Capital City Bank Group, Inc. Reports Third Quarter 2018 Results

TALLAHASSEE, Fla., Oct. 23, 2018 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income of $6.0 million, or $0.35 per diluted share for the third quarter of 2018 compared to net income of $6.0 million, or $0.35 per diluted share for the second quarter of 2018, and $4.6 million, or $0.27 per diluted share for the third quarter of 2017. Net income for the third quarter of 2018 included a tax benefit of $0.4 million, or $0.02 per diluted share related to a 2017 plan year pension contribution made during the quarter as well as a non-routine operating loss of $0.2 million, or $0.01 per diluted share.

For the first nine months of 2018, net income totaled $17.8 million, or $1.04 per diluted share, compared to net income of $10.9 million, or $0.64 per diluted share for the same period of 2017. Net income for 2018 included tax benefits totaling $3.3 million, or $0.19 per diluted share related to 2017 plan year pension contributions made during 2018.

HIGHLIGHTS

Net interest income up 3.7% sequentially and 10.8% over prior year
Net interest margin of 3.72%, up 14 basis points over prior quarter
Period-end loan growth of $49 million, or 2.8% over prior quarter
Year-to-date net charge-offs at 12 basis points continues to reflect the quality of our loan portfolio
Tangible capital ratio of 7.80%, up 33 basis points over prior quarter

“The third quarter was a continuation of trends we have seen in recent quarters and represented an improvement in our overall performance”, said William G. Smith, Jr., Chairman, President and CEO. “Rising rates, loan growth and a phenomenal core deposit base are all contributing to higher net interest income. Credit quality remains strong and the strength of our Florida and Georgia economies is driving continued improvement in our market demographics. Lowering our efficiency ratio is a top priority and we have multiple strategies in place to grow revenues and manage expenses. There is more to be done, but I am pleased with our progress as we remain focused on strategies that produce long-term value for our shareowners.”

Compared to the second quarter of 2018, the $1.2 million increase in operating profit reflected a $0.8 million increase in net interest income and higher noninterest income of $0.8 million, partially offset by higher noninterest expense of $0.3 million and a $0.1 million increase in the loan loss provision.

Compared to the third quarter of 2017, the $0.3 million increase in operating profit was attributable to higher net interest income of $2.4 million and higher noninterest income of $0.3 million, partially offset by a $2.0 million increase in noninterest expense and a $0.4 million increase in the loan loss provision.

The increase in operating profit of $2.6 million for the first nine months of 2018 versus the comparable period of 2017 was attributable to higher net interest income of $6.7 million, partially offset by lower noninterest income of $0.5 million, higher noninterest expense of $2.5 million, and $1.1 million increase in the loan loss provision.

Our return on average assets (“ROA”) was 0.84% and our return on average equity (“ROE”) was 7.98% for the third quarter of 2018. These metrics were 0.84% and 8.25% for the second quarter of 2018, respectively, and 0.65% and 6.33% for the third quarter of 2017, respectively. For the first nine months of 2018, our ROA was 0.83% and our ROE was 8.12% compared to 0.52% and 5.15%, respectively, for the same period of 2017.

Discussion of Operating Results

Tax-equivalent net interest income for the third quarter of 2018 was $23.8 million compared to $22.9 million for the second quarter of 2018 and $21.6 million for the third quarter of 2017. The increase in tax-equivalent net interest income compared to both prior periods reflected higher interest rates and a favorable shift in the earning asset mix. Higher rates were earned on overnight funds, investment securities and variable rate loans, partially offset by a higher cost on our negotiated rate deposits. For the first nine months of 2018, tax-equivalent net interest income totaled $68.6 million compared to $62.4 million for the comparable period of 2017. 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 our negotiated rate deposits.

The federal funds target rate has been increased eight times since December 2015 to 2.25% at the end of the third quarter of 2018, which positively affected our net interest income due to favorable repricing of our variable and adjustable rate earning assets. Although these increases have resulted in higher rates paid on our negotiated rate deposit products, we continue to prudently manage our overall cost of funds, which was 28 basis points for the third quarter of 2018 compared to 26 basis points for the second quarter of 2018. In conjunction with our overall balance sheet management, we continue to review our deposit board rates to determine whether rate increases are appropriate. Various deposit products have been developed and are available to assist in attracting new clients or maintaining existing relationships that are seeking higher returns on their deposit balances. While rising rates and client expectations will result in a higher cost of funds, we will continue to prudently manage the mix and costs of our deposit base as we have done in the past.

