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Capital City Bank Group, Inc. Reports Fourth Quarter and Full Year 2016 Results

TALLAHASSEE, Fla., Jan. 24, 2017 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (Nasdaq:CCBG) today reported net income of $3.3 million, or $0.20 per diluted share for the fourth quarter of 2016 compared to net income of $2.9 million, or $0.17 per diluted share for the third quarter of 2016, and $2.6 million, or $0.16 per diluted share, for the fourth quarter of 2015. For the full year 2016, net income totaled $11.7 million, or $0.69 per diluted share, compared to net income of $9.1 million, or $0.53 per diluted share in 2015.

Full Year 2016 HIGHLIGHTS

  • Broader based loan growth of 4.6% driven by both increased demand and effective calling efforts
  • 49% reduction in loan loss provision driven by lower loan charge-offs and strong loan recoveries
  • 1.8% decrease in noninterest expenses (primarily OREO costs and FDIC fees)
  • NPAs and classified assets down by 35% and 28%, respectively
  • $10 million trust preferred securities (“TRUPs”) repurchased at a discount added $2.5 million pre-tax earnings ($0.09 per share)
  • Repurchased 435,000 shares of common stock

Fourth Quarter 2016 HIGHLIGHTS

  • Average loans grew 1.1% sequentially driven by strong commercial real estate production
  • Continued progress in reducing noninterest expenses – down 1.6% sequentially
  • NPAs and classified assets down sequentially by 10% and 7%, respectively

“We finished 2016 with a strong fourth quarter, and I am pleased with our performance for the full year,” said William G. Smith, Jr., Chairman, President and CEO. “Positive trends continued through the quarter, and we experienced solid loan growth, significant reductions in nonperforming assets, decreases in expenses and growth in earnings. We made meaningful progress throughout the year, thanks to the hard work of our associates and our sustained focus on initiatives that add value to our shareowners. As we move into 2017, I look forward to the opportunities and challenges of a new year.”

Compared to the third quarter of 2016, performance reflects higher net interest income of $0.7 million and lower noninterest expense of $0.5 million, partially offset by a $0.5 million increase in the loan loss provision, lower noninterest income of $0.2 million, and higher income taxes of $0.1 million.

Compared to the fourth quarter of 2015, the increase in earnings was due to lower noninterest expense of $0.7 million, higher net interest income of $0.3 million, and lower income taxes of $0.1 million, partially offset by lower noninterest income of $0.4 million.

For the full year 2016, the increase in earnings was attributable to lower noninterest expense of $2.0 million, higher net interest income of $1.6 million, and a $0.8 million decrease in the loan loss provision, partially offset by higher income taxes of $1.4 million and lower noninterest income of $0.4 million.

The Return on Average Assets was 0.48% and the Return on Average Equity was 4.70% for the fourth quarter of 2016. These metrics were 0.42% and 4.12% for the third quarter of 2016, respectively, and 0.39% and 3.74% for the fourth quarter of 2015, respectively. For the full year 2016, the Return on Average Assets was 0.43% and the Return on Average Equity was 4.22% compared to 0.34% and 3.31%, respectively, for 2015.

Discussion of Operating Results

Tax equivalent net interest income for the fourth quarter of 2016 was $20.3 million compared to $19.6 million for the third quarter of 2016 and $20.0 million for the fourth quarter of 2015. During the fourth quarter of 2016, overnight funds were used to fund growth in the loan and investment portfolios resulting in a positive shift in our earning asset mix. Non-accrual loan adjustments also had a favorable impact. The increase in tax equivalent net interest income compared to the fourth 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 full year 2016, tax equivalent net interest income totaled $79.0 million compared to $77.0 million for the prior year. The year over year increase was driven primarily by one additional calendar day and growth in the loan and investment portfolios. These increases were partially offset by generally lower loan rates.

