SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter: March 31, 1996 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 (I.R.S. Employer Identification No.) incorporation or organization) 217 North Monroe Street, Tallahassee, Florida 32301 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (904) 671-0610 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 such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes __X___ No _____ At April 30, 1996, 2,862,290 shares of the Registrant's Common Stock, $.01 par value, were outstanding. CAPITAL CITY BANK GROUP, INC. I N D E X PART I. FINANCIAL INFORMATION PAGE NUMBER Consolidated Statements of Condition -- March 31, 1996 and December 31, 1995 3 Consolidated Statements of Income -- Three Months Ended March 31, 1996 4 and 1995 Consolidated Statements of Cash Flows -- Three Months Ended March 31, 1996 and 1995 5 Notes to Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II. OTHER INFORMATION Index to Exhibits 16 Signatures 16 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS CAPITAL CITY BANK GROUP, INC. CONSOLIDATED STATEMENTS OF CONDITION AS OF MARCH 31, 1996 AND DECEMBER 31, 1995 (Dollars In Thousands, Except Per Share Amounts) March 31, December 31, 1996 1995 (Unaudited) (Audited) ASSETS Cash and Due From Banks $54,502 $61,613 Federal Funds Sold 28,950 41,150 Interest Bearing Deposits in Other Banks 1,978 300 Investment Securities Available-for-Sale 211,513 230,747 Loans 466,303 447,779 Unearned Interest (3,513) (3,806) Allowance for Loan Losses (6,429) (6,474) Loans, Net 456,361 437,499 Premises and Equipment 26,580 26,240 Accrued Interest Receivable 7,312 7,339 Intangibles 1,068 1,129 Other Assets 7,974 7,642 Total Assets $796,238 $813,659 LIABILITIES Deposits: Noninterest Bearing Deposits 171,135 168,566 Interest Bearing Deposits 506,027 531,013 Total Deposits 677,162 699,579 Federal Funds Purchased and Securities Sold Under Repurchase Agreements 26,060 17,367 Other Short-Term Borrowings 1,827 2,400 Long-Term Debt 1,954 1,982 Other Liabilities 6,939 11,173 Total Liabilities 713,942 732,501 SHAREHOLDERS' EQUITY Common Stock, $.01 par value; 4,000,000 shares authorized; 2,862,287 issued and outstanding at March 31, 1996 and 2,853,716 issued and outstanding at December 31, 1995 29 29 Additional Paid In Capital 4,162 3,913 Retained Earnings 78,042 76,248 Net Unrealized Gain (Loss) on Available- for-Sale Securities 63 968 Total Shareholders' Equity 82,296 81,158 Total Liabilities and Shareholders' Equity $796,238 $813,659 Book Value Per Share $ 28.75 $ 28.44 CAPITAL CITY BANK GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME FOR THE PERIODS ENDED MARCH 31 (Dollars in Thousands, Except Per Share Amounts) 1996 1995 Unaudited Unaudited INTEREST INCOME Interest and Fees on Loans $10,675 $ 9,737 Investment Securities: U. S. Treasury 1,044 1,087 U. S. Government Agencies/Corp. 1,011 556 States and Political Subdivisions 904 839 Other Securities 69 67 Funds Sold 458 478 Total Interest Income $14,161 $12,764 INTEREST EXPENSE Deposits 4,770 4,205 Federal Funds Purchased & Securities Sold Under Repurchase Agreements 283 225 Other Short-Term Borrowings 12 12 Long-Term Debt 30 - Total Interest Expense 5,095 4,442 Net Interest Income 9,066 8,322 Provision for Loan Losses 261 274 Net Interest Income After Provision for Loan Losses 8,805 8,048 NONINTEREST INCOME Service Charges on Deposit Accounts 1,519 1,323 Data Processing 667 606 Income from Fiduciary Activities 288 337 Securities Transactions 12 - Other 1,072 1,088 Total Noninterest Income 3,558 3,354 NONINTEREST EXPENSE Salaries and Employee Benefits 4,785 4,443 Occupancy, Net 617 591 Furniture and Equipment 891 840 Other 2,485 2,486 Total Noninterest Expense 8,778 8,360 Income Before Income Taxes 3,585 3,042 Income Tax Expense 1,018 854 NET INCOME $ 2,567 $ 2,188 Net Income Per Share $ .90 $ .77 Cash Dividends Per Share $ .27 $ -- Average Shares Outstanding 2,859,980 2,851,821 CAPITAL CITY BANK GROUP, INC. STATEMENT OF CASH FLOWS FOR THE PERIODS ENDED MARCH 31 (Dollars in Thousands) 1996 1995 (Unaudited) (Unaudited) NET INCOME $ 2,567 $ 2,188 Adjustments to Reconcile Net Income to Cash Provided by Operating Activities: Provision for Loan Losses 261 274 Depreciation 609 583 Net Amortization (Accretion)-AFS Securities 303 341 Amortization of Intangible Assets 61 67 Non-Cash Compensation 90 72 Net (Increase) Decrease in Interest Receivable 27 (588) Net (Increase) Decrease in Other