UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2019
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number: 0-13358
|
(Exact name of registrant as specified in its charter) |
Florida |
|
59-2273542 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
217 North Monroe Street, Tallahassee, Florida |
|
32301 |
(Address of principal executive office) |
|
(Zip Code) |
(850) 402-7821 |
||
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
|
||
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common Stock, Par value $0.01 |
CCBG |
Nasdaq Stock Market, LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] |
Accelerated filer [X] |
Non-accelerated filer [ ] |
Smaller reporting company [ ] |
|
|
|
Emerging growth company [ ] |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of The Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
At October 31, 2019, 16,748,858 shares of the Registrant's Common Stock, $.01 par value, were outstanding.
CAPITAL CITY BANK GROUP, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 30, 2019
TABLE OF CONTENTS
PART I – Financial Information |
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Page |
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Item 1. |
Consolidated Financial Statements (Unaudited) |
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Consolidated Statements of Financial Condition – September 30, 2019 and December 31, 2018 |
4 |
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Consolidated Statements of Income – Three and Nine Months Ended September 30, 2019 and 2018 |
5 |
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Consolidated Statements of Comprehensive Income – Three and Nine Months Ended September 30, 2019 and 2018 |
6 |
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Consolidated Statements of Changes in Shareowners’ Equity – Three and Nine Months Ended September 30, 2019 and 2018 |
7 |
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Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2019 and 2018 |
8 |
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Notes to Consolidated Financial Statements |
9 |
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Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
29 |
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Item 3. |
Quantitative and Qualitative Disclosure About Market Risk |
46 |
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Item 4. |
Controls and Procedures |
46 |
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PART II – Other Information |
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Item 1. |
Legal Proceedings |
46 |
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Item 1A. |
Risk Factors |
46 |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
46 |
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Item 3. |
Defaults Upon Senior Securities |
46 |
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Item 4. |
Mine Safety Disclosure |
46 |
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Item 5. |
Other Information |
46 |
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Item 6. |
Exhibits |
47 |
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Signatures
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48 |
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2
INTRODUCTORY NOTE
Caution Concerning Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements about our beliefs, plans, objectives, goals, expectations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. The words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “target,” “goal,” and similar expressions are intended to identify forward-looking statements.
All forward-looking statements, by their nature, are subject to risks and uncertainties. Our actual future results may differ materially from those set forth in our forward-looking statements.
Our ability to achieve our financial objectives could be adversely affected by the factors discussed in detail in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q and the following sections of our Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 Form 10-K”): (a) “Introductory Note” in Part I, Item 1. “Business”; (b) “Risk Factors” in Part I, Item 1A, as updated in our subsequent quarterly reports filed on Form 10-Q; and (c) “Introduction” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in Part II, Item 7, as well as:
· our ability to successfully manage interest rate risk, liquidity risk, and other risks inherent to our industry;
· legislative or regulatory changes;
· changes in monetary and fiscal policies of the U.S. Government;
· inflation, interest rate, market and monetary fluctuations;
· the effects of security breaches and computer viruses that may affect our computer systems or fraud related to debit card products;
· the accuracy of our financial statement estimates and assumptions, including the estimates used for our loan loss reserve, deferred tax asset valuation and pension plan;
· changes in accounting principles, policies, practices or guidelines, including the effects of forthcoming Current Expected Credit Losses (“CECL”) accounting implementation;
· the frequency and magnitude of foreclosure of our loans;
· the effects of our lack of a diversified loan portfolio, including the risks of geographic and industry concentrations;
· the strength of the United States economy in general and the strength of the local economies in which we conduct operations;
· our ability to declare and pay dividends, the payment of which is subject to our capital requirements;
· changes in the securities and real estate markets;
· the effects of harsh weather conditions, including hurricanes, and man-made disasters;
· our ability to comply with the extensive laws and regulations to which we are subject, including the laws for each jurisdiction where we operate;
· the willingness of clients to accept third-party products and services rather than our products and services and vice versa;
· increased competition and its effect on pricing;
· technological changes;
· negative publicity and the impact on our reputation;
· changes in consumer spending and saving habits;
· growth and profitability of our noninterest income;
· the limited trading activity of our common stock;
· the concentration of ownership of our common stock;
· anti-takeover provisions under federal and state law as well as our Articles of Incorporation and our Bylaws;
· other risks described from time to time in our filings with the Securities and Exchange Commission; and
· our ability to manage the risks involved in the foregoing.
However, other factors besides those listed in Item 1A Risk Factors or discussed in this Form 10-Q also could adversely affect our results, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties. Any forward-looking statements made by us or on our behalf speak only as of the date they are made. We do not undertake to update any forward-looking statement, except as required by applicable law.
