UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2020

☐	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

Capital City Bank Group, Inc.

(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 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 [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 ☒	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 July 31, 2020, 16,780,276 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 JUNE 30, 2020

TABLE OF CONTENTS

PART I – Financial Information			Page

Item 1.	Consolidated Financial Statements (Unaudited)
	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

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations			36

Item 3.	Quantitative and Qualitative Disclosure About Market Risk			54

Item 4.	Controls and Procedures			54

PART II – Other Information

Item 1.		Legal Proceedings		54

Item 1A.		Risk Factors		54

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		54

Item 3.		Defaults Upon Senior Securities		55

Item 4.		Mine Safety Disclosure		55

Item 5.		Other Information		55

Item 6.		Exhibits		56

Signatures				57

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.

PART I. FINANCIAL INFORMATION
Item 1.

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

			(Unaudited)
			June 30,		December 31,
(Dollars in Thousands)			2020		2019
ASSETS
Cash and Due From Banks			$	75,155	$	60,087
Federal Funds Sold and Interest Bearing Deposits				513,273		318,336
		Total Cash and Cash Equivalents		588,428		378,423

Investment Securities, Available for Sale, at fair value				341,180		403,601
Investment Securities, Held to Maturity, (fair value of $238,499 and $241,429				232,178		239,539
		Total Investment Securities		573,358		643,140

Loans Held For Sale, at fair value				76,610		9,509

Loans Held for Investment				2,022,177		1,835,929
	Allowance for Credit Losses			(22,457)		(13,905)
		Loans Held for Investment, Net		1,999,720		1,822,024

Premises and Equipment, Net				87,972		84,543
Goodwill				89,095		84,811
Other Real Estate Owned				1,059		953
Other Assets				83,282		65,550
		Total Assets	$	3,499,524	$	3,088,953

LIABILITIES
Deposits:
	Noninterest Bearing Deposits		$	1,377,032	$	1,044,699
	Interest Bearing Deposits			1,577,964		1,600,755
		Total Deposits		2,954,996		2,645,454

Short-Term Borrowings				63,958		6,404
Subordinated Notes Payable				52,887		52,887
Other Long-Term Borrowings				5,583		6,514
Other Liabilities				75,702		50,678
		Total Liabilities		3,153,126		2,761,937

Temporary Equity				11,341		-

SHAREOWNERS’ EQUITY
Preferred Stock, $.01 par value; 3,000,000 shares authorized; no shares issued and outstanding				-		-
Common Stock, $.01 par value; 90,000,000 shares authorized; 16,780,276 and 16,771,544 shares
issued and outstanding at June 30, 2020 and December 31, 2019, respectively				168		168
Additional Paid-In Capital				31,575		32,092
Retained Earnings				328,570		322,937
Accumulated Other Comprehensive Loss, net of tax				(25,256)		(28,181)
Total Shareowners’ Equity				335,057		327,016
Total Liabilities, Temporary Equity and Shareowners' Equity			$	3,499,524	$	3,088,953

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

		Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in Thousands, Except Per Share Data)		2020		2019		2020		2019
INTEREST INCOME
Loans, including Fees		$	23,687	$	23,765	$	47,280	$	46,381
Investment Securities:
	Taxable		2,708		3,301		5,704		6,688
	Tax Exempt		29		92		48		218
Federal Funds Sold and Interest Bearing Deposits			88		1,507		845		3,100
Total Interest Income			26,512		28,665		53,877		56,387

INTEREST EXPENSE
Deposits			218		1,988		1,157		4,087
Short-Term Borrowings			421		31		553		66
Subordinated Notes Payable			374		596		845		1,204
Other Long-Term Borrowings			41		66		91		138
Total Interest Expense			1,054		2,681		2,646		5,495

NET INTEREST INCOME			25,458		25,984		51,231		50,892
Provision for Credit Losses			2,005		646		6,995		1,413
Net Interest Income After Provision For Credit Losses			23,453		25,338		44,236		49,479

NONINTEREST INCOME
Deposit Fees			3,756		4,756		8,771		9,531
Bank Card Fees			3,142		3,036		6,193		5,891
Wealth Management Fees			2,554		2,404		5,158		4,727
Mortgage Banking Revenues			17,814		1,199		20,844		2,192
Other			2,933		1,375		4,711		2,981
Total Noninterest Income			30,199		12,770		45,677		25,322

NONINTEREST EXPENSE
Compensation			23,658		16,437		43,394		32,786
Occupancy, Net			5,798		4,537		10,777		9,046
Other Real Estate Owned, Net			116		75		(682)		438
Other			7,731		7,347		14,783		14,324
Total Noninterest Expense			37,303		28,396		68,272		56,594

INCOME BEFORE INCOME TAXES			16,349		9,712		21,641		18,207
Income Tax Expense			2,950		2,387		4,232		4,446

NET INCOME			13,399		7,325		17,409		13,761
Net Income Attributable to Noncontrolling Interests			(4,253)		-		(3,976)		-

