Capital City Bank Group, Inc. Reports Third Quarter 2020 Results

TALLAHASSEE, Fla., Oct. 27, 2020 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income of $10.4 million, or $0.62 per diluted share for the third quarter of 2020 compared to net income of $9.1 million, or $0.55 per diluted share for the second quarter of 2020, and $8.5 million, or $0.50 per diluted share for the third quarter of 2019. For the first nine months of 2020, net income totaled $23.8 million, or $1.42 per diluted share, compared to net income of $22.2 million, or $1.32 per diluted share, for the same period of 2019.

QUARTER HIGHLIGHTS

Return on assets improved to 1.17% and return on equity to 12.16%
Diversified revenue and strong balance sheet continue to buffer impact of pandemic and lower interest rates
Strong performance by Capital City Home Loans (“CCHL”) contributed significantly ($0.23 per share)
11% increase in other fee revenues (deposit, bankcard, and wealth management)
Credit quality remains strong with no significant problem loan migration
88% of loan balances extended in the first and second quarter have resumed payments

“Although the environment remains challenging, Capital City reported a strong third quarter, up 12.7% over the second quarter,” said William G. Smith, Jr., Chairman, President and CEO. “I am proud of both our financial performance and how our team has responded to the COVID-19 pandemic. We continue to put the safety and well-being of our associates and clients first, as we reach out to assist our communities through the origination of SBA PPP loans, grants and volunteer hours, and endeavor to meet the needs of our clients through both in-person and virtual delivery channels. The mortgage market has been robust and we have benefitted from our alliance with CCHL, which contributed $0.23 per share in the third quarter – up from $0.20 per share in the second quarter. Earnings from CCHL and SBA PPP loan fees have helped to mitigate the adverse impacts of a lower interest rate environment and reserve build attributable to the adoption of CECL and COVID-19. Hopefully, we will continue to experience economic improvement during the fourth quarter and into 2021. I am proud of what our team has accomplished in a very difficult year, and I remain optimistic about the long-term outlook for Capital City. Thank you for your continued support.”

COVID-19 Update

Lobby access remains open for all of our banking offices and operations are subject to national guidelines and local safety ordinances to protect both clients and associates – we will continue to monitor changing conditions with the pandemic and its impact on client and associate interactions within our banking offices
Most operational associates returned to work in early June, but we have extended some remote work arrangements on a case-by-case basis
Enhanced digital access options are available for banking products and access to sales associates
We continue to monitor COVID-19 case count trends in our markets and respond appropriately to help ensure client and associate safety
We continue to support clients with the Small Business Administration Payment Protection Program (“SBA PPP”) by actively assisting with the forgiveness process

Discussion of Operating Results

Summary Overview

Compared to the second quarter of 2020, the $2.1 million increase in operating profit was attributable to a $4.7 million increase in noninterest income and a $0.7 million decrease in the provision for credit losses, partially offset by higher noninterest expense of $3.0 million and lower net interest income of $0.3 million.

Compared to the third quarter of 2019, the $7.0 million increase in operating profit was attributable to a $21.1 million increase in noninterest income, partially offset by higher noninterest expense of $12.5 million, a $0.5 million increase in the provision for credit losses and lower net interest income of $1.1 million.

The $10.4 million increase in operating profit for the first nine months of 2020 versus the comparable period of 2019 was attributable to higher noninterest income of $41.4 million, partially offset by higher noninterest expense of $24.2 million, a $6.1 million increase in the provision for credit losses and lower net interest income of $0.7 million.

The aforementioned period over period variances reflect the acquisition of a 51% membership interest and consolidation of CCHL late in the first quarter of 2020.

Our return on average assets (“ROA”) was 1.17% and our return on average equity (“ROE”) was 12.16% for the third quarter of 2020. These metrics were 1.10% and 11.03% for the second quarter of 2020, respectively, and 1.14% and 10.51% for the third quarter of 2019, respectively. For the first nine months of 2020, our ROA was 0.96% and our ROE was 9.50% compared to 1.00% and 9.48%, respectively, for the same period of 2019.

Net Interest Income/Net Interest Margin

Tax-equivalent net interest income for the third quarter of 2020 was $25.2 million compared to $25.6 million for the second quarter of 2020 and $26.3 million for the third quarter of 2019. For the first nine months of 2020, tax-equivalent net interest income totaled $76.7 million compared to $77.5 million in 2019. The decrease compared to all prior periods reflected lower rates earned on overnight funds, investment securities and variable rate loans, partially offset by lower cost for deposits.

The federal funds target rate has remained in the range of 0.00%-0.25% since March 2020 when the Fed reduced its overnight rate by 150 basis points, and as a result we continue to experience lower repricing of our variable/adjustable rate earning assets and investment securities. Our overall cost of funds remained low during the third quarter of 2020 at 0.13% compared to 0.14% for the second quarter of 2020. Due to highly competitive fixed-rate loan pricing in our markets, we continue to review our loan pricing and make adjustments where we believe appropriate and prudent.

