Capital City Bank Group, Inc.
Reports Third Quarter 2011 Results

TALLAHASSEE, Fla. (October 25, 2011) – Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income for the third quarter of 2011 totaling $2.0 million, or $0.12 per diluted share, compared to $2.1 million, or $0.12 per diluted share for the second quarter of 2011, and $0.4 million, or $0.02 per diluted share, for the third quarter of 2010.  Net income for the nine month period ended September 30, 2011 was $5.4 million, or $0.32 per diluted share, compared to a net loss of $2.3 million, or $0.14 per diluted share for the same period in 2010.

Compared to the second quarter of 2011, third quarter 2011 earnings reflect lower operating revenues of $0.6 million and a $0.2 million increase in the loan loss provision, partially offset by a $0.5 million decline in noninterest expense and lower income tax expense of $0.1 million.  A $1.9 million decline in the loan loss provision and a $1.7 million reduction in noninterest expense partially offset by lower operating revenues of $0.9 million and higher income taxes of $1.1 million drove the improvement in earnings compared to the third quarter of 2010.

The increase in earnings for the nine month period ended September 30, 2011 is attributable to an $8.6 million reduction in the loan loss provision and lower noninterest expense of $5.2 million, partially offset by a $0.8 million decline in operating revenues and higher income taxes of $5.2 million.  2011 performance also reflects the sale of our Visa Class B shares of stock during the first quarter which resulted in a $2.6 million net gain ($3.2 million pre-tax included in noninterest income and a swap liability of $0.6 million included in noninterest expense).

“Although we are still facing a challenging operating environment, I am pleased with our progress,” said William G. Smith, Jr., Chairman, President and Chief Executive Officer.  “Market disruption continues to present opportunities and strengthen the Capital City brand.  Profit in the third quarter of $2.0 million, or $0.12 per share represents our sixth consecutive quarter of profitability.  Highlights from the quarter include lower nonperforming assets, declining credit costs, a strong net interest margin and lower operating expenses.  While the economy remains sluggish and revenue growth continues to be a challenge, I am pleased with our third quarter performance” said Smith.

The Return on Average Assets was 0.31% and the Return on Average Equity was 2.97% for the third quarter of 2011.  These metrics were 0.33% and 3.28% for the second quarter of 2011, and 0.06% and 0.60% for the third quarter of 2010, respectively.

For the nine month period ended September 30, 2011, the Return on Average Assets was 0.28% and the Return on Average Equity was 2.77% compared to -0.12% and -1.17%, respectively, for the same period of 2010.

Discussion of Financial Condition

Average earning assets were $2.203 billion for the third quarter of 2011, a decrease of $56.0 million, or 2.5% from the second quarter of 2011 and an increase of $15.1 million, or 0.7%, from the fourth quarter of 2010.  The lower level of earning assets over the second quarter of 2011 was a result of a decline in the loan portfolio of $36.6 million, short-term investments of $17.4 million and the investment portfolio of $2.0 million.  Compared to the fourth quarter of 2010, average overnight funds were higher by $59.0 million, the investment portfolio increased $41.1 million and loans declined $115.2 million, partially attributable to the resolution of problem loans during 2011.

Average loans continued to decline throughout the portfolio, driven primarily by a reduction in the commercial real estate, residential and commercial loan categories.  The loan portfolio is impacted by weak loan demand attributable to the lack of consumer confidence and a sluggish economy.  In addition to lower production, normal amortization, payoffs and the resolution of problem loans (which has the effect of lowering the loan portfolio as loans are either charged off or transferred to the other real estate owned (“OREO”) category), contributed to the overall decline.  During the third quarter, problem loan resolutions accounted for $13.5 million or 45% of the net reduction in total loans of $29.9 million from the second quarter 2011.  Problem loan resolutions accounted for $44.5 million, or 44%, of the net reduction in loans of $101.0 million from the fourth quarter of 20101.

 
1 The problem loan resolutions and reductions in portfolio balances stated in this paragraph are based on “as of" balances, not averages.
 

 

Nonperforming assets (including nonaccrual loans, restructured loans (“TDRs”), and OREO) totaled $143.0 million at the end of the third quarter of 2011, a decrease of $2.7 million from the second quarter of 2011 and a decrease of $2.3 million from the fourth quarter of 2010.  Nonaccrual loans decreased $7.7 million from the second quarter of 2011 to $53.4 million, primarily reflecting migration of loans into the restructured loan category and the transfer of loans to OREO.  Nonaccrual loan inflow for the third quarter of 2011 was comparable to the second quarter of 2011.

Compared to the fourth quarter of 2010, nonaccrual loans declined by $12.3 million reflecting the movement of loans to the OREO category and, to a lesser extent, migration to the restructured loan category.  TDR's totaled $28.4 million at the end of the third quarter, a $4.8 million increase over the second quarter of 2011 and a $6.8 million increase over the fourth quarter of 2010.  The balance of OREO totaled $61.2 million at the end of the third quarter, a slight increase of $0.2 million from the second quarter of 2011.  For 2011, we have realized a slower pace of loan defaults, momentum in working loans through the collection cycle, and progress in our property disposition efforts, which has contributed to the overall improvement in our nonperforming asset portfolio.  So far in 2011, we have sold OREO properties totaling $25.2 million, which compares to $18.0 million for the full year 2010.  Nonperforming assets represented 5.67% of total assets at September 30, 2011 compared to 5.60% at June 30, 2011 and 5.54% at December 31, 2010.