Our net interest margin for the third quarter of 2018 was 3.72%, an increase of 14 basis points over the second quarter of 2018 and an increase of 24 basis points over the third quarter of 2017. For the first nine months of 2018, the net interest margin increased 24 basis points to 3.58% compared to the same period of 2017. The increase in the margin as compared to all prior periods reflects rising interest rates and a favorable shift in our earning asset mix, which has produced higher net interest income in each period.

The provision for loan losses for the third quarter of 2018 was $0.9 million compared to $0.8 million for the second quarter of 2018 and $0.5 million for the third quarter of 2017. For the first nine months of 2018, the loan loss provision was $2.5 million compared to $1.4 million in 2017. The higher provision in 2018 reflected growth in the loan portfolio. At September 30, 2018, the allowance for loan losses of $14.2 million represented 0.80% of outstanding loans (net of overdrafts) and provided coverage of 207% of nonperforming loans compared to 0.78% and 236%, respectively, at June 30, 2018 and 0.80% and 186%, respectively, at December 31, 2017.

Noninterest income for the third quarter of 2018 totaled $13.3 million, an increase of $0.8 million, or 6.1%, over the second quarter of 2018 and $0.3 million, or 2.4%, over the third quarter of 2017. Compared to the second quarter of 2018, the increase was primarily due to higher deposit fees, wealth management fees, mortgage banking fees and other income. A higher level of deposit fees, bank card fees, and other income drove the increase over the third quarter of 2017. For the first nine months of 2018, noninterest income totaled $38.3 million, a $0.5 million, or 1.3%, decrease from the same period of 2017, primarily due to lower mortgage banking fees of $0.7 million partially offset by higher wealth management fees of $0.3 million. The lower level of mortgage banking fees was due to a slowdown in secondary market loan production as adjustable rate loan production has picked up momentum and is being retained in our loan portfolio instead of sold on the secondary market. Total residential loan production (secondary market sales and portfolio) during the first nine months of 2018 was comparable to the prior year. The increase in wealth management was attributable to higher trust fees and reflected growth in assets under management.

Noninterest expense for the third quarter of 2018 totaled $28.7 million, an increase of $0.3 million, or 1.1%, over the second quarter of 2018 and $2.0 million, or 7.5%, over the third quarter of 2017. For the first nine months of 2018, noninterest expense totaled $85.0 million, a $2.5 million, or 3.0%, increase over the same period of 2017. Compared to the second quarter of 2018, the increase was primarily attributable to a non-routine operating loss. The increase over the three and nine month periods of 2017 was mostly attributable to an increase in other expense, primarily professional fees, but higher compensation, other real estate owned (“OREO”) expense and a non-routine operating loss also contributed to the increase. The higher level of professional fees reflected costs associated with several consulting projects, including both profit enhancements projects and the upgrading of ancillary systems, all of which were essentially complete at the end of the third quarter. The increase in compensation expense reflected higher incentive plan expense driven by improved financial performance. The increase in OREO expense reflected a $0.7 million decline in property sale gains which spiked in the third quarter of 2017.

For the first nine months of 2018, we realized income tax expense of $1.3 million, which reflected three discrete tax benefit items totaling $3.3 million resulting from the effect of federal tax reform, enacted in December 2017, specifically related to pension plan contributions made in 2018 for the plan year 2017. The discrete tax items for 2018 totaled $1.5 million for the first quarter, $1.4 million for the second quarter and $0.4 million for the third quarter. Absent these discrete items, our effective tax rate was approximately 24%.

Discussion of Financial Condition

Average earning assets were $2.535 billion for the third quarter of 2018, a decrease of $30.7 million, or 1.2%, from the second quarter of 2018, and an increase of $23.3 million, or 0.9%, over the fourth quarter of 2017. The change in average earning assets compared to the second quarter 2018 was attributable to a decrease in short-term investments, primarily due to a decline in seasonal public fund balances and certificates of deposit. The change in average earning assets over the fourth quarter 2017 was attributable to growth in the loan and investment portfolios primarily funded by increases in noninterest bearing deposits and savings accounts.

We maintained an average net overnight funds (deposits with banks plus fed funds sold less fed funds purchased) sold position of $63.6 million during the third quarter of 2018 compared to an average net overnight funds sold position of $158.7 million in the second quarter of 2018 and $174.6 million in the fourth quarter of 2017. The decrease in average net overnight funds compared to all prior periods reflected growth in our loan and investment portfolios. Additionally, part of the decrease compared to the second quarter of 2018 was attributable to the decline in our public deposits and certificates of deposit.