3
PART I. FINANCIAL INFORMATION |
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Item 1. |
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CAPITAL CITY BANK GROUP, INC. |
|||||||
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION |
|||||||
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|
|
|
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|
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(Unaudited) |
|
|
|
|
|
|
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September 30, |
|
December 31, |
||
(Dollars in Thousands) |
2019 |
|
2018 |
||||
ASSETS |
|
|
|
|
|
||
Cash and Due From Banks |
$ |
61,151 |
|
$ |
62,032 |
||
Federal Funds Sold and Interest Bearing Deposits |
|
177,389 |
|
|
213,968 |
||
|
|
Total Cash and Cash Equivalents |
|
238,540 |
|
|
276,000 |
|
|
|
|
|
|
|
|
Investment Securities, Available for Sale, at fair value |
|
376,981 |
|
|
446,157 |
||
Investment Securities, Held to Maturity, at amortized cost (fair value of $241,887 and $214,413) |
|
240,303 |
|
|
217,320 |
||
|
|
Total Investment Securities |
|
617,284 |
|
|
663,477 |
|
|
|
|
|
|
|
|
Loans Held For Sale |
|
13,075 |
|
|
6,869 |
||
|
|
|
|
|
|
|
|
Loans, Net of Unearned Income |
|
1,827,753 |
|
|
1,774,225 |
||
|
Allowance for Loan Losses |
|
(14,319) |
|
|
(14,210) |
|
|
|
Loans, Net |
|
1,813,434 |
|
|
1,760,015 |
|
|
|
|
|
|
|
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Premises and Equipment, net |
|
85,810 |
|
|
87,190 |
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Goodwill |
|
84,811 |
|
|
84,811 |
||
Other Real Estate Owned |
|
526 |
|
|
2,229 |
||
Other Assets |
|
81,033 |
|
|
78,592 |
||
|
|
Total Assets |
$ |
2,934,513 |
|
$ |
2,959,183 |
|
|
|
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|
|
|
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LIABILITIES |
|
|
|
|
|
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Deposits: |
|
|
|
|
|
||
|
Noninterest Bearing Deposits |
$ |
1,022,774 |
|
$ |
947,858 |
|
|
Interest Bearing Deposits |
|
1,450,233 |
|
|
1,583,998 |
|
|
|
Total Deposits |
|
2,473,007 |
|
|
2,531,856 |
|
|
|
|
|
|
|
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Short-Term Borrowings |
|
10,622 |
|
|
13,541 |
||
Subordinated Notes Payable |
|
52,887 |
|
|
52,887 |
||
Other Long-Term Borrowings |
|
6,963 |
|
|
8,568 |
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Other Liabilities |
|
69,472 |
|
|
49,744 |
||
|
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Total Liabilities |
|
2,612,951 |
|
|
2,656,596 |
|
|
|
|
|
|
|
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SHAREOWNERS’ EQUITY |
|
|
|
|
|
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Preferred Stock, $.01 par value; 3,000,000 shares authorized; no shares issued and outstanding |
|
- |
|
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- |
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Common Stock, $.01 par value; 90,000,000 shares authorized; 16,748,858 and 16,747,571 shares |
|
|
|
|
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issued and outstanding at September 30, 2019 and December 31, 2018, respectively |
|
167 |
|
|
167 |
||
Additional Paid-In Capital |
|
31,075 |
|
|
31,058 |
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Retained Earnings |
|
316,551 |
|
|
300,177 |
||
Accumulated Other Comprehensive Loss, net of tax |
|
(26,231) |
|
|
(28,815) |
||
Total Shareowners’ Equity |
|
321,562 |
|
|
302,587 |
||
Total Liabilities and Shareowners' Equity |
$ |
2,934,513 |
|
$ |
2,959,183 |
||
|
|
|
|
|
|
|
|
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. |
4
CAPITAL CITY BANK GROUP, INC. |