Average total deposits were $2.061 billion for the third quarter, a decrease of $45.4 million, or 2.2%, from the second quarter of 2011 and $53.9 million, or 2.6%, from the fourth quarter of 2010.  Deposits decreased in both periods driven primarily by a reduction in certificates of deposit.  Additionally, a decrease resulting from existing clients moving from our Guaranteed Now Account product to repurchase agreements occurred late in the fourth quarter of 2010 as further discussed below.  Public funds balances increased as anticipated from the fourth quarter of 2010, but have declined from the second quarter level, which reflects the seasonality within this deposit category.  Noninterest bearing demand and savings accounts experienced a slight increase in both periods, partially offsetting the above mentioned decline.

As a result of changes in the FDIC’s Temporary Liquidity Guarantee Program, our government guaranteed NOW product was discontinued during the fourth quarter.  As of December 31, 2010, approximately $95 million in balances from this product remained in the NOW category, $95 million migrated to the noninterest bearing DDA category, and $60 million moved into repurchase agreements.

We continue to pursue prudent pricing discipline to manage the mix of our deposits.  Therefore, we are not attempting to compete with higher rate paying competitors for deposits.  We continue to experience a favorable shift in the mix of our deposits as higher cost certificates of deposit balances are replaced with lower rate nonmaturity deposits and noninterest bearing demand accounts.

We maintained an average net overnight funds (deposits with banks plus fed funds sold less fed funds purchased) sold position of $231.7 million during the third quarter of 2011 compared to an average overnight funds sold position of $249.1 million in the linked quarter and $164.9 million in the fourth quarter of 2010.  The lower balance when compared to the linked quarter primarily reflects declining deposits mentioned above and lower levels of short-term borrowings, partially offset by a decrease in the loan portfolio.  The variance as compared to the fourth quarter of 2010 is primarily attributable to a net reduction in loans and an increase in repurchase agreements, partially offset by a decline in deposits and the deployment of funds to the investment portfolio.
 
Equity capital was $260.9 million as of September 30, 2011, compared to $260.5 million as of June 30, 2011 and $259.0 million as of December 31, 2010.  Our leverage ratio was 10.20%, 9.95%, and 10.10%, respectively, for these periods.  Further, our risk-adjusted capital ratio of 15.41% at September 30, 2011 exceeds the 10.0% threshold to be designated as “well-capitalized” under the risk-based regulatory guidelines.  At September 30, 2011, our tangible common equity ratio was 7.19%, compared to 6.96% at June 30, 2011 and 6.82% at December 31, 2010.




 
 

 
 
Discussion of Operating Results

Tax equivalent net interest income for the third quarter of 2011 was $23.3 million compared to $23.7 million for the second quarter of 2011 and $25.1 million for the third quarter of 2010.  For the nine month period ended September 30, 2011, tax equivalent net interest income totaled $70.3 million compared to $74.3 million for the same period in 2010.

The decrease of $0.4 million in tax equivalent net interest income from the second quarter of 2011 was due to lower loan balances, declining loan fees and lower earning asset yields, partially offset by a reduction in the costs of funds, an additional calendar day and a lower level of foregone interest on nonaccrual loans.
 
 
The decrease in tax equivalent net interest income of $1.8 million and $4.0 million, for the three and nine month periods ended September 30, 2011, respectively, as compared to the same periods in 2010, resulted from an unfavorable change in earning asset mix and yield, partially offset by a reduction in interest expense and a lower level of foregone interest on nonaccrual loans.

The decline in loans, coupled with the low rate environment continues to put pressure on our net interest income.  Lowering our costs of funds, to the extent we can and continuing to shift the mix of our deposits will help to partially mitigate the unfavorable impact of weak loan demand and re-pricing.

The net interest margin in the third quarter of 2011 was 4.20%, a decrease of one basis point over the linked quarter and a decline of 18 basis points from the third quarter of 2010.  Year over year, for the nine month period, the margin declined 11 basis points to 4.18%.  The decrease in the margin for all comparable periods is attributable to the shift in our earning asset mix and unfavorable asset re-pricing, partially offset by a favorable variance in our average cost of funds.
 
The provision for loan losses for the third quarter of 2011 was $3.7 million compared to $3.5 million in the second quarter of 2011 and $5.7 million for the third quarter of 2010.  For the nine month period ended September 30, 2011, the loan loss provision totaled $11.4 million compared to $20.0 million for the same period in 2010.  This change was driven by a reduction in impaired loans and related reserves as well as a lower general reserve, which is primarily reflective of a 14% reduction in the level of internally classified loans, and lower loss rates.  Net charge-offs for the third quarter of 2011 totaled $5.1 million, or 1.22%, of average loans compared to $6.3 million, or 1.49% for the second  quarter of 2011 and $6.4 million, or 1.40%, in the third quarter of 2010.  For the nine month period ended September 30, 2011, net charge-offs totaled $17.2 million, or 1.35%, of average loans compared to $26.3 million, or 1.91%, for the same period of 2010.  At quarter-end, the allowance for loan losses of $29.7 million was 1.79% of outstanding loans (net of overdrafts) and provided coverage of 36% of nonperforming loans compared to 1.84% and 37%, respectively, at June 30, 2011, and 2.01% and 41%, respectively, at December 31, 2010.