Average loans increased $55.8 million, or 3.3% compared to the second quarter of 2018, and have grown $106.4 million, or 6.5% compared to the fourth quarter of 2017. The increase compared to both prior periods reflected growth in all loans types except home equity loans. Over the course of 2018, we have purchased both adjustable rate residential loans and fixed and adjustable rate commercial real estate loan pools totaling $25.1 million based on principal balances at the time of purchase.

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 loan growth. In this rising rate environment, our fixed rate pricing is reviewed frequently and rate increases are implemented as appropriate.

Nonperforming assets (nonaccrual loans and OREO) totaled $9.6 million at September 30, 2018, representing an increase of $0.5 million, or 5.2%, over June 30, 2018, and a decrease of $1.5 million, or 13.6%, from December 31, 2017. Nonaccrual loans totaled $6.9 million at September 30, 2018, a $1.1 million increase over June 30, 2018 and a $0.3 million decrease from December 31, 2017. The balance of OREO totaled $2.7 million at September 30, 2018, a decrease of $0.6 million from June 30, 2018 and a decrease of $1.2 million from December 31, 2017. For the third quarter of 2018, we added properties totaling $0.4 million, sold properties totaling $0.9 million and recorded valuation adjustments totaling $0.2 million.

Average total deposits were $2.392 billion for the third quarter of 2018, a decrease of $39.7 million, or 1.6%, from the second quarter of 2018, and an increase of $13.9 million, or 0.6%, over the fourth quarter of 2017. The decline in deposits compared to the second quarter of 2018 reflected lower public fund and certificates of deposit balances, partially offset by increases in noninterest bearing and savings accounts. The increase in deposits when compared to the fourth quarter of 2017 reflected growth in all deposit products except public fund, regular NOW accounts and certificates of deposit. Average public fund balances typically peak in the first quarter and trend downward through the middle of the fourth quarter due to the cycle of tax receipts.

Deposit levels continue to be closely monitored and managed in conjunction with runoff from the investment portfolio. We monitor deposit rates on an ongoing basis as a prudent pricing discipline remains the key to managing our mix of deposits.

Average borrowings for the third quarter 2018 increased $5.9 million compared to the second quarter 2018, and increased $2.9 million compared to the fourth quarter of 2017. Increases occurred in short-term borrowings, partially offset by declines in long-term borrowings. We utilized short-term funding from the Federal Home Loan Bank to fund a small portion of the $55.8 million in average loan growth during the third quarter as we awaited maturities and cash flow back from the investment portfolio.

Shareowners’ equity was $298.0 million at September 30, 2018, compared to $293.6 million at June 30, 2018 and $284.2 million at December 31, 2017. At September 30, 2018, our common stock had a book value of $17.40 per diluted share compared to $17.15 at June 30, 2018 and $16.65 at December 31, 2017. Book value is impacted through other comprehensive income by the net unrealized gains and losses in our available for sale investment portfolio. At September 30, 2018, the net after tax unrealized loss was $3.4 million compared to $3.0 million at June 30, 2018 and $1.7 million at December 31, 2017. Book value is also impacted by the recording of our unfunded pension liability through other comprehensive income. At September 30, 2018, the net after tax pension liability reflected in accumulated other comprehensive loss was $30.3 million. This liability is re-measured annually on December 31^st based on an actuarial calculation of our pension liability. Significant assumptions used in calculating the liability are discussed in our 2017 Form 10-K “Critical Accounting Policies” and include the weighted average discount rate used to measure the present value of the pension liability, the weighted-average expected long-term rate of return on pension plan assets, and the assumed rate of annual compensation increases, all of which will vary when re-measured. The discount rate assumption used to calculate the pension liability is subject to long-term corporate bond rates at December 31^st. The estimated impact to the pension liability based on a 25 basis point increase or decrease in long-term corporate bond rates used to discount the pension obligation would decrease or increase the pension liability by approximately $5.3 million (after-tax) using the balances from the December 31, 2017 measurement date.

At September 30, 2018, our leverage ratio was 10.99% compared to 10.69% and 10.47% at June 30, 2018 and December 31, 2017, respectively. Further, our risk-adjusted capital ratio was 16.94%, 17.00%, and 17.10% on these respective dates. Our common equity tier 1 ratio was 13.43% at September 30, 2018, compared to 13.46% at June 30, 2018 and 13.42% at December 31, 2017. All of our capital ratios exceeded the threshold to be designated as “well-capitalized” under the Basel III capital standards.