Our net interest margin for the third quarter of 2020 was 3.12%, a decrease of 29 basis points from the second quarter of 2020 and 80 basis points from the third quarter of 2019. For the first nine months of 2020, the net interest margin decreased 42 basis points to 3.42%. The decrease compared to all prior periods was primarily attributable to considerable growth in overnight funds which reduced our margin. Our net interest margin for the third quarter of 2020, excluding the impact of SBA PPP loans, was 3.17%. We discuss the effect of the pandemic related stimulus programs on our balance sheet in more detail below under Discussion of Financial Condition.

Provision for Credit Loss

The provision for credit losses for the third quarter of 2020 was $1.3 million compared to $2.0 million for the second quarter of 2020 and $0.8 million for the third quarter of 2019. For the first nine months of 2020, the provision was $8.3 million compared to $2.2 million in 2019. The higher provision in 2020 reflected expected losses due to deterioration in economic conditions related to COVID-19. We discuss the allowance for credit losses and COVID-19 exposure further below.

Noninterest Income and Noninterest Expense

CCHL’s mortgage banking operations impacted our noninterest income and noninterest expense for the three and nine month periods ended September 30, 2020, and thus, the period over period comparisons reflect the impact of the CCHL consolidation, which occurred late in the first quarter 2020. The table below provides an overview of CCHL’s impact on our noninterest income and noninterest expense for 2020.

Noninterest income for the third quarter of 2020 totaled $35.0 million compared to $30.2 million for the second quarter of 2020 and $13.9 million for the third quarter of 2019. For the first nine months of 2020, noninterest income totaled $80.6 million compared to $39.2 million for same period of 2019. The improvement over all prior periods was primarily attributable to higher mortgage banking revenues at CCHL. Higher deposit fees, bank card fees, and wealth management fees contributed to the increase over the second quarter of 2020. Compared to both prior year periods, deposit fees declined primarily due to the impact of government stimulus during the second quarter related to the COVID-19 pandemic, but were partially offset by higher debit card activity which drove improvement in bank card fees. The downward trend in deposit fees we realized in the second quarter of 2020 reversed in the third quarter of 2020 reflecting higher utilization of our overdraft product.

Noninterest expense for the third quarter of 2020 totaled $40.3 million compared to $37.3 million for the second quarter of 2020 and $27.9 million for the third quarter of 2019. The increase over the second quarter of 2020 was primarily attributable to higher compensation expense of $2.5 million and other expense of $0.4 million. The increase in compensation reflected higher commission expense of $1.6 million related to higher mortgage production volume at CCHL and lower realized loan cost (credit offset to salary expense) of $1.0 million related to the high level of SBA PPP loan originations in the second quarter. Higher amortization expense for mortgage servicing rights at CCHL and Core CCBG expenses (debit card losses, activity based costs, and miscellaneous expenses) drove the increase in other expense.

For the first nine months of 2020, noninterest expense totaled $108.6 million, an increase of $24.2 million over the same period of 2019 primarily attributable to the addition of expenses at CCHL, including compensation expense of $21.8 million, occupancy expense of $1.8 million, and other expense of $3.0 million. Core CCBG noninterest expense decreased $2.6 million and reflected lower compensation expense of $1.2 million, ORE expense of $0.9 million, and other expense of $1.6 million, partially offset by higher occupancy expense of $1.1 million. The decrease in compensation expense was primarily attributable to higher realized loan cost of $0.6 million related to the aforementioned increase in SBA PPP loan originations and lower stock compensation expense of $0.5 million. A $1.0 million gain from the sale of a banking office in the first quarter of 2020 drove the reduction in ORE expense. The decline in other expense was primarily attributable to lower service cost expense for our pension plan. Higher expense for FF&E depreciation and maintenance agreements (related to technology investment and upgrades), deferred maintenance for premises, and pandemic related cleaning/supply costs drove the increase in occupancy. The same aforementioned factors drove the increase over the third quarter of 2019.

Overall, CCHL has contributed significantly to the improvement in our efficiency ratio for 2020.


		Three Months Ended												Nine Months Ended
		Sep 30, 2020				Jun 30, 2020				Sep 30, 2019				Sep 30, 2020				Sep 30, 2019
(Dollars in thousands)		Core CCBG		CCHL		Core CCBG		CCHL		Core CCBG		CCHL		Core CCBG		CCHL		Core CCBG		CCHL
Deposit Fees	$	4,316		-	$	3,756	$	-	$	4,961	$	-	$	13,087	$	-	$	14,492	$	-
Bank Card Fees		3,389		-		3,142		-		2,972		-		9,582		-		8,863		-
Wealth Management Fees		2,808		-		2,554		-		2,992		-		7,966		-		7,719		-
Mortgage Banking Fees		208		22,775		241		19,156		1,587		-		1,587		44,046		3,779		-
Other		1,182		287		1,147		203		1,391		-		3,787		587		4,372		-
Total Noninterest Income	$	11,903	$	23,062	$	10,840	$	19,359	$	13,903	$	-	$	36,009	$	44,633	$	39,225	$	-

Salaries	$	11,603	$	10,753	$	11,596	$	8,381	$	12,533	$	-	$	36,687	$	21,376	$	37,314	$	-
Other Associate Benefits		3,616		192		3,477		204		3,670		-		11,049		446		11,675		-
Total Compensation		15,219		10,945		15,073		8,585		16,203		-		47,736		21,822		48,989		-

