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Capital City Bank Group, Inc. Reports Fourth Quarter and Full Year 2017 Results

TALLAHASSEE, Fla., Jan. 23, 2018 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (Nasdaq:CCBG) today reported net income of $3,000, or $0.00 per diluted share for the fourth quarter of 2017 which included a $4.0 million, or $0.24 per diluted share, income tax expense related to the tax reform act commonly known as Tax Cuts and Jobs Act (the “Tax Act”) enacted on December 22, 2017, compared to net income of $4.6 million, or $0.27 per diluted share for the third quarter of 2017, and $3.3 million, or $0.20 per diluted share, for the fourth quarter of 2016.

Net income for the fourth quarter, excluding the impact of the Tax Act (“core earnings”) a non-GAAP financial measure, totaled $4.0 million, or $0.24 per diluted share.

For the full year 2017, net income was 10.9 million, or $0.64 per diluted share, compared to net income of $11.7 million, or $0.69 per diluted share in 2016. Core earnings for 2017 totaled $14.9 million, or $0.88 per diluted share.

Core earnings is presented in this press release to enable investors to better compare period-to-period results due to the effect of the Tax Act on 2017 fourth quarter and full year results of operations. Reconciliations of this and other non-GAAP financial measures in this press release are included in the financial tables at the end of this press release.

Full Year 2017 HIGHLIGHTS

  • Core earnings per diluted share of $0.88, 28% increase over 2016
  • Significant improvement in operating leverage driven by margin expansion and expense reduction
    • Net interest income up $5.0 million, or 6.4%
    • Average loan growth of $76 million, or 5.0%
    • Noninterest expense down $3.8 million, or 3.3%
  • NPAs and classified assets down 42% and 33%, respectively

Fourth Quarter 2017 HIGHLIGHTS

  • Core earnings per diluted share of $0.24, down $0.03 sequentially due to other real estate owned gains in the third quarter of 2017
  • Continued growth in net interest income, up $0.2 million, or 1.1 % sequentially
  • NPAs and classified assets, down sequentially by 12% and 18%, respectively

“This year produced marked improvement in our overall performance as core earnings increased 28 percent,” said William G. Smith, Jr., Chairman, President and CEO. “These results were driven by loan growth, a rising rate environment, improving credit costs and a disciplined approach to managing expenses. Our net interest margin has increased 12 basis points year over year, aided by an asset-sensitive balance sheet and strong core deposit base. Since 2010, we have reduced annual expenses by $24 million and this was our seventh consecutive year of expense reduction. We are proud of these accomplishments and remain focused on strategies that will produce long-term value for our shareowners.”

Compared to the third quarter of 2017, the decrease in core earnings was primarily attributable to a higher loan loss provision of $0.3 million, a $0.2 million increase in noninterest expense, lower noninterest income of $0.1 million, and higher income taxes of $0.2 million, partially offset by higher net interest income of $0.2 million.

Compared to the fourth quarter of 2016, the increase in core earnings reflected higher net interest income of $1.4 million, a $0.7 million decrease in noninterest expense, and a $0.1 million increase in noninterest income, partially offset by higher income taxes of $1.1 million and a $0.4 million increase in the loan loss provision.

For the full year 2017, the increase in core earnings compared to 2016 was attributable to higher net interest income of $5.0 million and a $3.8 million reduction in noninterest expense, partially offset by lower noninterest income of $1.9 million, a $2.3 million increase in income taxes, and a $1.4 million increase in the loan loss provision.

Our return on average assets (“ROA”) was 0.00% and our return on average equity (“ROE”) was 0.00% for the fourth quarter of 2017. Our core earnings ROA was 0.57% and our core earnings ROE was 5.56% for the fourth quarter of 2017. These metrics were 0.65% and 6.33% for the third quarter of 2017, respectively, and 0.48% and 4.70% for the fourth quarter of 2016, respectively. For the full year 2017, our ROA was 0.39% and our ROE was 3.83%. Our core earnings ROA was 0.53% and our core earnings ROE was 5.26% for the full year 2017, compared to 0.43% and 4.22%, respectively, for the same period in 2016.

Discussion of Operating Results

Tax equivalent net interest income for the fourth quarter of 2017 was $21.8 million compared to $21.6 million for the third quarter of 2017 and $20.3 million for the fourth quarter of 2016. During the fourth quarter of 2017, overnight funds increased as a result of the growth in noninterest bearing deposits, and to a lesser degree, seasonal growth in our public funds deposits. A portion of these overnight funds were used to fund growth in the loan and investment portfolios. The increase in tax equivalent net interest income compared to the fourth quarter of 2016 reflected growth in the loan portfolio and higher rates earned on overnight funds, investment securities, and variable rate loans, partially offset by a higher cost on our negotiated rate deposits. For the full year 2017, tax equivalent net interest income totaled $84.2 million compared to $79.0 million for the prior year. The year over year increase was driven by growth in the loan and investment portfolios, coupled with higher short-term rates, partially offset by a higher rate paid on negotiated rate deposits and one less calendar day as 2016 was a leap year.

