Capital City Bank Group, Inc. Reports Third Quarter 2010 Results
TALLAHASSEE, Fla., Oct. 26, 2010 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (Nasdaq:CCBG) today reported net income for the third quarter of 2010 totaling $0.4 million, or $0.02 per diluted share, compared to net income of $0.7 million, or $0.04 per diluted share, for the second quarter of 2010 and a net loss of $1.5 million, or $0.08 per diluted share, for the third quarter of 2009. For the first nine months of 2010, the Company reported a net loss of $2.3 million, or $0.14 per diluted share compared to a net loss of $0.1 million, or $0.00 per diluted share for the same period in 2009.
Net income for the third quarter reflects a loan loss provision of $5.7 million compared to $3.6 million for the second quarter of 2010. The increase in the loan loss provision and lower noninterest income of $1.2 million, partially offset by higher net interest income of $0.4 million and lower noninterest expense of $2.3 million, were the primary factors driving the reduction in earnings from the linked second quarter. Compared to the third quarter of 2009, a $6.7 million reduction in the loan loss provision, partially offset by a decline in net interest income of $1.8 million, lower noninterest income of $0.9 million and higher noninterest expense of $0.7 million, drove the improvement in earnings.
For the first nine months of 2010, lower net interest income of $7.5 million, a decline in noninterest income of $0.9 million, and higher noninterest expense of $3.6 million were the primary reasons for the decline in earnings over 2009. A lower loss provision of $9.1 million helped offset the aforementioned unfavorable variances.
"Given the current state of our economy, we were pleased to report a profit for the second consecutive quarter. Credit related costs continue to be elevated, but our diligence and focus on resolving problem assets is paying benefits as our nonperforming assets fell $4.2 million to $145.6 million as of quarter-end. Our capital levels remain strong and we believe we are well positioned to capitalize on opportunities evolving in our markets. While resolving problem assets is a high priority, it is not to the detriment of serving our existing clients and growing our business," said William G. Smith, Jr., Chairman, President and Chief Executive Officer.
The Return on Average Assets was 0.06% and the Return on Average Equity was 0.60% for the third quarter of 2010. These metrics were 0.11% and 1.11% for the second quarter of 2010, and -0.24% and -2.15% for the third quarter of 2009, respectively.
For the first nine months of 2010, the Return on Average Assets was -0.12% and the Return on Average Equity was -1.17% compared to 0.00% and -0.03%, respectively, for the same period in 2009.
Discussion of Financial Condition
Average earning assets were $2.273 billion for the third quarter of 2010, a decrease of $56.2 million, or 2.4%, from the second quarter of 2010, and an increase of $35.6 million, or 1.6%, from the fourth quarter of 2009. The decrease from the second quarter is primarily attributable to a lower level of overnight funds of $15.1 million (reflecting the reduction in deposits), and problem loan resolutions, which have the effect of lowering the loan portfolio as loans are either charged off or transferred to the other real estate owned category. Growth over the fourth quarter is attributable to increases in overnight funds and investment securities of $139.6 million and $33.4 million, respectively, which were primarily funded by higher deposit balances. These increases were partially offset by problem loan resolutions. Average loans have declined throughout the portfolio, driven by reductions in the commercial real estate and construction loan categories. The portfolio continues to be impacted by weak loan demand attributable to the sluggish economy, but not at the levels we have experienced in recent quarters. In addition to lower production and normal amortization and payoffs, the reduction in the portfolio is also attributable to gross charge-offs and the transfer of loans to the other real estate owned category, which collectively accounted for $60.9 million, or 53%, of the net reduction of $114.7 million1 in the portfolio during the first nine months of 2010.
At the end of the third quarter, nonperforming assets (including nonaccrual loans, restructured loans and other real estate owned) totaled $145.6 million, a decrease of $4.2 million from the second quarter of 2010, driven primarily by a decrease in restructured loans of $6.9 million - two large loans were restored to performing status due to paying as agreed under restructured terms. Nonaccrual loans realized a net decrease of $0.4 million in the current quarter as the volume of loans migrating to nonaccrual status was essentially offset by resolutions and transfers to the other real estate owned category. The $3.1 million increase in the other real estate owned balance reflects the aforementioned migration of nonaccrual loans through the foreclosure process as well as a slight slowdown in property dispositions. Nonperforming assets represented 7.86% of loans and other real estate at the end of the third quarter compared to 8.01% at the prior quarter-end and 7.38% at year-end 2009.