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CONSOLIDATED STATEMENTS OF INCOME |
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(Unaudited) |
||||||||||||
|
|
|
|
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|
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|
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Three Months Ended September 30, |
|
Nine Months Ended September 30, |
||||||||
(Dollars in Thousands, Except Per Share Data) |
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||
INTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
Loans, including Fees |
$ |
23,992 |
|
$ |
21,618 |
|
$ |
70,373 |
|
$ |
61,686 |
|
Investment Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
3,249 |
|
|
3,290 |
|
|
9,937 |
|
|
8,757 |
|
Tax Exempt |
|
58 |
|
|
182 |
|
|
276 |
|
|
633 |
Federal Funds Sold and Interest Bearing Deposits |
|
1,142 |
|
|
302 |
|
|
4,242 |
|
|
1,949 |
|
Total Interest Income |
|
28,441 |
|
|
25,392 |
|
|
84,828 |
|
|
73,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
1,596 |
|
|
1,068 |
|
|
5,683 |
|
|
2,931 |
|
Short-Term Borrowings |
|
27 |
|
|
41 |
|
|
93 |
|
|
57 |
|
Subordinated Notes Payable |
|
558 |
|
|
568 |
|
|
1,762 |
|
|
1,595 |
|
Other Long-Term Borrowings |
|
63 |
|
|
92 |
|
|
201 |
|
|
286 |
|
Total Interest Expense |
|
2,244 |
|
|
1,769 |
|
|
7,739 |
|
|
4,869 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST INCOME |
|
26,197 |
|
|
23,623 |
|
|
77,089 |
|
|
68,156 |
|
Provision for Loan Losses |
|
776 |
|
|
904 |
|
|
2,189 |
|
|
2,464 |
|
Net Interest Income After Provision For Loan Losses |
|
25,421 |
|
|
22,719 |
|
|
74,900 |
|
|
65,692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
Deposit Fees |
|
4,961 |
|
|
5,207 |
|
|
14,492 |
|
|
14,921 |
|
Bank Card Fees |
|
2,972 |
|
|
2,828 |
|
|
8,863 |
|
|
8,548 |
|
Wealth Management Fees |
|
2,992 |
|
|
2,181 |
|
|
7,719 |
|
|
6,391 |
|
Mortgage Banking Fees |
|
1,587 |
|
|
1,343 |
|
|
3,779 |
|
|
3,606 |
|
Other |
|
1,391 |
|
|
1,749 |
|
|
4,372 |
|
|
4,861 |
|
Total Noninterest Income |
|
13,903 |
|
|
13,308 |
|
|
39,225 |
|
|
38,327 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
Compensation |
|
16,203 |
|
|
15,891 |
|
|
48,989 |
|
|
47,599 |
|
Occupancy, net |
|
4,710 |
|
|
4,645 |
|
|
13,756 |
|
|
13,699 |
|
Other Real Estate Owned, net |
|
6 |
|
|
347 |
|
|
444 |
|
|
1,221 |
|
Other |
|
6,954 |
|
|
7,816 |
|
|
21,278 |
|
|
22,479 |
|
Total Noninterest Expense |
|
27,873 |
|
|
28,699 |
|
|
84,467 |
|
|
84,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES |
|
11,451 |
|
|
7,328 |
|
|
29,658 |
|
|
19,021 |
|
Income Tax Expense |
|
2,970 |
|
|
1,338 |
|
|
7,416 |
|
|
1,255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
$ |
8,481 |
|
$ |
5,990 |
|
$ |
22,242 |
|
$ |
17,766 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC NET INCOME PER SHARE |
$ |
0.51 |
|
$ |
0.35 |
|
$ |
1.33 |
|
$ |
1.04 |
|
DILUTED NET INCOME PER SHARE |
$ |
0.50 |
|
$ |
0.35 |
|
$ |
1.32 |
|
$ |
1.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Common Basic Shares Outstanding |
|
16,747 |
|
|
17,056 |
|
|
16,776 |
|
|
17,043 |
|
Average Common Diluted Shares Outstanding |
|
16,795 |
|
|
17,125 |
|
|
16,810 |
|
|
17,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. |
5
CAPITAL CITY BANK GROUP, INC. |
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
|||||||||||
(Unaudited) |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||
|
September 30, |
|
September 30, |
||||||||
(Dollars in Thousands) |
2019 |
|
2018 |
|
2019 |
|
2018 |
||||
NET INCOME |
$ |
8,481 |
|
$ |
5,990 |
|
$ |
22,242 |
|
$ |
17,766 |
