UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended
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:
(Exact name of Registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
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(Address of principal executive office) |
| (Zip Code) | ||
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| (Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |
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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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes [ ] 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 ☐ | Non-accelerated filer ☐ | Smaller reporting company | |
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| 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 [
At July 31, 2020,
CAPITAL CITY BANK GROUP, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 2020
TABLE OF CONTENTS
PART I – Financial Information |
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Item 1. | Consolidated Financial Statements (Unaudited) |
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| Consolidated Statements of Financial Condition – June 30, 2020 and December 31, 2019 | 4 | |||
| Consolidated Statements of Income – Three and Six Months Ended June 30, 2020 and 2019 | 5 | |||
| Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2020 and 2019 | 6 | |||
| Consolidated Statements of Changes in Shareowners’ Equity – Three and Six Months Ended June 30, 2020 and 2019 | 7 | |||
| Consolidated Statements of Cash Flows – Six Months Ended June 30, 2020 and 2019 | 8 | |||
| Notes to Consolidated Financial Statements | 9 | |||
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Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 36 | |||
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Item 3. | Quantitative and Qualitative Disclosure About Market Risk | 54 | |||
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Item 4. | Controls and Procedures | 54 | |||
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PART II – Other Information |
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Item 1. | Legal Proceedings | 54 | |||
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Item 1A. | Risk Factors | 54 | |||
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 54 | |||
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Item 3. | Defaults Upon Senior Securities | 55 | |||
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Item 4. | Mine Safety Disclosure | 55 | |||
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Item 5. | Other Information | 55 | |||
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Item 6. | Exhibits | 56 | |||
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Signatures
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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, 2019 (the “2019 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:
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;
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;
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 effect of corporate restructuring, acquisitions or dispositions, including the actual restructuring and other related charges and the failure to achieve the expected gains, revenue growth or expense savings from such corporate restructuring, acquisitions or dispositions;
the effects of natural disasters, harsh weather conditions (including hurricanes), widespread health emergencies, military conflict, terrorism, civil unrest or other geopolitical events;
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 | |||||||
Item 1. | |||||||
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CAPITAL CITY BANK GROUP, INC. | |||||||
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | |||||||
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| June 30, |
| December 31, | ||
(Dollars in Thousands) | 2020 |
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ASSETS |
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Cash and Due From Banks | $ |
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Federal Funds Sold and Interest Bearing Deposits |
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| Total Cash and Cash Equivalents |
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Investment Securities, Available for Sale, at fair value |
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Investment Securities, Held to Maturity, (fair value of $ |
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| Total Investment Securities |
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Loans Held For Sale, at fair value |
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Loans Held for Investment |
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| Allowance for Credit Losses |
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Premises and Equipment, Net |
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Goodwill |
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Other Real Estate Owned |
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Other Assets |
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LIABILITIES |
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Deposits: |
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| Noninterest Bearing Deposits | $ |
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| Interest Bearing Deposits |
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Short-Term Borrowings |
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Subordinated Notes Payable |
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Other Long-Term Borrowings |
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Other Liabilities |
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Temporary Equity |
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SHAREOWNERS’ EQUITY |
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Preferred Stock, $ par value; |
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Common Stock, $ par value; |
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issued and outstanding at June 30, 2020 and December 31, 2019, respectively |
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Additional Paid-In Capital |
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Retained Earnings |
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Accumulated Other Comprehensive Loss, net of tax |
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Total Shareowners’ Equity |
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Total Liabilities, Temporary Equity and Shareowners' Equity | $ |
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The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. |
4
CAPITAL CITY BANK GROUP, INC. | ||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
(Unaudited) | ||||||||||||
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| Three Months Ended June 30, |
| Six Months Ended June 30, | ||||||||
(Dollars in Thousands, Except Per Share Data) | 2020 |
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INTEREST INCOME |
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Loans, including Fees | $ |
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Investment Securities: |
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| Taxable |
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| Tax Exempt |
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Federal Funds Sold and Interest Bearing Deposits |
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Total Interest Income |
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INTEREST EXPENSE |
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Deposits |
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Short-Term Borrowings |
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Subordinated Notes Payable |
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Other Long-Term Borrowings |
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Total Interest Expense |
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NET INTEREST INCOME |
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Provision for Credit Losses |