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, and securities brokerage services. Our bank subsidiary, Capital City Bank, was founded in 1895 and now has 59 banking offices and 73 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 our future results to differ materially. The following factors, among others, could cause our actual results to differ: the accuracy of the our financial statement estimates and assumptions; legislative or regulatory changes, 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 our computer systems or fraud related to debit card products; changes in consumer spending and savings habits; our growth and profitability; the strength of the U.S. economy and the local economies where we conduct operations; the effects of a non-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 our ability to manage the risks involved in the foregoing. Additional factors can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and our 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 we assume 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. The GAAP to non-GAAP reconciliation is provided below.

(Dollars in Thousands)		Sep 30, 2018			Jun 30, 2018			Mar 31, 2018			Dec 31, 2017			Sep 30, 2017
Shareowners' Equity (GAAP)		$	298,016		$	293,571		$	288,360		$	284,210		$	285,201
Less: Goodwill (GAAP)			84,811			84,811			84,811			84,811			84,811
Tangible Shareowners' Equity (non-GAAP)	A		213,205			208,760			203,549			199,399			200,390
Total Assets (GAAP)			2,819,190			2,880,278			2,924,832			2,898,794			2,790,842
Less: Goodwill (GAAP)			84,811			84,811			84,811			84,811			84,811
Tangible Assets (non-GAAP)	B	$	2,734,379		$	2,795,467		$	2,840,021		$	2,813,983		$	2,706,031
Tangible Common Equity Ratio (non-GAAP)	A/B		7.80	%		7.47	%		7.17	%		7.09	%		7.41	%
Actual Diluted Shares Outstanding (GAAP)	C		17,127,846			17,114,380			17,088,419			17,071,107			17,045,326
Tangible Book Value per Diluted Share (non-GAAP)	A/C	$	12.45		$	12.20		$	11.91		$	11.68		$	11.76

CAPITAL CITY BANK GROUP, INC.
EARNINGS HIGHLIGHTS
*Unaudited*

		Three Months Ended									Nine Months Ended
(Dollars in thousands, except per share data)		Sep 30, 2018			Jun 30, 2018			Sep 30, 2017			Sep 30, 2018			Sep 30, 2017

EARNINGS
Net Income	$	5,990		$	6,003		$	4,555		$	17,766		$	10,860
Net Income Per Common Share	$	0.35		$	0.35		$	0.27		$	1.04		$	0.64
PERFORMANCE
Return on Average Assets		0.84	%		0.84	%		0.65	%		0.83	%		0.52	%
Return on Average Equity		7.98	%		8.25	%		6.33	%		8.12	%		5.15	%
Net Interest Margin		3.72	%		3.58	%		3.48	%		3.58	%		3.34	%
Noninterest Income as % of Operating Revenue		36.04	%		35.52	%		37.94	%		35.99	%		38.72	%
Efficiency Ratio		77.37	%		80.07	%		77.21	%		79.46	%		81.53	%
CAPITAL ADEQUACY
Tier 1 Capital Ratio		16.17	%		16.25	%		16.19	%		16.17	%		16.19	%
Total Capital Ratio		16.94	%		17.00	%		16.96	%		16.94	%		16.96	%
Tangible Common Equity Ratio		7.80	%		7.47	%		7.41	%		7.80	%		7.41	%
Leverage Ratio		10.99	%		10.69	%		10.48	%		10.99	%		10.48	%
Common Equity Tier 1 Ratio		13.43	%		13.46	%		13.26	%		13.43	%		13.26	%
Equity to Assets		10.57	%		10.19	%		10.22	%		10.57	%		10.22	%
ASSET QUALITY
Allowance as % of Non-Performing Loans		207.06	%		236.25	%		203.39	%		207.06	%		203.39	%
Allowance as a % of Loans		0.80	%		0.78	%		0.82	%		0.80	%		0.82	%
Net Charge-Offs as % of Average Loans		0.06	%		0.12	%		0.10	%		0.12	%		0.12	%
Nonperforming Assets as % of Loans and ORE		0.54	%		0.52	%		0.76	%		0.54	%		0.76	%
Nonperforming Assets as % of Total Assets		0.34	%		0.32	%		0.45	%		0.34	%		0.45	%
STOCK PERFORMANCE
High	$	25.91		$	25.99		$	24.58		$	26.50		$	24.58
Low		23.19			22.28			19.60			22.28			17.68
Close	$	23.34		$	23.63		$	24.01		$	23.34		$	24.01
Average Daily Trading Volume		16,500			25,246			29,551			20,957			25,362