The overnight funds rate has increased five times since December 2015 to a target rate of 1.50% at the end of 2017, which positively affected our net interest income due to favorable repricing of our variable and adjustable rate earning assets. Although these increases have also resulted in higher rates paid on our negotiated rate products, we continue to prudently manage our overall cost of funds, which was 18 and 16 basis points for the fourth quarter and full year 2017, respectively. Despite highly competitive fixed-rate loan pricing across most markets, we continue to review our loan pricing and make adjustments where appropriate.

Our net interest margin for the fourth quarter of 2017 was 3.45%, a decrease of three basis points compared to the third quarter of 2017 and an increase of 11 basis points from the fourth quarter of 2016. For the full year 2017, the net interest margin increased 12 basis points to 3.37% compared to 2016. The decrease in the margin compared to the third quarter of 2017 was due to seasonal growth in our overnight funds, resulting in a slightly less favorable asset mix. The increase in the margin compared to the fourth quarter of 2016 and the prior full year was primarily attributable to loan growth, and higher yields on overnight funds and the investment portfolio, partially offset by higher rates on our negotiated rate deposits.

The provision for loan losses for the fourth quarter of 2017 was $0.8 million compared to $0.5 million for the third quarter of 2017 and $0.5 million for the fourth quarter of 2016. The higher provision for the fourth quarter of 2017 reflected higher impaired reserves held for two problem loans. For the full year 2017, the loan loss provision totaled $2.2 million compared to $0.8 million for 2016 with the increase primarily attributable to a higher level of net charge-offs and growth in the loan portfolio. Net loan charge-offs for the fourth quarter of 2017 totaled $0.9 million compared to net loan charge-offs of $0.4 million for the third quarter of 2017 and net loan charge-offs of $0.8 million for the fourth quarter of 2016. For the full year 2017, net loan charge-offs totaled $2.3 million (consisting of gross charge-offs of $4.8 million, less recoveries of $2.5 million), or 0.14% of average loans compared to $1.3 million (consisting of gross charge-offs of $4.7 million, less recoveries of $3.4 million), or 0.09% for 2016. At December 31, 2017, the allowance for loan losses of $13.3 million was 0.80% of outstanding loans (net of overdrafts) and provided coverage of 186% of nonperforming loans compared to 0.82% and 203%, respectively, at September 30, 2017 and 0.86% and 157%, respectively, at December 31, 2016.

Noninterest income for the fourth quarter of 2017 totaled $12.9 million, a decrease of $0.1 million, or 0.8%, from the third quarter of 2017 and an increase of $0.1 million, or 0.9%, over the fourth quarter of 2016. The decrease from the third quarter of 2017 was attributable to lower deposit fees and the increase over the fourth quarter of 2016 reflected higher wealth management fees of $0.4 million, partially offset by lower other income of $0.2 million and deposit fees of $0.1 million. For the full year 2017, noninterest income totaled $51.7 million, a $1.9 million, or 3.6%, decrease from 2016, attributable to lower other income of $2.7 million and deposit fees of $1.0 million, partially offset by higher wealth management fees of $1.2 million and mortgage banking fees of $0.6 million. The decrease in other income was attributable to a $2.5 million gain from the partial retirement of our trust preferred securities in the second quarter of 2016. Lower fees related to data processing services provided to third parties also contributed to the decrease and reflected the discontinuance of this line of business over the past two years with our last client discontinuing service in the fourth quarter of 2017. The reduction in deposit fees reflected lower utilization of our overdraft service product. Growth in assets under management as well as improved sales efforts have resulted in strong growth in wealth management fees. Strong home sales in our markets and a growing market share of residential loan production have driven the improvement in mortgage banking fees.

