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

TALLAHASSEE, Fla., July 21, 2020 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income of $9.1 million, or $0.55 per diluted share for the second quarter of 2020 compared to net income of $4.3 million, or $0.25 per diluted share for the first quarter of 2020, and $7.3 million, or $0.44 per diluted share for the second quarter of 2019. For the first six months of 2020, net income totaled $13.4 million, or $0.80 per diluted share, compared to net income of $13.8 million, or $0.82 per diluted share, for the same period of 2019.

QUARTER HIGHLIGHTS

Return on assets improved to 1.10% and efficiency ratio to 67%
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 ($0.20/share)
Pandemic related stimulus programs contributed $190 million in loan growth and deposit balances totaling $243 million

“Though the second quarter presented a challenging environment, I am pleased with our financial performance and how we responded to the COVID-19 pandemic,” said William G. Smith, Jr., Chairman, President and CEO. “We issued $190 million in Paycheck Protection Program (PPP) loans to assist our small business clients and took critical precautions to protect the health and welfare of our associates and clients as we reopened our offices for routine lobby service. Despite a challenged economy, the mortgage market has been robust, and our recent alliance with CCHL contributed $0.20 per share during the second quarter. Earnings from CCHL and SBA/PPP fees helped mitigate the adverse impacts of a lower interest rate environment and reserve build attributable to the adoption of CECL and COVID-19. I anticipate the second half of 2020 will remain challenging but am hopeful it will bring improvement. We have taken a prudent and measured approach to managing through this ongoing crisis and continue to focus on our commitments to our associates, clients, communities, and shareowners. I remain optimistic about the long-term outlook for Capital City and appreciate your continued support.”

COVID-19 Update

Lobby access has been re-opened for 56 of our 57 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
Continue to monitor COVID-19 case count trends in our markets and respond appropriately to help ensure client and associate safety
Continued support of clients with the Small Business Administration Payment Protection Program (“SBA PPP”) - we will actively assist our clients with the forgiveness process in coming quarters
We continued to assist our clients and communities in the second quarter by processing a total of 2,217 loan extensions ($330 million, or 16% of loan balances at June 30, 2020).

Discussion of Operating Results

Summary Overview

Compared to the first quarter of 2020, the $11.1 million increase in operating profit was attributable to a $14.7 million increase in noninterest income (primarily mortgage banking revenues) and a $3.0 million decrease in the provision for credit losses, partially offset by higher noninterest expense of $6.3 million and lower net interest income of $0.3 million.

Compared to the second quarter of 2019, the $6.6 million increase in operating profit was attributable to a $17.4 million increase in noninterest income, partially offset by a higher noninterest expense of $8.9 million, a $1.4 million increase in the provision for credit losses and lower net interest income of $0.5 million.

The $3.4 million increase in operating profit for the first six months of 2020 versus the comparable period of 2019 was attributable to higher noninterest income of $20.4 million and net interest income of $0.3 million, partially offset by a $5.6 million increase in the provision for credit losses and higher noninterest expense of $11.7 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 1.10% and our return on average equity (“ROE”) was 11.03% for the second quarter of 2020. These metrics were 0.57% and 5.20% for the first quarter of 2020, respectively, and 0.98% and 9.37% for the second quarter of 2019, respectively. For the first six months of 2020, our ROA was 0.85% and our ROE was 8.12% compared to 0.92% and 8.94%, respectively, for the same period of 2019.

Net Interest Income/Net Interest Margin

Tax-equivalent net interest income for the second quarter of 2020 was $25.6 million compared to $25.9 million for the first quarter of 2020 and $26.1 million for the second quarter of 2019. The decrease compared to both prior periods reflected lower rates earned on overnight funds, investment securities and variable rate loans, partially offset by lower cost for our negotiated rate deposits. For the first six months of 2020, tax-equivalent net interest income totaled $51.4 million compared to $51.2 million in 2019. The increase was primarily due to loan growth and a reduction in the cost of our negotiated rate deposits, partially offset by lower rates on our earning assets.