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
*Unaudited*

		2018									2017
(Dollars in thousands)		Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter
ASSETS
Cash and Due From Banks	$	48,423		$	56,573		$	47,804		$	58,419		$	50,420
Funds Sold and Interest Bearing Deposits		26,839			107,066			250,821			227,023			140,694
Total Cash and Cash Equivalents		75,262			163,639			298,625			285,442			191,114

Investment Securities Available for Sale		484,243			493,662			471,836			480,911			510,846
Investment Securities Held to Maturity		227,923			236,764			225,552			216,679			184,262
Total Investment Securities		712,166			730,426			697,388			697,590			695,108

Loans Held for Sale		8,297			8,246			4,845			4,817			7,800

Loans, Net of Unearned Interest
Commercial, Financial, & Agricultural		239,044			222,406			198,775			218,166			215,963
Real Estate - Construction		87,672			88,169			80,236			77,966			67,813
Real Estate - Commercial		596,391			575,993			551,309			535,707			527,331
Real Estate - Residential		333,896			320,296			307,050			308,159			306,272
Real Estate - Home Equity		212,942			218,851			223,994			229,513			228,499
Consumer		294,040			285,599			284,356			278,622			273,670
Other Loans		8,167			11,648			14,988			3,747			9,311
Overdrafts		1,602			1,513			1,187			1,612			1,479
Total Loans, Net of Unearned Interest		1,773,754			1,724,475			1,661,895			1,653,492			1,630,338
Allowance for Loan Losses		(14,219	)		(13,563	)		(13,258	)		(13,307	)		(13,339	)
Loans, Net		1,759,535			1,710,912			1,648,637			1,640,185			1,616,999

Premises and Equipment, Net		89,567			90,000			90,939			91,698			92,345
Goodwill		84,811			84,811			84,811			84,811			84,811
Other Real Estate Owned		2,720			3,373			3,330			3,941			5,987
Other Assets		86,832			88,871			96,257			90,310			96,678
Total Other Assets		263,930			267,055			275,337			270,760			279,821

Total Assets	$	2,819,190		$	2,880,278		$	2,924,832		$	2,898,794		$	2,790,842

LIABILITIES
Deposits:
Noninterest Bearing Deposits	$	934,146		$	937,241		$	890,482		$	874,583		$	870,644
NOW Accounts		713,967			778,131			859,704			877,820			749,816
Money Market Accounts		254,099			257,965			257,422			239,212			249,964
Regular Savings Accounts		352,508			354,156			353,996			335,140			329,742
Certificates of Deposit		126,496			131,697			137,280			143,122			147,451
Total Deposits		2,381,216			2,459,190			2,498,884			2,469,877			2,347,617

Short-Term Borrowings		16,644			7,021			4,893			7,480			6,777
Subordinated Notes Payable		52,887			52,887			52,887			52,887			52,887
Other Long-Term Borrowings		12,456			12,897			13,333			13,967			15,047
Other Liabilities		57,971			54,712			66,475			70,373			83,313

Total Liabilities		2,521,174			2,586,707			2,636,472			2,614,584			2,505,641

SHAREOWNERS' EQUITY
Common Stock		171			171			171			170			170
Additional Paid-In Capital		38,325			37,932			37,343			36,674			35,892
Retained Earnings		293,254			288,800			283,990			279,410			275,013
Accumulated Other Comprehensive Loss, Net of Tax		(33,734	)		(33,332	)		(33,144	)		(32,044	)		(25,874	)

Total Shareowners' Equity		298,016			293,571			288,360			284,210			285,201

Total Liabilities and Shareowners' Equity	$	2,819,190		$	2,880,278		$	2,924,832		$	2,898,794		$	2,790,842

OTHER BALANCE SHEET DATA
Earning Assets	$	2,521,056		$	2,570,213		$	2,614,949		$	2,582,922		$	2,473,940
Interest Bearing Liabilities		1,529,057			1,594,754			1,679,515			1,669,628			1,551,684

Book Value Per Diluted Share	$	17.40		$	17.15		$	16.87		$	16.65		$	16.73
Tangible Book Value Per Diluted Share		12.45			12.20			11.91			11.68			11.76