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. The Federal Open Market Committee (FOMC) increased the federal funds rate 25 basis points to a target rate of 75 basis points in December 2016, alleviating some of this pressure in 2017, particularly in our variable rate loans. However, aggressive lending competition in all markets continues to impact the pricing for loans. Historically low rates and competition, collectively, continue to 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 fourth quarter of 2016 was 3.34%, an increase of 11 basis points over the third quarter of 2016 and a decrease of three basis points from the fourth quarter of 2015. The increase in the margin compared to the third quarter of 2016 was due to growth in our loan and investment portfolios, in addition to $0.5 million in net interest recoveries. The decrease in the margin compared to the fourth quarter of 2015 was primarily attributable to lower loan yields. For the full year 2016, the net interest margin declined six basis points to 3.25% compared to 2015, primarily due to lower loan yields and loan fees.

The provision for loan losses for the fourth quarter of 2016 was $0.5 million compared to no provision for the third quarter of 2016 and $0.5 million for the fourth quarter of 2015. For the full year 2016, the loan loss provision totaled $0.8 million compared to $1.6 million for 2015. For 2016, the lower level of loan loss provision reflects continued favorable problem loan migration and lower net loan charge-offs, partially offset by growth in the loan portfolio. Net loan charge-offs for the fourth quarter of 2016 totaled $0.8 million compared to net loan recoveries of $0.1 million for the third quarter of 2016 and net loan charge-offs of $1.3 million for the fourth quarter of 2015. For the full year 2016, net loan charge-offs totaled $1.3 million (consisting of gross charge-offs of $4.7 million, less recoveries of $3.4 million), or 0.09% of average loans compared to $5.2 million, or 0.35% for 2015. As of December 31, 2016, the allowance for loan losses of $13.4 million was 0.86% of outstanding loans (net of overdrafts) and provided coverage of 157% of nonperforming loans compared to 0.88% and 160%, respectively, as of September 30, 2016 and 0.93% and 135%, respectively, as of December 31, 2015.

Noninterest income for the fourth quarter of 2016 totaled $12.8 million, a decrease of $0.2 million, or 1.8%, from the third quarter of 2016 and a decrease of $0.4 million, or 3.4%, from the fourth quarter of 2015. The decrease from the third quarter of 2016 reflects lower deposit fees of $0.1 million and mortgage banking fees of $0.1 million. Compared to the fourth quarter of 2015, the decrease reflects lower deposit fees of $0.4 million, wealth management fees of $0.2 million, and bank card fees of $0.1 million, partially offset by higher mortgage banking fees of $0.3 million. For the full year 2016, noninterest income totaled $53.7 million, a $0.4 million decrease from 2015, primarily attributable to lower deposit fees of $1.3 million and wealth management fees of $0.5 million partially offset by higher other income of $0.8 million and mortgage banking fees of $0.6 million. The decrease 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. The favorable variance in other income primarily reflects a $2.5 million gain from the partial retirement of our trust preferred securities (“TRUPs”) in 2016, partially offset by higher BOLI income of $1.7 million in 2015. Strong residential home sales activity in our markets drove the improvement in mortgage banking fees.

Noninterest expense for the fourth quarter of 2016 totaled $27.6 million, a decrease of $0.5 million, or 1.6%, from the third quarter of 2016 reflective of lower other real estate owned (“OREO”) expense of $0.5 million, other expense of $0.5 million, and occupancy expense of $0.2 million, partially offset by higher compensation expense of $0.7 million. Compared to the fourth quarter of 2015, noninterest expense decreased $0.7 million, or 2.5%, due to lower OREO expense of $0.9 million, other expense of $0.6 million, and occupancy expense of $0.1 million, partially offset by higher compensation expense of $0.9 million. For the full year 2016, noninterest expense totaled $113.2 million, a decrease of $2.1 million, or 1.8%, from 2015 reflective of lower OREO expense of $1.3 million, other expense of $0.9 million and compensation expense of $0.4 million, partially offset by higher occupancy expense of $0.5 million. Lower carrying costs drove the reduction in OREO expense. The reduction in other expense was primarily attributable to lower FDIC insurance fees and professional fees, partially offset by higher telephone expense. The decrease in compensation reflects a higher level of deferred loan cost (which reduces salary expense) partially offset by higher pension plan expense. The increase in occupancy expense was primarily due to higher depreciation expense reflective of 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 $1.5 million (32% effective rate) for the fourth quarter of 2016 compared to $1.4 million (33% effective rate) for the third quarter of 2016 and $1.6 million (38% effective rate) for the fourth quarter of 2015. For the full year 2016, income tax expense totaled $5.9 million (33% effective rate) compared to $4.5 million (33% effective rate) for 2015. Absent future discrete events, we anticipate our effective tax rate will remain in the range of 34%-35%.