Occupancy, Net		5,061		845		5,030		768		4,710		-		14,839		1,844		13,756		-
Other		6,930		1,342		6,599		1,248		6,960		-		19,325		3,048		21,722		-
Total Noninterest Expense	$	27,210	$	13,132	$	26,702	$	10,601	$	27,873	$	-	$	81,900	$	26,714	$	84,467	$	-

Income Taxes

We realized income tax expense of $3.2 million (effective rate of 17%) for the third quarter of 2020 compared to $2.9 million (effective rate of 18%) for the second quarter of 2020 and $3.0 million (effective rate of 26%) for the third quarter of 2019. For the first nine months of 2020, we realized income tax expense of $7.4 million (effective rate of 18%) compared to $7.4 million (effective rate of 25%) for the same period of 2019. The decrease in our effective tax rate in 2020 reflected the impact of converting CCHL to a partnership for tax purposes in the second quarter of 2020. Absent discrete items, we expect our annual effective tax rate to approximate 18%-19% for the remainder of 2020.

Discussion of Financial Condition

Earning Assets

Average earning assets were $3.224 billion for the third quarter of 2020, an increase of $207.1 million, or 6.9% over the second quarter of 2020, and an increase of $529.1 million, or 19.6% over the fourth quarter of 2019. The increase over both prior periods was primarily driven by higher deposit balances which funded growth in the loan portfolio and overnight funds sold. Deposit balances increased as a result of strong core deposit growth, in addition to funding retained at the bank from SBA PPP loans, and various other stimulus programs.

We maintained an average net overnight funds (deposits with banks plus FED funds sold less FED funds purchased) sold position of $567.9 million during the third quarter of 2020 compared to an average net overnight funds sold position of $351.5 million in the second quarter of 2020 and $228.1 million in the fourth quarter of 2019. The increase compared to both prior periods was driven by strong core deposit growth, in addition to pandemic related stimulus programs (see below – Funding).

Average loans held for investment (“HFI”) increased $22.2 million, or 1.1%, over the second quarter of 2020 and $171.1 million, or 9.3%, over the fourth quarter of 2019. We originated SBA PPP loans totaling $190 million (reflected in the commercial loan category) which averaged $190 million in the third quarter and $134 million in the second quarter. Period-end HFI loans decreased $24.0, or 1.2%, from the second quarter of 2020 and increased $162.2 million, or 8.8%, over the fourth quarter of 2019. The decline in the core loan portfolio (ex-SBA PPP loans) has been driven by residential real estate loan run-off reflective of the lower rate environment and refinancing activity as well as lower utilization of commercial lines of credit reflective of the economic slowdown.

To date, our borrowers have submitted a nominal level of SBA PPP forgiveness applications, but these applications are expected to accelerate over the next six months. Amortized SBA PPP loan fees totaled approximately $0.6 million for the third quarter of 2020 and $0.4 million for the second quarter of 2020. At September 30, 2020, we had approximately $4.0 million (net) in deferred SBA PPP loan fees.

Allowance for Credit Losses

At September 30, 2020, the allowance for credit losses totaled $23.1 million compared to $22.5 million at June 30, 2020 and $13.9 million at December 31, 2019. At September 30, 2020, the allowance represented 1.16% of outstanding loans held for investment (HFI) and provided coverage of 420% of nonperforming loans compared to 1.11% and 322%, respectively, at June 30, 2020 and 0.75% and 311%, respectively, at December 31, 2019. At September 30, 2020, excluding SBA PPP loans (100% government guaranteed), the allowance represented 1.28% of loans held for investment.

The adoption of ASC 326 (“CECL”) on January 1, 2020 had an impact of $4.0 million ($3.3 million increase in the allowance for credit losses and $0.7 million increase in the allowance for unfunded loan commitments (other liability account)). The $6.4 million build (provision of $8.3 million less net charge-offs of $1.9 million) in the allowance for credit losses for the first nine months of 2020 was attributable to deterioration in economic conditions, primarily a higher rate of unemployment due to the COVID-19 pandemic and its potential effect on rates of default.

Credit Quality/COVID-19 Exposure

Nonperforming assets (nonaccrual loans and OREO) totaled $6.7 million at September 30, 2020, a $1.3 million decrease from June 30, 2020, and a $1.3 million increase over December 31, 2019. Nonaccrual loans totaled $5.5 million at September 30, 2020, a $1.5 million decrease from June 30, 2020 and a $1.0 million increase over December 31, 2019. The balance of OREO totaled $1.2 million at September 30, 2020, an increase of $0.2 million over June 30, 2020 and a $0.3 million increase over December 31, 2019.

We continue to analyze our loan portfolio for segments that have been affected by the stressed economic and business conditions caused by the pandemic. Certain at-risk segments total 8% of our loan balances at September 30, 2020, including hotel (3%), restaurant (1%), retail and shopping centers (3%), and other (1%). The other segment includes churches, non-profits, education, and recreational. To assist our clients, in mid-March of 2020, we began allowing short term 60 to 90 day loan extensions for affected borrowers. A roll-forward of loan extension activity is provided in the table below. Approximately 83% of the $325 million in loans extended were for commercial borrowers and 17% for consumer borrowers. Approximately $285 million, or 88% of the loan balances associated with these borrowers have resumed making regularly scheduled payments. Of the $40 million that remains on extension, approximately $2 million was classified at September 30, 2020 and $26 million is related to six hotel loans which were not classified, but continue to be monitored closely.

