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 September 30, 2020

☐	TRANSITION REPORTPURSUANT 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 October 31, 2020, 16,761,464 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, 2020

TABLE OF CONTENTS

PART I – Financial Information			Page

Item 1.	Consolidated Financial Statements (Unaudited)
	Consolidated Statements of Financial Condition – September 30, 2020 and December 31, 2019			4
	Consolidated Statements of Income – Three and Nine Months Ended September 30, 2020 and 2019			5
	Consolidated Statements of Comprehensive Income – Three and Nine Months Ended September 30, 2020 and 2019			6
	Consolidated Statements of Changes in Shareowners’ Equity – Three and Nine Months Ended September 30, 2020 and 2019			7
	Consolidated Statements of Cash Flows – Nine Months Ended September 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			53

Item 4.	Controls and Procedures			53

PART II – Other Information

Item 1.		Legal Proceedings		53

Item 1A.		Risk Factors		53

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		53

Item 3.		Defaults Upon Senior Securities		54

Item 4.		Mine Safety Disclosure		54

Item 5.		Other Information		54

Item 6.		Exhibits		55

Signatures				56

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 ongoing COVID-19 pandemic and its impact on the global and local economies 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 credit risk, 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)
			September 30,		December 31,
(Dollars in Thousands)			2020		2019
ASSETS
Cash and Due From Banks			$	76,509	$	60,087
Federal Funds Sold and Interest Bearing Deposits				626,104		318,336
		Total Cash and Cash Equivalents		702,613		378,423

Investment Securities, Available for Sale, at fair value				328,253		403,601
Investment Securities, Held to Maturity (fair value of $208,266 and $241,429)				202,593		239,539
		Total Investment Securities		530,846		643,140

Loans Held For Sale, at fair value				116,561		9,509

Loans Held for Investment				1,998,161		1,835,929
	Allowance for Credit Losses			(23,137)		(13,905)
		Loans Held for Investment, Net		1,975,024		1,822,024

Premises and Equipment, Net				87,192		84,543
Goodwill				89,095		84,811
Other Real Estate Owned				1,227		953
Other Assets				84,483		65,550
		Total Assets	$	3,587,041	$	3,088,953

LIABILITIES
Deposits:
	Noninterest Bearing Deposits		$	1,378,314	$	1,044,699
	Interest Bearing Deposits			1,631,132		1,600,755
		Total Deposits		3,009,446		2,645,454

Short-Term Borrowings				90,936		6,404
Subordinated Notes Payable				52,887		52,887
Other Long-Term Borrowings				5,268		6,514
Other Liabilities				71,880		50,678
		Total Liabilities		3,230,417		2,761,937

Temporary Equity				17,199		-

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; 16,761,464 and 16,771,544 shares
issued and outstanding at September 30, 2020 and December 31, 2019, respectively				168		168
Additional Paid-In Capital				31,425		32,092
Retained Earnings				333,545		322,937
Accumulated Other Comprehensive Loss, net of tax				(25,713)		(28,181)
Total Shareowners’ Equity				339,425		327,016
Total Liabilities, Temporary Equity, and Shareowners' Equity			$	3,587,041	$	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 September 30,				Nine Months Ended September 30,
(Dollars in Thousands, Except Per Share Data)		2020		2019		2020		2019
INTEREST INCOME
Loans, including Fees		$	23,594	$	23,992	$	70,874	$	70,373
Investment Securities:
	Taxable		2,400		3,249		8,105		9,937
	Tax Exempt		26		58		73		276
Federal Funds Sold and Interest Bearing Deposits			146		1,142		991		4,242
Total Interest Income			26,166		28,441		80,043		84,828

INTEREST EXPENSE
Deposits			190		1,596		1,347		5,683
Short-Term Borrowings			498		27		1,051		93
Subordinated Notes Payable			316		558		1,161		1,762
Other Long-Term Borrowings			40		63		131		201
Total Interest Expense			1,044		2,244		3,690		7,739

NET INTEREST INCOME			25,122		26,197		76,353		77,089
Provision for Credit Losses			1,308		776		8,303		2,189
Net Interest Income After Provision For Credit Losses			23,814		25,421		68,050		74,900

NONINTEREST INCOME
Deposit Fees			4,316		4,961		13,087		14,492
Bank Card Fees			3,389		2,972		9,582		8,863
Wealth Management Fees			2,808		2,992		7,966		7,719
Mortgage Banking Revenues			22,983		1,587		45,633		3,779
Other			1,469		1,391		4,374		4,372
Total Noninterest Income			34,965		13,903		80,642		39,225