Other comprehensive income, before tax: |
|
|
|
|
|
|
|
|
|
|
|
Change in net unrealized gain (loss) on securities available for sale |
|
443 |
|
|
(553) |
|
|
3,427 |
|
|
(2,306) |
Amortization of unrealized losses on securities transferred from |
|
|
|
|
|
|
|
|
|
|
|
available for sale to held to maturity |
|
11 |
|
|
13 |
|
|
33 |
|
|
42 |
Total Investment Securities |
|
454 |
|
|
(540) |
|
|
3,460 |
|
|
(2,264) |
Other comprehensive income (loss), before tax |
|
454 |
|
|
(540) |
|
|
3,460 |
|
|
(2,264) |
Deferred tax expense (benefit) related to other comprehensive income |
|
115 |
|
|
(137) |
|
|
876 |
|
|
(574) |
Other comprehensive income (loss), net of tax |
|
339 |
|
|
(403) |
|
|
2,584 |
|
|
(1,690) |
TOTAL COMPREHENSIVE INCOME |
$ |
8,820 |
|
$ |
5,587 |
|
$ |
24,826 |
|
$ |
16,076 |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. |
6
CAPITAL CITY BANK GROUP, INC. |
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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
Comprehensive |
|
|
|
|
(Dollars In Thousands, |
Shares |
Common |
|
|
Paid-In |
|
Retained |
|
(Loss) Income, |
|
|
|
||||
Except Share Data) |
Outstanding |
Stock |
|
|
Capital |
|
Earnings |
|
Net of Taxes |
|
Total |
|||||
Three Months Ended: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 1, 2019 |
16,745,866 |
|
$ |
167 |
|
$ |
30,751 |
|
$ |
310,247 |
|
$ |
(26,570) |
|
$ |
314,595 |
Net Income |
- |
|
|
- |
|
|
- |
|
|
8,481 |
|
|
- |
|
|
8,481 |
Other Comprehensive Income, net of tax |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
339 |
|
|
339 |
Cash Dividends ($0.1300 per share) |
- |
|
|
- |
|
|
- |
|
|
(2,177) |
|
|
- |
|
|
(2,177) |
Stock Based Compensation |
- |
|
|
- |
|
|
249 |
|
|
- |
|
|
- |
|
|
249 |
Impact of Transactions Under Compensation Plans, net |
2,992 |
|
|
- |
|
|
75 |
|
|
- |
|
|
- |
|
|
75 |
Balance, September 30, 2019 |
16,748,858 |
|
$ |
167 |
|
$ |
31,075 |
|
$ |
316,551 |
|
$ |
(26,231) |
|
$ |
321,562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 1, 2018 |
17,055,664 |
|
$ |
171 |
|
$ |
37,932 |
|
$ |
288,800 |
|
$ |
(33,332) |
|
$ |
293,571 |
Net Income |
- |
|
|
- |
|
|
- |
|
|
5,990 |
|
|
- |
|
|
5,990 |
Other Comprehensive Loss, net of tax |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(402) |
|
|
(402) |
Cash Dividends ($0.0900 per share) |
- |
|
|
- |
|
|
- |
|
|
(1,536) |
|
|
- |
|
|
(1,536) |
Stock Based Compensation |
- |
|
|
- |
|
|
323 |
|
|
- |
|
|
- |
|
|
323 |
Impact of Transactions Under Compensation Plans, net |
2,857 |
|
|
- |
|
|
70 |
|
|
- |
|
|
- |
|
|
70 |
Balance, September 30, 2018 |
17,058,521 |
|
$ |
171 |
|
$ |
38,325 |
|
$ |
293,254 |
|
$ |
(33,734) |
|
$ |
298,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
Comprehensive |
|
|
|
|
(Dollars In Thousands, |
Shares |
|
Common |
|
|
Paid-In |
|
Retained |
|
(Loss) Income, |
|
|
|
|||
Except Share Data) |
Outstanding |
|
Stock |
|
|
Capital |
|
Earnings |
|
Net of Taxes |
|
Total |
||||
Nine Months Ended: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2019 |
16,747,571 |
|
$ |
167 |
|
$ |
31,058 |
|
$ |
300,177 |
|
$ |
(28,815) |
|
$ |
302,587 |
Net Income |
- |
|
|
- |
|
|
- |
|
|
22,242 |
|
|
- |
|
|
22,242 |
Other Comprehensive Income, net of tax |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
2,584 |
|
|
2,584 |
Cash Dividends ($0.3500 per share) |
- |
|
|
- |
|
|
- |
|
|
(5,868) |
|
|
- |
|
|
(5,868) |
Repurchase of Common Stock |
(77,000) |
|
|
(1) |
|
|
(1,805) |
|
|
- |
|
|
- |
|
|
(1,806) |
Stock Based Compensation |
- |
|
|
- |
|
|
1,134 |
|
|
- |
|
|
- |
|
|
1,134 |
Impact of Transactions Under Compensation Plans, net |
78,287 |
|
|
1 |