The federal funds target rate ended the second quarter of 2020 in a range of 0.00%-0.25%, unchanged from the end of the first quarter of 2020. However, since 150 basis points of rate cuts were made late in the first quarter of 2020, we experienced lower repricing of our variable/adjustable rate earning assets and investment securities during the second quarter 2020. We continue to prudently manage our deposit mix and overall cost of funds, which was 14 basis points for the second quarter of 2020 compared to 23 basis points for the first 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 second quarter of 2020 was 3.41%, a decrease of 37 basis points from the first quarter of 2020 and 44 basis points from the second quarter of 2019. For the first six months of 2020, the net interest margin decreased 21 basis points to 3.59%. The decrease compared to all prior periods was attributable to lower rates on our variable and adjustable rate earning assets, partially offset by a lower cost of funds. Our net interest margin for the second quarter of 2020 excluding the impact of SBA PPP loans was 3.46%. 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 second quarter of 2020 was $2.0 million compared to $5.0 million for the first quarter of 2020 and $0.6 million for the second quarter of 2019. For the first six months of 2020, the provision was $7.0 million compared to $1.4 million in 2019. The higher provision in 2020 reflected expected losses due to deterioration in economic conditions related to COVID-19. We discuss this exposure further below.

Noninterest Income and Noninterest Expense

CCHL’s mortgage banking operations impacted our noninterest income and noninterest expense for the three and six month periods ended June 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 second quarter of 2020 totaled $30.2 million compared to $15.5 million for the first quarter of 2020 and $12.8 million for the second quarter of 2019. The increase over both periods was driven by higher mortgage banking fees and other income (loan origination fees) at CCHL, partially offset by lower deposit fees (overdraft fees). Deposit fees decreased $1.3 million, or 25.1% compared to the first quarter of 2020 and reflected slower consumer spending and the impact of stimulus payments in the second quarter related to the COVID-19 pandemic.

Noninterest expense for the second quarter of 2020 totaled $37.3 million compared to $31.0 million for the first quarter of 2020 and $28.4 million for the second quarter of 2019. The increase over the first quarter of 2020 was attributable to higher compensation expense of $4.2 million, occupancy expense of $0.8 million, and other real estate (“ORE”) expense of $1.1 million. The increase in compensation and occupancy expense was primarily due to the integration of CCHL late in the first quarter of 2020. We also realized approximately $0.8 million in expenses in the second quarter related to SBA PPP loan origination activities and pandemic related costs. Approximately $0.3 million were one-time SBA PPP expenses and the remainder are pandemic related and will phase out over time. The increase in ORE expense reflected a $1.0 million gain on the sale of a banking office in the first quarter of 2020. For the first six months of 2020, noninterest expense totaled $68.3 million compared to $56.6 million for the same period of 2019 with the increase driven primarily by the same aforementioned factors.

Overall, CCHL contributed significantly to the improvement in our efficiency ratio for the second quarter of 2020.


		Three Months Ended												Six Months Ended
		Jun 30, 2020				Mar 31, 2020				Jun 30, 2019				Jun 30, 2020				Jun 30, 2019
(Dollars in thousands)		Core CCBG		CCHL		Core CCBG		CCHL		Core CCBG		CCHL		Core CCBG		CCHL		Core CCBG		CCHL
Deposit Fees	$	3,756		-	$	5,015	$	-	$	4,756	$	-	$	8,771	$	-	$	9,531	$	-
Bank Card Fees		3,142		-		3,051		-		3,036		-		6,193		-		5,891		-
Wealth Management Fees		2,554		-		2,604		-		2,404		-		5,158		-		4,727		-
Mortgage Banking Fees		241		17,573		1,138		1,892		1,199		-		1,379		19,465		2,192		-
Other		1,147		1,786		1,459		319		1,375		-		2,606		2,105		2,981		-
Total Noninterest Income	$	10,840	$	19,359	$	13,267	$	2,211	$	12,770	$	-	$	24,107	$	21,570	$	25,322	$	-

Salaries	$	11,596	$	8,381	$	13,488	$	2,242	$	12,496	$	-	$	25,085	$	10,623	$	24,781	$	-
Other Associate Benefits		3,477		204		3,957		49		3,941		-		7,433		253		8,005		-
Total Compensation		15,073		8,585		17,445		2,291		16,437		-		32,518		10,876		32,786		-

Occupancy, Net		5,030		768		4,748		231		4,537		-		9,778		999		9,046		-
Other		6,599		1,248		5,797		457		7,422		-		12,396		1,705		14,762		-
Total Noninterest Expense	$	26,702	$	10,601	$	27,990	$	2,979	$	28,396	$	-	$	54,692	$	13,580	$	56,594	$	-

Income Taxes

We realized income tax expense of $2.9 million (effective rate of 18%) for the second quarter of 2020 compared to $1.3 million (effective rate of 24%) for the first quarter of 2020 and $2.4 million (effective rate of 25%) for the second quarter of 2019. For the first six months of 2020, we realized income tax expense of $4.2 million (effective rate of 20%) compared to $4.4 million (effective rate of 24%) for the same period of 2019. The decrease in our effective tax rate for the three and six month periods ended June 30, 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 19%-20%.