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Net Interest Income After Provision For Credit Losses |
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NONINTEREST INCOME |
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Deposit Fees |
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Bank Card Fees |
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Wealth Management Fees |
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Mortgage Banking Revenues |
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Other |
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Total Noninterest Income |
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NONINTEREST EXPENSE |
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Compensation |
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Occupancy, Net |
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Other Real Estate Owned, Net |
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Other |
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Total Noninterest Expense |
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INCOME BEFORE INCOME TAXES |
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Income Tax Expense |
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NET INCOME |
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Net Income Attributable to Noncontrolling Interests |
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NET INCOME ATTRIBUTABLE TO COMMON SHAREOWNERS | $ |
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BASIC NET INCOME PER SHARE | $ |
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DILUTED NET INCOME PER SHARE | $ |
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Average Common Basic Shares Outstanding |
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Average Common Diluted Shares Outstanding |
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The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. |
5
CAPITAL CITY BANK GROUP, INC. | |||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||
(Unaudited) | |||||||||||
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| Three Months Ended |
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| June 30, |
| June 30, | ||||||||
(Dollars in Thousands) | 2020 |
| 2019 |
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| 2019 | ||||
NET INCOME ATTRIBUTABLE TO COMMON SHAREOWNERS | $ |
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Other comprehensive income, before tax: |
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Change in net unrealized gain/loss on securities available for sale |
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Amortization of unrealized losses on securities transferred from |
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available for sale to held to maturity |
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Total Investment Securities |
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Change in net unrealized gain/loss on interest rate swap |
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Other comprehensive income, before tax |
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Deferred tax expense related to other comprehensive income |
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Other comprehensive income, net of tax |
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Total comprehensive income attributable to common shareowners | $ |
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The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. |
6
CAPITAL CITY BANK GROUP, INC. | ||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY | ||||||||||||||||
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| Accumulated |
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| Other |
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(Dollars In Thousands, Except Share Data) | Outstanding | Stock |
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Three Months Ended: |
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Balance, April 1, 2020 |
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Net Income | - |
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Other Comprehensive Income, net of tax | - |
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Cash Dividends ($ | - |
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Repurchase of Common Stock | ( |
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Stock Based Compensation | - |
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Stock Compensation Plan Transactions, net |
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Balance, June 30, 2020 |
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Balance, April 1, 2019 |
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Net Income | - |
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Other Comprehensive Income, net of tax | - |
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Cash Dividends ($ | - |
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Repurchase of Common Stock | ( |
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Stock Based Compensation | - |
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Stock Compensation Plan Transactions, net |
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Balance, June 30, 2019 |
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(Dollars In Thousands, Except Share Data) | Outstanding |
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Balance, January 1, 2020 |
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Adoption of ASC 326 - See Note 1 | - |
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Net Income | - |
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Other Comprehensive Income, net of tax | - |
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Cash Dividends ($ | - |
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Repurchase of Common Stock | ( |
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Stock Based Compensation | - |
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Stock Compensation Plan Transactions, net |
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Balance, June 30, 2020 |
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Balance, January 1, 2019 |
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Net Income | - |
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Other Comprehensive Income, net of tax | - |
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Cash Dividends ($ | - |
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Repurchase of Common Stock | ( |
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Stock Based Compensation | - |
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Stock Compensation Plan Transactions, net |
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Balance, June 30, 2019 |
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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) | |||||
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| Six Months Ended June 30, | ||||
(Dollars in Thousands) | 2020 |
| 2019 | ||
CASH FLOWS FROM OPERATING ACTIVITIES |
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Net Income | $ |
| $ | ||
Adjustments to Reconcile Net Income to |
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Cash Provided by Operating Activities: |
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Provision for Credit Losses |
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Depreciation |
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Amortization of Premiums, Discounts and Fees, net |
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Originations of Loans Held-for-Sale |
| ( |
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| ( |
Proceeds From Sales of Loans Held-for-Sale |
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Net Gain From Sales of Loans Held-for-Sale |
| ( |
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| ( |
Stock Compensation |
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Net Tax Benefit From Stock-Based Compensation |
| ( |