Discussion of Financial Condition

Average earning assets were $2.423 billion for the fourth quarter of 2016, an increase of $5.4 million, or 0.2%, over the third quarter of 2016, and an increase of $69.7 million, or 3.0%, over the fourth quarter of 2015. The change in earning assets over both periods reflects a higher level of total deposits. 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 $145.5 million during the fourth quarter of 2016 compared to an average net overnight funds sold position of $166.2 million in the third quarter of 2016 and $222.8 million in the fourth quarter of 2015. The decrease in net overnight funds compared to the third quarter of 2016 reflects an increase in both the investment and loan portfolios. The decrease in net overnight funds compared to the fourth quarter of 2015 reflects growth in the loan and investment portfolios, and a reduction in both short-term and long-term borrowings, partially offset by growth in deposit balances.

Average loans increased $17.4 million, or 1.1% when compared to the third quarter of 2016, and have grown $80.7 million, or 5.4% when compared to the fourth quarter of 2015. The increase compared to the third quarter of 2016 reflects growth in all loan types except institutional and residential mortgages. Growth over the fourth quarter of 2015 was experienced in all loan products, with the exception of residential 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 $19.2 million at year-end 2016, a decrease of $2.2 million, or 10%, from the third quarter of 2016 and $10.4 million, or 35%, from year-end 2015. Nonaccrual loans totaled $8.5 million at year-end 2016, a $0.1 million decrease from the third quarter of 2016 and a $1.8 million decrease from year-end 2015. Nonaccrual loan additions totaled $3.9 million in the fourth quarter of 2016 and $13.1 million for the full year 2016, which compares to $3.6 million and $15.7 million, respectively, for the same periods of 2015. The balance of OREO totaled $10.6 million at year-end 2016, a decrease of $2.1 million and $8.7 million, respectively, from the third quarter of 2016 and year-end 2015. For the fourth quarter of 2016, we added properties totaling $0.7 million, sold properties totaling $2.4 million, and recorded valuation adjustments totaling $0.4 million. For the full year 2016, we added properties totaling $4.0 million, sold properties totaling $10.3 million, and recorded valuation adjustments totaling $2.4 million. Nonperforming assets represented 0.67% of total assets as of December 31, 2016 compared to 0.78% as of September 30, 2016 and 1.06% as of December 31, 2015.

Average total deposits were $2.307 billion for the fourth quarter of 2016, an increase of $18.2 million, or 0.8%, over the third quarter of 2016, and an increase of $132.2 million, or 6.1% over the fourth quarter of 2015. The increase in deposits when compared to both periods reflects growth in all deposit products except money market accounts and certificates of deposit. The seasonal inflow of public fund balances began late in the fourth quarter of 2016, and is expected to peak during the first quarter of 2017 for this cycle.

Deposit levels remain strong, particularly given the recent increase in the fed funds rate, and average core deposits continue to experience growth. Competitive rates are monitored on an ongoing basis as a prudent pricing discipline remains the key to managing our mix of deposits.

Compared to the third quarter of 2016, average borrowings decreased $3.5 million primarily due to payoffs of FHLB advances. Compared to the fourth quarter of 2015, average borrowings decreased by $74.5 million due to a partial redemption of subordinated debt and a decline in repurchase agreements.