Discussion of Financial Condition

Earning Assets

Average earning assets were $3.017 billion for the second quarter of 2020, an increase of $264.9 million, or 9.6% over the first quarter of 2020, and an increase of $322.1 million, or 12.0% 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. The impact of pandemic related stimulus programs on our balance sheet in the second quarter of 2020 is discussed in further detail below.

We maintained an average net overnight funds (deposits with banks plus FED funds sold less FED funds purchased) sold position of $351.5 million during the second quarter of 2020 compared to an average net overnight funds sold position of $234.4 million in the first quarter of 2020 and $228.1 million in the fourth quarter of 2019. The increase compared to both prior periods was primarily driven by pandemic related stimulus programs (see below – Funding).

Average loans held for investment (“HFI”) increased $135.2 million, or 7.3%, over the first quarter of 2020 and $148.9 million, or 8.1%, over the fourth quarter of 2019. Period-end HFI loans increased $159.8, or 8.6%, over the first quarter of 2020 and $186.2 million, or 10.1%, over the fourth quarter of 2019. Demand from the SBA PPP was strong with SBA PPP loans (reflected in commercial loans) averaging $133.8 million in the second quarter of 2020 and totaling $190 million at June 30, 2020. In total, we funded 2,208 loans for $193 million under the SBA PPP, all from current balance sheet liquidity. To date, our borrowers have submitted a nominal level of forgiveness applications, but these applications are expected to accelerate in the second half of the year. We received 100% of our SBA PPP loan fees totaling approximately $6.3 million (net) late in the second quarter. Amortized SBA PPP loan fees totaled approximately $0.4 million for the second quarter of 2020.

Allowance for Credit Losses

At June 30, 2020, the allowance for credit losses totaled $22.5 million compared to $21.1 million at March 31, 2020 and $13.9 million at December 31, 2019. At June 30, 2020, the allowance represented 1.11% of outstanding loans held for investment (HFI) and provided coverage of 322% of nonperforming loans compared to 1.13% and 433%, respectively, at March 31, 2020 and 0.75% and 311%, respectively, at December 31, 2019. At June 30, 2020, excluding SBA PPP loans (100% government guaranteed), the allowance represented 1.23% 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 $5.7 million build (provision of $7.0 million less net charge-offs of $1.3 million) in the allowance for credit losses for the first six months of 2020 reflected a higher forecasted rate of unemployment due to stressed economic conditions related the COVID-19 pandemic.

Credit Quality/COVID-19 Exposure

Nonperforming assets (nonaccrual loans and OREO) totaled $8.0 million at June 30, 2020, a $1.7 million increase over March 31, 2020, and a $2.6 million increase over December 31, 2019. Nonaccrual loans totaled $7.0 million at June 30, 2020, a $2.1 million increase over March 31, 2020 and a $2.5 million increase over December 31, 2019. The balance of OREO totaled $1.1 million at June 30, 2020, a decrease of $0.4 million from March 31, 2020 and a $0.1 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 June 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 these loans were for commercial borrowers and 17% for consumer borrowers.

						% Loans Extended
At July 9, 2020 (Dollars in thousands)	# Loans			Loan Amount		# Loans		$ Loans
Loans Extended	2,217		$	330,406
Loans Resuming Payments	(1,708	)		(234,610	)	77	%	71	%
Loans Still on Extension	509		$	95,796		23	%	29	%

Still on Extension: From First Extension	382		$	60,237		17	%	18	%
Still on Extension: From Second Extension	127		$	35,559		6	%	11	%

Funding (Deposits/Debt)