						% Loans Extended
At October 2, 2020 (Dollars in thousands)	# Loans			Loan Amount		# Loans		$ Loans
Loans Extended	2,333		$	325,014
Loans Resuming Payments	(2,129	)		(284,548	)	91	%	88	%
Loans Still on Extension	204		$	40,466		9	%	12	%

Funding (Deposits/Debt)

Average total deposits were $2.971 billion for the third quarter of 2020, an increase of $187.8 million, or 6.8% over the second quarter of 2020, and an increase of $446.3 million, or 17.7% over the fourth quarter of 2019. Period end deposit balances grew $54.4 million and $364.0 million over the second quarter of 2020 and fourth quarter of 2019, respectively, indicating strong growth in core deposit balances. The estimated deposit inflows related to the two pandemic related stimulus programs that occurred primarily during the second quarter were $179 million (SBA PPP) and $64 million (Economic Impact Payment stimulus checks). Given these large increases, the potential exists for our deposit levels to be volatile over the coming quarters due to the uncertain timing of the outflows of the stimulus related deposits and the economic recovery. It is anticipated that current liquidity levels will remain robust due to our strong overnight funds sold position. We monitor deposit rates on an ongoing basis and adjust if necessary, as a prudent pricing discipline remains the key to managing our mix of deposits.

Average borrowings increased $0.9 million over the second quarter of 2020 and $65.8 million over the fourth quarter of 2019 as short-term borrowings (warehouse lines used to support HFS loans) were added as part of the CCHL integration.

Capital

Shareowners’ equity was $339.4 million at September 30, 2020 compared to $335.1 million at June 30, 2020 and $327.0 million at December 31, 2019. For the first nine months of 2020, shareowners’ equity was positively impacted by net income of $23.8 million, a $2.4 million increase in the unrealized gain on investment securities, net adjustments totaling $0.9 million related to transactions under our stock compensation plans, and stock compensation accretion of $0.6 million. Shareowners’ equity was reduced by common stock dividends of $7.1 million ($0.42 per share), a $3.1 million (net of tax) adjustment to retained earnings for the adoption of CECL, reclassification of $3.1 million to temporary equity to increase the redemption value of the non-controlling interest in CCHL, and share repurchases of $2.0 million (99,952 shares).

At September 30, 2020, our total risk-based capital ratio was 17.88% compared to 17.60% at June 30, 2020 and 17.90% at December 31, 2019. Our common equity tier 1 capital ratio was 14.20%, 14.01%, and 14.47%, respectively, on these dates. Our leverage ratio was 9.64%, 10.12%, and 11.25%, respectively, on these dates. All of our regulatory capital ratios exceeded the threshold to be designated as “well-capitalized” under the Basel III capital standards. Further, our tangible common equity ratio was 7.16% at September 30, 2020 compared to 7.21% and 8.06% at June 30, 2020 and December 31, 2019, respectively.

About Capital City Bank Group, Inc.

Capital City Bank Group, Inc. (NASDAQ: CCBG) is one of the largest publicly traded financial holding companies headquartered in Florida and has approximately $3.6 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 57 banking offices and 85 ATMs/ITMs 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 magnitude and duration of the COVID-19 pandemic and its impact on the global economy and financial market conditions and our business, results of operations and financial condition, including the impact of our participation in government programs related to COVID-19; the accuracy of the our financial statement estimates and assumptions; legislative or regulatory changes; 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; natural disasters, widespread health emergencies, military conflict, terrorism or other geopolitical events; 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; 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, 2019, 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 reconciliations are provided below.

(Dollars in Thousands, except per share data)		Sep 30, 2020			Jun 30, 2020			Mar 31, 2020			Dec 31, 2019			Sep 30, 2019
Shareowners' Equity (GAAP)		$	339,425		$	335,057		$	328,507		$	327,016		$	321,562
Less: Goodwill (GAAP)			89,095			89,095			89,275			84,811			84,811
Tangible Shareowners' Equity (non-GAAP)	A		250,330			245,962			239,232			242,205			236,751
Total Assets (GAAP)			3,587,041			3,499,524			3,086,523			3,088,953			2,934,513
Less: Goodwill (GAAP)			89,095			89,095			89,275			84,811			84,811
Tangible Assets (non-GAAP)	B	$	3,497,946		$	3,410,429		$	2,997,248		$	3,004,142		$	2,849,702
Tangible Common Equity Ratio (non-GAAP)	A/B		7.16	%		7.21	%		7.98	%		8.06	%		8.31	%
Actual Diluted Shares Outstanding (GAAP)	C		16,800,563			16,821,743			16,845,462			16,855,161			16,797,241
Tangible Book Value per Diluted Share (non-GAAP)	A/C	$	14.90		$	14.62		$	14.20		$	14.37		$	14.09

