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, 2017			Sep 30, 2017			Jun 30, 2017			Mar 31, 2017			Dec 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

Released January 23, 2018

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

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