Average total deposits were $2.783 billion for the second quarter of 2020, an increase of $230.8 million, or 9.0% over the first quarter of 2020, and an increase of $258.5 million, or 10.2% over the fourth quarter of 2019. The estimated deposit inflows, related to the two pandemic related stimulus programs, were $179 million (SBA PPP) and $64 million (Economic Impact Payment stimulus checks). Period end deposit balances grew $409 million and $310 million over the first quarter of 2020 and fourth quarter of 2019, respectively, indicating strong growth in core deposit balances. 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, in addition to cash flow generated from the investment portfolio. 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 $39.9 million over the first quarter of 2020 and $65.0 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 $335.1 million at June 30, 2020 compared to $328.5 million at March 31, 2020 and $327.0 million at December 31, 2019. For the first six months of 2020, shareowners’ equity was positively impacted by net income of $13.4 million, a $3.0 million increase in the unrealized gain on investment securities, net adjustments totaling $0.7 million related to transactions under our stock compensation plans, and stock compensation accretion of $0.4 million. Shareowners’ equity was reduced by common stock dividends of $4.7 million ($0.28 per share), a $3.1 million (net of tax) adjustment to retained earnings for the adoption of ASC 326 (“CECL”), and share repurchases of $1.6 million (76,952 shares).

At June 30, 2020, our total risk-based capital ratio was 17.81% compared to 17.19% at March 31, 2020 and 17.90% at December 31, 2019. Our common equity tier 1 capital ratio was 14.21%, 13.55%, and 14.47%, respectively, on these dates. Our leverage ratio was 10.24%, 10.81%, 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 7.21% at June 30, 2020 compared to 7.98% and 8.06% at March 31, 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 $3.5 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)		Jun 30, 2020			Mar 31, 2020			Dec 31, 2019			Sep 30, 2019			Jun 30, 2019
Shareowners' Equity (GAAP)		$	335,057		$	328,507		$	327,016		$	321,562		$	314,595
Less: Goodwill (GAAP)			89,095			89,275			84,811			84,811			84,811
Tangible Shareowners' Equity (non-GAAP)	A		245,962			239,232			242,205			236,751			229,784
Total Assets (GAAP)			3,499,524			3,086,523			3,088,953			2,934,513			3,017,654
Less: Goodwill (GAAP)			89,095			89,275			84,811			84,811			84,811
Tangible Assets (non-GAAP)	B	$	3,410,429		$	2,997,248		$	3,004,142		$	2,849,702		$	2,932,843
Tangible Common Equity Ratio (non-GAAP)	A/B		7.21	%		7.98	%		8.06	%		8.31	%		7.83	%
Actual Diluted Shares Outstanding (GAAP)	C		16,821,743			16,845,462			16,855,161			16,797,241			16,773,449
Tangible Book Value per Diluted Share (non-GAAP)	A/C	$	14.62		$	14.20		$	14.37		$	14.09		$	13.70

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

	Three Months Ended										Six Months Ended
(Dollars in thousands, except per share data)		Jun 30, 2020			Mar 31, 2020			Jun 30, 2019			Jun 30, 2020			Jun 30, 2019
EARNINGS
Net Income Attributable to Common Shareowners	$	9,146		$	4,287		$	7,325		$	13,433		$	13,761
Diluted Net Income Per Share	$	0.55		$	0.25		$	0.44		$	0.80		$	0.82
PERFORMANCE
Return on Average Assets		1.10	%		0.57	%		0.98	%		0.85	%		0.92	%
Return on Average Equity		11.03	%		5.20	%		9.37	%		8.12	%		8.94	%
Net Interest Margin		3.41	%		3.78	%		3.85	%		3.59	%		3.80	%
Noninterest Income as % of Operating Revenue		54.26	%		37.52	%		32.95	%		47.13	%		33.23	%
Efficiency Ratio		66.90	%		74.89	%		73.02	%		70.30	%		74.00	%
CAPITAL ADEQUACY
Tier 1 Capital		16.79	%		16.12	%		16.36	%		16.79	%		16.36	%
Total Capital		17.81	%		17.19	%		17.13	%		17.81	%		17.13	%
Leverage		10.24	%		10.81	%		10.64	%		10.24	%		10.64	%
Common Equity Tier 1		14.21	%		13.55	%		13.67	%		14.21	%		13.67	%
Tangible Common Equity ⁽¹⁾		7.21	%		7.98	%		7.83	%		7.21	%		7.83	%
Equity to Assets		9.57	%		10.64	%		10.43	%		9.57	%		10.43	%
ASSET QUALITY
Allowance as % of Non-Performing Loans		322.37	%		432.61	%		259.55	%		322.37	%		259.55	%
Allowance as a % of Loans		1.11	%		1.13	%		0.79	%		1.11	%		0.79	%
Net Charge-Offs as % of Average Loans		0.05	%		0.23	%		0.04	%		0.14	%		0.12	%
Nonperforming Assets as % of Loans and OREO		0.40	%		0.34	%		0.36	%		0.40	%		0.36	%
Nonperforming Assets as % of Total Assets		0.23	%		0.21	%		0.22	%		0.23	%		0.22	%
STOCK PERFORMANCE
High	$	23.99		$	30.62		$	25.00		$	30.62		$	25.87
Low		16.16			15.61			21.57			15.61			21.04
Close	$	20.95		$	20.12		$	24.85		$	20.95		$	24.85
Average Daily Trading Volume		49,569			40,536			24,258			45,089			21,380