Shareowners’ equity was $275.2 million as of December 31, 2016, compared to $276.6 million as of September 30, 2016 and $274.4 million as of December 31, 2015. During 2016, shareowners’ equity was positively impacted by net income of $11.7 million, stock compensation accretion of $1.3 million, and net adjustments totaling $1.0 million related to transactions under our stock compensation plans. Shareowners’ equity was reduced by common stock dividends of $2.9 million ($0.17 per share), common stock share repurchases totaling $6.3 million (435,461 shares), a $3.5 million increase in the accumulated other comprehensive loss for our pension plan, and a net increase of $0.5 million in the unrealized loss on investment securities. Our leverage ratio was 10.23%, 10.12%, and 10.65%, respectively, for these periods. Further, as of December 31, 2016, our risk-adjusted capital ratio was 16.28% compared to 16.28% and 17.25% at September 30, 2016 and December 31, 2015, respectively. Our common equity tier 1 ratio was 12.61% as of December 31, 2016, compared to 12.55% as of September 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. Share repurchase activity and the partial retirement of TRUPs during 2016 unfavorably impacted our regulatory capital ratios by approximately 38 basis points and 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 and a tangible book value per diluted share that removes the effect of goodwill resulting from merger and acquisition activity. We believe these measures are useful to investors because it allows investors to more easily compare our capital adequacy to other companies in the industry. The GAAP to non-GAAP reconciliation is provided below.

(Dollars in Thousands) Dec 31, 2016Sep 30, 2016Jun 30, 2016Mar 31, 2016Dec 31, 2015
TANGIBLE COMMON EQUITY RATIO
Shareowners' Equity (GAAP) $275,168 $276,624 $274,824 $276,833 $274,352
Less: Goodwill (GAAP) 84,811 84,811 84,811 84,811 84,811
Tangible Shareowners' Equity (non-GAAP)A 190,357 191,813 190,013 192,022 189,541
Total Assets (GAAP) 2,845,197 2,753,154 2,767,635 2,792,186 2,797,860
Less: Goodwill (GAAP) 84,811 84,811 84,811 84,811 84,811
Tangible Assets (non-GAAP)B$2,760,386 $2,668,343 $2,682,824 $2,707,375 $2,713,049
Tangible Common Equity Ratio (non-GAAP)A/B 6.90% 7.19% 7.08% 7.09% 6.99%
Actual Diluted Shares Outstanding (GAAP)C 16,949 16,874 16,855 17,254 17,226
Tangible Book Value per Diluted Share (non-GAAP)A/C$11.23 $11.37 $11.27 $11.13 $11.00