|
|
688 |
|
|
- |
|
|
- |
|
|
689 |
Balance, September 30, 2019 |
16,748,858 |
|
$ |
167 |
|
$ |
31,075 |
|
$ |
316,551 |
|
$ |
(26,231) |
|
$ |
321,562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2018 |
16,988,951 |
|
$ |
170 |
|
$ |
36,674 |
|
$ |
279,410 |
|
$ |
(32,044) |
|
$ |
284,210 |
Net Income |
- |
|
|
- |
|
|
- |
|
|
17,766 |
|
|
- |
|
|
17,766 |
Other Comprehensive Loss, net of tax |
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(1,690) |
|
|
(1,690) |
Cash Dividends ($0.2300 per share) |
- |
|
|
- |
|
|
- |
|
|
(3,922) |
|
|
- |
|
|
(3,922) |
Stock Based Compensation |
- |
|
|
- |
|
|
978 |
|
|
- |
|
|
- |
|
|
978 |
Impact of Transactions Under Compensation Plans, net |
69,570 |
|
|
1 |
|
|
673 |
|
|
- |
|
|
- |
|
|
674 |
Balance, September 30, 2018 |
17,058,521 |
|
$ |
171 |
|
$ |
38,325 |
|
$ |
293,254 |
|
$ |
(33,734) |
|
$ |
298,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. |
7
CAPITAL CITY BANK GROUP, INC. |
|||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||
(Unaudited) |
|||||
|
|
|
|
|
|
|
Nine Months Ended September 30, |
||||
(Dollars in Thousands) |
2019 |
|
2018 |
||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
Net Income |
$ |
22,242 |
|
$ |
17,766 |
Adjustments to Reconcile Net Income to |
|
|
|
|
|
Cash Provided by Operating Activities: |
|
|
|
|
|
Provision for Loan Losses |
|
2,189 |
|
|
2,464 |
Depreciation |
|
4,693 |
|
|
4,845 |
Amortization of Premiums, Discounts and Fees, net |
|
3,826 |
|
|
5,253 |
Originations of Loans Held-for-Sale |
|
(160,720) |
|
|
(136,492) |
Proceeds From Sales of Loans Held-for-Sale |
|
158,293 |
|
|
136,618 |
Net Gain From Sales of Loans Held-for-Sale |
|
(3,779) |
|
|
(3,606) |
Stock Compensation |
|
1,134 |
|
|
978 |
Net Tax Benefit From Stock-Based Compensation |
|
(14) |
|
|
(41) |
Deferred Income Taxes |
|
1,131 |
|
|
1,847 |
Net Change in Operating Leases |
|
68 |
|
|
- |
Net Loss on Sales and Write-Downs of Other Real Estate Owned |
|
165 |
|
|
941 |
Proceeds From Insurance Claim for Operating Loss |
|
268 |
|
|
- |
Loss on Disposal of Premises and Equipment |
|
39 |
|
|
57 |
Net (Increase) Decrease in Other Assets |
|
(5,483) |
|
|
3,040 |
Net Increase (Decrease) in Other Liabilities |
|
19,876 |
|
|
(12,208) |
Net Cash Provided By Operating Activities |
|
43,928 |
|
|
21,462 |
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
Securities Held to Maturity: |
|
|
|
|
|
Purchases |
|
(69,347) |
|
|
(102,428) |
Payments, Maturities, and Calls |
|
45,146 |
|
|
89,932 |
Securities Available for Sale: |
|
|
|
|
|
Purchases |
|
(56,450) |
|
|
(129,502) |
Payments, Maturities, and Calls |
|
126,171 |
|
|
119,092 |
Purchases of Loans Held for Investment |
|
(21,537) |
|
|
(25,048) |
Net Increase in Loans |
|
(34,589) |
|
|
(98,007) |
Proceeds from Insurance Claims on Premises |
|
814 |
|
|
- |
Proceeds From Sales of Other Real Estate Owned |
|
2,330 |
|
|
1,540 |
Purchases of Premises and Equipment |
|
(3,352) |
|
|
(2,771) |
Net Cash Used In Investing Activities |
|
(10,814) |
|
|
(147,192) |
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
Net Decrease in Deposits |
|
(58,849) |
|
|
(88,661) |
Net (Decrease) Increase in Short-Term Borrowings |
|
(3,279) |
|
|
9,164 |
Repayment of Other Long-Term Borrowings |
|
(1,245) |
|
|
(1,511) |
Dividends Paid |
|
(5,868) |
|
|
(3,922) |
Payments to Repurchase Common Stock |
|
(1,806) |
|
|
- |
Issuance of Common Stock Under Compensation Plans |
|
473 |
|
|
480 |
Net Cash Used In Financing Activities |
|
(70,574) |
|
|
(84,450) |
|
|
|
|
|
|
NET DECREASE IN CASH AND CASH EQUIVALENTS |
|
(37,460) |
|
|
(210,180) |
|
|
|
|
|
