226 17,223


CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited
Nine Months Ended
2016 2015 September 30,
(Dollars in thousands, except per share data) Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter 2016 2015
INTEREST INCOME
Interest and Fees on Loans$18,046$ 18,105 $18,045$18,861$18,214$54,196$54,308
Investment Securities 1,846 1,751 1,637 1,572 1,540 5,234 4,285
Funds Sold 212 318 362 169 123 892 463
Total Interest Income 20,104 20,174 20,044 20,602 19,877 60,322 59,056
INTEREST EXPENSE
Deposits 223 211 221 219 220 655 725
Short-Term Borrowings 43 38 10 9 14 91 50
Subordinated Notes Payable 341 343 387 354 344 1,071 1,014
Other Long-Term Borrowings 177 206 216 226 233 599 710
Total Interest Expense 784 798 834 808 811 2,416 2,499
Net Interest Income 19,320 19,376 19,210 19,794 19,066 57,906 56,557
Provision for Loan Losses - (97) 452 513 413 355 1,081
Net Interest Income after Provision for Loan Losses 19,320 19,473 18,758 19,281 18,653 57,551 55,476
NONINTEREST INCOME
Deposit Fees 5,373 5,321 5,400 5,664 5,721 16,094 16,944
Bank Card Fees 2,759 2,855 2,853 2,866 2,826 8,467 8,412
Wealth Management Fees 1,774 1,690 1,792 1,893 1,818 5,256 5,640
Mortgage Banking Fees 1,503 1,267 1,030 1,043 1,306 3,800 3,496
Data Processing Fees 360 335 347 335 400 1,042 1,137
Other 1,242 3,747 1,255 1,420 1,157 6,244 5,241
Total Noninterest Income 13,011 15,215 12,677 13,221 13,228 40,903 40,870
NONINTEREST EXPENSE
Compensation 15,993 16,051 16,241 15,833 16,653 48,285 49,581
Occupancy, Net 4,734 4,584 4,459 4,638 4,446 13,777 13,100
Other Real Estate, Net 821 1,060 1,425 1,241 1,302 3,306 3,730
Other 6,474 7,007 6,805 6,568 6,763 20,286 20,582
Total Noninterest Expense 28,022 28,702 28,930 28,280 29,164 85,654 86,993
OPERATING PROFIT 4,309 5,986 2,505 4,222 2,717 12,800 9,353
Income Tax Expense 1,436 2,056 858 1,620 1,034 4,350 2,839
NET INCOME$2,873$ 3,930 $1,647$2,602$1,683$8,450$6,514
PER SHARE DATA
Basic Net Income$0.18$ 0.22 $0.10$0.16$0.10$0.50$0.38
Diluted Net Income 0.17 0.22 0.10 0.16 0.09 0.49 0.37
Cash Dividend$0.04$ 0.04 $0.04$0.04$0.03$0.12$0.09
AVERAGE SHARES
Basic 16,804 17,144 17,202 17,145 17,150 17,049 17,317
Diluted 16,871 17,196 17,235 17,214 17,229 17,100 17,379


CAPITAL CITY BANK GROUP, INC.