Noninterest expense for the fourth quarter of 2017 totaled $26.9 million, an increase of $0.2 million, or 0.7%, over the third quarter of 2017, and a $0.7 million, or 2.4%, decrease from the fourth quarter of 2016. The increase over the third quarter of 2017 reflected higher other real estate owned (“OREO”) expense of $0.5 million and other expense of $0.4 million, partially offset by lower compensation expense of $0.6 million and occupancy expense of $0.1 million. The decrease from the fourth quarter of 2016 was attributable to lower compensation expense of $1.0 million and occupancy expense of $0.1 million, partially offset by higher other expense of $0.4 million. For the full year 2017, noninterest expense totaled $109.4 million, a decrease of $3.8 million, or 3.3%, from 2016 attributable to lower OREO expense of $2.5 million, other expense of $0.7 million, occupancy expense of $0.5 million, and compensation expense of $0.1 million. All OREO expense categories (gain/loss on sale, carrying costs, and valuation adjustments) declined as we continued efforts to liquidate our remaining properties. Reduction in other cycle related expenses (legal expense and FDIC insurance expense) drove the decline in other expense. The decrease in occupancy expense reflected our continuing efforts to optimize our banking office structure and operational processes. The decrease in compensation expense reflected lower salary expense of $1.2 million partially offset by higher associate benefit expense of $1.1 million. Continued headcount attrition drove the decline in salary expense and the increase in associate benefit expense reflected higher pension plan expense attributable to utilization of a lower discount rate for plan liabilities and to a lesser extent higher associate insurance expense and stock compensation expense.

We realized income tax expense of $6.7 million for the fourth quarter of 2017 which included a $4.0 million discrete tax expense related to the Tax Act. Excluding the discrete tax expense, income tax totaled $2.7 million (39% effective rate) compared to $2.5 million (35% effective rate) for the third quarter of 2017 and $1.5 million (32% effective rate) for the fourth quarter of 2016. For the full year 2017, income tax expense totaled $12.2 million, including the aforementioned $4.0 million discrete tax expense related to the Tax Act. Excluding the discrete tax expense, income tax totaled $8.2 million (36% effective rate) compared to $5.9 million (33% effective rate) for 2016. Income tax expense for the fourth quarter included a $0.3 million write-off of a deferred tax asset related to a cancelled stock award. Income tax for the full year 2017 also included income tax benefits realized in the second quarter related to stock based compensation awards. Absent future discrete events, we anticipate that our effective tax will approximate 24% due to a lower federal tax rate related to the Tax Act.

Discussion of Financial Condition

Average earning assets were $2.512 billion for the fourth quarter of 2017, an increase of $45.7 million, or 1.9%, over the third quarter of 2017, and an increase of $88.6 million, or 3.7%, over the fourth quarter of 2016. The change in earning assets over both periods reflected a higher level of total deposits.

We maintained an average net overnight funds (deposits with banks plus fed funds sold less fed funds purchased) sold position of $174.6 million during the fourth quarter of 2017 compared to an average net overnight funds sold position of $140.7 million in the third quarter of 2017 and $145.5 million in the fourth quarter of 2016. The increase in net overnight funds compared to the prior periods reflected increases in noninterest bearing deposits, partially offset by increases in the loan portfolio and/or the investment portfolio.

Average loans increased $2.2 million, or 0.1% when compared to the third quarter of 2017, and have grown $67.5 million, or 4.3% when compared to the fourth quarter of 2016. The average increase compared to the third quarter of 2017 primarily reflected growth in construction and indirect consumer loans, partially offset by a reduction in the remaining loan types. Average growth over the fourth quarter of 2016 was experienced in all loan products, with the exception of commercial loans, home equity loans, and consumer direct loans. A portion of the increase compared to the fourth quarter 2016 was due to strategic loan purchases of approximately $26.8 million in adjustable residential real estate loans and $16.4 million in fixed and adjustable rate commercial real estate loans.

We continue to make minor modifications on some of our lending programs to try and mitigate the impact that consumer and business deleveraging has had on our portfolio. These programs, coupled with economic improvements in our anchor markets and strategic loan purchases, have helped to increase overall loan growth.

Nonperforming assets (nonaccrual loans and OREO) totaled $11.1 million at December 31, 2017, a decrease of $1.4 million, or 12%, from September 30, 2017 and $8.1 million, or 42%, from December 31, 2016. Nonaccrual loans totaled $7.2 million at December 31, 2017, a $0.6 million increase over September 30, 2017 and a $1.4 million decrease from December 31, 2016. Nonaccrual loan additions totaled $5.6 million in the fourth quarter of 2017 and $14.1 million for the full year 2017, which compares to $3.9 million and $13.1 million, respectively, for the same periods of 2016. The balance of OREO totaled $3.9 million at December 31, 2017, a decrease of $2.0 million and $6.7 million, respectively, from September 30, 2017 and December 31, 2016. For the fourth quarter of 2017, we added properties totaling $0.4 million, sold properties totaling $2.2 million, and recorded valuation adjustments totaling $0.2 million. For the full year 2017, we added properties totaling $2.4 million, sold properties totaling $7.5 million, recorded valuation adjustments totaling $1.3 million, and miscellaneous adjustments totaling $0.3 million. Nonperforming assets represented 0.38% of total assets at December 31, 2017 compared to 0.45% at September 30, 2017 and 0.67% at December 31, 2016.