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

		Three Months Ended									Nine Months Ended
(Dollars in thousands, except per share data)		Sep 30, 2020			Jun 30, 2020			Sep 30, 2019			Sep 30, 2020			Sep 30, 2019
EARNINGS
Net Income Attributable to Common Shareowners	$	10,397		$	9,146		$	8,481		$	23,830		$	22,242
Diluted Net Income Per Share	$	0.62		$	0.55		$	0.50		$	1.42		$	1.32
PERFORMANCE
Return on Average Assets		1.17	%		1.10	%		1.14	%		0.96	%		1.00	%
Return on Average Equity		12.16			11.03			10.51			9.50			9.48
Net Interest Margin		3.12			3.41			3.92			3.42			3.84
Noninterest Income as % of Operating Revenue		58.19			54.26			34.67			51.37			33.72
Efficiency Ratio		67.01	%		66.90	%		69.27	%		69.04	%		72.37	%
CAPITAL ADEQUACY
Tier 1 Capital		16.77	%		16.59	%		16.83	%		16.77	%		16.83	%
Total Capital		17.88			17.60			17.59			17.88			17.59
Leverage		9.64			10.12			11.09			9.64			11.09
Common Equity Tier 1		14.20			14.01			14.13			14.20			14.13
Tangible Common Equity ⁽¹⁾		7.16			7.21			8.31			7.16			8.31
Equity to Assets		9.46	%		9.57	%		10.96	%		9.46	%		10.96	%
ASSET QUALITY
Allowance as % of Non-Performing Loans		420.30	%		322.37	%		290.55	%		420.30	%		290.55	%
Allowance as a % of Loans HFI		1.16			1.11			0.78			1.16			0.78
Net Charge-Offs as % of Average Loans HFI		0.11			0.05			0.23			0.13			0.15
Nonperforming Assets as % of Loans HFI and OREO		0.34			0.40			0.30			0.34			0.30
Nonperforming Assets as % of Total Assets		0.19	%		0.23	%		0.19	%		0.19	%		0.19	%
STOCK PERFORMANCE
High	$	21.71		$	23.99		$	28.00		$	30.62		$	28.00
Low		17.55			16.16			23.70			15.61			21.04
Close	$	18.79		$	20.95		$	27.45		$	18.79		$	27.45
Average Daily Trading Volume		28,517			49,569			25,596			39,477			22,815

⁽¹⁾ Tangible common equity ratio is a non-GAAP financial measure. For additional information, including a reconciliation to GAAP, refer to Page 6.

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

	2020										2019
(Dollars in thousands)	Third Quarter				Second Quarter			First Quarter			Fourth Quarter			Third Quarter
ASSETS
Cash and Due From Banks	$	76,509		$	75,155		$	72,676		$	60,087		$	61,151
Funds Sold and Interest Bearing Deposits		626,104			513,273			196,936			318,336			177,389
Total Cash and Cash Equivalents		702,613			588,428			269,612			378,423			238,540

Investment Securities Available for Sale		328,253			341,180			382,514			403,601			376,981
Investment Securities Held to Maturity		202,593			232,178			251,792			239,539			240,303
Total Investment Securities		530,846			573,358			634,306			643,140			617,284

Loans Held for Sale ("HFS")		116,561			76,610			82,598			9,509			13,075

Loans Held for Investment ("HFI"):
Commercial, Financial, & Agricultural		402,997			421,270			249,020			255,365			259,870
Real Estate - Construction		125,804			117,794			122,595			115,018			111,358
Real Estate - Commercial		656,064			662,434			656,084			625,556			610,726
Real Estate - Residential		335,713			353,831			354,150			353,642			354,545
Real Estate - Home Equity		197,363			194,479			196,443			197,360			197,326
Consumer		268,393			266,417			275,982			279,565			277,970
Other Loans		10,488			4,883			6,580			7,808			14,248
Overdrafts		1,339			1,069			1,533			1,615			1,710
Total Loans Held for Investment		1,998,161			2,022,177			1,862,387			1,835,929			1,827,753
Allowance for Credit Losses		(23,137	)		(22,457	)		(21,083	)		(13,905	)		(14,319	)
Loans Held for Investment, Net		1,975,024			1,999,720			1,841,304			1,822,024			1,813,434

Premises and Equipment, Net		87,192			87,972			87,684			84,543			85,810
Goodwill		89,095			89,095			89,275			84,811			84,811
Other Real Estate Owned		1,227			1,059			1,463			953			526
Other Assets		84,483			83,282			80,281			65,550			81,033
Total Other Assets		261,997			261,408			258,703			235,857			252,180
Total Assets	$	3,587,041		$	3,499,524		$	3,086,523		$	3,088,953		$	2,934,513

LIABILITIES
Deposits:
Noninterest Bearing Deposits	$	1,378,314		$	1,377,033		$	1,066,607		$	1,044,699		$	1,022,774
NOW Accounts		827,506			808,244			779,467			902,499			728,395
Money Market Accounts		247,823			240,754			210,124			217,839			239,410
Regular Savings Accounts		451,944			423,924			384,480			374,396			372,601
Certificates of Deposit		103,859			105,041			104,907			106,021			109,827
Total Deposits		3,009,446			2,954,996			2,545,585			2,645,454			2,473,007