ALLOWANCE FOR LOAN LOSSES
AND RISK ELEMENT ASSETS
Unaudited
Nine Months Ended
2016 2015 September 30,
(Dollars in thousands, except per share data) Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter 2016 2015
ALLOWANCE FOR LOAN LOSSES
Balance at Beginning of Period$ 13,677 $ 13,613 $ 13,953 $ 14,737 $ 15,236 $ 13,953 $ 17,539
Provision for Loan Losses 0 (97) 452 513 413 355 1,081
Net Charge-Offs (Recoveries) (67) (161) 792 1,297 912 564 3,883
Balance at End of Period$ 13,744 $ 13,677 $ 13,613 $ 13,953 $ 14,737 $ 13,744 $ 14,737
As a % of Loans 0.88% 0.89% 0.90% 0.93% 0.99% 0.88% 0.99%
As a % of Nonperforming Loans 159.56% 166.50% 150.44% 135.40% 112.17% 159.56% 112.17%
CHARGE-OFFS
Commercial, Financial and Agricultural$ 143 $ 304 $ 37 $ 135 $ 365 $ 484 $ 894
Real Estate - Construction - - - - - - -
Real Estate - Commercial 5 - 274 87 (26) 279 1,163
Real Estate - Residential 96 205 478 587 476 779 1,265
Real Estate - Home Equity 51 146 215 397 370 412 1,006
Consumer 479 438 439 656 318 1,356 1,245
Total Charge-Offs$ 774 $ 1,093 $ 1,443 $ 1,862 $ 1,503 $ 3,310 $ 5,573
RECOVERIES
Commercial, Financial and Agricultural$ 199 $ 49 $ 39 $ 57 $ 45 $ 287 $ 182
Real Estate - Construction - - - - - - -
Real Estate - Commercial 45 237 81 13 86 363 170
Real Estate - Residential 139 579 236 264 193 954 441
Real Estate - Home Equity 237 81 59 37 42 377 99
Consumer 221 308 236 194 225 765 798
Total Recoveries$ 841 $ 1,254 $ 651 $ 565 $ 591 $ 2,746 $ 1,690
NET CHARGE-OFFS (RECOVERIES)$ (67)$ (161)$ 792 $ 1,297 $ 912 $ 564 $ 3,883
Net Charge-Offs as a % of Average Loans (1) (0.02)% 0.04% 0.21% 0.34% 0.24% 0.05% 0.35%
RISK ELEMENT ASSETS
Nonaccruing Loans$ 8,614 $ 8,214 $ 9,049 $ 10,305 $ 13,138
Other Real Estate Owned 12,738 14,622 17,450 19,290 25,219
Total Nonperforming Assets$ 21,352 $ 22,836 $ 26,499 $ 29,595 $ 38,357
Past Due Loans 30-89 Days$ 5,667 $ 3,872 $ 3,599 $ 5,775 $ 4,335
Past Due Loans 90 Days or More - - - - -
Classified Loans 43,227 45,058 49,780 53,551 61,411
Performing Troubled Debt Restructuring's$ 35,046 $ 35,526 $ 36,700 $ 35,634 $ 35,961
Nonperforming Loans as a % of Loans 0.55% 0.54% 0.60% 0.69% 0.88%
Nonperforming Assets as a % of Loans and Other Real Estate 1.35% 1.48% 1.73% 1.94% 2.54%
Nonperforming Assets as a % of Total Assets 0.78% 0.83% 0.95% 1.06% 1.47%
(1) Annualized


CAPITAL CITY BANK GROUP, INC.
AVERAGE BALANCE AND INTEREST RATES(1)
Unaudited
Third Quarter 2016 Second Quarter 2016 First Quarter 2016 Fourth Quarter 2015 Third Quarter 2015 Sep 2016 YTD Sep 2015 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$ 1,555,889 18,216 4.66%$ 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%$ 1,531,813 54,590 4.76%$ 1,468,871 54,484 4.96%
Investment Securities
Taxable Investment Securities 606,606 1,632 1.07 571,343 1,539 1.08 552,092 1,420 1.03 544,542 1,365 0.99 543,550 1,347 0.98 576,790 4,591 1.03 525,498 3,858 0.98
Tax-Exempt Investment Securities 89,241 327 1.47 90,030 325 1.44 94,951 332 1.40 93,838 328 1.40 92,685 304 1.31 91,399 984 1.44 77,673 677 1.16