Noninterest income for the third quarter of 2011 totaled $14.2 million, a decrease of $0.3 million, or 1.8%, from the second quarter of 2011 and an increase of $0.7 million, or 5.5%, over the third quarter of 2010.  A $0.5 million reduction in other income drove the decline from the second quarter of 2011 and reflects a lower level of gains from the sale of ORE properties.  Partially offsetting the lower level of other income was a $0.3 million increase in deposit fees.  The favorable variance compared to the third quarter of 2010 was primarily due to a higher deposit and bank card fees of $0.2 million and $0.3 million, respectively.  For the nine month period ended September 30, 2011, noninterest income totaled $45.0 million, an increase of $2.9 million, or 6.8%, from the same period in 2010.  The increase reflects a $3.3 million increase in other income reflective of a $3.2 million pre-tax gain from the sale of our Class B shares of Visa stock during the first quarter of 2011, and a $1.0 million increase in gains from the sale of OREO properties, partially offset by a $1.1 million decline in merchant fees.  Increases in retail brokerage and bank card fees of $0.4 million and $0.8 million, respectively, also contributed to the increase for the year.  Partially offsetting these favorable variances was a $1.1 million reduction in deposit fees reflective of a lower level of overdraft fees due to reduced activity as well as the implementation of new rules under Regulation E.  The aforementioned reduction in merchant fees reflects the transfer of our merchant processing business to another processor, which was completed in August 2010.  This decline is substantially offset by a reduction in processing costs, which is reflected as interchange fees in noninterest expense.
 
 
 
 

 
 
Noninterest expense for the third quarter of 2011 totaled $30.6 million, a decrease of $0.5 million from the second quarter of 2011 and $1.7 million from the third quarter of 2010.  The decline from the second quarter of 2011 was primarily due to a $0.5 million reduction in OREO expense reflective of both a reduction in valuation adjustments and losses from the sale of properties.  Compared to the third quarter of 2010, the favorable variance was due to lower OREO expense of $0.8 million, intangible amortization expense of $0.6 million, occupancy expense of $0.3 million, and other expense of $0.9 million, partially offset by higher salaries/associate benefit expense of $0.8 million.  The lower level of OREO expense primarily reflects a reduction in the level of losses recognized on the sale of OREO.  Intangible amortization expense declined due to the full amortization of core deposit intangibles related to several past acquisitions.  Occupancy expense declined due to lower lease expense for two banking offices that have been relocated to newly constructed offices as well as lower expense for furniture/equipment, reflecting the full depreciation of our imaging system components.  The $0.9 million decline in other expense was primarily due to lower FDIC insurance expense of $0.5 million and professional fees of $0.2 million.  FDIC insurance expense declined due to a lower rate reflecting recent changes to the FDIC premium structure.  Professional fees declined due to reduction in consulting fees related to a review of our vendor contracts.  The increase in salaries/associate benefit expense primarily reflects a higher level of performance incentive expense and associate salaries reflective of third quarter, 2011 merit raises.

For the nine month period ended September 30, 2011, noninterest expense totaled $95.1 million, a $5.2 million decline from the same period of 2010 attributable to lower occupancy expense of $0.3 million, furniture/equipment expense of $0.2 million, intangible amortization expense of $1.6 million, other real estate expense of $1.0 million, and a decline in other expense of $3.3 million.  Partially offsetting the aforementioned favorable variances was a $1.0 million increase in salaries/associate benefit expense.  Occupancy expense declined due to lower lease expense for two banking offices that have been relocated to newly constructed offices and the reduction in furniture/equipment expense reflects the full depreciation of several system components.  Intangible amortization expense declined due to the full amortization of core deposit intangibles related to several past acquisitions.  The lower level of OREO expense reflects both a reduction in valuation adjustments and a property carrying costs.  The $3.3 million reduction in other expense primarily reflects a reduction in FDIC insurance expense of $1.3 million, interchange fees of $0.9 million, professional fees of $0.5 million, advertising expense of $0.2 million, and telephone expense of $0.2 million.  The reduction in FDIC insurance expense reflects a lower rate due to recent changes to the FDIC premium structure.  Lower interchange fees are attributable to the sale of our merchant processing business as noted above in our discussion of noninterest income.  Professional fees declined due to lower consulting fees.  The reduction in advertising fees reflects efficiencies gained in the promotion of our free checking products.  Telephone expense declined primarily due to the renegotiation of contracts.

About Capital City Bank Group, Inc.