CAPITAL CITY BANK GROUP, INC.
EARNINGS HIGHLIGHTS
Unaudited
Three Months Ended Twelve Months Ended
(Dollars in thousands, except per share data) Dec 31, 2016 Sep 30, 2016 Dec 31, 2015 Dec 31, 2016 Dec 31, 2015
EARNINGS
Net Income$3,296 $2,873 $2,602 $11,746 $9,116
Diluted Net Income Per Share$0.20 $0.17 $0.16 $0.69 $0.53
PERFORMANCE
Return on Average Assets 0.48% 0.42% 0.39% 0.43% 0.34%
Return on Average Equity 4.70% 4.12% 3.74% 4.22% 3.31%
Net Interest Margin 3.34% 3.23% 3.37% 3.25% 3.31%
Noninterest Income as % of Operating Revenue 38.91% 40.24% 40.05% 40.78% 41.47%
Efficiency Ratio 83.23% 85.92% 85.11% 85.34% 87.94%
CAPITAL ADEQUACY
Tier 1 Capital 15.51% 15.48% 16.42% 15.51% 16.42%
Total Capital 16.28% 16.28% 17.25% 16.28% 17.25%
Tangible Common Equity (1) 6.90% 7.19% 6.99% 6.90% 6.99%
Leverage 10.23% 10.12% 10.65% 10.23% 10.65%
Common Equity Tier 1 12.61% 12.55% 12.84% 12.61% 12.84%
Equity to Assets 9.67% 10.05% 9.81% 9.67% 9.81%
ASSET QUALITY
Allowance as % of Non-Performing Loans 157.40% 159.56% 135.40% 157.40% 135.40%
Allowance as a % of Loans 0.86% 0.88% 0.93% 0.86% 0.93%
Net Charge-Offs as % of Average Loans 0.20% (0.02)% 0.34% 0.09% 0.35%
Nonperforming Assets as % of Loans and ORE 1.21% 1.35% 1.94% 1.21% 1.94%
Nonperforming Assets as % of Total Assets 0.67% 0.78% 1.06% 0.67% 1.06%
STOCK PERFORMANCE
High$23.15 $15.35 $16.05 $23.15 $16.33
Low 14.29 13.32 13.56 12.83 13.16
Close$20.48 $14.77 $15.35 $20.48 $15.35
Average Daily Trading Volume 23,371 19,696 19,500 21,473 21,073
(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) Fourth Quarter Third Quarter Second Quarter First Quarter Fourth Quarter
ASSETS
Cash and Due From Banks$48,268 $79,608 $51,766 $45,914 $51,288
Funds Sold and Interest Bearing Deposits 247,779 144,576 220,719 304,908 327,617
Total Cash and Cash Equivalents 296,047 224,184 272,485 350,822 378,905
Investment Securities Available for Sale 522,734 500,139 485,848 462,444 451,028
Investment Securities Held to Maturity 177,365 189,928 204,474 187,079 187,892
Total Investment Securities 700,099 690,067 690,322 649,523 638,920
Loans Held for Sale 10,886 10,510 12,046 10,475 11,632
Loans, Net of Unearned Interest
Commercial, Financial, & Agricultural 216,404 223,278 207,105 183,681 179,816
Real Estate - Construction 58,443 54,107 46,930 42,538 46,484
Real Estate - Commercial 503,978 497,775 485,329 503,259 499,813
Real Estate - Residential 272,895 276,193 280,015 285,772 285,748
Real Estate - Home Equity 236,512 235,433 235,394 234,128 233,901
Consumer 262,735 258,173 252,347 245,197 240,434
Other Loans 8,614 10,875 11,177 10,297 4,837
Overdrafts 1,708 1,678 2,177 1,963 1,242
Total Loans, Net of Unearned Interest 1,561,289 1,557,512 1,520,474 1,506,835 1,492,275
Allowance for Loan Losses (13,431) (13,744) (13,677) (13,613) (13,953)
Loans, Net 1,547,858 1,543,768 1,506,797 1,493,222 1,478,322
Premises and Equipment, Net 95,476 96,499 97,313 98,029 98,819
Goodwill 84,811 84,811 84,811 84,811 84,811
Other Real Estate Owned 10,638 12,738 14,622 17,450 19,290
Other Assets 99,382 90,577 89,240 87,854 87,161
Total Other Assets 290,307 284,625 285,986 288,144 290,081
Total Assets$2,845,197 $2,753,154 $2,767,636 $2,792,186 $2,797,860
LIABILITIES
Deposits:
Noninterest Bearing Deposits$791,182 $801,671 $798,219 $790,040 $758,283
NOW Accounts 904,014 793,363 804,263 786,432 848,330
Money Market Accounts 252,800 257,004 259,813 254,682 248,367
Regular Savings Accounts 304,680 298,682 294,432 286,807 269,162