Average total deposits were $2.172 billion for the third quarter, a decrease of $62.0 million, or 2.8%, from the second quarter of 2010 and an increase of $82.2 million, or 3.9%, from the fourth quarter of 2009. Deposit levels are strong, but down slightly from the second quarter level, primarily attributable to lower money market account and certificates of deposit balances, and a decline in public funds. The money market account promotion launched during the third quarter of 2009 and concluded in the fourth quarter, experienced runoff as rates were eased during the current quarter to standard levels. Despite the lowering of rates, the bank has retained in excess of $24.4 million in new deposit balances. This initiative served to support our core deposit growth strategy while succeeding in further strengthening the Bank's overall liquidity position. Certificates of deposit declined primarily due to the maturity of one large public fund CD and a reduction in the number of single relationship, higher yielding certificates of deposit with the Bank. Public funds balances have declined as anticipated from the linked quarter reflecting seasonality within this deposit category. Our Absolutely Free Checking ("AFC") products continue to be successful as both balances and the number of accounts increased quarter over quarter.
We continue to pursue prudent pricing discipline to manage the mix of our deposits. Therefore, we are not attempting to compete with higher rate paying competitors for deposits. The increase from the fourth quarter of 2009 reflects higher public funds of $37.3 million and core deposits of $44.9 million, fueled primarily by the success of the AFC products.
We maintained an average net overnight funds (deposits with banks plus fed funds sold less fed funds purchased) sold position of $246.9 million during the third quarter of 2010 compared to an average net overnight funds sold position of $262.2 million in the prior quarter and an average overnight funds sold position of $112.8 million in the fourth quarter of 2009. The lower balance when compared to the linked quarter primarily reflects the decline in deposits mentioned above, partially offset by the lower investment and loan portfolios. The favorable variance as compared to year-end is primarily attributable to the growth in deposits and net reductions in the loan portfolio, partially offset by a higher balance in the investment portfolio. Late in the third quarter, a portion of the funds sold position was deployed into the investment portfolio. We will continue to evaluate deploying the excess funds sold position into the investment portfolio during the fourth quarter of 2010.
Equity capital was $260.7 million as of September 30, 2010, compared to $261.7 million as of June 30, 2010 and $267.9 million as of December 31, 2009. Our leverage ratio was 9.75%, 9.58%, and 10.39%, respectively, for the comparable periods. Further, our risk-adjusted capital ratio of 14.29% at September 30, 2010 exceeds the 10.0% threshold to be designated as "well-capitalized" under the risk-based regulatory guidelines. At September 30, 2010, our tangible common equity ratio was 6.98%, compared to 6.80% at June 30, 2010 and 6.84% at December 31, 2009.
Discussion of Operating Results
Tax equivalent net interest income for the third quarter of 2010 was $25.1 million compared to $24.7 million for the second quarter of 2010 and $27.1 million for the third quarter of 2009. For the first nine months of 2010, tax equivalent net interest income totaled $74.3 million compared to $82.4 million in 2009.
The increase of $0.4 million in tax equivalent net interest income on a linked quarter basis was due to lower interest expense, one additional calendar day, and a continued decrease in foregone interest on nonaccrual loans, partially offset by a reduction in loan income attributable to declining loan balances, and continued unfavorable asset repricing. Lower interest expense reflects a reduction in deposit rates primarily in the categories of NOWs, money market accounts and certificates of deposit.
The decrease of $8.1 million in tax equivalent net interest income for the first nine months of 2010, as compared to the same period in 2009, resulted from a reduction in loans outstanding, lower earning assets yields reflecting unfavorable asset repricing, higher foregone interest and lower loan fees, partially offset by a reduction in interest expense.
The net interest margin in the third quarter of 2010 was 4.38%, an increase of 12 basis points over the linked quarter and a decline of 61 basis points from the third quarter of 2009. The increase in the margin when compared to the linked quarter was a result of a 12 basis point reduction in the cost of funds, as the yield on earning assets remained constant. The lower cost of funds resulted from a reduction in the rates on NOW accounts primarily to comply with the Transaction Account Guarantee Program changes. Rates were lowered on the money market promotional accounts while certificates of deposit rates were significantly reduced in all markets. The decline in the margin for the first nine months of 2010 is attributable to the shift in our earning asset mix and unfavorable asset repricing, partially offset by a favorable variance in our average cost of funds. Strong deposit growth experienced in the fourth quarter of 2009 and the first half of 2010 improved our liquidity position, but has also adversely impacted our margin in the short term as a significant portion of this growth is currently invested in overnight funds.