Capital City Bank Group, Inc. (“Company”) (NASDAQ: CCBG) is one of the largest publicly traded financial services companies headquartered in Florida and has approximately $2.5 billion in assets. The Company provides a full range of banking services, including traditional deposit and credit services, asset management, trust, mortgage banking, merchant services, bankcards, data processing and securities brokerage services.  The Company's bank subsidiary, Capital City Bank, was founded in 1895 and now has 70 banking offices and 79 ATMs in Florida, Georgia and Alabama.  For more information about Capital City Bank Group, Inc., visit www.ccbg.com.

FORWARD-LOOKING STATEMENTS

Forward-looking statements in this Press Release are based on current plans and expectations that are subject to uncertainties and risks, which could cause the Company’s future results to differ materially.  The following factors, among others, could cause the Company’s actual results to differ: legislative or regulatory changes, including the Dodd-Frank Act; the strength of the U.S. economy and the local economies where the Company conducts operations; the accuracy of the Company’s financial statement estimates and assumptions, including the estimate for the Company’s loan loss provision; the frequency and magnitude of foreclosure of the Company’s loans; continued depression of the market value of the Company that could result in an impairment of goodwill; restrictions on our operations, including the inability to pay dividends without our regulators’ consent; the effects of the health and soundness of other financial institutions, including the FDIC’s need to increase Deposit Insurance Fund assessments; our ability to declare and pay dividends; 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; fluctuations in inflation, interest rates, or monetary policies; 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 impact on our net interest margin from the repeal of Regulation Q; negative publicity and the impact on our reputation; technological changes; the effects of security breaches and computer viruses that may affect the Company’s computer systems; changes in consumer spending and savings habits; the Company’s growth and profitability; changes in accounting; the Company’s ability to integrate acquisitions; 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, 2010, 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.
 


 
 

 

CAPITAL CITY BANK GROUP, INC.
                             
CONSOLIDATED STATEMENT OF OPERATIONS
                             
Unaudited
                             
   
Three Months Ended
   
Nine Months Ended
 
(Dollars in thousands, except per share data)
 
Sep 30, 2011
   
June 30, 2011
   
Sep 30, 2010
   
Sep 30, 2011
   
Sep 30, 2010
 
                               
EARNINGS
                             
Net Income (Loss)
  $ 1,977     $ 2,145     $ 401     $ 5,432     $ (2,331 )
Net Income (Loss) Per Common Share
  $ 0.12     $ 0.12     $ 0.02     $ 0.32     $ (0.14 )
PERFORMANCE
                                       
Return on Average Equity
    2.97 %     3.28 %     0.60 %     2.77 %     -1.17 %
Return on Average Assets
    0.31 %     0.33 %     0.06 %     0.28 %     -0.12 %
Net Interest Margin
    4.20 %     4.21 %     4.38 %     4.18 %     4.29 %
Noninterest Income as % of Operating Revenue
    38.14 %     38.13 %     35.17 %     39.38 %     36.52 %
Efficiency Ratio
    81.40 %     81.41 %     82.08 %     82.07 %     84.39 %
CAPITAL ADEQUACY
                                       
Tier 1 Capital Ratio
    14.05 %     13.83 %     12.93 %     14.05 %     12.93 %
Total Capital Ratio
    15.41 %     15.19 %     14.29 %     15.41 %     14.29 %
Tangible Common Equity Ratio
    7.19 %     6.96 %     6.98 %     7.19 %     6.98 %
Leverage Ratio
    10.20 %     9.95 %     9.75 %     10.20 %     9.75 %
Equity to Assets
    10.34 %     10.02 %     10.10 %     10.34 %     10.10 %
ASSET QUALITY
                                       
Allowance as % of Non-Performing Loans
    36.26 %     36.71 %     39.94 %     36.26 %     39.94 %
Allowance as a % of Loans
    1.79 %     1.84 %     2.10 %     1.79 %     2.10 %
Net Charge-Offs as % of Average Loans
    1.22 %     1.49 %     1.40 %     1.35 %     1.91 %
Nonperforming Assets as % of Loans and ORE
    8.32 %     8.33 %     7.86 %     8.32 %     7.86 %
Nonperforming Assets as % of Total Assets
    5.67 %     5.60 %     5.65 %     5.67 %     5.65 %
STOCK PERFORMANCE
                                       
High
  $ 11.18     $ 13.12     $ 14.24     $ 13.80     $ 18.25  
Low
  $ 9.81     $ 9.94     $ 10.76     $ 9.81     $ 10.76  
Close
  $ 10.38     $ 10.26     $ 12.14     $ 10.38     $ 12.14  
Average Daily Trading Volume
    43,483       29,716       29,747       31,783       34,489  


 
 

 

CAPITAL CITY BANK GROUP, INC.
                             