⁽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*

	2020							2019
(Dollars in thousands)	Second Quarter				First Quarter			Fourth Quarter			Third Quarter			Second Quarter
ASSETS
Cash and Due From Banks	$	75,155		$	72,676		$	60,087		$	61,151		$	53,731
Funds Sold and Interest Bearing Deposits		513,273			196,936			318,336			177,389			234,097
Total Cash and Cash Equivalents		588,428			269,612			378,423			238,540			287,828

Investment Securities Available for Sale		341,180			382,514			403,601			376,981			410,851
Investment Securities Held to Maturity		232,178			251,792			239,539			240,303			229,516
Total Investment Securities		573,358			634,306			643,140			617,284			640,367

Loans Held for Sale ("HFS")		76,610			82,598			9,509			13,075			9,885

Loans Held for Investment ("HFI")
Commercial, Financial, & Agricultural		421,270			249,020			255,365			259,870			265,001
Real Estate - Construction		117,794			122,595			115,018			111,358			101,372
Real Estate - Commercial		662,434			656,084			625,556			610,726			614,618
Real Estate - Residential		353,831			354,150			353,642			354,545			349,843
Real Estate - Home Equity		194,479			196,443			197,360			197,326			201,579
Consumer		266,417			275,982			279,565			277,970			288,196
Other Loans		4,883			6,580			7,808			14,248			13,131
Overdrafts		1,069			1,533			1,615			1,710			1,442
Total Loans Held for Investment		2,022,177			1,862,387			1,835,929			1,827,753			1,835,182
Allowance for Loan Losses		(22,457	)		(21,083	)		(13,905	)		(14,319	)		(14,593	)
Loans Held for Investment, Net		1,999,720			1,841,304			1,822,024			1,813,434			1,820,589

Premises and Equipment, Net		87,972			87,684			84,543			85,810			86,005
Goodwill		89,095			89,275			84,811			84,811			84,811
Other Real Estate Owned		1,059			1,463			953			526			1,010
Other Assets		83,282			80,281			65,550			81,033			87,159
Total Other Assets		261,408			258,703			235,857			252,180			258,985
Total Assets	$	3,499,524		$	3,086,523		$	3,088,953		$	2,934,513		$	3,017,654

LIABILITIES
Deposits:
Noninterest Bearing Deposits	$	1,377,033		$	1,066,607		$	1,044,699		$	1,022,774		$	1,024,898
NOW Accounts		808,244			779,467			902,499			728,395			810,568
Money Market Accounts		240,754			210,124			217,839			239,410			240,181
Regular Savings Accounts		423,924			384,480			374,396			372,601			371,773
Certificates of Deposit		105,041			104,907			106,021			109,827			113,684
Total Deposits		2,954,996			2,545,585			2,645,454			2,473,007			2,561,104

Short-Term Borrowings		63,958			76,516			6,404			10,622			9,753
Subordinated Notes Payable		52,887			52,887			52,887			52,887			52,887
Other Long-Term Borrowings		5,583			5,896			6,514			6,963			7,313
Other Liabilities		75,702			70,044			50,678			69,472			72,002
Total Liabilities		3,153,126			2,750,928			2,761,937			2,612,951			2,703,059

Temporary Equity		11,341			7,088			-			-			-

SHAREOWNERS' EQUITY
Common Stock		168			168			168			167			167
Additional Paid-In Capital		31,575			32,100			32,092			31,075			30,751
Retained Earnings		328,570			321,772			322,937			316,551			310,247
Accumulated Other Comprehensive Loss, Net of Tax		(25,256	)		(25,533	)		(28,181	)		(26,231	)		(26,570	)
Total Shareowners' Equity		335,057			328,507			327,016			321,562			314,595
Total Liabilities, Temporary Equity and Shareowners' Equity	$	3,499,524		$	3,086,523		$	3,088,953		$	2,934,513		$	3,017,654