Average total deposits were $2.378 billion for the fourth quarter of 2017, an increase of $49.2 million, or 2.1%, over the third quarter of 2017, and an increase of $71.5 million, or 3.1% over the fourth quarter of 2016. The increase in deposits when compared to the prior periods reflected growth in all deposit products except money market accounts and certificates of deposit. Average total deposits year-over-year reflected strong growth in noninterest bearing deposits and savings accounts. Deposit levels remain strong, particularly given the increases in the fed funds rate. 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.

Average borrowings decreased $2.5 million compared to the third quarter of 2017, and decreased $9.4 million compared to the fourth quarter 2016. Declines over both prior periods were primarily due to payoffs of FHLB advances.

Shareowners’ equity was $284.4 million at December 31, 2017, compared to $285.2 million at September 30, 2017 and $275.2 million at December 31, 2016. Our leverage ratio was 10.26%, 10.48%, and 10.23%, respectively, for these periods. Further, at December 31, 2017, our risk-adjusted capital ratio was 16.77% compared to 16.96% and 16.28% at September 30, 2017 and December 31, 2016, respectively. Our common equity tier 1 ratio was 13.09% at December 31, 2017, compared to 13.26% at September 30, 2017 and 12.61% at December 31, 2016. All of our capital ratios exceeded the threshold to be designated as “well-capitalized” under the Basel III capital standards. The $4.0 million deferred tax re-measurement adjustment recorded in the fourth quarter of 2017 due to the Tax Act unfavorably impacted our common equity tier 1 and risk-adjusted capital ratio by approximately 26 basis points.

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 $2.9 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 and securities brokerage services. Our bank subsidiary, Capital City Bank, was founded in 1895 and now has 60 banking offices and 74 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, 2016, 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 MEASURES

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.

In our discussion of financial performance, we use core earnings for the fourth quarter and full year 2017. We believe this measure will enhance the understanding of the Company’s core business and performance without the impact of the deferred tax re-measurement that was required with the enactment of the Tax Act.

The GAAP to non-GAAP reconciliations are provided below.

(Dollars in Thousands, except per share data) Dec 31, 2017Sep 30, 2017Jun 30, 2017Mar 31, 2017Dec 31, 2016
TANGIBLE COMMON EQUITY RATIO
Shareowners' Equity (GAAP) $284,425 $285,201 $281,513 $278,059 $275,168
Less: Goodwill (GAAP) 84,811 84,811 84,811 84,811 84,811
Tangible Shareowners' Equity (non-GAAP)A 199,614 200,390 196,702 193,248 190,357
Total Assets (GAAP) 2,899,192 2,790,842 2,814,843 2,895,531 2,845,197
Less: Goodwill (GAAP) 84,811 84,811 84,811 84,811 84,811
Tangible Assets (non-GAAP)B$2,814,381 $2,706,031 $2,730,032 $2,810,720 $2,760,386
Tangible Common Equity Ratio (non-GAAP)A/B 7.09% 7.41% 7.21% 6.88% 6.90%
Actual Diluted Shares Outstanding (GAAP)C 17,071 17,045 17,025 16,979 16,949
Tangible Book Value per Diluted Share (non-GAAP)A/C$11.69 $11.76 $11.55 $11.38 $11.23


Three Months Ended Twelve Months Ended
(Dollars in Thousands, except per share data) Dec 31, 2017 Dec 31, 2017
CORE EARNINGS
Net Income (GAAP)$3 $10,863
Plus: Deferred Tax Re-Measurement 4,033 4,033
Net Income Core Earnings (non-GAAP) 4,036 14,896
Earnings Per Diluted Share (GAAP) 0.00 0.64
Plus: Deferred Tax Re-Measurement 0.24 0.24
Earnings Per Diluted Share Core Earnings (non-GAAP) 0.24 0.88
Average Assets 2,822,464 2,816,099
Average Shareowner's Equity$288,051 $283,406
ROA (GAAP) 0.00% 0.39%
Plus: Deferred Tax Re-Measurement 0.57% 0.14%
Core Earnings ROA (non-GAAP) 0.57% 0.53%
ROE (GAAP) 0.00% 3.83%
Plus: Deferred Tax Re-Measurement 5.56% 1.43%
Core Earnings ROE (non-GAAP) 5.56% 5.26%