|
Cash and Cash Equivalents at Beginning of Period |
|
276,000 |
|
|
285,442 |
Cash and Cash Equivalents at End of Period |
$ |
238,540 |
|
$ |
75,262 |
|
|
|
|
|
|
Supplemental Cash Flow Disclosures: |
|
|
|
|
|
Interest Paid |
$ |
7,761 |
|
$ |
4,837 |
Income Taxes Paid |
$ |
4,496 |
|
$ |
151 |
|
|
|
|
|
|
Noncash Investing and Financing Activities: |
|
|
|
|
|
Loans Transferred to Other Real Estate Owned |
$ |
792 |
|
$ |
1,260 |
Right-of-Use Assets Obtained in Exchange for Operating Lease Liabilities(1) |
$ |
1,992 |
|
$ |
- |
|
|
|
|
|
|
(1)Initial amount recorded upon implementation on January 1, 2019. |
|
|
|
|
|
|
|
|
|
|
|
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. |
|
8
CAPITAL CITY BANK GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations. Capital City Bank Group, Inc. (“CCBG” or the “Company”) provides a full range of banking and banking-related services to individual and corporate clients through its subsidiary, Capital City Bank, with banking offices located in Florida, Georgia, and Alabama. The Company is subject to competition from other financial institutions, is subject to regulation by certain government agencies and undergoes periodic examinations by those regulatory authorities.
Basis of Presentation. The consolidated financial statements in this Quarterly Report on Form 10-Q include the accounts of CCBG and its wholly owned subsidiary, Capital City Bank (“CCB” or the “Bank”). All material inter-company transactions and accounts have been eliminated. Certain previously reported amounts have been reclassified to conform to the current year’s presentation.
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
The consolidated statement of financial condition at December 31, 2018 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2018.
Leases. Accounting Standards Update ("ASU") 2016-02 requires that lessees and lessors recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. ASU 2016-02 was effective for the Company on January 1, 2019. ASU 2016-02 provides for a modified retrospective transition approach requiring lessees to recognize and measure leases on the balance sheet at the beginning of either the earliest period presented or as of the beginning of the period of adoption with the option to elect certain practical expedients. The Company elected to apply the modified retrospective transition approach as of the beginning of the period of adoption and has not restated comparative periods. The Company also adopted the package of practical expedients provided under ASU 2016-02, which provided for the Company not to reassess: (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, and (iii) initial and direct costs of any existing leases. The Company elected not to apply the recognition requirements of ASU 2016-02 to any short-term leases (as defined by the accounting guidance).
The Company’s operating leases related primarily to banking office locations. As a result of implementing ASU 2016-02, the Company recognized operating lease right-of-use (“ROU”) assets of $2.0 million and operating lease liabilities of $2.8 million on January 1, 2019, with no significant impact on its consolidated statement of income or consolidated statement of cash flows compared to the prior lease accounting model. The difference between the lease assets and the lease liabilities of $0.8 million was prepaid rent, which was reclassified to lease assets. The ROU asset and lease liability are recorded in other assets and other liabilities, respectively, in the consolidated statement of financial condition. See Note 5 – Leases for additional information.