Actual Basic Shares Outstanding		17,059			17,056			17,044			16,989			16,966
Actual Diluted Shares Outstanding		17,128			17,114			17,088			17,071			17,045

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
*Unaudited*

														Nine Months Ended
		2018							2017					September 30,
(Dollars in thousands, except per share data)		Third Quarter		Second Quarter		First Quarter			Fourth Quarter		Third Quarter			2018		2017

INTEREST INCOME
Interest and Fees on Loans	$	21,618	$	20,533	$	19,535		$	19,513	$	19,479		$	61,686	$	56,204
Investment Securities		3,472		3,156		2,762			2,520		2,416			9,390		6,627
Funds Sold		302		730		917			594		446			1,949		1,472
Total Interest Income		25,392		24,419		23,214			22,627		22,341			73,025		64,303

INTEREST EXPENSE
Deposits		1,068		995		868			590		530			2,931		1,199
Short-Term Borrowings		41		8		8			5		15			57		77
Subordinated Notes Payable		568		552		475			431		420			1,595		1,203
Other Long-Term Borrowings		92		94		100			112		115			286		331
Total Interest Expense		1,769		1,649		1,451			1,138		1,080			4,869		2,810
Net Interest Income		23,623		22,770		21,763			21,489		21,261			68,156		61,493
Provision for Loan Losses		904		815		745			826		490			2,464		1,389
Net Interest Income after Provision for Loan Losses		22,719		21,955		21,018			20,663		20,771			65,692		60,104

NONINTEREST INCOME
Deposit Fees		5,207		4,842		4,872			5,040		5,153			14,921		15,295
Bank Card Fees		2,828		2,909		2,811			2,830		2,688			8,548		8,361
Wealth Management Fees		2,181		2,037		2,173			2,172		2,197			6,391		6,112
Mortgage Banking Fees		1,343		1,206		1,057			1,410		1,480			3,606		4,344
Other		1,749		1,548		1,564			1,445		1,478			4,861		4,737
Total Noninterest Income		13,308		12,542		12,477			12,897		12,996			38,327		38,849

NONINTEREST EXPENSE
Compensation		15,891		15,797		15,911			15,102		15,711			47,599		47,211
Occupancy, Net		4,645		4,503		4,551			4,400		4,501			13,699		13,437
Other Real Estate, Net		347		248		626			355		(118	)		1,221		780
Other		7,816		7,845		6,818			7,040		6,613			22,479		21,122
Total Noninterest Expense		28,699		28,393		27,906			26,897		26,707			84,998		82,550

OPERATING PROFIT		7,328		6,104		5,589			6,663		7,060			19,021		16,403
Income Tax Expense (Benefit)		1,338		101		(184	)		6,660		2,505			1,255		5,543
NET INCOME	$	5,990	$	6,003	$	5,773		$	3	$	4,555		$	17,766	$	10,860

PER SHARE DATA
Basic Net Income	$	0.35	$	0.35	$	0.34		$	0.00	$	0.27		$	1.04	$	0.64
Diluted Net Income		0.35		0.35		0.34			0.00		0.27			1.04		0.64
Cash Dividend	$	0.09	$	0.07	$	0.07		$	0.07	$	0.07		$	0.23	$	0.17
AVERAGE SHARES
Basic		17,056		17,045		17,028			16,967		16,965			17,043		16,946
Diluted		17,125		17,104		17,073			17,050		17,044			17,102		17,009

CAPITAL CITY BANK GROUP, INC.
ALLOWANCE FOR LOAN LOSSES
AND RISK ELEMENT ASSETS
*Unaudited*

																	Nine Months Ended
		2018									2017						September 30,
(Dollars in thousands, except per share data)		Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			2018			2017

ALLOWANCE FOR LOAN LOSSES
Balance at Beginning of Period	$	13,563		$	13,258		$	13,307		$	13,339		$	13,242		$	13,307		$	13,431
Provision for Loan Losses		904			815			745			826			490			2,464			1,389
Net Charge-Offs		248			510			794			858			393			1,552			1,481
Balance at End of Period	$	14,219		$	13,563		$	13,258		$	13,307		$	13,339		$	14,219		$	13,339
As a % of Loans		0.80	%		0.78	%		0.80	%		0.80	%		0.82	%		0.80	%		0.82	%
As a % of Nonperforming Loans		207.06	%		236.25	%		181.26	%		185.87	%		203.39	%		207.06	%		203.39	%