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
                   
Unaudited
                             
                               
   
2011
   
2011
   
2011
   
2010
   
2010
 
(Dollars in thousands)
 
Third Quarter
   
Second Quarter
   
First Quarter
   
Fourth Quarter
   
Third Quarter
 
ASSETS:
                             
Cash and Due From Banks
  $ 53,027     $ 71,554     $ 52,000     $ 35,410     $ 48,701  
Funds Sold and Interest Bearing Deposits
    193,387       223,183       271,375       200,783       193,415  
Total Cash and Cash Equivalents
    246,414       294,737       323,375       236,193       242,116  
                                         
Investment Securities, Available-for-Sale
    306,038       304,313       311,356       309,731       231,303  
                                         
Loans, Net of Unearned Interest
                                       
Commercial, Financial, & Agricultural
    142,511       149,830       153,960       157,394       156,049  
Real Estate - Construction
    31,991       30,867       35,614       43,239       45,346  
Real Estate - Commercial
    644,128       660,058       668,583       671,702       680,639  
Real Estate - Residential
    388,686       395,126       404,204       420,604       448,704  
Real Estate - Home Equity
    245,438       248,228       248,745       251,565       250,795  
Consumer
    188,933       194,624       196,205       200,727       207,207  
Other Loans
    13,720       5,987       5,098       9,937       9,828  
Overdrafts
    2,292       2,882       2,385       3,503       2,669  
Total Loans, Net of Unearned Interest
    1,657,699       1,687,602       1,714,794       1,758,671       1,801,237  
Allowance for Loan Losses
    (29,658 )     (31,080 )     (33,873 )     (35,436 )     (37,720 )
Loans, Net
    1,628,041       1,656,522       1,680,921       1,723,235       1,763,517  
                                         
Premises and Equipment, Net
    111,471       112,576       113,918       115,356       115,689  
Intangible Assets
    85,591       85,699       85,806       86,159       86,712  
Other Real Estate Owned
    61,196       61,016       55,364       57,937       51,208  
Other Assets
    85,221       84,395       91,754       93,442       89,451  
Total Other Assets
    343,479       343,686       346,842       352,894       343,060  
                                         
Total Assets
  $ 2,523,972     2,599,258     $ 2,662,494     $ 2,622,053     $ 2,579,996  
                                         
LIABILITIES
                                       
Deposits:
                                       
Noninterest Bearing Deposits
  584,628     568,813     540,184     546,257     479,887  
NOW Accounts
    708,066       764,480       818,512       770,149       830,297  
Money Market Accounts
    280,001       283,230       288,224       275,416       282,848  
Regular Savings Accounts
    154,136       153,403       150,051       139,888       135,143  
Certificates of Deposit
    316,968       331,085       350,076       372,266       393,268  
Total Deposits
    2,043,798       2,101,011       2,147,047       2,103,976       2,121,443  
                                         
Short-Term Borrowings
    47,508       65,237       86,650       92,928       38,138  
Subordinated Notes Payable
    62,887       62,887       62,887       62,887       62,887  
Other Long-Term Borrowings
    45,389       49,196       50,050       50,101       46,456  
Other Liabilities
    63,465       60,383       56,582       53,142       50,383  
                                         
Total Liabilities
    2,263,047       2,338,714       2,403,216       2,363,034       2,319,307  
                                         
SHAREOWNERS' EQUITY
                                       
Common Stock
    172       171       171       171       171  
Additional Paid-In Capital
    38,074       37,724       37,548       36,920       36,864  
Retained Earnings
    237,969       237,709       237,276       237,679       237,471  
Accumulated Other Comprehensive Loss, Net of Tax
    (15,290 )     (15,060 )     (15,717 )     (15,751 )     (13,817 )
                                         
Total Shareowners' Equity
    260,925       260,544       259,278       259,019       260,689  
                                         
Total Liabilities and Shareowners' Equity
  2,523,972     2,599,258     2,662,494     2,622,053     2,579,996  
                                         
OTHER BALANCE SHEET DATA
                                       
Earning Assets
  2,157,124     2,215,098     2,297,525     2,269,185     2,225,955  
Intangible Assets
                                       
Goodwill
    84,811       84,811       84,811       84,811       84,811  
Core Deposits
    318       378       437       742       1,248  
Other
    462       510       558       606       653  
Interest Bearing Liabilities
    1,614,954       1,709,518       1,806,450       1,763,635       1,789,037  
                                         
Book Value Per Diluted Share
  15.20     15.20     15.13     15.15     15.25  
Tangible Book Value Per Diluted Share
    10.21       10.21       10.13       10.11       10.18  
                                         
Actual Basic Shares Outstanding
    17,157       17,127       17,127       17,100       17,095  
Actual Diluted Shares Outstanding
    17,172       17,139       17,136       17,101       17,096  

 
 

 


CAPITAL CITY BANK GROUP, INC.
                                     
CONSOLIDATED STATEMENT OF OPERATIONS
                               
Unaudited
                                         
                                           
                                 
Nine Months Ended
 
   
2011
   
2011
   
2011
   
2010
   
2010
   
2011
   
2010
 
(Dollars in thousands, except per share data)
 
Third Quarter
   
Second Quarter
   
First Quarter
   
Fourth Quarter
   
Third Quarter
   
Third Quarter
   
Third Quarter
 
                                           
INTEREST INCOME
                                         
Interest and Fees on Loans
  $ 23,777     $ 24,305     $ 23,947     $ 25,656     $ 26,418     $ 72,029     $ 80,054  
Investment Securities
    978       1,017       1,071       1,080       1,014       3,066       3,118  
Funds Sold
    136       145       171       95       144       452       492  
Total Interest Income
    24,891       25,467       25,189       26,831       27,576       75,547       83,664  
                                                         