OTHER BALANCE SHEET DATA
Earning Assets	$	3,185,418		$	2,776,228		$	2,806,913		$	2,635,501		$	2,719,530
Interest Bearing Liabilities		1,700,391			1,614,277			1,666,560			1,520,705			1,606,159
Book Value Per Diluted Share	$	19.92		$	19.50		$	19.40		$	19.14		$	18.76
Tangible Book Value Per Diluted Share⁽¹⁾		14.62			14.20			14.37			14.09			13.70
Actual Basic Shares Outstanding		16,780			16,812			16,772			16,749			16,746
Actual Diluted Shares Outstanding		16,822			16,845			16,855			16,797			16,773

⁽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*

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

INTEREST INCOME
Interest and Fees on Loans	$	23,687		$	23,593		$	23,842		$	23,992	$	23,765	$	47,280		$	46,381
Investment Securities		2,737			3,015			3,221			3,307		3,393		5,752			6,906
Funds Sold		88			757			945			1,142		1,507		845			3,100
Total Interest Income		26,512			27,365			28,008			28,441		28,665		53,877			56,387

INTEREST EXPENSE
Deposits		218			939			1,157			1,596		1,988		1,157			4,087
Short-Term Borrowings		421			132			16			27		31		553			66
Subordinated Notes Payable		374			471			525			558		596		845			1,204
Other Long-Term Borrowings		41			50			56			63		66		91			138
Total Interest Expense		1,054			1,592			1,754			2,244		2,681		2,646			5,495
Net Interest Income		25,458			25,773			26,254			26,197		25,984		51,231			50,892
Provision for Credit Losses		2,005			4,990			(162	)		776		646		6,995			1,413
Net Interest Income after Provision for Loan Losses		23,453			20,783			26,416			25,421		25,338		44,236			49,479

NONINTEREST INCOME
Deposit Fees		3,756			5,015			4,980			4,961		4,756		8,771			9,531
Bank Card Fees		3,142			3,051			3,131			2,972		3,036		6,193			5,891
Wealth Management Fees		2,554			2,604			2,761			2,992		2,404		5,158			4,727
Mortgage Banking Fees		17,814			3,030			1,542			1,587		1,199		20,844			2,192
Other		2,933			1,778			1,414			1,391		1,375		4,711			2,981
Total Noninterest Income		30,199			15,478			13,828			13,903		12,770		45,677			25,322

NONINTEREST EXPENSE
Compensation		23,658			19,736			17,363			16,203		16,437		43,394			32,786
Occupancy, Net		5,798			4,979			4,680			4,710		4,537		10,777			9,046
Other Real Estate, Net		116			(798	)		102			6		75		(682	)		438
Other		7,731			7,052			6,997			6,954		7,347		14,783			14,324
Total Noninterest Expense		37,303			30,969			29,142			27,873		28,396		68,272			56,594

OPERATING PROFIT		16,349			5,292			11,102			11,451		9,712		21,641			18,207
Income Tax Expense		2,950			1,282			2,537			2,970		2,387		4,232			4,446
Net Income		13,399			4,010			8,565			8,481		7,325		17,409			13,761
(Gain) Loss Attributable to Noncontrolling Interest		(4,253	)		277			-			-		-		(3,976	)		-
NET INCOME ATTRIBUTABLE TO COMMON SHAREOWNERS	$	9,146		$	4,287		$	8,565		$	8,481	$	7,325	$	13,433		$	13,761

PER COMMON SHARE
Basic Net Income	$	0.55		$	0.25		$	0.51		$	0.51	$	0.44	$	0.80		$	0.82
Diluted Net Income		0.55			0.25			0.51			0.50		0.44		0.80			0.82
Cash Dividend	$	0.14		$	0.14		$	0.13		$	0.13	$	0.11	$	0.28		$	0.22
AVERAGE SHARES
Basic		16,797			16,808			16,750			16,747		16,791		16,803			16,791
Diluted		16,839			16,842			16,834			16,795		16,818		16,844			16,820