The provision for loan losses for the third quarter of 2010 was $5.7 million compared to $3.6 million in the second quarter of 2010 and $12.3 million for the third quarter of 2009. For the first nine months of 2010, the loan loss provision totaled $20.0 million compared to $29.2 million for the same period in 2009. The higher provision over the second quarter primarily reflects an increase in the volume of loans migrating to impaired status and collateral devaluation on existing impaired loans. The lower provision for the first nine months of the year primarily reflects a reduction in the level of loans migrating into our problem loan pool as well as other stabilizing trends within the loan portfolio. Net charge-offs in the third quarter totaled $6.4 million, or 1.40% of average loans, compared to $6.4 million, or 1.39%, in the second quarter of 2010. At quarter-end, the allowance for loan losses was 2.10% of outstanding loans (net of overdrafts) and provided coverage of 40% of nonperforming loans compared to 2.11% and 38%, respectively, at the end of the prior quarter.
Noninterest income for the third quarter decreased $1.2 million, or 8.3%, from the linked quarter attributable to lower deposit fees ($0.6 million), retail brokerage fees ($0.2 million), and other income ($0.5 million). The decline in deposit fees was attributable to a lower level of overdraft fees due to reduced activity and to a lesser extent a higher level of overdraft charge-offs. The reduction in overdraft activity reflects current economic conditions and a higher level of consumer awareness that have both impacted consumer and business spending habits, as well as the recent implementation of new rules under Regulation E, which regulate our ability to post one-time debit card/ATM transactions for clients who have not opted in to our overdraft protection service. The lower level of retail brokerage fees is primarily reflective of lower trading activity. The decline in other income is due to a reduced level of merchant fees - a substantial portion of our merchant portfolio was sold in July 2008 and over the course of 2009 our merchants migrated to a new processor. For 2010, we continued to service our largest remaining merchant who migrated to a new processor during the third quarter of 2010. The reduction in this revenue source has been substantially offset by a reduction in processing costs which is reflected in noninterest expense (interchange fees). For the first nine months of 2010, noninterest income declined $0.9 million, or 2.1%, from the same period in 2009 attributable to lower deposit fees ($0.9 million) and other income ($1.2 million), partially offset by an increase in debit card and interchange fees ($0.9 million). The declines in deposit and merchant fees are attributable the same aforementioned factors for the current quarter. The higher level of debit card fees reflect a new rewards program implemented in early 2010 as well as a higher level of card activation and utilization.
Total noninterest expense decreased $2.3 million, or 6.5%, from the linked quarter driven by a reduction in expense for other real estate properties ($0.8 million), FDIC insurance ($0.4 million), advertising costs ($0.5 million), pension plan expense ($0.4 million), and interchange fees ($0.3 million). The decline in other real estate expense reflects a lower level of property valuation write-downs. The favorable variance in FDIC insurance reflects a higher required expense in the prior quarter due to an adjustment in our premium rate. The lower level of pension expense reflects a year-to-date adjustment after receipt of accounting reports from our actuary which included better than estimated asset return performance. The decline in interchange fees reflects the migration of our last merchant services client to a new processor – this decline is substantially offset by a corresponding decline in merchant fee revenue. For the first nine months of 2010, as compared to the same period in 2009, noninterest expense increased $3.6 million, or 3.7%, due primarily to higher expense for other real estate properties ($6.2 million), partially offset by lower pension expense ($1.4 million), advertising expense ($0.4 million), and intangible asset amortization ($0.9 million). A higher level of other real estate owned properties drove the increase in other real estate expenses. The decline in pension expense reflects improved return on pension plan assets. Closer management of costs related to our free checking products as well as lower public relations expense contributed to the decline in advertising expense. The lower level of intangible asset amortization reflects the full amortization of a core deposit intangible.
About Capital City Bank Group, Inc.
Capital City Bank Group, Inc. (Nasdaq:CCBG) is one of the largest publicly traded financial services companies headquartered in Florida and has approximately $2.6 billion in assets. The Company provides a full range of banking services, including traditional deposit and credit services, asset management, trust, mortgage banking, merchant services, bankcards, data processing and securities brokerage services. The Company's bank subsidiary, Capital City Bank, was founded in 1895 and now has 70 banking offices and 79 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 frequency and magnitude of foreclosure of the Company's loans; the effects of the Company's lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; the accuracy of the Company's financial statement estimates and assumptions, including the estimate for the Company's loan loss provision and the valuation allowance on deferred tax assets; restrictions on our operations, including the inability to pay dividends without our regulators' consent; continued depression of the market value of the Company that could result in an impairment of goodwill; the Company's ability to integrate acquisitions; the strength of the U.S. economy and the local economies where the Company conducts operations; harsh weather conditions and manmade disasters; fluctuations in inflation, interest rates, or monetary policies; changes in the stock market and other capital and real estate markets; legislative or regulatory changes; customer acceptance of third-party products and services; increased competition and its effect on pricing; technological changes; the effects of security breaches and computer viruses that may affect the Company's computer systems; changes in consumer spending and savings habits; the Company's growth and profitability; changes in accounting; and the Company's ability to manage the risks involved in the foregoing. Additional factors can be found in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, 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.