Short-Term Borrowings		90,936			63,958			76,516			6,404			10,622
Subordinated Notes Payable		52,887			52,887			52,887			52,887			52,887
Other Long-Term Borrowings		5,268			5,583			5,896			6,514			6,963
Other Liabilities		71,880			75,702			70,044			50,678			69,472
Total Liabilities		3,230,417			3,153,126			2,750,928			2,761,937			2,612,951

Temporary Equity		17,199			11,341			7,088			-			-

SHAREOWNERS' EQUITY
Common Stock		168			168			168			168			167
Additional Paid-In Capital		31,425			31,575			32,100			32,092			31,075
Retained Earnings		333,545			328,570			321,772			322,937			316,551
Accumulated Other Comprehensive Loss, Net of Tax		(25,713	)		(25,256	)		(25,533	)		(28,181	)		(26,231	)
Total Shareowners' Equity		339,425			335,057			328,507			327,016			321,562
Total Liabilities, Temporary Equity and Shareowners' Equity	$	3,587,041		$	3,499,524		$	3,086,523		$	3,088,953		$	2,934,513

OTHER BALANCE SHEET DATA
Earning Assets	$	3,271,672		$	3,185,418		$	2,776,228		$	2,806,913		$	2,635,501
Interest Bearing Liabilities		1,780,223			1,700,391			1,614,277			1,666,560			1,520,705
Book Value Per Diluted Share	$	20.20		$	19.92		$	19.50		$	19.40		$	19.14
Tangible Book Value Per Diluted Share⁽¹⁾		14.90			14.62			14.20			14.37			14.09
Actual Basic Shares Outstanding		16,761			16,780			16,812			16,772			16,749
Actual Diluted Shares Outstanding		16,801			16,822			16,845			16,855			16,797
⁽¹⁾ Tangible book value per diluted share is a non-GAAP financial measure. For additional information, including a reconciliation to GAAP, refer to Page 6.

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

																Nine Months Ended
		2020									2019					September 30,
(Dollars in thousands, except per share data)		Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter		2020			2019

INTEREST INCOME
Interest and Fees on Loans	$	23,594		$	23,687		$	23,593		$	23,842		$	23,992	$	70,874		$	70,373
Investment Securities		2,426			2,737			3,015			3,221			3,307		8,178			10,213
Funds Sold		146			88			757			945			1,142		991			4,242
Total Interest Income		26,166			26,512			27,365			28,008			28,441		80,043			84,828

INTEREST EXPENSE
Deposits		190			218			939			1,157			1,596		1,347			5,683
Short-Term Borrowings		498			421			132			16			27		1,051			93
Subordinated Notes Payable		316			374			471			525			558		1,161			1,762
Other Long-Term Borrowings		40			41			50			56			63		131			201
Total Interest Expense		1,044			1,054			1,592			1,754			2,244		3,690			7,739
Net Interest Income		25,122			25,458			25,773			26,254			26,197		76,353			77,089
Provision for Credit Losses		1,308			2,005			4,990			(162	)		776		8,303			2,189
Net Interest Income after Provision for Credit Losses		23,814			23,453			20,783			26,416			25,421		68,050			74,900

NONINTEREST INCOME
Deposit Fees		4,316			3,756			5,015			4,980			4,961		13,087			14,492
Bank Card Fees		3,389			3,142			3,051			3,131			2,972		9,582			8,863
Wealth Management Fees		2,808			2,554			2,604			2,761			2,992		7,966			7,719
Mortgage Banking Fees		22,983			19,397			3,253			1,542			1,587		45,633			3,779
Other		1,469			1,350			1,555			1,414			1,391		4,374			4,372
Total Noninterest Income		34,965			30,199			15,478			13,828			13,903		80,642			39,225

NONINTEREST EXPENSE
Compensation		26,164			23,658			19,736			17,363			16,203		69,558			48,989
Occupancy, Net		5,906			5,798			4,979			4,680			4,710		16,683			13,756
Other Real Estate, Net		219			116			(798	)		102			6		(463	)		444
Other		8,053			7,731			7,052			6,997			6,954		22,836			21,278
Total Noninterest Expense		40,342			37,303			30,969			29,142			27,873		108,614			84,467

OPERATING PROFIT		18,437			16,349			5,292			11,102			11,451		40,078			29,658
Income Tax Expense		3,165			2,950			1,282			2,537			2,970		7,397			7,416
Net Income		15,272			13,399			4,010			8,565			8,481		32,681			22,242
Pre-Tax Income Attributable to Noncontrolling Interest		(4,875	)		(4,253	)		277			-			-		(8,851	)		-
NET INCOME ATTRIBUTABLE TO COMMON SHAREOWNERS	$	10,397		$	9,146		$	4,287		$	8,565		$	8,481	$	23,830		$	22,242

PER COMMON SHARE
Basic Net Income	$	0.62		$	0.55		$	0.25		$	0.51		$	0.51	$	1.42		$	1.33
Diluted Net Income		0.62			0.55			0.25			0.51			0.50		1.42			1.32
Cash Dividend	$	0.14		$	0.14		$	0.14		$	0.13		$	0.13	$	0.42		$	0.35
AVERAGE SHARES
Basic		16,771			16,797			16,808			16,750			16,747		16,792			16,776
Diluted		16,810			16,839			16,842			16,834			16,795		16,823			16,810