CAPITAL CITY BANK GROUP, INC.
EARNINGS HIGHLIGHTS
Unaudited
Three Months Ended Twelve Months Ended
(Dollars in thousands, except per share data) Dec 31, 2017 Sep 30, 2017 Dec 31, 2016 Dec 31, 2017 Dec 31, 2016
EARNINGS
Net Income$3 $4,555 $3,296 $10,863 $11,746
Diluted Net Income Per Share$0.00 $0.27 $0.20 $0.64 $0.69
PERFORMANCE
Return on Average Assets 0.00% 0.65% 0.48% 0.39% 0.43%
Return on Average Equity 0.00% 6.33% 4.70% 3.83% 4.22%
Net Interest Margin 3.45% 3.48% 3.34% 3.37% 3.25%
Noninterest Income as % of Operating Revenue 37.51% 37.94% 38.91% 38.41% 40.78%
Efficiency Ratio 77.50% 77.21% 83.23% 80.50% 85.34%
CAPITAL ADEQUACY
Tier 1 Capital 16.01% 16.19% 15.51% 16.01% 15.51%
Total Capital 16.77% 16.96% 16.28% 16.77% 16.28%
Tangible Common Equity (1) 7.09% 7.41% 6.90% 7.09% 6.90%
Leverage 10.26% 10.48% 10.23% 10.26% 10.23%
Common Equity Tier 1 13.09% 13.26% 12.61% 13.09% 12.61%
Equity to Assets 9.81% 10.22% 9.67% 9.81% 9.67%
ASSET QUALITY
Allowance as % of Non-Performing Loans 185.87% 203.39% 157.40% 185.87% 157.40%
Allowance as a % of Loans 0.80% 0.82% 0.86% 0.80% 0.86%
Net Charge-Offs as % of Average Loans 0.21% 0.10% 0.20% 0.14% 0.09%
Nonperforming Assets as % of Loans and ORE 0.67% 0.76% 1.21% 0.67% 1.21%
Nonperforming Assets as % of Total Assets 0.38% 0.45% 0.67% 0.38% 0.67%
STOCK PERFORMANCE
High $26.01 $24.58 $23.15 $26.01 $23.15
Low 22.21 19.60 14.29 17.68 12.83
Close$22.94 $24.01 $20.48 $22.94 $20.48
Average Daily Trading Volume 19,112 29,551 23,371 23,793 21,473
(1) Tangible common equity ratio is a non-GAAP financial measure. For additional information, including a reconciliation to GAAP, refer to
page 5.


CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
Unaudited
2017 2016
(Dollars in thousands) Fourth Quarter Third Quarter Second Quarter First Quarter Fourth Quarter
ASSETS
Cash and Due From Banks$58,419 $50,420 $72,801 $47,650 $48,268
Funds Sold and Interest Bearing Deposits 227,023 140,694 162,377 290,897 247,779
Total Cash and Cash Equivalents 285,442 191,114 235,178 338,547 296,047
Investment Securities Available for Sale 480,911 510,846 529,686 541,102 522,734
Investment Securities Held to Maturity 216,679 184,262 157,074 158,515 177,365
Total Investment Securities 697,590 695,108 686,760 699,617 700,099
Loans Held for Sale 4,817 7,800 8,213 7,498 10,886
Loans, Net of Unearned Interest
Commercial, Financial, & Agricultural 218,166 215,963 213,544 214,595 216,404
Real Estate - Construction 77,966 67,813 67,331 59,938 58,443
Real Estate - Commercial 535,707 527,331 519,140 503,868 503,978
Real Estate - Residential 308,159 306,272 302,072 295,406 272,895
Real Estate - Home Equity 229,513 228,499 230,995 231,300 236,512
Consumer 278,622 273,670 269,539 268,921 262,735
Other Loans 3,747 9,311 17,057 9,586 8,614
Overdrafts 1,612 1,479 1,518 1,345 1,708
Total Loans, Net of Unearned Interest 1,653,492 1,630,338 1,621,196 1,584,959 1,561,289
Allowance for Loan Losses (13,307) (13,339) (13,242) (13,335) (13,431)
Loans, Net 1,640,185 1,616,999 1,607,954 1,571,624 1,547,858
Premises and Equipment, Net 91,698 92,345 92,495 93,755 95,476
Goodwill 84,811 84,811 84,811 84,811 84,811
Other Real Estate Owned 3,941 5,987 7,968 9,501 10,638
Other Assets 90,708 96,678 91,464 90,178 99,382
Total Other Assets 271,158 279,821 276,738 278,245 290,307
Total Assets$2,899,192 $2,790,842 $2,814,843 $2,895,531 $2,845,197
LIABILITIES
Deposits:
Noninterest Bearing Deposits$874,583 $870,644 $842,314 $836,011 $791,182
NOW Accounts 877,820 749,816 787,090 882,605 904,014
Money Market Accounts 239,212 249,964 265,032 263,080 252,800
Regular Savings Accounts 335,140 329,742 327,560 321,160 304,680
Certificates of Deposit 143,122 147,451 149,937 156,449 159,610
Total Deposits 2,469,877 2,347,617 2,371,933 2,459,305 2,412,286
Short-Term Borrowings 7,480 6,777 6,105 7,603 12,749
Subordinated Notes Payable 52,887 52,887 52,887 52,887 52,887
Other Long-Term Borrowings 13,967 15,047 15,631 16,460 14,881
Other Liabilities 70,556 83,313 86,774 81,217 77,226
Total Liabilities 2,614,767 2,505,641 2,533,330 2,617,472 2,570,029
SHAREOWNERS' EQUITY
Common Stock 170 170 170 170 168
Additional Paid-In Capital 36,674 35,892 35,522 34,859 34,188
Retained Earnings 273,829 275,013 271,646 268,934 267,037
Accumulated Other Comprehensive Loss, Net of Tax (26,248) (25,874) (25,825) (25,904) (26,225)
Total Shareowners' Equity 284,425 285,201 281,513 278,059 275,168
Total Liabilities and Shareowners' Equity$2,899,192 $2,790,842 $2,814,843 $2,895,531 $2,845,197
OTHER BALANCE SHEET DATA
Earning Assets$2,582,922 $2,473,940 $2,478,546 $2,582,971 $2,520,053
Interest Bearing Liabilities 1,669,628 1,551,684 1,604,242 1,700,244 1,701,621
Book Value Per Diluted Share$16.66 $16.73 $16.54 $16.38 $16.23
Tangible Book Value Per Diluted Share(1) 11.69 11.76 11.55 11.38 11.23
Actual Basic Shares Outstanding 16,989 16,966 16,964 16,954 16,845
Actual Diluted Shares Outstanding 17,071 17,045 17,025 16,979 16,949
(1) Tangible book value per diluted share is a non-GAAP financial measure. For additional information, including a reconciliation to GAAP, refer to page 5.


CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited
Twelve Months Ended
2017 2016 December 31,
(Dollars in thousands, except per share data) Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Fourth
Quarter
2017 2016
INTEREST INCOME
Interest and Fees on Loans$19,513$19,479 $18,720$18,005$18,671$75,717$72,867
Investment Securities 2,520 2,416 2,169 2,042 1,949 9,147 7,183
Funds Sold 594 446 533 493 212 2,066 1,104
Total Interest Income 22,627 22,341 21,422 20,540 20,832 86,930 81,154
INTEREST EXPENSE
Deposits 590 530 388 281 224 1,789 879
Short-Term Borrowings 5 15 17 45 57 82 148
Subordinated Notes Payable 431 420 404 379 363 1,634 1,434
Other Long-Term Borrowings 112 115 117 99 129 443 728
Total Interest Expense 1,138 1,080 926 804 773 3,948 3,189
Net Interest Income 21,489 21,261 20,496 19,736 20,059 82,982 77,965
Provision for Loan Losses 826 490 589 310 464 2,215 819
Net Interest Income after Provision for
Loan Losses
20,663 20,771 19,907 19,426 19,595 80,767 77,146
NONINTEREST INCOME
Deposit Fees 5,040 5,153 5,052 5,090 5,238 20,335 21,332
Bank Card Fees 2,830 2,688 2,870 2,803 2,754 11,191 11,221
Wealth Management Fees 2,172 2,197 2,073 1,842 1,773 8,284 7,029
Mortgage Banking Fees 1,410 1,480 1,556 1,308 1,392 5,754 5,192
Other 1,445 1,478 1,584 1,675 1,621 6,182 8,907
Total Noninterest Income 12,897 12,996 13,135 12,718 12,778 51,746 53,681
NONINTEREST EXPENSE
Compensation 15,740 16,349 16,292 16,496 16,699 64,877 64,984
Occupancy, Net 4,400 4,501 4,555 4,381 4,519 17,837 18,296
Other Real Estate, Net 355 (118) 315 583 343 1,135 3,649
Other 6,402 5,975 6,759 6,462 5,999 25,598 26,285
Total Noninterest Expense 26,897 26,707 27,921 27,922 27,560 109,447 113,214
OPERATING PROFIT 6,663 7,060 5,121 4,222 4,813 23,066 17,613
Income Tax Expense 6,660 2,505 1,560 1,478 1,517 12,203 5,867
NET INCOME$3$4,555 $3,561$2,744$3,296$10,863$11,746
PER SHARE DATA
Basic Net Income$0.00$0.27 $0.21$0.16$0.20$0.64$0.69
Diluted Net Income 0.00 0.27 0.21 0.16 0.20 0.64 0.69
Cash Dividend $0.07$0.07 $0.05$0.05$0.05$0.24$0.17
AVERAGE SHARES
Basic 16,967 16,965 16,955 16,919 16,809 16,952 16,989
Diluted 17,050 17,044 17,016 16,944 16,913 17,013 17,061