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

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

ALLOWANCE FOR CREDIT LOSSES
Balance at Beginning of Period	$	21,083		$	13,905		$	14,319		$	14,593		$	14,120		$	13,905		$	14,210
Impact of Adopting ASC 326 (CECL)		-			3,269			-			-			-			3,269			-
Provision for Credit Losses - HFI		1,615			4,990			(162	)		776			646			6,605			1,413
Net Charge-Offs		241			1,081			252			1,050			173			1,322			1,030
Balance at End of Period⁽²⁾	$	22,457		$	21,083		$	13,905		$	14,319		$	14,593		$	22,457		$	15,623
As a % of Loans		1.11	%		1.13	%		0.75	%		0.78	%		0.79	%		1.11	%		0.79	%
As a % of Nonperforming Loans		322.37	%		432.61	%		310.99	%		290.55	%		259.55	%		322.37	%		259.55	%

CHARGE-OFFS
Commercial, Financial and Agricultural	$	186		$	362		$	149		$	289		$	235		$	548		$	330
Real Estate - Construction		-			-			58			223			-			-			-
Real Estate - Commercial		-			11			33			26			-			11			155
Real Estate - Residential		1			110			27			44			65			111			329
Real Estate - Home Equity		52			31			0			333			45			83			97
Consumer		634			864			819			744			520			1,498			1,315
Overdrafts⁽³⁾		541			702			-			-			-			1,243			-
Total Charge-Offs	$	1,414		$	2,080		$	1,086		$	1,659		$	865		$	3,494		$	2,226

RECOVERIES
Commercial, Financial and Agricultural	$	74		$	40		$	127		$	86		$	58		$	114		$	132
Real Estate - Construction		-			-			-			-			-			-			-
Real Estate - Commercial		70			191			266			142			100			261			170
Real Estate - Residential		51			40			116			46			223			91			267
Real Estate - Home Equity		64			33			25			58			60			97			92
Consumer		365			268			300			277			251			633			535
Overdrafts⁽³⁾		549			427			-			-			-			976			-
Total Recoveries	$	1,173		$	999		$	834		$	609		$	692		$	2,172		$	1,196

NET CHARGE-OFFS	$	241		$	1,081		$	252		$	1,050		$	173		$	1,322		$	1,030

Net Charge-Offs as a % of Average Loans⁽¹⁾		0.05	%		0.23	%		0.05	%		0.23	%		0.04	%		0.14	%		0.12	%

RISK ELEMENT ASSETS
Nonaccruing Loans	$	6,966		$	4,874		$	4,472		$	4,928		$	5,622
Other Real Estate Owned		1,059			1,463			953			526			1,010
Total Nonperforming Assets ("NPAs")	$	8,025		$	6,337		$	5,425		$	5,454		$	6,632

Past Due Loans 30-89 Days	$	2,948		$	5,077		$	4,871		$	5,120		$	5,443
Past Due Loans 90 Days or More		-			-			-			-			-
Classified Loans		17,091			16,548			20,847			21,323			26,406
Performing Troubled Debt Restructuring's	$	15,133		$	15,934		$	16,888		$	18,284		$	18,737

Nonperforming Loans as a % of Loans		0.34	%		0.26	%		0.24	%		0.27	%		0.30	%
NPAs as a % of Loans and Other Real Estate		0.40	%		0.34	%		0.29	%		0.30	%		0.36	%
NPAs as a % of Total Assets		0.23	%		0.21	%		0.18	%		0.19	%		0.22	%

⁽¹⁾ Annualized
⁽²⁾ Does not include $1.4 million for unfunded commitments recorded in other liabilities
⁽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*

		Second Quarter 2020					First Quarter 2020					Fourth Quarter 2019					Third Quarter 2019					Second Quarter 2019					Jun 2020 YTD					Jun 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	$	2,057,925	$	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%	$	1,823,311	$	23,873	5.25%	$	1,970,551	$	47,477	4.85%	$	1,801,977	$	46,591	5.21%

Investment Securities
Taxable Investment Securities		601,509		2,708	1.80		629,512		2,995	1.91		610,046		3,186	2.08		607,363		3,249	2.13		614,775		3,301	2.15		615,511		5,703	1.86		616,442		6,688	2.18
Tax-Exempt Investment Securities		5,865		37	2.51		5,293		25	1.86		10,327		43	1.67		18,041		73	1.63		29,342		116	1.58		5,579		62	2.20		34,928		274	1.57

Total Investment Securities		607,374		2,745	1.81		634,805		3,020	1.91		620,373		3,229	2.08		625,404		3,322	2.12		644,117		3,417	2.12		621,090		5,765	1.86		651,370		6,962	2.14