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

																	Nine Months Ended
		2020									2019						September 30,
(Dollars in thousands, except per share data)		Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter			2020			2019

ALLOWANCE FOR CREDIT LOSSES
Balance at Beginning of Period	$	22,457		$	21,083		$	13,905		$	14,319		$	14,593		$	13,905		$	14,210
Impact of Adopting ASC 326 (CECL)		-			-			3,269			-			-			3,269			-
Provision for Credit Losses - HFI		1,265			1,615			4,990			(162	)		776			7,870			2,189
Net Charge-Offs		585			241			1,081			252			1,050			1,907			2,080
Balance at End of Period⁽²⁾	$	23,137		$	22,457		$	21,083		$	13,905		$	14,319		$	23,137		$	14,319
As a % of Loans HFI		1.16	%		1.11	%		1.13	%		0.75	%		0.78	%		1.16	%		0.78	%
As a % of Nonperforming Loans		420.30	%		322.37	%		432.61	%		310.99	%		290.55	%		420.30	%		290.55	%

CHARGE-OFFS
Commercial, Financial and Agricultural	$	137		$	186		$	362		$	149		$	289		$	685		$	619
Real Estate - Construction		-			-			0			58			223			-			223
Real Estate - Commercial		17			-			11			33			26			28			181
Real Estate - Residential		1			1			110			27			44			112			373
Real Estate - Home Equity		58			52			31			0			333			141			430
Consumer		619			634			864			819			744			2,117			2,059
Overdrafts⁽³⁾		450			541			702			-			-			1,693			-
Total Charge-Offs	$	1,282		$	1,414		$	2,080		$	1,086		$	1,659		$	4,776		$	3,885

RECOVERIES
Commercial, Financial and Agricultural	$	74		$	74		$	40		$	127		$	86		$	188		$	218
Real Estate - Construction		-			-			-			-			-			-			-
Real Estate - Commercial		30			70			191			266			142			291			312
Real Estate - Residential		35			51			40			116			46			126			313
Real Estate - Home Equity		41			64			33			25			58			138			150
Consumer		280			365			268			300			277			913			812
Overdrafts⁽³⁾		237			549			427			-			-			1,213			-
Total Recoveries	$	697		$	1,173		$	999		$	834		$	609		$	2,869		$	1,805

NET CHARGE-OFFS	$	585		$	241		$	1,081		$	252		$	1,050		$	1,907		$	2,080

Net Charge-Offs as a % of Average Loans HFI⁽¹⁾		0.11	%		0.05	%		0.23	%		0.05	%		0.23	%		0.13	%		0.15	%

RISK ELEMENT ASSETS
Nonaccruing Loans	$	5,505		$	6,966		$	4,874		$	4,472		$	4,928
Other Real Estate Owned		1,227			1,059			1,463			953			526
Total Nonperforming Assets ("NPAs")	$	6,732		$	8,025		$	6,337		$	5,425		$	5,454

Past Due Loans 30-89 Days	$	3,191		$	2,948		$	5,077		$	4,871		$	5,120
Past Due Loans 90 Days or More		-			-			-			-			-
Classified Loans		16,772			17,091			16,548			20,847			21,323
Performing Troubled Debt Restructuring's	$	14,693		$	15,133		$	15,934		$	16,888		$	18,284

Nonperforming Loans as a % of Loans HFI		0.28	%		0.34	%		0.26	%		0.24	%		0.27	%
NPAs as a % of Loans HFI and Other Real Estate		0.34	%		0.40	%		0.34	%		0.29	%		0.30	%
NPAs as a % of Total Assets		0.19	%		0.23	%		0.21	%		0.18	%		0.19	%

⁽¹⁾ Annualized
⁽²⁾ Does not include $1.5 million for unfunded commitments recorded in other liabilities at 9/30/2020.
⁽³⁾ Prior to the first quarter 2020, overdraft losses were reflected in noninterest income (deposit fees).

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

		Third Quarter 2020							Second Quarter 2020							First Quarter 2020							Fourth Quarter 2019							Third Quarter 2019							Sep 2020 YTD							Sep 2019 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 HFI and HFS	$	2,097,700		$	23,698	4.50	%	$	2,057,925		$	23,785	4.65	%	$	1,882,703		$	23,692	5.06	%	$	1,846,190			23,958	5.15	%	$	1,837,548		$	24,113	5.21	%	$	2,013,243		$	71,175	4.73	%	$	1,813,964		$	70,705	5.21	%

Investment Securities
Taxable Investment Securities		553,395			2,401	1.73			601,509			2,708	1.80			629,512			2,995	1.91			610,046			3,186	2.08			607,363			3,249	2.13			594,654			8,104	1.82			613,382			9,936	2.16
Tax-Exempt Investment Securities		4,860			32	2.66			5,865			37	2.51			5,293			25	1.86			10,327			43	1.67			18,041			73	1.63			5,338			94	2.34			29,237			347	1.59

Total Investment Securities		558,255			2,433	1.74			607,374			2,745	1.81			634,805			3,020	1.91			620,373			3,229	2.08			625,404			3,322	2.12			599,992			8,198	1.82			642,619			10,283	2.13