INTEREST EXPENSE
                                                       
Deposits
    907       1,083       1,258       1,524       1,820       3,248       7,121  
Short-Term Borrowings
    78       110       111       99       31       299       60  
Subordinated Notes Payable
    339       343       340       342       376       1,022       1,666  
Other Long-Term Borrowings
    467       492       494       508       565       1,453       1,642  
Total Interest Expense
    1,791       2,028       2,203       2,473       2,792       6,022       10,489  
Net Interest Income
    23,100       23,439       22,986       24,358       24,784       69,525       73,175  
Provision for Loan Losses
    3,718       3,545       4,133       3,783       5,668       11,396       20,041  
Net Interest Income after Provision for Loan Losses
    19,382       19,894       18,853       20,575       19,116       58,129       53,134  
                                                         
NONINTEREST INCOME
                                                       
Service Charges on Deposit Accounts
    6,629       6,309       5,983       6,434       6,399       18,921       20,066  
Data Processing Fees
    749       764       974       880       911       2,487       2,730  
Asset Management Fees
    1,080       1,080       1,080       1,095       1,040       3,240       3,140  
Retail Brokerage Fees
    807       939       729       738       671       2,475       2,082  
Gain on Sale of Investment Securities
    -       -       -       -       3       -       8  
Mortgage Banking Fees
    645       568       617       1,027       772       1,830       1,921  
Interchange Fees (1)
    1,420       1,443       1,360       1,285       1,291       4,223       3,792  
ATM/Debit Card Fees (1)
    1,170       1,115       1,136       1,051       1,036       3,421       3,072  
Other
    1,693       2,230       4,455       2,225       1,326       8,378       5,279  
Total Noninterest Income
    14,193       14,448       16,334       14,735       13,449       44,975       42,090  
                                                         
NONINTEREST EXPENSE
                                                       
Salaries and Associate Benefits
    15,805       16,000       16,577       15,389       15,003       48,382       47,366  
Occupancy, Net
    2,495       2,447       2,396       2,406       2,611       7,338       7,604  
Furniture and Equipment
    2,118       2,117       2,226       2,268       2,288       6,461       6,661  
Intangible Amortization
    108       107       353       553       709       568       2,129  
Other Real Estate
    2,542       3,033       3,677       4,709       3,306       9,252       10,213  
Other
    7,579       7,463       8,102       8,215       8,446       23,144       26,403  
Total Noninterest Expense
    30,647       31,167       33,331       33,540       32,363       95,145       100,376  
                                                         
OPERATING PROFIT(LOSS)
    2,928       3,175       1,856       1,770       202       7,959       (5,152 )
Provision for Income Taxes
    951       1,030       546       (148 )     (199 )     2,527       (2,821 )
NET INCOME(LOSS)
  $ 1,977     $ 2,145     $ 1,310     $ 1,918     $ 401     $ 5,432     $ (2,331 )
                                                         
PER SHARE DATA
                                                       
Basic Earnings
  $ 0.12     $ 0.12     $ 0.08     $ 0.12     $ 0.02     $ 0.32     $ (0.14 )
Diluted Earnings
  $ 0.12     $ 0.12     $ 0.08     $ 0.12     $ 0.02     $ 0.32     $ (0.14 )
Cash Dividends
    0.100       0.100       0.100       0.100       0.100       0.300       0.390  
AVERAGE SHARES
                                                       
Basic
    17,152       17,127       17,122       17,095       17,087       17,134       17,069  
Diluted
    17,167       17,139       17,130       17,096       17,088       17,143       17,070  
                                                         
                                                         
(1) Together referred to as "Bank Card Fees"
                                 

 
 

 

CAPITAL CITY BANK GROUP, INC.
                             
ALLOWANCE FOR LOAN LOSSES
                             
AND NONPERFORMING ASSETS
                             
Unaudited
                             
                               
   
2011
   
2011
   
2011
   
2010
   
2010
 
(Dollars in thousands, except per share data)
 
Third Quarter
   
Second Quarter
   
First Quarter
   
Fourth Quarter
   
Third Quarter
 
                               
ALLOWANCE FOR LOAN LOSSES
                             
Balance at Beginning of Period
  $ 31,080     $ 33,873     $ 35,436     $ 37,720     $ 38,442  
Provision for Loan Losses
    3,718       3,545       4,133       3,783       5,668  
Net Charge-Offs
  $ 5,140     $ 6,338     $ 5,696     $ 6,067     $ 6,390  
                                         
Balance at End of Period
    29,658       31,080       33,873       35,436       37,720  
As a % of Loans
    1.79 %     1.84 %     1.98 %     2.01 %     2.10 %
As a % of Nonperforming Loans
    36.26 %     36.71 %     34.57 %     40.57 %     39.94 %
As a % of Nonperforming Assets
    20.74 %     21.34 %     22.09 %     24.39 %     25.90 %
                                         
CHARGE-OFFS
                                       
Commercial, Financial and Agricultural
  $ 186     $ 301     $ 721     $ 629     $ 242  
Real Estate - Construction
    75       14       -       234       701  
Real Estate - Commercial
    1,031       2,808       430       1,469       1,741  
Real Estate - Residential
    3,867       3,315       4,445       3,629       3,175  
Consumer
    832       606       620       582       1,057  
                                         