Assets (331) 1,637 Net Increase (Decrease) in Other Liabilities (1,814) 1,045 Net Cash From Operating Activities 1,773 5,619 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from Payments/Maturities of Investment Securities-HTM - 7,357 Proceeds from Payments/Maturities of Investment Securities-AFS 36,084 2,825 Purchase of Investment Securities-HTM - (5,587) Purchase of Investment Securities-AFS (17,965) (2,442) Net (Increase) Decrease in Loans (19,124) (1,327) Purchase of Premises & Equipment (949) (1,411) Sales of Premises & Equipment - 12 Net Cash from Investing Activities (1,954) (573) CASH FLOWS FROM FINANCING ACTIVITIES: Net Increase (Decrease) in Deposits (22,417) 20,439 Net Increase (Decrease) in Federal Funds Purchased 8,693 10,742 Net Increase (Decrease) in Other Short-Term Borrowings (574) 455 Repayment of Long-Term Debt (27) - Dividends Paid (3,313) (2,277) Issuance of Common Stock 186 30 Net Cash From Financing Activities (17,452) 29,389 Net Increase (Decrease) in Cash and Cash Equivalents (17,633) 34,435 Cash and Cash Equivalents at Beginning of Period 103,063 89,067 Cash and Cash Equivalents at End of Period $ 85,430 $123,502 Supplemental Disclosure: Interest Paid $ 6,237 $ 4,163 Taxes Paid - - CAPITAL CITY BANK GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) MANAGEMENT'S OPINION AND ACCOUNTING POLICIES The consolidated financial statements, included herein, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. Prior year financial statements have been reformatted and/or amounts reclassified, as necessary, to conform with the current year presentation. In the opinion of management, the consolidated financial statements contain all adjustments, which are those of a recurring nature, and disclosures necessary to present fairly the financial position of the Company as of March 31, 1996 and December 31, 1995, and the results of operations and cash flows for the three month periods ended March 31, 1996 and 1995. The Company and its subsidiaries follow generally accepted accounting principles and reporting practices applicable to the banking industry. The principles which materially affect the financial position, results of operations and cash flows are set forth in Notes to Financial Statements which are included in the Company's 1995 Annual Report and Form 10K. The Company has not changed its accounting and reporting policies from those disclosed in its 1995 Annual Report or Form 10K. (2) INVESTMENT SECURITIES The carrying value and related market value/amortized cost of investment securities in the available-for-sale portfolios at March 31, 1996 and December 31, 1995 were as follows (dollars in thousands): March 31, 1996 Amortized Unrealized Unrealized Market Available-For-Sale Cost Gains Losses Value U. S. Treasury $ 62,712 $ 281 $ 45 $ 62,948 U. S. Government Agencies and Corporations 65,289 57 544 64,802 States and Political Subdivisions 74,582 680 317 74,945 Mortgage Backed Securities 4,872 35 66 4,841 Other Securities 3,959 18 - 3,977 Total $211,414 $1,071 $ 972 $211,513 December 31, 1995 Amortized Unrealized Unrealized Market Available For Sale Cost Gains Losses Value U.S. Treasury $ 72,289 $ 470 $ 54 $ 72,705 U.S. Government Agencies and Corporations 70,883 264 96 71,051 States and Political Subdivisions 75,986 1,037 143 76,880 Mortgage Backed Securities 5,965 47 26 5,986 Other Securities 4,107 19 1 4,125 Total $ 229,230 $ 1,837 $ 320 $230,747 (3) LOANS The composition of the Company's loan portfolio at March 31, 1996 and December 31, 1995 was as follows (dollars in thousands): 1996 1995 Commercial, Financial and Agricultural $ 55,874 $ 46,149 Real Estate-Construction 27,081 28,391 Real Estate-Mortgage 268,139 259,503 Consumer 115,209 113,736 Gross Loans $466,303 $447,779 (4) ALLOWANCE FOR LOAN LOSSES An analysis of the changes in the allowance for loan losses for the three month period ended March 31, 1996 and 1995, is as follows (dollars in thousands): 1996 1995 Balance, Beginning of the Period $ 6,474 $ 7,551 Provision for Loan Losses 261 274 Recoveries on Loans Previously Charged-Off 104 183 Loans Charged-Off (410) (288) Balance, End of Period $ 6,429 $ 7,720 Impaired loans are primarily defined as all nonaccruing loans for the loan categories which are included within the scope of SFAS 114. Selected information pertaining to impaired loans is depicted in the table below (dollars in thousands). 