CAPITAL CITY BANK GROUP, INC.
ALLOWANCE FOR LOAN LOSSES
AND RISK ELEMENT ASSETS
Unaudited
Twelve Months Ended
2017 2016 December 31,
(Dollars in thousands, except per share data) Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Fourth
Quarter
2017 2016
ALLOWANCE FOR LOAN LOSSES
Balance at Beginning of Period$13,339 $13,242 $13,335 $13,431 $13,744 $13,431 $13,953
Provision for Loan Losses 826 490 589 310 464 2,215 819
Net Charge-Offs 858 393 682 406 777 2,339 1,341
Balance at End of Period$13,307 $13,339 $13,242 $13,335 $13,431 $13,307 $13,431
As a % of Loans 0.80% 0.82% 0.81% 0.84% 0.86% 0.80% 0.86%
As a % of Nonperforming Loans 185.87% 203.39% 166.23% 160.70% 157.40% 185.87% 157.40%
CHARGE-OFFS
Commercial, Financial and Agricultural$664 $276 $324 $93 $377 $1,357 $861
Real Estate - Construction - - - - - - -
Real Estate - Commercial 42 94 478 71 70 685 349
Real Estate - Residential 126 125 44 116 120 411 899
Real Estate - Home Equity 48 50 0 92 38 190 450
Consumer 577 455 537 624 771 2,193 2,127
Total Charge-Offs$1,457 $1,000 $1,383 $996 $1,376 $4,836 $4,686
RECOVERIES
Commercial, Financial and Agricultural$113 $79 $40 $81 $50 $313 $337
Real Estate - Construction - 50 - - - 50 -
Real Estate - Commercial 24 69 58 23 45 174 408
Real Estate - Residential 141 60 202 213 277 616 1,231
Real Estate - Home Equity 67 84 39 29 32 219 409
Consumer 254 265 362 244 195 1,125 960
Total Recoveries$599 $607 $701 $590 $599 $2,497 $3,345
NET CHARGE-OFFS$858 $393 $682 $406 $777 $2,339 $1,341
Net Charge-Offs as a % of Average Loans (1) 0.21% 0.10% 0.17% 0.10% 0.20% 0.14% 0.09%
RISK ELEMENT ASSETS
Nonaccruing Loans$7,159 $6,558 $7,966 $8,298 $8,533
Other Real Estate Owned 3,941 5,987 7,968 9,501 10,638
Total Nonperforming Assets$11,100 $12,545 $15,934 $17,799 $19,171
Past Due Loans 30-89 Days $4,579 $5,687 $3,789 $3,263 $6,438
Past Due Loans 90 Days or More - - - - -
Classified Loans 31,002 36,545 41,322 40,978 41,507
Performing Troubled Debt Restructuring's$32,164 $33,427 $35,436 $36,555 $38,233
Nonperforming Loans as a % of Loans 0.43% 0.40% 0.49% 0.52% 0.54%
Nonperforming Assets as a % of
Loans and Other Real Estate 0.67% 0.76% 0.97% 1.11% 1.21%
Nonperforming Assets as a % of
Total Assets
0.38% 0.45% 0.57% 0.61% 0.67%
(1) Annualized