Total Charge-Offs
  $ 5,991     $ 7,044     $ 6,216     $ 6,543     $ 6,916  
                                         
RECOVERIES
                                       
Commercial, Financial and Agricultural
  $ 33     $ 43     $ 63     $ 48     $ 65  
Real Estate - Construction
    -       5       9       -       -  
Real Estate - Commercial
    37       115       12       55       6  
Real Estate - Residential
    379       170       96       7       181  
Consumer
    402       373       340       366       274  
                                         
Total Recoveries
  $ 851     $ 706     $ 520     $ 476     $ 526  
                                         
NET CHARGE-OFFS
  $ 5,140     $ 6,338     $ 5,696     $ 6,067     $ 6,390  
                                         
Net Charge-Offs as a % of Average Loans(1)
    1.22 %     1.49 %     1.33 %     1.35 %     1.40 %
                                         
RISK ELEMENT ASSETS
                                       
Nonaccruing Loans
  $ 53,396     $ 61,076     $ 73,954     $ 65,700     $ 74,168  
Restructured Loans
    28,404       23,582       24,028       21,649       20,267  
Total Nonperforming Loans
    81,800       84,658       97,982       87,349       94,435  
Other Real Estate
    61,196       61,016       55,364       57,937       51,208  
Total Nonperforming Assets
  $ 142,996     $ 145,674     $ 153,346     $ 145,286     $ 145,643  
                                         
Past Due Loans 30-89 Days
  $ 17,053     $ 18,103     $ 19,391     $ 24,193     $ 24,904  
Past Due Loans 90 Days or More
  $ 26     $ 271     $ -     $ 159     $ -  
                                         
Nonperforming Loans as a % of Loans
    4.93 %     5.02 %     5.71 %     4.97 %     5.24 %
Nonperforming Assets as a % of
                                       
Loans and Other Real Estate
    8.32 %     8.33 %     8.66 %     8.00 %     7.86 %
Nonperforming Assets as a % of Capital(2)
    49.21 %     49.95 %     52.31 %     49.34 %     48.81 %
Nonperforming Assets as a % of Total Assets
    5.67 %     5.60 %     5.76 %     5.54 %     5.65 %
                                         
                                         
(1) Annualized
                                       
(2) Capital includes allowance for loan losses.
                                 

 
 

 

 
                                 
 
AVERAGE BALANCE AND INTEREST RATES(1)
                           
Unaudited                                
   
Third Quarter 2011
   
Second Quarter 2011
   
First Quarter 2011
   
Fourth Quarter 2010
   Third Quarter 2010    September 2011 YTD      September 2010 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
  $ 1,667,720     $ 23,922       5.69   $ 1,704,348     $ 24,465     5.76   $ 1,730,330       $ 24,101       5.65   $ 1,782,916       $ 25,799       5.74   $ 1,807,483       $ 26,568       5.83   $ 1,700,570       $ 72,488       5.70 %   $ 1,844,788       $ 80,543       5.84 %
                                                                                                                                                                                 
Investment Securities
                                                                                                                                                                               
Taxable Investment Securities
    248,138       828       1.32
%
    244,487       825     1.35
%
    231,153         851       1.48
%
    178,926         799       1.78
%
    124,625         674       2.15
%
    241,321         2,504       1.40 %     108,268         1,882       2.32 %
Tax-Exempt Investment Securities
    55,388       231       1.67
%
    60,963       297     1.95
%
    74,226         337       1.81
%
    83,469         434       2.08
%
    88,656         521       2.35
%
    63,457         865       1.82 %     92,672         1,898       2.73 %
                                                                                                                                                                                 
Total Investment Securities
    303,526       1,059       1.39
%
    305,450       1,122     1.47
%
    305,379         1,188       1.56
%
    262,395         1,233       1.87
%
    213,281         1,195       2.23
%
    304,778         3,369       1.47 %     200,940         3,780       2.51 %
                                                                                                                                                                                 
Funds Sold
    231,681       136       0.23
%
    249,133       145     0.23
%
    242,893         171       0.28
%
    172,738         95       0.24
%
    252,434         144       0.22
%
    241,195         452       0.25 %     274,245         492       0.24 %
                                                                                                                                                                                 
Total Earning Assets
    2,202,927     $ 25,117       4.52
%
    2,258,931     $ 25,732     4.57
%
    2,278,602       $ 25,460       4.53
%
    2,218,049       $ 27,127       4.85
%
    2,273,198       $ 27,907       4.87
%
    2,246,543       $ 76,309       4.54 %     2,319,973       $ 84,815       4.89 %
                                                                                                                                                                                 
Cash and Due From Banks
    47,252                       47,465                     50,942                         51,030                         50,942                         48,539                         52,170                    
Allowance for Loan Losses
    (30,969 )                     (32,993 )                   (34,822 )                       (37,713 )                       (39,584 )                       (32,914 )                       (41,729 )                  
Other Assets
    344,041                       344,884                     348,295                         345,427                         342,202                         345,725                         337,212                    
                                                                                                                                                                                 