1 The $114.7 million reduction in the loan portfolio and the $60.9 million in loan resolutions are based on "as of" balances not averages.
EARNINGS HIGHLIGHTS
Three Months Ended Nine Months Ended
(Dollars in thousands, except per share data) Sep 30, 2010 Jun 30, 2010 Sep 30, 2009 Sep 30, 2010 Sep 30, 2009
EARNINGS
Net Income(Loss) $ 401 $ 731 $ (1,488) $ (2,331) $ (64)
Net Income(Loss) Per Common Share $ 0.02 $ 0.04 $ (0.08) $ (0.14) $ 0.00
PERFORMANCE
Return on Average Equity 0.60% 1.11% -2.15% -1.17% -0.03%
Return on Average Assets 0.06% 0.11% -0.24% -0.12% 0.00%
Net Interest Margin 4.38% 4.26% 4.99% 4.29% 5.09%
Noninterest Income as % of Operating Revenue 35.17% 37.58% 35.01% 36.52% 34.75%
Efficiency Ratio 82.08% 86.06% 73.86% 84.39% 74.82%
CAPITAL ADEQUACY
Tier 1 Capital Ratio 12.93% 12.78% 12.76% 12.93% 12.76%
Total Capital Ratio 14.29% 14.14% 14.12% 14.29% 14.12%
Tangible Capital Ratio 6.98% 6.80% 7.43% 6.98% 7.43%
Leverage Ratio 9.75% 9.58% 10.96% 9.75% 10.96%
Equity to Assets 10.10% 9.87% 10.77% 10.10% 10.77%
ASSET QUALITY
Allowance as % of Non-Performing Loans 39.94% 37.80% 40.90% 39.94% 40.90%
Allowance as a % of Loans 2.10% 2.11% 2.32% 2.10% 2.32%
Net Charge-Offs as % of Average Loans 1.40% 1.39% 1.76% 1.91% 1.41%
Nonperforming Assets as % of Loans and ORE 7.86% 8.01% 7.25% 7.86% 7.25%
STOCK PERFORMANCE
High $ 14.24 $ 18.25 $ 17.10 $ 18.25 $ 27.31
Low $ 10.76 $ 12.36 $ 13.92 $ 10.76 $ 9.50
Close $ 12.14 $ 12.38 $ 14.20 $ 12.14 $ 14.20
Average Daily Trading Volume 29,747 46,507 33,823 34,489 44,127
CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited
Nine Months Ended
September 30
(Dollars in thousands, except per share data) 2010
Third Quarter 2010
Second Quarter 2010
First Quarter 2009
Fourth Quarter 2009
Third Quarter 2010 2009
INTEREST INCOME
Interest and Fees on Loans $ 26,418 $ 26,644 $ 26,992 $ 28,582 $ 29,463 $ 80,054 $ 88,742
Investment Securities 1,014 1,114 990 1,097 1,323 3,118 4,273
Funds Sold 144 176 172 77 1 492 5
Total Interest Income 27,576 27,934 28,154 29,756 30,787 83,664 93,020
INTEREST EXPENSE
Deposits 1,820 2,363 2,938 2,964 2,626 7,121 7,621
Short-Term Borrowings 31 12 17 22 113 60 269
Subordinated Notes Payable 376 639 651 936 936 1,666 2,794
Other Long-Term Borrowings 565 551 526 542 560 1,642 1,694
Total Interest Expense 2,792 3,565 4,132 4,464 4,235 10,489 12,378
Net Interest Income 24,784 24,369 24,022 25,292 26,552 73,175 80,642
Provision for Loan Losses 5,668 3,633 10,740 10,834 12,347 20,041 29,183
Net Interest Income after Provision for Loan Losses 19,116 20,736 13,282 14,458 14,205 53,134 51,459
NONINTEREST INCOME
Service Charges on Deposit Accounts 6,399 7,039 6,628 7,183 7,099 20,066 20,959
Data Processing Fees 911 919 900 948 914 2,730 2,680
Asset Management Fees 1,040 1,080 1,020 1,065 960 3,140 2,860
Retail Brokerage Fees 671 846 565 772 765 2,082 1,883
Gain on Sale of Investment Securities 3 -- 5 -- 4 8 10
Mortgage Banking Revenues 772 641 508 550 663 1,921 2,149
Interchange Fees 1,291 1,289 1,212 1,129 1,129 3,792 3,303
ATM/Debit Card Fees 1,036 1,073 963 892 876 3,072 2,623
Other 1,326 1,787 2,166 1,872 1,894 5,279 6,513
Total Noninterest Income 13,449 14,674 13,967 14,411 14,304 42,090 42,980
NONINTEREST EXPENSE