CAPITAL CITY BANK GROUP, INC.
AVERAGE BALANCE AND INTEREST RATES(1)
Unaudited
Fourth Quarter 2017 Third Quarter 2017 Second Quarter 2017 First Quarter 2017 Fourth Quarter 2016 Dec 2017 YTD Dec 2016 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$1,640,738 19,696 4.76%$1,638,578 19,672 4.76%$1,608,629 18,880 4.71%$1,585,561 18,137 4.64%$1,573,264 18,827 4.76%$1,618,583 76,385 4.72%$1,542,232 73,417 4.76%
Investment Securities
Taxable Investment Securities 602,353 2,263 1.50 588,518 2,150 1.45 591,825 1,898 1.28 600,528 1,784 1.20 614,560 1,726 1.12 595,790 8,095 1.36 586,284 6,317 1.08
Tax-Exempt Investment Securities 94,329 393 1.67 98,463 407 1.65 100,742 414 1.64 97,965 396 1.62 90,046 343 1.52 97,867 1,610 1.65 91,059 1,327 1.46
Total Investment Securities 696,682 2,656 1.52 686,981 2,557 1.48 692,567 2,312 1.34 698,493 2,180 1.26 704,606 2,069 1.17 693,657 9,705 1.40 677,343 7,644 1.13
Funds Sold 174,565 594 1.35 140,728 446 1.26 200,834 533 1.06 245,153 493 0.81 145,518 212 0.58 189,991 2,066 1.09 212,817 1,104 0.52
Total Earning Assets 2,511,985 $22,946 3.63% 2,466,287 $22,675 3.65% 2,502,030 $21,725 3.48% 2,529,207 $20,810 3.33% 2,423,388 $21,108 3.47% 2,502,231 $88,156 3.52% 2,432,392 $82,165 3.38%
Cash and Due From Banks 51,235 51,880 52,312 48,906 50,207 51,091 47,447
Allowance for Loan Losses (13,524) (13,542) (13,662) (13,436) (14,017) (13,541) (14,080)
Other Assets 272,768 275,335 276,799 280,463 283,885 276,318 286,550
Total Assets$2,822,464 $2,779,960 $2,817,479 $2,845,140 $2,743,463 $2,816,099 $2,752,309
LIABILITIES:
Interest Bearing Deposits
NOW Accounts$782,133 $400 0.20%$755,620 $339 0.18%$806,621 $222 0.11%$880,707 $134 0.06%$782,518 $78 0.04%$805,861 $1,094 0.14%$779,764 $292 0.04%
Money Market Accounts 249,953 80 0.13 262,486 80 0.12 261,726 57 0.09 259,106 35 0.06 257,398 31 0.05 258,304 252 0.10 256,265 120 0.05
Savings Accounts 333,703 41 0.05 327,675 40 0.05 322,833 39 0.05 311,212 38 0.05 303,006 37 0.05 323,928 159 0.05 292,326 144 0.05
Time Deposits 145,622 69 0.19 148,652 71 0.19 152,811 70 0.18 158,289 74 0.19 161,859 78 0.19 151,301 284 0.19 168,741 323 0.19
Total Interest Bearing Deposits 1,511,411 590 0.16% 1,494,433 530 0.14% 1,543,991 -388 0.10% 1,609,314 -281 0.07% 1,504,781 224 0.06% 1,539,394 1,789 0.12% 1,497,096 879 0.06%
Short-Term Borrowings 8,074 5 0.25% 9,920 15 0.59% 8,957 17 0.75% 12,810 45 1.43% 14,768 57 1.54% 9,927 82 0.82% 36,762 148 0.40%
Subordinated Notes Payable 52,887 431 3.19 52,887 420 3.11 52,887 404 3.02 52,887 379 2.86 52,887 363 2.68 52,887 1,634 3.05 55,729 1,434 2.53
Other Long-Term Borrowings 14,726 112 3.01 15,427 115 2.95 16,065 117 2.93 14,468 99 2.77 17,473 129 2.93 15,174 443 2.92 23,880 728 3.05
Total Interest Bearing Liabilities 1,587,098 $1,138 0.29% 1,572,667 $1,080 0.28% 1,621,900 $926 0.23% 1,689,479 $804 0.20% 1,589,909 $773 0.20% 1,617,382 $3,948 0.25% 1,613,467 $3,189 0.20%
Noninterest Bearing Deposits 867,000 834,729 829,432 797,964 802,136 832,477 785,689
Other Liabilities 80,315 87,268 84,486 79,208 72,475 82,834 74,818
Total Liabilities 2,534,413 2,494,664 2,535,818 2,566,651 2,464,520 2,532,693 2,473,974
SHAREOWNERS' EQUITY: 288,051 285,296 281,661 278,489 278,943 283,406 278,335
Total Liabilities and Shareowners' Equity$2,822,464 $2,779,960 $2,817,479 $2,845,140 $2,743,463 $2,816,099 $2,752,309
Interest Rate Spread $21,808 3.33% $21,595 3.37% $20,799 3.25% $20,006 3.14% $20,335 3.27% $84,208 3.27% $78,976 3.18%
Interest Income and Rate Earned(1) 22,946 3.63 22,675 3.65 21,725 3.48 20,810 3.33 21,108 3.47 88,156 3.52 82,165 3.38
Interest Expense and Rate Paid(2) 1,138 0.18 1,080 0.17 926 0.15 804 0.13 773 0.13 3,948 0.16 3,189 0.13
Net Interest Margin $21,808 3.45% $21,595 3.48% $20,799 3.33% $20,006 3.21% $20,335 3.34% $84,208 3.37% $78,976 3.25%
(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