NONINTEREST EXPENSE
Compensation			26,164		16,203		69,558		48,989
Occupancy, Net			5,906		4,710		16,683		13,756
Other Real Estate Owned, Net			219		6		(463)		444
Other			8,053		6,954		22,836		21,278
Total Noninterest Expense			40,342		27,873		108,614		84,467

INCOME BEFORE INCOME TAXES			18,437		11,451		40,078		29,658
Income Tax Expense			3,165		2,970		7,397		7,416

NET INCOME			15,272		8,481		32,681		22,242
Pre-Tax Income Attributable to Noncontrolling Interests			(4,875)		-		(8,851)		-

NET INCOME ATTRIBUTABLE TO COMMON SHAREOWNERS		$	10,397	$	8,481	$	23,830	$	22,242

BASIC NET INCOME PER SHARE		$	0.62	$	0.51	$	1.42	$	1.33
DILUTED NET INCOME PER SHARE		$	0.62	$	0.50	$	1.42	$	1.32

Average Common Basic Shares Outstanding			16,771		16,747		16,792		16,776
Average Common Diluted Shares Outstanding			16,810		16,795		16,823		16,810

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				Nine Months Ended
	September 30,				September 30,
(Dollars in Thousands)	2020		2019		2020		2019
NET INCOME ATTRIBUTABLE TO COMMON SHAREOWNERS	$	10,397	$	8,481	$	23,830	$	22,242
Other comprehensive income, before tax:
Change in net unrealized gain/loss on securities available for sale		(773)		443		3,189		3,427
Amortization of unrealized losses on securities transferred from
available for sale to held to maturity		10		11		28		33
Total Investment Securities		(763)		454		3,217		3,460
Change in net unrealized gain/loss on interest rate swap		157		-		52		-
Other comprehensive (loss) income, before tax		(606)		454		3,269		3,460
Deferred tax (benefit) expense related to other comprehensive income		(149)		115		801		876
Other comprehensive (loss) income, net of tax		(457)		339		2,468		2,584
Total comprehensive income attributable to common shareowners	$	9,940	$	8,820	$	26,298	$	24,826

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
Balance, July 1, 2020	16,780,276	$	168	$	31,575	$	328,570	$	(25,256)	$	335,057
Net Income	-		-		-		10,397		-		10,397
Reclassification to Temporary Equity⁽¹⁾	-		-		-		(3,075)		-		(3,075)
Other Comprehensive Income, net of tax	-		-		-		-		(457)		(457)
Cash Dividends ($0.1400 per share)	-		-		-		(2,347)		-		(2,347)
Repurchase of Common Stock	23,000		-		(472)		-		-		(472)
Stock Based Compensation	-		-		242		-		-		242
Stock Compensation Plan Transactions, net	4,188		-		80		-		-		80
Balance, September 30, 2020	16,761,464	$	168	$	31,425	$	333,545	$	(25,713)	$	339,425

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
Stock Compensation Plan Transactions, net	2,992		-		75		-		-		75
Balance, September 30, 2019	16,748,858	$	167	$	31,075	$	316,551	$	(26,231)	$	321,562

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	-		-		-		23,830		-		23,830
Reclassification to Temporary Equity⁽¹⁾	-		-		-		(3,075)		-		(3,075)
Other Comprehensive Income, net of tax	-		-		-		-		2,468		2,468
Cash Dividends ($0.4200 per share)	-		-		-		(7,052)		-		(7,052)
Repurchase of Common Stock	99,952		(1)		(2,042)		-		-		(2,043)
Stock Based Compensation	-		-		610		-		-		610
Stock Compensation Plan Transactions, net	89,872		1		765		-		-		766
Balance, September 30, 2020	16,761,464	$	168	$	31,425	$	333,545	$	(25,713)	$	339,425

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
Stock Compensation Plan Transactions, net	78,287		1		688		-		-		689
Balance, September 30, 2019	16,748,858	$	167	$	31,075	$	316,551	$	(26,231)	$	321,562

⁽¹⁾Adjustment to redemption value for non-controlling interest in Capital City Home Loans

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)

	Nine Months Ended September 30,
(Dollars in Thousands)	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	23,830	$	22,242
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Provision for Credit Losses		8,303		2,189
Depreciation		5,174		4,693
Amortization of Premiums, Discounts and Fees, net		5,256		3,826
Originations of Loans Held-for-Sale		(561,609)		(160,720)
Proceeds From Sales of Loans Held-for-Sale		500,190		158,293
Net Gain From Sales of Loans Held-for-Sale