Salaries and Associate Benefits 15,003 15,584 16,779 16,121 15,660 47,366 48,946
Occupancy, Net 2,611 2,585 2,408 2,458 2,455 7,604 7,340
Furniture and Equipment 2,288 2,192 2,181 2,261 2,193 6,661 6,835
Intangible Amortization 709 710 710 1,010 1,011 2,129 3,032
Other 11,752 13,558 11,306 13,463 10,296 36,616 30,649
Total Noninterest Expense 32,363 34,629 33,384 35,313 31,615 100,376 96,802
OPERATING PROFIT(LOSS) 202 781 (6,135) (6,444) (3,106) (5,152) (2,363)
Provision for Income Taxes (199) 50 (2,672) (3,037) (1,618) (2,821) (2,299)
NET INCOME(LOSS) $ 401 $ 731 $ (3,463) $ (3,407) $ (1,488) $ (2,331) $ (64)
PER SHARE DATA
Basic Earnings $ 0.02 $ 0.04 $ (0.20) $ (0.20) $ (0.08) $ (0.14) $ 0.00
Diluted Earnings $ 0.02 $ 0.04 $ (0.20) $ (0.20) $ (0.08) $ (0.14) $ 0.00
Cash Dividends 0.100 0.100 0.190 0.190 0.190 0.390 0.570
AVERAGE SHARES
Basic 17,087 17,063 17,057 17,034 17,024 17,069 17,047
Diluted 17,088 17,074 17,070 17,035 17,025 17,070 17,048
CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
Unaudited
(Dollars in thousands, except per share data) 2010
Third Quarter 2010
Second Quarter 2010
First Quarter 2009
Fourth Quarter 2009
Third Quarter
ASSETS
Cash and Due From Banks $ 48,701 $ 52,380 $ 52,615 $ 57,877 $ 79,275
Funds Sold and Interest Bearing Deposits 193,415 250,508 293,413 276,416 828
Total Cash and Cash Equivalents 242,116 302,888 346,028 334,293 80,103
Investment Securities, Available-for-Sale 231,303 218,785 217,606 176,673 183,944
Loans, Net of Unearned Interest
Commercial, Financial, & Agricultural 156,049 161,268 169,766 189,061 203,813
Real Estate - Construction 45,346 56,910 79,145 111,249 128,476
Real Estate - Commercial 680,639 676,516 729,011 716,791 704,595
Real Estate - Residential 448,704 450,997 394,132 406,262 424,715
Real Estate - Home Equity 250,795 247,726 245,185 246,722 243,808
Consumer 207,207 215,723 224,793 233,524 241,672
Other Loans 9,828 9,498 6,888 10,207 7,790
Overdrafts 2,669 3,144 2,701 2,124 3,163
Total Loans, Net of Unearned Interest 1,801,237 1,821,782 1,851,621 1,915,940 1,958,032
Allowance for Loan Losses (37,720) (38,442) (41,198) (43,999) (45,401)
Loans, Net 1,763,517 1,783,340 1,810,423 1,871,941 1,912,631
Premises and Equipment, Net 115,689 116,802 117,055 115,439 111,797
Intangible Assets 86,712 87,421 88,131 88,841 89,851
Other Real Estate Owned 51,208 48,110 46,444 36,134 33,371
Other Assets 89,451 93,398 89,416 85,003 80,240
Total Other Assets 343,060 345,731 341,046 325,417 315,259
Total Assets $ 2,579,996 $ 2,650,744 $ 2,715,103 $ 2,708,324 $ 2,491,937
LIABILITIES
Deposits:
Noninterest Bearing Deposits $ 479,887 $ 460,168 $ 446,855 $ 427,791 $ 397,943
NOW Accounts 830,297 891,636 890,570 899,649 687,679
Money Market Accounts 282,848 303,369 376,091 373,105 301,662
Regular Savings Accounts 135,143 132,174 130,936 122,370 122,040
Certificates of Deposit 393,268 412,964 438,488 435,319 440,666
Total Deposits 2,121,443 2,200,311 2,282,940 2,258,234 1,949,990
Short-Term Borrowings 38,138 21,376 18,900 35,841 103,711
Subordinated Notes Payable 62,887 62,887 62,887 62,887 62,887
Other Long-Term Borrowings 46,456 55,605 50,679 49,380 50,665
Other Liabilities 50,383 48,885 37,738 34,083 56,269
Total Liabilities 2,319,307 2,389,064 2,453,144 2,440,425 2,223,522