Total Assets
  $ 2,563,251                     $ 2,618,287                   $ 2,643,017                       $ 2,576,793                       $ 2,626,758                       $ 2,607,893                       $ 2,667,626                    
                                                                                                                                                                                 
LIABILITIES:
                                                                                                                                                                               
Interest Bearing Deposits
                                                                                                                                                                               
NOW Accounts
  $ 726,652     $ 222       0.12   $ 782,698     $ 259     0.13   $ 786,939       $ 261       0.13   $ 837,625       $ 296       0.14   $ 871,158       $ 326       0.15   $ 765,209       $ 742       0.13 %   $ 872,512       $ 1,110       0.17 %
Money Market Accounts
    282,378       95       0.13
%
    284,411       136     0.19
%
    278,562         131       0.19
%
    282,887         134       0.19
%
    293,424         145       0.20
%
    281,798         362       0.17 %     333,558         1,165       0.47 %
Savings Accounts
    153,748       19       0.05
%
    152,599       16     0.04
%
    144,623         18       0.05
%
    136,276         16       0.05
%
    133,690         17       0.05
%
    150,357         53       0.05 %     130,485         49       0.05 %
Time Deposits
    324,951       571       0.70
%
    338,723       672     0.80
%
    360,575         848       0.95
%
    382,870         1,078       1.12
%
    402,880         1,332       1.31
%
    341,286         2,091       0.82 %     423,726         4,797       1.51 %
Total Interest Bearing Deposits
    1,487,729       907       0.24
%
    1,558,431       1,083     0.28
%
    1,570,699         1,258       0.32
%
    1,639,658         1,524       0.37
%
    1,701,152         1,820       0.42
%
    1,538,650         3,248       0.28 %     1,760,281         7,121       0.54 %
                                                                                                                                                                                 
Short-Term Borrowings
    64,160       78       0.48
%
    76,754       110     0.58
%
    87,267         111       0.52
%
    34,706         99       1.14
%
    23,388         31       0.54
%
    75,976         299       0.53 %     25,558         60       0.31 %
Subordinated Notes Payable
    62,887       339       2.11
%
    62,887       343     2.16
%
    62,887         340       2.16
%
    62,887         342       2.13
%
    62,887         376       2.34
%
    62,887         1,022       2.14 %     62,887         1,666       3.49 %
Other Long-Term Borrowings
    46,435       467       3.99
%
    49,650       492     3.97
%
    50,345         494       3.98
%
    50,097         508       4.02
%
    54,258         565       4.13
%
    48,795         1,453       3.98 %     52,330         1,642       4.20 %
                                                                                                                                                                                 
Total Interest Bearing Liabilities
    1,661,211     $ 1,791       0.43
%
    1,747,722     $ 2,028     0.47
%
    1,771,198       $ 2,203       0.50
%
    1,787,348       $ 2,473       0.55
%
    1,841,685       $ 2,792       0.60
%
    1,726,308       $ 6,022       0.47 %     1,901,056       $ 10,489       0.74 %
                                                                                                                                                                                 
Noninterest Bearing Deposits
    574,184                       548,870                     554,680                         476,209                         471,013                         559,316                         457,807                    
Other Liabilities
    63,954                       59,324                     55,536                         50,614                         50,318                         59,635                         43,391                    
                                                                                                                                                                                 
Total Liabilities
    2,299,349                       2,355,916                     2,381,414                         2,314,171                         2,363,016                         2,345,259                         2,402,254                    
                                                                                                                                                                                 
SHAREOWNERS' EQUITY:
  $ 263,902                     $ 262,371                   $ 261,603                       $ 262,622                       $ 263,742                       $ 262,634                       $ 265,372                    
                                                                                                                                                                                 
Total Liabilities and Shareowners' Equity
  $ 2,563,251                     $ 2,618,287                   $ 2,643,017                       $ 2,576,793                       $ 2,626,758                       $ 2,607,893                       $ 2,667,626                    
                                                                                                                                                                                 
Interest Rate Spread
          $ 23,326       4.09
%
          $ 23,704     4.10
%
            $ 23,257       4.03
%
            $ 24,654       4.30
%
            $ 25,115       4.27 %  
 
      $ 70,287       4.07 %             $ 74,326       4.15 %
                                                                                                                                                                                 
Interest Income and Rate Earned(1)
      25,117       4.52
%
            25,732     4.57
%
              25,460       4.53
%
              27,127       4.85
%
              27,907       4.87 %  
 
    76,309       4.54 %               84,815       4.89 %
Interest Expense and Rate Paid(2)
      1,791       0.32
%
            2,028     0.36
%
              2,203       0.39
%
              2,473       0.44
%
              2,792       0.49  
 
        6,022       0.36 %               10,489       0.60 %
                                                                                                                                                                                 
Net Interest Margin
          $ 23,326       4.20
%
          $ 23,704     4.21
%
            $ 23,257       4.14
%
            $ 24,654       4.41
%
            $ 25,115       4.38 %
 
      $ 70,287       4.18 %             $ 74,326       4.29 %
                                                                                                                                                                                 
                                                                                                                                                                                 
(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.