9
NOTE 2 – INVESTMENT SECURITIES |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Portfolio Composition. The amortized cost and related market value of investment securities available-for-sale and |
|||||||||||||||||||||||
held-to-maturity were as follows: |
|||||||||||||||||||||||
|
September 30, 2019 |
|
|
December 31, 2018 |
|||||||||||||||||||
|
Amortized |
Unrealized |
Unrealized |
Market |
Amortized |
Unrealized |
Unrealized |
Market |
|||||||||||||||
|
Cost |
|
Gains |
|
Losses |
|
Value |
|
Cost |
|
Gain |
|
Losses |
|
Value |
||||||||
Available for Sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government Treasury |
$ |
216,707 |
|
$ |
858 |
|
$ |
300 |
|
$ |
217,265 |
|
$ |
264,298 |
|
$ |
167 |
|
$ |
2,616 |
|
$ |
261,849 |
U.S. Government Agency |
|
137,798 |
|
|
572 |
|
|
332 |
|
|
138,038 |
|
|
133,201 |
|
|
520 |
|
|
515 |
|
|
133,206 |
States and Political Subdivisions |
|
13,041 |
|
|
6 |
|
|
3 |
|
|
13,044 |
|
|
42,509 |
|
|
- |
|
|
144 |
|
|
42,365 |
Mortgage-Backed Securities |
|
708 |
|
|
79 |
|
|
- |
|
|
787 |
|
|
903 |
|
|
40 |
|
|
- |
|
|
943 |
Equity Securities(1) |
|
7,847 |
|
|
- |
|
|
- |
|
|
7,847 |
|
|
7,794 |
|
|
- |
|
|
- |
|
|
7,794 |
Total |
$ |
376,101 |
|
$ |
1,515 |
|
$ |
635 |
|
$ |
376,981 |
|
$ |
448,705 |
|
$ |
727 |
|
$ |
3,275 |
|
$ |
446,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to Maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government Treasury |
$ |
25,050 |
|
$ |
10 |
|
$ |
46 |
|
$ |
25,014 |
|
$ |
35,088 |
|
$ |
- |
|
$ |
477 |
|
$ |
34,611 |
States and Political Subdivisions |
|
3,356 |
|
|
- |
|
|
1 |
|
|
3,355 |
|
|
6,512 |
|
|
- |
|
|
26 |
|
|
6,486 |
Mortgage-Backed Securities |
|
211,897 |
|
|
1,856 |
|
|
235 |
|
|
213,518 |
|
|
175,720 |
|
|
220 |
|
|
2,624 |
|
|
173,316 |
Total |
$ |
240,303 |
|
$ |
1,866 |
|
$ |
282 |
|
$ |
241,887 |
|
$ |
217,320 |
|
$ |
220 |
|
$ |
3,127 |
|
$ |
214,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investment Securities |
$ |
616,404 |
|
$ |
3,381 |
|
$ |
917 |
|
$ |
618,868 |
|
$ |
666,025 |
|
$ |
947 |
|
$ |
6,402 |
|
$ |
660,570 |
(1) Includes Federal Home Loan Bank and Federal Reserve Bank stock, recorded at cost of $3.1 million, $4.8 million, respectively, at September 30, 2019 and includes Federal Home Loan Bank and Federal Reserve Bank stock recorded at cost of $3.0 million and $4.8 million, respectively, at December 31, 2018.
Securities with an amortized cost of $262.8 million and $319.6 million at September 30, 2019 and December 31, 2018, respectively, were pledged to secure public deposits and for other purposes.
The Bank, as a member of the Federal Home Loan Bank of Atlanta (“FHLB”), is required to own capital stock in the FHLB based generally upon the balances of residential and commercial real estate loans and FHLB advances. FHLB stock, which is included in equity securities, is pledged to secure FHLB advances. No ready market exists for this stock, and it has no quoted market value; however, redemption of this stock has historically been at par value.
As a member of the Federal Reserve Bank of Atlanta, the Bank is required to maintain stock in the Federal Reserve Bank of Atlanta based on a specified ratio relative to the Bank’s capital. Federal Reserve Bank stock is carried at cost.
Maturity Distribution. At September 30, 2019, the Company's investment securities had the following maturity distribution based on contractual maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations. Mortgage-backed securities and certain amortizing U.S. government agency securities are shown separately because they are not due at a certain maturity date.
|
Available for Sale |
|
Held to Maturity |
||||||||
(Dollars in Thousands) |
Amortized Cost |
|
Market Value |
|
Amortized Cost |
|
Market Value |
||||
Due in one year or less |
$ |
141,609 |
|
$ |
141,370 |
|
$ |
13,354 |
|
$ |
13,331 |
Due after one year through five years |
|
90,139 |
|
|
90,937 |
|
|
15,052 |
|
|
15,038 |
Mortgage-Backed Securities |
|
708 |
|
|
787 |
|
|
211,897 |
|
|
213,518 |
U.S. Government Agency |
|
135,798 |
|
|
136,040 |
|
|
- |
|
|
- |
Equity Securities |
|
7,847 |
|
|
7,847 |
|
|
- |
|
|
- |
Total |
$ |
376,101 |
|
$ |
376,981 |
|
$ |
240,303 |
|
$ |
241,887 |
10
Unrealized Losses on Investment Securities. The following table summarizes the investment securities with unrealized losses aggregated by major security type and length of time in a continuous unrealized loss position:
|
Less Than |
|
Greater Than |
|
|
|
|
|
|
||||||||
|
12 Months |
|
12 Months |
|
Total |
||||||||||||
|
Market |
|
Unrealized |
|
Market |
|
Unrealized |
|
Market |
|
Unrealized |
||||||
(Dollars in Thousands) |
Value |
|
Losses |
|
Value |
|
Losses |
|
Value |
|
Losses |
||||||
September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for Sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government Treasury |
$ |
4,973 |
|
$ |
8 |
|
$ |
128,152 |
|
$ |
292 |
|
$ |
133,125 |
|
$ |
300 |
U.S. Government Agency |
|
29,698 |
|
|
179 |
|
|
28,524 |
|
|
153 |
|
|
58,222 |
|
|
332 |
States and Political Subdivisions |
|
5,428 |
|
|
3 |
|
|
- |
|
|
- |
|
|
5,428 |
|
|
3 |
Total |
|
40,099 |
|
|
190 |
|
|
156,676 |
|
|
445 |
|
|
196,775 |
|
|
635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to Maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government Treasury |
|
- |
|
|
- |
|
|
19,996 |
|
|
46 |
|
|
19,996 |
|
|
46 |
States and Political Subdivisions |
|
1,794 |
|
|
1 |
|
|
500 |
|
|
- |
|
|
2,294 |
|
|
1 |
Mortgage-Backed Securities |
|
29,466 |
|
|
78 |
|
|
16,318 |
|
|
157 |
|
|
45,784 |
|
|
235 |
Total |
$ |
31,260 |
|
$ |
79 |
|
$ |
36,814 |
|
$ |
203 |
|
$ |
68,074 |
|
$ |
282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for Sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government Treasury |
$ |
28,420 |
|
$ |
80 |
|
$ |
193,501 |
|
$ |
2,536 |
|
$ |
221,921 |
|
$ |
2,616 |
U.S. Government Agency |
|
53,237 |
|
|
271 |
|
|
28,735 |
|
|
244 |
|
|
81,972 |
|
|
515 |
States and Political Subdivisions |
|
8,243 |
|
|
12 |
|
|
31,417 |
|
|
132 |
|
|
39,660 |
|
|
144 |
Mortgage-Backed Securities |
|
10 |
|
|
- |
|
|
- |
|
|
- |
|
|
10 |
|
|
- |
Total |
|
89,910 |
|
|
363 |
|
|
253,653 |
|
|
2,912 |
|
|
343,563 |
|
|
3,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held to Maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government Treasury |
|
- |
|
|
- |
|
|
34,612 |
|
|
477 |
|
|
34,612 |
|
|
477 |
States and Political Subdivisions |
|
204 |
|
|
- |
|
|
6,281 |
|
|
26 |
|
|
6,485 |
|
|
26 |
Mortgage-Backed Securities |
|
51,327 |
|
|
389 |
|
|
84,705 |
|
|
2,235 |
|
|
136,032 |
|
|
2,624 |
Total |
$ |
51,531 |
|
$ |
389 |
|
$ |
125,598 |
|
$ |
2,738 |
|
$ |
177,129 |
|
$ |
3,127 |
Management evaluates securities for other than temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Declines in the fair value of available-for-sale (“AFS”) and held-to-maturity (“HTM”) securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, the Company considers, (i) whether it has decided to sell the security, (ii) whether it is more likely than not that the Company will have to sell the security before its market value recovers, and (iii) whether the present value of expected cash flows is sufficient to recover the entire amortized cost basis. When assessing a security’s expected cash flows, the Company considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost and (ii) the financial condition and near-term prospects of the issuer. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by rating agencies have occurred, regulatory issues, and analysts’ reports.
At September 30, 2019, there were 242 positions (combined AFS and HTM) with unrealized losses totaling $0.9 million. 31 of these positions were U.S. government treasury securities guaranteed by the U.S. government. 187 of these positions were U.S. government agency and mortgage-backed securities issued by U.S. government sponsored entities. The remaining 24 positions were municipal securities. Because the declines in the market value of these securities were attributable to changes in interest rates and not credit quality, and because the Company had the ability and intent to hold these investments until there is a recovery in fair value, which may be at maturity, the Company did not consider these investments to be other-than-temporarily impaired at September 30, 2019.
11
NOTE 3 – LOANS, NET
Loan Portfolio Composition. The composition of the loan portfolio was as follows:
(Dollars in Thousands) |
September 30, 2019 |
|
December 31, 2018 |
|||
Commercial, Financial and Agricultural |
$ |
259,870 |
|
$ |
233,689 |
|
Real Estate – Construction |
|
111,358 |
|
|
89,527 |
|
Real Estate – Commercial Mortgage |
|
610,726 |
|
|
602,061 |
|
Real Estate – Residential(1) |
|
368,793 |
|
|
342,215 |
|
Real Estate – Home Equity |
|
197,326 |
|
|
210,111 |
|
Consumer(2) |
|
279,680 |
|
|