Certificates of Deposit 159,610 164,387 168,079 173,447 178,707
Total Deposits 2,412,286 2,315,107 2,324,806 2,291,408 2,302,849
Short-Term Borrowings 12,749 12,113 9,609 62,922 61,058
Subordinated Notes Payable 52,887 52,887 52,887 62,887 62,887
Other Long-Term Borrowings 14,881 21,368 26,401 27,062 28,265
Other Liabilities 77,226 75,055 79,109 71,074 68,449
Total Liabilities 2,570,029 2,476,530 2,492,812 2,515,353 2,523,508
SHAREOWNERS' EQUITY
Common Stock 168 168 168 172 172
Additional Paid-In Capital 34,188 33,152 32,855 38,671 38,256
Retained Earnings 267,037 264,581 262,380 259,139 258,181
Accumulated Other Comprehensive Loss, Net of Tax (26,225) (21,277) (20,579) (21,149) (22,257)
Total Shareowners' Equity 275,168 276,624 274,824 276,833 274,352
Total Liabilities and Shareowners' Equity$2,845,197 $2,753,154 $2,767,636 $2,792,186 $2,797,860
OTHER BALANCE SHEET DATA
Earning Assets$2,520,053 $2,402,664 $2,443,561 $2,471,741 $2,470,445
Interest Bearing Liabilities 1,701,621 1,599,804 1,615,484 1,654,239 1,696,776
Book Value Per Diluted Share$16.23 $16.39 $16.31 $16.04 $15.93
Tangible Book Value Per Diluted Share(1) 11.23 11.37 11.27 11.13 11.00
Actual Basic Shares Outstanding 16,845 16,807 16,804 17,222 17,157
Actual Diluted Shares Outstanding 16,949 16,874 16,855 17,254 17,226
(1) Tangible book value per diluted share 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 OPERATIONS
Unaudited
Twelve Months Ended
2016 2015 December 31,
(Dollars in thousands, except per share data) Fourth Quarter Third Quarter Second Quarter First Quarter Fourth Quarter 2016 2015
INTEREST INCOME
Interest and Fees on Loans$18,671$18,046$18,105 $18,045$18,861$72,867$73,169
Investment Securities 1,949 1,846 1,751 1,637 1,572 7,183 5,857
Funds Sold 212 212 318 362 169 1,104 632
Total Interest Income 20,832 20,104 20,174 20,044 20,602 81,154 79,658
INTEREST EXPENSE
Deposits 224 223 211 221 219 879 944
Short-Term Borrowings 57 43 38 10 9 148 59
Subordinated Notes Payable 363 341 343 387 354 1,434 1,368
Other Long-Term Borrowings 129 177 206 216 226 728 936
Total Interest Expense 773 784 798 834 808 3,189 3,307
Net Interest Income 20,059 19,320 19,376 19,210 19,794 77,965 76,351
Provision for Loan Losses 464 - (97) 452 513 819 1,594
Net Interest Income after Provision for Loan Losses 19,595 19,320 19,473 18,758 19,281 77,146 74,757
NONINTEREST INCOME
Deposit Fees 5,238 5,373 5,321 5,400 5,664 21,332 22,608
Bank Card Fees 2,754 2,759 2,855 2,853 2,866 11,221 11,278
Wealth Management Fees 1,773 1,774 1,690 1,792 1,893 7,029 7,533
Mortgage Banking Fees 1,392 1,503 1,267 1,030 1,043 5,192 4,539
Other 1,621 1,602 4,082 1,602 1,755 8,907 8,133
Total Noninterest Income 12,778 13,011 15,215 12,677 13,221 53,681 54,091
NONINTEREST EXPENSE
Compensation 16,699 15,993 16,051 16,241 15,833 64,984 65,414
Occupancy, Net 4,519 4,734 4,584 4,459 4,638 18,296 17,738
Other Real Estate, Net 343 821 1,060 1,425 1,241 3,649 4,971
Other 5,999 6,474 7,007 6,805 6,568 26,285 27,150
Total Noninterest Expense 27,560 28,022 28,702 28,930 28,280 113,214 115,273
OPERATING PROFIT 4,813 4,309 5,986 2,505 4,222 17,613 13,575
Income Tax Expense 1,517 1,436 2,056 858 1,620 5,867 4,459
NET INCOME$3,296$2,873$3,930 $1,647$2,602$11,746$9,116
PER SHARE DATA
Basic Net Income$0.20$0.17$0.22 $0.10$0.16$0.69$0.53
Diluted Net Income 0.20 0.17 0.22 0.10 0.16 0.69 0.53
Cash Dividend$0.05$0.04$0.04 $0.04$0.04$0.17$0.13
AVERAGE SHARES
Basic 16,809 16,804 17,144 17,202 17,145 16,989 17,273
Diluted 16,913 16,871 17,196 17,235 17,214 17,061 17,318