1996 1995 Impaired Loans: Valuation Valuation Balance Allowance Balance Allowance With Related Credit Allowance $ 133 $ 19 $ 946 $ 334 Without Related Credit Allowance 1,642 - $ 1,962 $ -- Average Recorded Investment for the Period 2,166 * $ 3,282 $ * Interest Income: Recognized $ 12 $ 37 Collected $ 7 $ 31 * Not Applicable __________________________________________________________________________ The Company recognizes income on impaired loans primarily on the cash basis. Any change in the present value of expected cash flows is recognized through the allowance for loan losses. (5) DEPOSITS The composition of the Company's interest bearing deposits at March 31, 1996 and December 31, 1995 was as follows (dollars in thousands): March 31, 1996 December 31, 1995 NOW Accounts $ 91,768 $122,517 Money Market Accounts 80,900 67,942 Savings Deposits 79,514 78,522 Other Time Deposits 253,845 262,032 Total Interest Bearing Deposits $506,027 $531,013 (6) RECLASSIFICATION Pursuant to current state laws, treasury shares are treated as authorized, but unissued. Accordingly, the Company cancelled all existing treasury shares and recorded the cancellation as charges to paid-in capital and retained earnings and a credit to treasury stock. At the time the shares previously recorded as treasury shares were originally issued, (January 1, 1984), the book value per share was $8.57. Upon cancellation of the treasury shares, the book value of $8.57 was used to reduce the capital stock accounts ($.01 per share for common stock and $8.56 per share for additional paid-in-capital), and the difference between $8.57 and the cost per share at which the treasury shares were repurchased was charged to retained earnings. All prior period statements presented herein have been reclassified to reflect the cancellation of treasury shares and to conform with current period presentation. ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion sets forth the major factors that have affected the Company's financial condition and results of operations and should be read in conjunction with the accompanying financial statements. The year-to-date averages used in this report are based on daily balances for each respective period. RESULTS OF OPERATIONS Net Income Net income was $2.6 million, or $.90 per share for the first quarter of 1996, a per share increase of 16.9% over the $2.2 million, or $.77 per share for the comparable period in 1995. Operating revenue, which includes net interest income and noninterest income, increased $948,000, or 8.1%, over the first quarter of 1995, and was the most significant factor contributing to the increase in earnings. Dollars in thousands): For The Three Months Ended March 31, 1996 1995 Interest Income $14,161 $12,764 Taxable Equivalent Adjustment(1) 441 390 Interest Income (FTE) 14,602 13,154 Interest Expense 5,095 4,442 Net Interest Income (FTE) 9,507 8,712 Provision for Loan Losses 261 274 Taxable Equivalent Adjustment 441 390 Net Int. Inc. After Provision 8,805 8,048 Noninterest Income 3,558 3,354 Noninterest Expense 8,778 8,360 Income Before Income Taxes 3,585 3,042 Income Taxes 1,018 854 Net Income $ 2,567 $ 2,188 Percent Change 17.32% (6.89)% Return on Average Assets (2) 1.30% 1.20% Return on Average Equity (2) 12.59% 12.07% (1) Computed using a statutory tax rate of 34% (2) Annualized Net Interest Income First quarter taxable equivalent net interest income increased $795,000, or 9.1%, over the comparable period for 1995. The increase is attributable to growth in average earning assets, as the net interest margin and interest rate spread were relatively stable for the comparative periods. Further, the first quarter of 1996 included one additional day due to leap year which added approximately $100,000 to net interest income. Table 1 on page 14 provides a comparative analysis of the Company's average balances and interest rates. Taxable-equivalent interest income increased $1.5 million, or 11.0%, due to growth in the loan and securities portfolios. Loans, which generally represent the Company's highest yielding asset, increased (on average) $29.7 million, or 7.0%, while the securities portfolio increased $21.9 million, 11.1%. The average yield on earning assets increased 15 basis points from 8.17% in the first quarter of 1995 to 8.32% in 1996. Interest expense increased $653,000, or 14.7%, due to deposit growth and a shift in deposit mix. Average deposits increased $38.1 million, or 6.0%. Certificates of deposits, which generally represent a higher cost of