Total Investment Securities 695,847 1,959 1.12 661,373 1,864 1.13 647,043 1,752 1.09 638,380 1,693 1.05 636,235 1,651 1.03 668,189 5,575 1.11 603,171 4,535 1.00
Funds Sold 166,207 212 0.51 254,627 318 0.50 286,167 362 0.51 222,828 169 0.30 190,931 123 0.26 235,414 892 0.51 243,081 463 0.26
Total Earning Assets 2,417,943 $20,387 3.35% 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% 2,435,416 $61,057 3.35% 2,315,123 $59,482 3.43%
Cash and Due From Banks 45,139 46,605 47,834 45,875 45,872 46,521 48,977
Allowance for Loan Losses (14,052) (14,254) (13,999) (14,726) (15,403) (14,102) (16,264)
Other Assets 285,435 287,726 289,193 293,336 298,400 287,444 305,113
Total Assets$ 2,734,465 $ 2,767,854 $ 2,763,746 $ 2,678,214 $ 2,639,692 $ 2,755,279 $ 2,652,949
LIABILITIES:
Interest Bearing Deposits
NOW Accounts$ 774,899 $78 0.04%$ 762,667 $67 0.04%$ 798,996 $69 0.03%$ 725,538 $62 0.03%$ 709,130 $60 0.03%$ 778,840 $214 0.04%$ 754,630 $192 0.03%
Money Market Accounts 258,183 30 0.05 257,000 30 0.05 252,446 29 0.05 259,091 30 0.05 261,749 31 0.05 255,885 89 0.05 257,525 104 0.05
Savings Accounts 297,172 37 0.05 291,210 36 0.05 277,745 34 0.05 266,468 33 0.05 258,752 32 0.05 288,740 107 0.05 251,666 93 0.05
Time Deposits 165,324 78 0.19 170,837 78 0.19 177,057 89 0.20 180,124 94 0.21 183,976 97 0.21 171,052 245 0.19 189,242 336 0.24
Total Interest Bearing Deposits 1,495,578 223 0.06% 1,481,714 211 0.06% 1,506,244 221 0.06% 1,431,221 219 0.06% 1,413,607 220 0.06% 1,494,517 655 0.06% 1,453,063 725 0.07%
Short-Term Borrowings 12,162 43 1.39% 53,691 38 0.28% 66,938 10 0.06% 68,093 9 0.06% 61,548 14 0.09% 44,147 91 0.28% 55,241 50 0.12%
Subordinated Notes Payable 52,887 341 2.52 54,316 343 2.50 62,887 387 2.43 62,887 354 2.20 62,887 344 2.14 56,683 1,071 2.48 62,887 1,014 2.13
Other Long-Term Borrowings 23,629 177 2.98 26,721 206 3.11 27,769 216 3.12 28,618 226 3.14 29,383 233 3.15 26,031 599 3.07 30,062 710 3.16
Total Interest Bearing Liabilities 1,584,256 $784 0.20% 1,616,442 $798 0.20% 1,663,838 $834 0.20% 1,590,819 $808 0.20% 1,567,425 $811 0.21% 1,621,378 $2,416 0.20% 1,601,253 $2,499 0.21%
Noninterest Bearing Deposits 793,163 794,839 752,356 743,497 723,826 780,167 706,578
Other Liabilities 79,639 77,041 70,088 68,005 73,485 75,603 70,226
Total Liabilities 2,457,058 2,488,322 2,486,282 2,402,321 2,364,736 2,477,148 2,378,057
SHAREOWNERS' EQUITY: 277,407 279,532 277,464 275,893 274,956 278,131 274,892
Total Liabilities and Shareowners' Equity$ 2,734,465 $ 2,767,854 $ 2,763,746 $ 2,678,214 $ 2,639,692 $ 2,755,279 $ 2,652,949
Interest Rate Spread $19,603 3.15% $19,617 3.15% $19,421 3.14% $20,006 3.31% $19,253 3.24% $58,641 3.15% $56,983 3.23%
Interest Income and Rate Earned(1) 20,387 3.35 20,415 3.35 20,255 3.34 20,814 3.51 20,064 3.45 61,057 3.35 59,482 3.43
Interest Expense and Rate Paid(2) 784 0.13 798 0.13 834 0.14 808 0.14 811 0.14 2,416 0.13 2,499 0.14
Net Interest Margin $19,603 3.23% $19,617 3.22% $19,421 3.20% $20,006 3.37% $19,253 3.31% $58,641 3.22% $56,983 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.