CAPITAL CITY BANK GROUP, INC.
ALLOWANCE FOR LOAN LOSSES
AND RISK ELEMENT ASSETS
Unaudited
Twelve Months Ended
2016 2015 December 31,
(Dollars in thousands, except per share data) Fourth Quarter Third Quarter Second Quarter First Quarter Fourth Quarter 2016 2015
ALLOWANCE FOR LOAN LOSSES
Balance at Beginning of Period$13,744 $13,677 $13,613 $13,953 $14,737 $13,953 $17,539
Provision for Loan Losses 464 - (97) 452 513 819 1,594
Net Charge-Offs (Recoveries) 777 (67) (161) 792 1,297 1,341 5,180
Balance at End of Period$13,431 $13,744 $13,677 $13,613 $13,953 $13,431 $13,953
As a % of Loans 0.86% 0.88% 0.89% 0.90% 0.93% 0.86% 0.93%
As a % of Nonperforming Loans 157.40% 159.56% 166.50% 150.44% 135.40% 157.40% 135.40%
CHARGE-OFFS
Commercial, Financial and Agricultural$377 $143 $304 $37 $135 $861 $1,029
Real Estate - Construction - - - - - - -
Real Estate - Commercial 70 5 - 274 87 349 1,250
Real Estate - Residential 120 96 205 478 587 899 1,852
Real Estate - Home Equity 38 51 146 215 397 450 1,403
Consumer 771 479 438 439 656 2,127 1,901
Total Charge-Offs$1,376 $774 $1,093 $1,443 $1,862 $4,686 $7,435
RECOVERIES
Commercial, Financial and Agricultural$50 $199 $49 $39 $57 $337 $239
Real Estate - Construction - - - - - - -
Real Estate - Commercial 45 45 237 81 13 408 183
Real Estate - Residential 277 139 579 236 264 1,231 705
Real Estate - Home Equity 32 237 81 59 37 409 136
Consumer 195 221 308 236 194 960 992
Total Recoveries$599 $841 $1,254 $651 $565 $3,345 $2,255
NET CHARGE-OFFS (RECOVERIES)$777 $(67)$(161)$792 $1,297 $1,341 $5,180
Net Charge-Offs as a % of Average Loans (1) 0.20% (0.02)% (0.04)% 0.21% 0.34% 0.09% 0.35%
RISK ELEMENT ASSETS
Nonaccruing Loans$8,533 $8,614 $8,214 $9,049 $10,305
Other Real Estate Owned 10,638 12,738 14,622 17,450 19,290
Total Nonperforming Assets$19,171 $21,352 $22,836 $26,499 $29,595
Past Due Loans 30-89 Days$6,438 $5,667 $3,872 $3,599 $5,775
Past Due Loans 90 Days or More - - - - -
Classified Loans 41,507 43,228 45,058 49,780 53,551
Performing Troubled Debt Restructuring's$38,233 $35,046 $35,526 $36,700 $35,634
Nonperforming Loans as a % of Loans 0.54% 0.55% 0.54% 0.60% 0.69%
Nonperforming Assets as a % of
Loans and Other Real Estate 1.21% 1.35% 1.48% 1.73% 1.94%
Nonperforming Assets as a % of Total Assets 0.67% 0.78% 0.83% 0.95% 1.06%
(1) Annualized