SHAREOWNERS' EQUITY
Common Stock 171 171 171 170 170
Additional Paid-In Capital 36,864 36,633 36,816 36,099 36,065
Retained Earnings 237,471 238,779 239,755 246,460 253,104
Accumulated Other Comprehensive Loss, Net of Tax (13,817) (13,903) (14,783) (14,830) (20,924)
Total Shareowners' Equity 260,689 261,680 261,959 267,899 268,415
Total Liabilities and Shareowners' Equity $ 2,579,996 $ 2,650,744 $ 2,715,103 $ 2,708,324 $ 2,491,937
OTHER BALANCE SHEET DATA
Earning Assets $ 2,225,955 $ 2,291,075 $ 2,362,640 $ 2,369,029 $ 2,142,804
Intangible Assets
Goodwill 84,811 84,811 84,811 84,811 84,811
Core Deposits 1,248 1,910 2,572 3,233 4,196
Other 653 700 748 797 844
Interest Bearing Liabilities 1,789,037 1,880,011 1,968,551 1,978,551 1,769,310
Book Value Per Diluted Share $ 15.25 $ 15.32 $ 15.34 $ 15.72 $ 15.76
Tangible Book Value Per Diluted Share 10.18 10.21 10.18 10.51 10.48
Actual Basic Shares Outstanding 17,095 17,067 17,063 17,036 17,032
Actual Diluted Shares Outstanding 17,096 17,078 17,076 17,037 17,033
CAPITAL CITY BANK GROUP, INC.
ALLOWANCE FOR LOAN LOSSES
AND NONPERFORMING ASSETS
Unaudited
2010 2010 2010 2009 2009
(Dollars in thousands) Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter
ALLOWANCE FOR LOAN LOSSES
Balance at Beginning of Period $ 38,442 $ 41,199 $ 43,999 $ 45,401 $ 41,782
Provision for Loan Losses 5,668 3,633 10,740 10,834 12,347
Transfer of Unfunded Reserve to Other Liability -- -- -- 392 --
Net Charge-Offs 6,390 6,390 13,540 11,844 8,728
Balance at End of Period $ 37,720 $ 38,442 $ 41,199 $ 43,999 $ 45,401
As a % of Loans 2.10% 2.11% 2.23% 2.30% 2.32%
As a % of Nonperforming Loans 39.94% 37.80% 38.42% 40.77% 40.90%
As a % of Nonperforming Assets 25.90% 25.66% 26.81% 30.54% 31.45%
CHARGE-OFFS
Commercial, Financial and Agricultural $ 242 $ 405 $ 842 $ 712 $ 633
Real Estate - Construction 701 1,220 3,722 2,040 2,315
Real Estate - Commercial 1,741 920 4,631 1,584 1,707
Real Estate - Residential 3,175 4,725 3,727 7,377 3,394
Consumer 1,057 360 1,507 1,324 1,324
Total Charge-Offs $ 6,916 $ 7,630 $ 14,429 $ 13,037 $ 9,373
RECOVERIES
Commercial, Financial and Agricultural $ 65 $ 181 $ 77 $ 343 $ 64
Real Estate - Construction -- 8 -- 5 150
Real Estate - Commercial 6 43 157 43 8
Real Estate - Residential 181 638 114 331 92
Consumer 274 370 541 471 331
Total Recoveries $ 526 $ 1,240 $ 889 $ 1,193 $ 645
NET CHARGE-OFFS $ 6,390 $ 6,390 $ 13,540 $ 11,844 $ 8,728
Net Charge-Offs as a % of Average Loans(1) 1.40% 1.39% 2.91% 2.42% 1.76%
RISK ELEMENT ASSETS
Nonaccruing Loans $ 74,168 $ 74,504 $ 76,382 $ 86,274 $ 91,880
Restructured Loans 20,267 27,200 30,843 21,644 19,121
Total Nonperforming Loans 94,435 101,704 107,225 107,918 111,001
Other Real Estate 51,208 48,110 46,444 36,134 33,371
Total Nonperforming Assets $ 145,643 $ 149,814 $ 153,669 $ 144,052 $ 144,372
Past Due Loans 30-89 Days $ 24,904 $ 21,192 $ 18,768 $ 36,501 $ 32,553
Past Due Loans 90 Days or More $ -- $ -- $ -- $ -- $ 486
Nonperforming Loans as a % of Loans 5.24% 5.58% 5.79% 5.63% 5.67%
Nonperforming Assets as a % of Loans and Other Real Estate 7.86% 8.01% 8.10% 7.38% 7.25%
Nonperforming Assets as a % of Capital(2) 48.81% 49.92% 50.69% 46.19% 46.01%
(1) Annualized
(2) Capital includes allowance for loan losses.