funds than other deposit offerings, increased as a percent of average deposits from 34.7% in the first quarter of 1995 to 38.3% in the first quarter of 1996, while savings deposits decreased from 15.0% to 11.8%. While rates on transaction accounts and savings declined, the average rate paid on certificates of deposits during the first quarter of 1996 was 5.32%, versus 4.71% for the comparable period in 1995. The higher rate paid on certificates of deposits, coupled with a shift in the mix of deposits, resulted in a 22 basis point increase in the average rate paid on interest bearing liabilities which rose from 3.61% in the first quarter of 1995 to 3.83% in the first quarter of 1996. The Company's interest rate spread (defined as the average taxable equivalent yield on earning assets less the average rate paid on interest bearing liabilities) decreased from 4.56% in the first quarter of 1995 to 4.49% in the comparable quarter for 1996. The Company's net interest margin percentage (defined as taxable-equivalent net interest income divided by average earning assets) was unchanged at 5.42%. The decrease in the spread reflects the higher costs of funds. The margin of 5.42% is a very favorable margin under current market conditions. Rising interest rates could adversely affect the Company's margin during the second quarter. Provisions for Loan Losses The provision for loan losses for the three months ended March 31, 1996, was $261,000 versus $274,000 for the first quarter of 1995. Net charge-offs, while up significantly from 1995, are still at a relatively low level and, as a percent of average loans, are in line with past performance. Relative to year- end, the reserve for loan losses decreased slightly to $6.4 million, and represented 1.4% of total loans. Charge-off activity for the respective periods is set forth below. Three Months Ended 1996 1995 Net Charge-Offs $306,000 $105,000 Net Charge-Offs (Annualized) as a percent of Average Loans Outstanding, Net of Unearned Interest .28% .10% Noninterest Income Noninterest income increased $204,000, or 6.1%, over the first quarter of 1995, which included gains in all major categories except income from fiduciary activities. In January 1995, the Company changed its method of income recognition for Capital City Trust Company ("CCTC") from cash to accrual. This change resulted in a one-time adjustment which increased 1995 revenues by $166,000. Although CCTC had a very strong first quarter in 1996, income from fiduciary activities declined as a result of this one-time adjustment recognized in January 1995. Service charges on deposit accounts increased $196,000, or 14.8%. The increase primarily reflects a higher level of activity subject to service charge assessments and an increased emphasis on collections. Compared to the first quarter of 1995, there were no significant variation in the "Other" noninterest income category. However, within the category, there were a few variations which deserve mention. Increases in mortgage origination fees of $77,000 and check printing income of $42,000, were offset by decreases in bankcard merchant fees and real estate gains of $74,000 and $82,000, respectively. Noninterest income as a percent of average earning assets was 2.0% for the first quarter of 1996 versus 2.1% for the comparable quarter in 1995. Noninterest Expense Noninterest expense in the first quarter of 1996 increased $418,000, or 5.0%, over the first quarter of 1995. Compensation and occupancy expense were the primary factors contributing to the overall increase. Compensation expense increased $342,000, or 7.7%, reflecting annual raises of less than 4.0%, in aggregate, and an increase in full-time equivalent employees of 9. Occupancy expense, including premises, furniture, fixtures and equipment increased $77,000, or 5.4%. The increase is primarily attributable to depreciation expense which is up $26,000 and Other FF&E expense which is up $36,000. Other noninterest expense was unchanged as compared to the first quarter of 1995. Although there was no net change, a reduction in FDIC insurance premiums of approximately $360,000 was offset by increases in legal/professional fees of $202,000, ORE related expense(including losses on the sale of ORE) of $98,000, and courier service expense of $38,000. Net noninterest expense (noninterest income minus noninterest expense) as a percent of average earning assets was 3.0% in the first quarter of 1996 versus 3.1% for