CHARGE-OFFS
Commercial, Financial and Agricultural	$	268		$	141		$	182		$	664		$	276		$	591		$	693
Real Estate - Construction		-			-			7			-			-			7			-
Real Estate - Commercial		25			-			290			42			94			315			643
Real Estate - Residential		106			456			107			126			125			669			285
Real Estate - Home Equity		112			157			158			48			50.00			427			142
Consumer		463			509			695			577			455			1,667			1,616
Total Charge-Offs	$	974		$	1,263		$	1,439		$	1,457		$	1,000		$	3,676		$	3,379

RECOVERIES
Commercial, Financial and Agricultural	$	78		$	87		$	166		$	113		$	79		$	331		$	200
Real Estate - Construction		-			-			1			-			50			1			50
Real Estate - Commercial		222			15			123			24			69			360			150
Real Estate - Residential		107			346			84			141			60			537			475
Real Estate - Home Equity		47			22			61			67			84			130			152
Consumer		272			283			210			254			265			765			871
Total Recoveries	$	726		$	753		$	645		$	599		$	607		$	2,124		$	1,898

NET CHARGE-OFFS	$	248		$	510		$	794		$	858		$	393		$	1,552		$	1,481

Net Charge-Offs as a % of Average Loans ⁽¹⁾		0.06	%		0.12	%		0.20	%		0.21	%		0.10	%		0.12	%		0.12	%

RISK ELEMENT ASSETS
Nonaccruing Loans	$	6,867		$	5,741		$	7,314		$	7,159		$	6,558
Other Real Estate Owned		2,720			3,373			3,330			3,941			5,987
Total Nonperforming Assets	$	9,587		$	9,114		$	10,644		$	11,100		$	12,545

Past Due Loans 30-89 Days	$	3,684		$	3,472		$	4,268		$	4,543		$	5,687
Past Due Loans 90 Days or More (accruing)		126			-			-			36			-
Classified Loans		27,039			29,583			31,709			31,002			36,545
Performing Troubled Debt Restructurings	$	28,661		$	29,981		$	31,472		$	32,164		$	33,427

Nonperforming Loans as a % of Loans		0.39	%		0.33	%		0.44	%		0.43	%		0.40	%
Nonperforming Assets as a % of Loans and
Other Real Estate		0.54	%		0.52	%		0.64	%		0.67	%		0.76	%
Nonperforming Assets as a % of Total Assets		0.34	%		0.32	%		0.36	%		0.38	%		0.45	%

⁽¹⁾ Annualized

CAPITAL CITY BANK GROUP, INC.
AVERAGE BALANCE AND INTEREST RATES⁽¹⁾
*Unaudited*

		Third Quarter 2018							Second Quarter 2018							First Quarter 2018							Fourth Quarter 2017							Third Quarter 2017							Sep 2018 YTD							Sep 2017 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	$	1,747,093			21,733	4.94	%	$	1,691,287			20,625	4.89	%	$	1,647,612			19,636	4.83	%	$	1,640,738			19,696	4.76	%	$	1,638,578			19,672	4.76	%	$	1,695,695			61,994	4.89	%	$	1,611,117			56,689	4.70	%

Investment Securities
Taxable Investment Securities		663,639			3,290	1.98			643,516			2,945	1.83			619,137			2,523	1.64			602,353			2,263	1.50			588,518			2,150	1.45			642,260			8,758	1.82			593,579			5,832	1.31
Tax-Exempt Investment Securities		60,952			229	1.50			72,478			266	1.47			84,800			318	1.50			94,329			393	1.67			98,463			407	1.65			72,656			813	1.49			99,059			1,217	1.64

Total Investment Securities		724,591			3,519	1.94			715,994			3,211	1.79			703,937			2,841	1.62			696,682			2,656	1.52			686,981			2,557	1.48			714,916			9,571	1.79			692,638			7,049	1.36

Funds Sold		63,608			302	1.88			158,725			730	1.84			240,916			917	1.54			174,565			594	1.35			140,728			446	1.26			153,767			1,949	1.69			195,189			1,472	1.01

Total Earning Assets		2,535,292		$	25,554	4.00	%		2,566,006		$	24,566	3.84	%		2,592,465		$	23,394	3.66	%		2,511,985		$	22,946	3.63	%		2,466,287		$	22,675	3.65	%		2,564,378		$	73,514	3.83	%		2,498,944		$	65,210	3.49	%