NET INCOME ATTRIBUTABLE TO COMMON SHAREOWNERS		$	9,146	$	7,325	$	13,433	$	13,761

BASIC NET INCOME PER SHARE		$	0.55	$	0.44	$	0.80	$	0.82
DILUTED NET INCOME PER SHARE		$	0.55	$	0.44	$	0.80	$	0.82

Average Common Basic Shares Outstanding			16,797		16,791		16,803		16,791
Average Common Diluted Shares Outstanding			16,839		16,818		16,844		16,820

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(Dollars in Thousands)	2020		2019		2020		2019
NET INCOME ATTRIBUTABLE TO COMMON SHAREOWNERS	$	9,146	$	7,325	$	13,433	$	13,761
Other comprehensive income, before tax:
Change in net unrealized gain/loss on securities available for sale		424		1,736		3,962		2,985
Amortization of unrealized losses on securities transferred from
available for sale to held to maturity		9		11		18		22
Total Investment Securities		433		1,747		3,980		3,007
Change in net unrealized gain/loss on interest rate swap		(104)		-		(104)		-
Other comprehensive income, before tax		329		1,747		3,876		3,007
Deferred tax expense related to other comprehensive income		52		443		951		762
Other comprehensive income, net of tax		277		1,304		2,925		2,245
Total comprehensive income attributable to common shareowners	$	9,423	$	8,629	$	16,358	$	16,006

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY
(Unaudited)

								Accumulated
								Other
				Additional				Comprehensive
	Shares	Common		Paid-In		Retained		(Loss) Income,
(Dollars In Thousands, Except Share Data)	Outstanding	Stock		Capital		Earnings		Net of Taxes		Total
Three Months Ended:
Balance, April 1, 2020	16,811,781	$	168	$	32,100	$	321,772	$	(25,533)	$	328,507
Net Income	-		-		-		9,146		-		9,146
Other Comprehensive Income, net of tax	-		-		-		-		277		277
Cash Dividends ($0.1400 per share)	-		-		-		(2,348)		-		(2,348)
Repurchase of Common Stock	(43,878)		-		(863)		-		-		(863)
Stock Based Compensation	-		-		77		-		-		77
Stock Compensation Plan Transactions, net	12,373		-		261		-		-		261
Balance, June 30, 2020	16,780,276	$	168	$	31,575	$	328,570	$	(25,256)	$	335,057

Balance, April 1, 2019	16,812,460	$	168	$	31,929	$	304,763	$	(27,874)	$	308,986
Net Income	-		-		-		7,325		-		7,325
Other Comprehensive Income, net of tax	-		-		-		-		1,304		1,304
Cash Dividends ($0.1100 per share)	-		-		-		(1,841)		-		(1,841)
Repurchase of Common Stock	(77,000)		(1)		(1,805)		-		-		(1,806)
Stock Based Compensation	-		-		386		-		-		386
Stock Compensation Plan Transactions, net	10,406		-		241		-		-		241
Balance, June 30, 2019	16,745,866	$	167	$	30,751	$	310,247	$	(26,570)	$	314,595

								Accumulated
								Other
				Additional				Comprehensive
	Shares	Common		Paid-In		Retained		(Loss), Income
(Dollars In Thousands, Except Share Data)	Outstanding	Stock		Capital		Earnings		Net of Taxes		Total
Balance, January 1, 2020	16,771,544	$	168	$	32,092	$	322,937	$	(28,181)	$	327,016
Adoption of ASC 326 - See Note 1	-		-		-		(3,095)		-		(3,095)
Net Income	-		-		-		13,433		-		13,433
Other Comprehensive Income, net of tax	-		-		-		-		2,925		2,925
Cash Dividends ($0.2800 per share)	-		-		-		(4,705)		-		(4,705)
Repurchase of Common Stock	(76,952)		(1)		(1,570)		-		-		(1,571)
Stock Based Compensation	-		-		368		-		-		368
Stock Compensation Plan Transactions, net	85,684		1		685		-		-		686
Balance, June 30, 2020	16,780,276	$	168	$	31,575	$	328,570	$	(25,256)	$	335,057

Balance, January 1, 2019	16,747,571	$	167	$	31,058	$	300,177	$	(28,815)	$	302,587
Net Income	-		-		-		13,761		-		13,761
Other Comprehensive Income, net of tax	-		-		-		-		2,245		2,245
Cash Dividends ($0.2200 per share)	-		-		-		(3,691)		-		(3,691)
Repurchase of Common Stock	(77,000)		(1)		(1,805)		-		-		(1,806)
Stock Based Compensation	-		-		885		-		-		885
Stock Compensation Plan Transactions, net	75,295		1		613		-		-		614
Balance, June 30, 2019	16,745,866	$	167	$	30,751	$	310,247	$	(26,570)	$	314,595

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Six Months Ended June 30,
(Dollars in Thousands)	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	13,433	$	13,761
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Provision for Credit Losses		6,995		1,413
Depreciation		3,400		3,148
Amortization of Premiums, Discounts and Fees, net		3,414		2,520
Originations of Loans Held-for-Sale		(431,775)		(94,776)
Proceeds From Sales of Loans Held-for-Sale		385,518		93,952
Net Gain From Sales of Loans Held-for-Sale		(20,844)		(2,192)
Stock Compensation		368		885
Net Tax Benefit From Stock-Based Compensation		(84)