AVERAGE BALANCE AND INTEREST RATES(1)
Unaudited
Third Quarter 2010 Second Quarter 2010 First Quarter 2010
(Dollars in thousands) Average
Balance Interest Average
Rate Average
Balance Interest Average
Rate Average
Balance Interest Average
Rate
ASSETS:
Loans, Net of Unearned Interest $ 1,807,483 26,568 5.83% $ 1,841,379 26,795 5.84% $ 1,886,367 27,180 5.84%
Investment Securities
Taxable Investment Securities 124,625 674 2.15% 128,268 708 2.21% 71,325 500 2.81%
Tax-Exempt Investment Securities 88,656 521 2.35% 92,140 624 2.71% 97,316 753 3.10%
Total Investment Securities 213,281 1,195 2.23% 220,408 1,332 2.42% 168,641 1,253 2.98%
Funds Sold 252,434 144 0.22% 267,578 176 0.26% 303,280 172 0.23%
Total Earning Assets 2,273,198 $ 27,907 4.87% 2,329,365 $ 28,303 4.87% 2,358,288 $ 28,605 4.92%
Cash and Due From Banks 50,942 50,739 54,873
Allowance for Loan Losses (39,584) (41,074) (44,584)
Other Assets 342,202 339,458 329,842
Total Assets $ 2,626,758 $ 2,678,488 $ 2,698,419
LIABILITIES:
Interest Bearing Deposits
NOW Accounts $ 871,158 $ 326 0.15% $ 879,329 $ 400 0.18% $ 867,004 $ 384 0.18%
Money Market Accounts 293,424 145 0.20% 333,976 331 0.40% 374,161 689 0.75%
Savings Accounts 133,690 17 0.05% 131,333 17 0.05% 126,352 15 0.05%
Time Deposits 402,880 1,332 1.31% 430,571 1,615 1.50% 438,112 1,850 1.71%
Total Interest Bearing Deposits 1,701,152 1,820 0.42% 1,775,209 2,363 0.53% 1,805,629 2,938 0.66%
Short-Term Borrowings 23,388 31 0.54% 22,694 12 0.20% 30,673 17 0.22%
Subordinated Notes Payable 62,887 376 2.34% 62,887 639 4.02% 62,887 651 4.14%
Other Long-Term Borrowings 54,258 565 4.13% 52,704 551 4.20% 49,981 526 4.27%
Total Interest Bearing Liabilities 1,841,685 $ 2,792 0.60% 1,913,494 $ 3,565 0.75% 1,949,170 $ 4,132 0.86%
Noninterest Bearing Deposits 471,013 458,969 443,131
Other Liabilities 50,318 42,152 37,563
Total Liabilities 2,363,016 2,414,615 2,429,864
SHAREOWNERS' EQUITY: $ 263,742 $ 263,873 $ 268,555
Total Liabilities and Shareowners' Equity $ 2,626,758 $ 2,678,488 $ 2,698,419
Interest Rate Spread $ 25,115 4.27% $ 24,738 4.12% $ 24,473 4.06%
Interest Income and Rate Earned(1) $ 27,907 4.87% $ 28,303 4.87% $ 28,605 4.92%
Interest Expense and Rate Paid(2) 2,792 0.49% 3,565 0.61% 4,132 0.71%
Net Interest Margin $ 25,115 4.38% $ 24,738 4.26% $ 24,473 4.21%
(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.