the first quarter of 1995. The Company's efficiency ratio (noninterest expense expressed as a percent of the sum of net interest income plus noninterest income) was 69.5% at March 31, 1996 compared to 71.6% at March 31, 1995. The reduction in the efficiency ratio is attributable to growth in operating revenues. Income Taxes The provision for income taxes increased $164,000, or 19.2%, over the first quarter of 1995. The increase in the provision is attributable to higher taxable income. The Company's effective tax rate for the first quarter of 1996 was 28.4% compared to 28.1% for the same quarter in 1995. FINANCIAL CONDITION The Company's average assets increased to $791.2 million in the first quarter of 1996 from $735.9 million in the first quarter of 1995. Average earning assets were $705.5 million for the three months ended March 31, 1996 versus $652.3 million for the comparable quarter of 1995. Average loans were up $29.7 million, or 7.0%. Asset growth was funded primarily through an increase in average deposits of $38.1 million, or 6.0%. The investment portfolio is a significant component of the Company's operations and, as such, it functions as a key element of liquidity and asset/liability management. Securities in the Available-for-Sale portfolio are recorded at fair value and unrealized gains and losses associated with these securities are recorded, net of tax, as a separate component of shareholders' equity. At March 31, 1996, shareholders' equity included a net unrealized gain of $63,000 compared to $968,000 at December 31, 1995. The reduction in value reflects the rise in interest rates during the month of March. At March 31, 1996, the Company's nonperforming loans were $4.6 million versus $4.7 million at year-end and $5.1 million at March 31, 1995. As a percent of nonperforming loans, the allowance for loan losses represented 182.80% at March 31, 1996 versus 138.27% at December 31, 1995 and 156.0% at March 31, 1995. Nonperforming loans include nonaccruing and restructured loans. Other real estate, which includes property acquired either through foreclosure or by receiving a deed in lieu of foreclosure, was $1.1 million at March 31, 1996, versus $1.0 million at December 31, 1995, and $.7 million at March 31, 1995. Average deposits increased 6.0% from $635.1 million in the first quarter of 1995, to $673.2 million in the first quarter of 1996. The growth in deposits was primarily driven by deposit promotions which were initiated by the Company during the second and fourth quarters of 1995. As a result of these promotions, certificates of deposits represented $37.3 million, or 97.9%, of the $38.1 million growth in average total deposits. Certificates of deposits, as a percent of average total deposits increased to 38.3% from 34.7% for the comparable quarter in 1995. The ratio of average noninterest bearing deposits to total deposits was 24.5% for the first quarter of 1996 compared to 24.5% for the first quarter of 1995. For the same periods, the ratio of average interest bearing liabilities to average earning assets was 75.9% and 76.6%, respectively. LIQUIDITY AND CAPITAL RESOURCES Liquidity, for a financial institution, is the availability of funds to meet increased loan demand and/or excessive deposit withdrawals. Management has implemented a financial structure that provides ready access to sufficient liquid funds to meet normal transaction requirements, take advantage of investment opportunities and cover unforeseen liquidity demands. In addition to core deposit growth, sources of funds available to meet liquidity demands for the subsidiary banks include federal funds sold, near-term loan maturities, securities held in the available-for-sale portfolio, and the ability to purchase federal funds through established lines of credit with correspondent banks. The Company's equity capital was $82.3 million as of March 31, 1996 compared to $81.2 million as of December 31, 1995. Management continues to monitor its capital position in relation to its level of assets with the objective of maintaining a strong capital position. The leverage ratio was 10.20% at March 31, 1996 and December 31, 1995. Further, the Company's risk-adjusted capital ratio of 19.14% at March 31, 1996, significantly exceeds the 8.0% minimum requirement under the risk-based regulatory guidelines. State and federal regulations as well as the Company's long-term debt agreements place certain restrictions on the payment