CAPITAL CITY BANK GROUP, INC.
AVERAGE BALANCE AND INTEREST RATES(1)
Unaudited
Fourth Quarter 2016 Third Quarter 2016 Second Quarter 2016 First Quarter 2016 Fourth Quarter 2015 Dec 2016 YTD Dec 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$1,573,264 18,827 4.76%$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%$1,542,232 73,417 4.76%$1,474,833 73,436 4.98%
Investment Securities
Taxable Investment Securities 614,560 1,726 1.12 606,606 1,632 1.07 571,343 1,539 1.08 552,092 1,420 1.03 544,542 1,365 0.99 586,284 6,317 1.08 530,297 5,223 0.98
Tax-Exempt Investment Securities 90,046 343 1.52 89,241 327 1.47 90,030 325 1.44 94,951 332 1.40 93,838 328 1.40 91,059 1,327 1.46 81,748 1,005 1.23
Total Investment Securities 704,606 2,069 1.17 695,847 1,959 1.12 661,373 1,864 1.13 647,043 1,752 1.09 638,380 1,693 1.05 677,343 7,644 1.13 612,045 6,228 1.02
Funds Sold 145,518 212 0.58 166,207 212 0.51 254,627 318 0.50 286,167 362 0.51 222,828 169 0.30 212,817 1,104 0.52 237,976 632 0.27
Total Earning Assets 2,423,388 $21,108 3.47% 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% 2,432,392 $82,165 3.38% 2,324,854 $80,296 3.45%
Cash and Due From Banks 50,207 45,139 46,605 47,834 45,875 47,447 48,195
Allowance for Loan Losses (14,017) (14,052) (14,254) (13,999) (14,726) (14,080) (15,876)
Other Assets 283,885 285,435 287,726 289,193 293,336 286,550 302,144
Total Assets$2,743,463 $2,734,465 $2,767,854 $2,763,746 $2,678,214 $2,752,309 $2,659,317
LIABILITIES:
Interest Bearing Deposits
NOW Accounts$782,518 $78 0.04%$774,899 $78 0.04%$762,667 $67 0.04%$798,996 $69 0.03%$725,538 $62 0.03%$779,764 $292 0.04%$747,297 $254 0.03%
Money Market Accounts 257,398 31 0.05 258,183 30 0.05 257,000 30 0.05 252,446 29 0.05 259,091 30 0.05 256,265 120 0.05 257,920 134 0.05
Savings Accounts 303,006 37 0.05 297,172 37 0.05 291,210 36 0.05 277,745 34 0.05 266,468 33 0.05 292,326 144 0.05 255,397 126 0.05
Time Deposits 161,859 78 0.19 165,324 78 0.19 170,837 78 0.19 177,057 89 0.20 180,124 94 0.21 168,741 323 0.19 186,944 430 0.23
Total Interest Bearing Deposits 1,504,781 224 0.06% 1,495,578 223 0.06% 1,481,714 -211 0.06% 1,506,244 -221 0.06% 1,431,221 219 0.06% 1,497,096 879 0.06% 1,447,558 944 0.07%
Short-Term Borrowings 14,768 57 1.54% 12,162 43 1.39% 53,691 38 0.28% 66,938 10 0.06% 68,093 9 0.06% 36,762 148 0.40% 58,481 59 0.10%
Subordinated Notes Payable 52,887 363 2.68 52,887 341 2.52 54,316 343 2.50 62,887 387 2.43 62,887 354 2.20 55,729 1,434 2.53 62,887 1,368 2.14
Other Long-Term Borrowings 17,473 129 2.93 23,629 177 2.98 26,721 206 3.11 27,769 216 3.12 28,618 226 3.14 23,880 728 3.05 29,698 936 3.15
Total Interest Bearing Liabilities 1,589,909 $773 0.20% 1,584,256 $784 0.20% 1,616,442 $798 0.20% 1,663,838 $834 0.20% 1,590,819 $808 0.20% 1,613,467 $3,189 0.20% 1,598,624 $3,307 0.21%
Noninterest Bearing Deposits 802,136 793,163 794,839 752,356 743,497 785,689 715,883
Other Liabilities 72,475 79,639 77,041 70,088 68,005 74,818 69,666
Total Liabilities 2,464,520 2,457,058 2,488,322 2,486,282 2,402,321 2,473,974 2,384,173
SHAREOWNERS' EQUITY: 278,943 277,407 279,532 277,464 275,893 278,335 275,144
Total Liabilities and Shareowners' Equity$2,743,463 $2,734,465 $2,767,854 $2,763,746 $2,678,214 $2,752,309 $2,659,317
Interest Rate Spread $20,335 3.27% $19,603 3.15% $19,617 3.15% $19,421 3.14% $20,006 3.31% $78,976 3.18% $76,989 3.25%
Interest Income and Rate Earned(1) 21,108 3.47 20,387 3.35 20,415 3.35 20,255 3.34 20,814 3.51 82,165 3.38 80,296 3.45
Interest Expense and Rate Paid(2) 773 0.13 784 0.13 798 0.13 834 0.14 808 0.14 3,189 0.13 3,307 0.14
Net Interest Margin $20,335 3.34% $19,603 3.23% $19,617 3.22% $19,421 3.20% $20,006 3.37% $78,976 3.25% $76,989 3.31%
(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: Brooke Hallock Hallock.Brooke@ccbg.com 850.402.8525

Source:Capital City Bank Group, Inc.