AVERAGE BALANCE AND INTEREST RATES(1)
Unaudited
Fourth Quarter 2009 Third Quarter 2009
(Dollars in thousands) Average
Balance Interest Average
Rate Average
Balance Interest Average
Rate
ASSETS:
Loans, Net of Unearned Interest $ 1,944,873 28,813 5.88% $ 1,964,984 29,695 6.00%
Investment Securities
Taxable Investment Securities 72,537 498 2.74% 81,777 682 3.32%
Tax-Exempt Investment Securities 107,361 921 3.43% 107,307 985 3.67%
Total Investment Securities 179,898 1,419 3.15% 189,084 1,667 3.52%
Funds Sold 112,790 77 0.27% 3,294 1 0.11%
Total Earning Assets 2,237,561 $ 30,309 5.38% 2,157,362 $ 31,363 5.77%
Cash and Due From Banks 69,687 76,622
Allowance for Loan Losses (46,468) (42,774)
Other Assets 314,470 306,759
Total Assets $ 2,575,250 $ 2,497,969
LIABILITIES:
Interest Bearing Deposits
NOW Accounts $ 740,550 $ 308 0.17% $ 678,292 $ 257 0.15%
Money Market Accounts 361,104 625 0.69% 301,230 281 0.37%
Savings Accounts 122,158 16 0.05% 122,934 15 0.05%
Time Deposits 439,654 2,015 1.82% 430,944 2,073 1.91%
Total Interest Bearing Deposits 1,663,466 2,964 0.71% 1,533,400 2,626 0.68%
Short-Term Borrowings 47,114 22 0.18% 97,305 113 0.45%
Subordinated Notes Payable 62,887 936 5.83% 62,887 936 5.83%
Other Long-Term Borrowings 50,026 542 4.30% 51,906 560 4.28%
Total Interest Bearing Liabilities 1,823,493 $ 4,464 0.97% 1,745,498 $ 4,235 0.96%
Noninterest Bearing Deposits 426,542 416,770
Other Liabilities 56,659 60,674
Total Liabilities 2,306,694 2,222,942
SHAREOWNERS' EQUITY: $ 268,556 $ 275,027
Total Liabilities and Shareowners' Equity $ 2,575,250 $ 2,497,969
Interest Rate Spread $ 25,845 4.41% $ 27,128 4.81%
Interest Income and Rate Earned(1) $ 30,309 5.38% $ 31,363 5.77%
Interest Expense and Rate Paid(2) 4,464 0.79% 4,235 0.78%
Net Interest Margin $ 25,845 4.59% $ 27,128 4.99%
(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.
AVERAGE BALANCE AND INTEREST RATES(1)
Unaudited
September 2010 YTD September 2009 YTD
(Dollars in thousands) Average
Balance Interest Average
Rate Average
Balance Interest Average
Rate
ASSETS:
Loans, Net of Unearned Interest $ 1,844,788 80,543 5.84% $ 1,967,759 89,373 6.07%
Investment Securities
Taxable Investment Securities 108,268 1,882 2.32% 87,393 2,200 3.35%
Tax-Exempt Investment Securities 92,672 1,898 2.73% 105,117 3,185 4.04%
Total Investment Securities 200,940 3,780 2.51% 192,510 5,385 3.73%
Funds Sold 274,245 492 0.24% 5,992 5 0.12%
Total Earning Assets 2,319,973 $ 84,815 4.89% 2,166,261 $ 94,763 5.85%
Cash and Due From Banks 52,170 78,271
Allowance for Loan Losses (41,729) (40,937)
Other Assets 337,212 293,528
Total Assets $ 2,667,626 $ 2,497,123
LIABILITIES:
Interest Bearing Deposits
NOW Accounts $ 872,512 $ 1,110 0.17% $ 702,048 $ 731 0.14%
Money Market Accounts 333,558 1,165 0.47% 306,858 663 0.29%
Savings Accounts 130,485 49 0.05% 121,389 44 0.05%
Time Deposits 423,726 4,797 1.51% 413,641 6,183 2.00%
Total Interest Bearing Deposits 1,760,281 7,121 0.54% 1,543,936 7,621 0.66%
Short-Term Borrowings 25,558 60 0.31% 90,174 269 0.39%
Subordinated Notes Payable 62,887 1,666 3.49% 62,887 2,794 5.86%
Other Long-Term Borrowings 52,330 1,642 4.20% 52,629 1,694 4.30%
Total Interest Bearing Liabilities 1,901,056 $ 10,489 0.74% 1,749,626 $ 12,378 0.95%
Noninterest Bearing Deposits 457,807 415,610
Other Liabilities 43,391 53,986
Total Liabilities 2,402,254 2,219,222
SHAREOWNERS' EQUITY: $ 265,372 $ 277,901
Total Liabilities and Shareowners' Equity $ 2,667,626 $ 2,497,123
Interest Rate Spread $ 74,326 4.15% $ 82,385 4.90%
Interest Income and Rate Earned(1) $ 84,815 4.89% $ 94,763 5.85%
Interest Expense and Rate Paid(2) 10,489 0.60% 12,378 0.76%
Net Interest Margin $ 74,326 4.29% $ 82,385 5.09%
(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.
CONTACT: Capital City Bank Group, Inc.
J. Kimbrough Davis, Executive Vice President
and Chief Financial Officer
850.402.7820
Released October 26, 2010