Funds Sold		351,473		88	0.10		234,372		757	1.30		228,137		945	1.64		207,129		1,142	2.19		251,789		1,507	2.40		292,922		845	0.58		258,703		3,100	2.42

Total Earning Assets		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%		2,719,217	$	28,797	4.25%		2,884,563	$	54,087	3.77%		2,712,050	$	56,653	4.21%

Cash and Due From Banks		72,647					56,958					53,174					50,981					51,832					64,802					52,834
Allowance for Loan Losses		(21,642)					(14,389)					(14,759)					(14,863)					(14,513)					(18,015)					(14,431)
Other Assets		261,449					244,339					249,089					253,111					254,126					252,657					253,173

Total Assets	$	3,329,226				$	3,038,788				$	2,982,204				$	2,959,310				$	3,010,662				$	3,184,007				$	3,003,626


LIABILITIES:
Interest Bearing Deposits
NOW Accounts	$	789,378	$	78	0.04%	$	808,811	$	725	0.36%	$	755,625	$	889	0.47%	$	749,678	$	1,235	0.65%	$	832,982	$	1,623	0.78%	$	799,094	$	803	0.20%	$	858,488	$	3,378	0.79%
Money Market Accounts		222,377		40	0.07		212,211		117	0.22		227,479		170	0.30		238,565		264	0.44		237,921		265	0.45		217,295		157	0.15		238,714		512	0.43
Savings Accounts		409,366		50	0.05		379,237		46	0.05		372,518		46	0.05		372,593		46	0.05		371,716		46	0.05		394,301		96	0.05		368,268		90	0.05
Time Deposits		104,718		50	0.19		105,542		51	0.19		108,407		52	0.19		111,447		51	0.18		115,442		54	0.19		105,130		101	0.19		117,131		107	0.18
Total Interest Bearing Deposits		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%		1,558,061		1,988	0.51%		1,515,820		1,157	0.15%		1,582,601		4,087	0.52%

Short-Term Borrowings		73,377		421	2.31%		32,915		132	1.61%		7,448		16	0.87%		8,697		27	1.24%		9,625		31	1.30%		53,146		553	2.09%		10,497		66	1.28%
Subordinated Notes Payable		52,887		374	2.80		52,887		471	3.52		52,887		525	3.88		52,887		558	4.13		52,887		596	4.46		52,887		845	3.16		52,887		1,204	4.53
Other Long-Term Borrowings		5,766		41	2.84		6,312		50	3.21		6,723		56	3.33		7,158		63	3.47		7,509		66	3.53		6,039		91	3.03		7,853		138	3.54

Total Interest Bearing Liabilities		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%		1,628,082	$	2,681	0.66%		1,627,892	$	2,646	0.33%		1,653,838	$	5,495	0.67%

Noninterest Bearing Deposits		1,257,614					1,046,889					1,060,922					1,023,472					1,007,370					1,152,251					982,473
Other Liabilities		72,073					59,587					63,291					74,540					61,611					65,830					56,867

Total Liabilities		2,987,556					2,704,391					2,655,300					2,639,037					2,697,063					2,845,973					2,693,178
Temporary Equity		8,155					2,506.00					-					-					-					5,331					-

SHAREOWNERS' EQUITY:		333,515					331,891					326,904					320,273					313,599					332,703					310,448

Total Liabilities, Temporary Equity and Shareowners' Equity	$	3,329,226				$	3,038,788				$	2,982,204				$	2,959,310				$	3,010,662				$	3,184,007				$	3,003,626


Interest Rate Spread			$	25,564	3.30%			$	25,877	3.61%			$	26,378	3.69%			$	26,333	3.67%			$	26,116	3.59%			$	51,441	3.44%			$	51,158	3.54%

Interest Income and Rate Earned⁽¹⁾				26,618	3.55				27,469	4.01				28,132	4.14				28,577	4.25				28,797	4.25				54,087	3.77				56,653	4.21
Interest Expense and Rate Paid⁽²⁾				1,054	0.14				1,592	0.23				1,754	0.26				2,244	0.33				2,681	0.40				2,646	0.18				5,495	0.41

Net Interest Margin			$	25,564	3.41%			$	25,877	3.78%			$	26,378	3.89%			$	26,333	3.92%			$	26,116	3.85%			$	51,441	3.59%			$	51,158	3.80%

⁽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 July 21, 2020

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

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