Funds Sold		567,883			146	0.10			351,473			88	0.10			234,372			757	1.30			228,137			945	1.64			207,129			1,142	2.19			385,245			991	0.34			241,323			4,242	2.35

Total Earning Assets		3,223,838		$	26,277	3.25	%		3,016,772		$	26,618	3.55	%		2,751,880		$	27,469	4.01	%		2,694,700		$	28,132	4.14	%		2,670,081		$	28,577	4.25	%		2,998,480		$	80,364	3.58	%		2,697,906		$	85,230	4.22	%

Cash and Due From Banks		69,893							72,647							56,958							53,174							50,981							66,512							52,210
Allowance for Loan Losses		(22,948	)						(21,642	)						(14,389	)						(14,759	)						(14,863	)						(19,672	)						(14,576	)
Other Assets		268,549							261,449							244,339							249,089							253,111							257,993							253,152

Total Assets	$	3,539,332						$	3,329,226						$	3,038,788						$	2,982,204						$	2,959,310						$	3,303,313						$	2,988,692

LIABILITIES:
Interest Bearing Deposits
NOW Accounts	$	826,776		$	61	0.03	%	$	789,378		$	78	0.04	%	$	808,811		$	725	0.36	%	$	755,625		$	889	0.47	%	$	749,678		$	1,235	0.65	%	$	808,389		$	864	0.14	%	$	821,819		$	4,613	0.75	%
Money Market Accounts		247,185			32	0.05			222,377			40	0.07			212,211			117	0.22			227,479			170	0.30			238,565			264	0.44			227,331			189	0.11			238,664			775	0.43
Savings Accounts		438,762			54	0.05			409,366			50	0.05			379,237			46	0.05			372,518			46	0.05			372,593			46	0.05			409,230			150	0.05			369,726			136	0.05
Time Deposits		104,522			43	0.16			104,718			50	0.19			105,542			51	0.19			108,407			52	0.19			111,447			51	0.18			104,925			144	0.18			115,215			159	0.18
Total Interest Bearing Deposits		1,617,245			190	0.05	%		1,525,839			218	0.06	%		1,505,801			939	0.25	%		1,464,029			1,157	0.31	%		1,472,283			1,596	0.43	%		1,549,875			1,347	0.12	%		1,545,424			5,683	0.49	%

Short-Term Borrowings		74,557			498	2.66	%		73,377			421	2.31	%		32,915			132	1.61	%		7,448			16	0.87	%		8,697			27	1.24	%		60,335			1,051	2.33	%		9,890			93	1.27	%
Subordinated Notes Payable		52,887			316	2.34			52,887			374	2.80			52,887			471	3.52			52,887			525	3.88			52,887			558	4.13			52,887			1,161	2.89			52,887			1,762	4.39
Other Long-Term Borrowings		5,453			40	2.91			5,766			41	2.84			6,312			50	3.21			6,723			56	3.33			7,158			63	3.47			5,842			131	3.00			7,619			201	3.52

Total Interest Bearing Liabilities		1,750,142		$	1,044	0.24	%		1,657,869		$	1,054	0.26	%		1,597,915		$	1,592	0.40	%		1,531,087		$	1,754	0.45	%		1,541,025		$	2,244	0.58	%		1,668,939		$	3,690	0.30	%		1,615,820		$	7,739	0.64	%

Noninterest Bearing Deposits		1,354,032							1,257,614							1,046,889							1,060,922							1,023,472							1,220,002							996,290
Other Liabilities		83,192							72,073							59,587							63,291							74,540							71,661							62,823

Total Liabilities		3,187,366							2,987,556							2,704,391							2,655,300							2,639,037							2,960,602							2,674,933
Temporary Equity		11,893							8,155							2,506							-							-							7,534							-

SHAREOWNERS' EQUITY:		340,073							333,515							331,891							326,904							320,273							335,177							313,759

Total Liabilities, Temporary Equity and Shareowners' Equity	$	3,539,332						$	3,329,226						$	3,038,788						$	2,982,204						$	2,959,310						$	3,303,313						$	2,988,692

Interest Rate Spread				$	25,233	3.01	%				$	25,564	3.30	%				$	25,877	3.61	%				$	26,378	3.69	%				$	26,333	3.67	%				$	76,674	3.29	%				$	77,491	3.58	%

Interest Income and Rate Earned⁽¹⁾					26,277	3.25						26,618	3.55						27,469	4.01						28,132	4.14						28,577	4.25						80,364	3.58						85,230	4.22
Interest Expense and Rate Paid⁽²⁾					1,044	0.13						1,054	0.14						1,592	0.23						1,754	0.26						2,244	0.33						3,690	0.16						7,739	0.38

Net Interest Margin				$	25,233	3.12	%				$	25,564	3.41	%				$	25,877	3.78	%				$	26,378	3.89	%				$	26,333	3.92	%				$	76,674	3.42	%				$	77,491	3.84	%

⁽¹⁾ Interest and average rates are calculated on a tax-equivalent basis using a 21% 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 October 27, 2020

Capital City Bank Group, Inc. Reports Third Quarter 2020 Results

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