Cash and Due From Banks		49,493							50,364							52,711							51,235							51,880							50,844							51,043
Allowance for Loan Losses		(14,146	)						(13,521	)						(13,651	)						(13,524	)						(13,542	)						(13,774	)						(13,547	)
Other Assets		256,285							258,255							260,595							272,755							275,335							258,363							277,514

Total Assets	$	2,826,924						$	2,861,104						$	2,892,120						$	2,822,451						$	2,779,960						$	2,859,811						$	2,813,954

LIABILITIES:
Interest Bearing Deposits
NOW Accounts	$	733,255		$	773	0.42	%	$	790,335		$	725	0.37	%	$	863,175		$	659	0.31	%	$	782,133		$	400	0.20	%	$	755,620		$	339	0.18	%	$	795,112		$	2,157	0.36	%	$	813,858		$	694	0.11	%
Money Market Accounts		254,440			190	0.30			255,143			166	0.26			246,576			103	0.17			249,953			80	0.13			262,486			80	0.12			252,082			459	0.24			261,118			172	0.09
Savings Accounts		352,833			43	0.05			351,664			43	0.05			343,987			42	0.05			333,703			41	0.05			327,675			40	0.05			349,527			128	0.05			320,634			118	0.05
Time Deposits		129,927			62	0.19			134,171			61	0.18			140,359			64	0.18			145,622			69	0.19			148,652			71	0.19			134,781			187	0.19			153,215			215	0.19
Total Interest Bearing Deposits		1,470,455			1,068	0.30	%		1,531,313			995	0.27	%		1,594,097			868	0.23	%		1,511,411			590	0.16	%		1,494,433			530	0.14	%		1,531,502			2,931	0.27	%		1,548,825			1,199	0.11	%

Short-Term Borrowings		12,949			41	1.24	%		6,633			8	0.49	%		8,869			8	0.37	%		8,074			5	0.25	%		9,920			15	0.59	%		9,499			57	0.80	%		10,552			77	0.97	%
Subordinated Notes Payable		52,887			568	4.20			52,887			552	4.13			52,887			475	3.60			52,887			431	3.19			52,887			420	3.11			52,887			1,595	3.98			52,887			1,203	3.00
Other Long-Term Borrowings		12,729			92	2.87			13,151			94	2.88			13,787			100	2.93			14,726			112	3.01			15,427			115	2.95			13,218			286	2.89			15,324			331	2.89

Total Interest Bearing Liabilities		1,549,020		$	1,769	0.47	%		1,603,984		$	1,649	0.43	%		1,669,640		$	1,451	0.37	%		1,587,098		$	1,138	0.29	%		1,572,667		$	1,080	0.28	%		1,607,106		$	4,869	0.42	%		1,627,588		$	2,810	0.24	%

Noninterest Bearing Deposits		921,817							900,643							862,009							867,000							834,729							895,042							820,843
Other Liabilities		58,330							64,671							72,969							80,309							87,268							65,270							83,683

Total Liabilities		2,529,167							2,569,298							2,604,618							2,534,407							2,494,664							2,567,418							2,532,114

SHAREOWNERS' EQUITY:		297,757							291,806							287,502							288,044							285,296							292,393							281,840

Total Liabilities and Shareowners' Equity	$	2,826,924						$	2,861,104						$	2,892,120						$	2,822,451						$	2,779,960						$	2,859,811						$	2,813,954

Interest Rate Spread				$	23,785	3.53	%				$	22,917	3.41	%				$	21,943	3.29	%				$	21,808	3.33	%				$	21,595	3.37	%				$	68,645	3.41	%				$	62,400	3.25	%

Interest Income and Rate Earned⁽¹⁾					25,554	4.00						24,566	3.84						23,394	3.66						22,946	3.63						22,675	3.65						73,514	3.83						65,210	3.49
Interest Expense and Rate Paid⁽²⁾					1,769	0.28						1,649	0.26						1,451	0.23						1,138	0.18						1,080	0.17						4,869	0.25						2,810	0.15

Net Interest Margin				$	23,785	3.72	%				$	22,917	3.58	%				$	21,943	3.43	%				$	21,808	3.45	%				$	21,595	3.48	%				$	68,645	3.58	%				$	62,400	3.34	%

⁽¹⁾ Interest and average rates are calculated on a tax-equivalent basis using a 21% Federal tax rate for 2018 and a 35% Federal tax rate for 2017.
⁽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

Released October 23, 2018

Capital City Bank Group, Inc. Reports Third Quarter 2018 Results

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