of dividends by both the Company and its Group banks. At March 31, 1996, these regulations and covenants did not impair the Company's (or its Group banks') ability to declare and pay dividends or to meet other existing obligations in the normal course of business. During the first three months of 1996, shareholders' equity increased $1.1 million, or 5.6%, on an annualized basis. Growth in equity during the first quarter was adversely impacted by a reduction of $905,000 in the Company's net unrealized gain on available-for-sale securities, which declined from $968,000 at December 31, 1995 to $63,000 at March 31, 1996. The loss in value reflects the rise in interest rates which occurred primarily during March 1996. Additionally, shareholders' equity was reduced by $773,000 due to the declaration and payment of a $.27 per share dividend during the first quarter. Since its formation, Capital City Bank Group, Inc., has paid dividends on a semi-annual basis. Going forward, management intends to declare and pay dividends on a quarterly versus semi-annual basis. At March 31, 1996, the Company's common stock had a book value of $28.75 per share compared to $28.44 at December 31, 1995. Pursuant to the Company's stock repurchase program adopted in 1989, the Company has repurchased 263,580 shares of its common stock, and subsequently reissued 20,624 shares, primarily in conjunction with associate stock plans. In the first quarter of 1996, there were no shares repurchased and 8,571 shares were issued, a majority of which represented performance awards issued in accordance with the Company's Stock Incentive Plan and shares acquired under the Company's Associate Stock Purchase Plan. TABLE I AVERAGES BALANCES & INTEREST RATES (Taxable Equivalent Basis - Dollars in Thousands)
For Three Months Ended March 31 1996 1995 Average Average Average Average Balance Interest Rate Balance Interest Rate ASSETS Loans, Net of Unearned Interest $452,579 10,710 9.52% $422,880 9,749 9.35% Taxable Investment Securities 142,307 2,124 6.00% 128,478 1,710 5.40% Tax-Exempt Investment Securities 76,053 1,310 6.93% 67,990 1,217 7.26% Funds Sold 34,578 458 5.33% 32,909 478 5.89% Total Earning Assets 705,517 14,602 8.32% 652,257 13,154 8.18% Cash & Due From Banks 49,772 51,071 Allowance for Loan Losses (6,506) (7,646) Other Assets 42,411 40,283 TOTAL ASSETS $791,194 $735,965 LIABILITIES NOW Accounts $ 99,117 $ 432 1.75% $ 93,424 $ 529 2.30% Money Market Accounts 72,217 524 2.92% 70,750 541 3.10% Savings Accounts 79,219 407 2.07% 95,217 578 2.46% Other Time Deposits 257,485 3,407 5.32% 220,230 2,557 4.71% Total Interest Bearing Deposits 508,038 4,770 3.78% 479,621 4,205 3.56% Funds Purchased 23,986 283 4.75% 18,647 225 4.90% Other Short-Term Borrowings 1,310 12 3.68% 1,251 12 3.89% Long-Term Debt 1,927 30 6.26% - - - Total Int. Bearing Liabilities 535,261 5,095 3.83% 499,519 4,442 3.61% Noninterest Bearing Deposits 165,193 155,528 Other Liabilities 8,737 7,428 TOTAL LIABILITIES 709,191 662,475 SHAREHOLDERS' EQUITY Common Stock 31 31 Surplus 5,873 5,863 Retained Earnings 76,099 67,596 TOTAL SHAREHOLDERS' EQUITY 82,003 73,490 TOTAL LIABILITIES & EQUITY $791,194 $735,965 Net Interest Rate Spread 4.49% 4.56% Net Interest Income $9,507 $8,712 Net Interest Margin 5.42% 5.42% (1) Average balances include nonaccrual loans. Interest income includes fees on loans of approximately $476,000 and $459,000, for the three months ended March 31, 1996 and 1995, respectively. (2) Interest income includes the effects of taxable equivalent adjustments using a 34% tax rate.
PART II. OTHER INFORMATION Items 1-4. Not applicable Item 5. Other Information At a special meeting of stockholders held on April 25, 1996, First Financial Bancorp, Inc. stockholders' approved the Agreement and Plan of Merger pursuant to which First Financial would be acquired by Capital City Bank Group, Inc. The stockholder approval, in combination with CCBG's recent receipt of all required regulatory approvals which are necessary to consummate the acquisition of First Financial under the terms of the acquisition agreement, completes the actions which are needed to be taken by third parties to permit consummation of the transaction, which remains subject to certain customary closing conditions. The parties have agreed to close the transaction on July 1, 1996 in order to permit a smooth transition for customers of First Federal Bank and Capital City Bank, which will be combined after CCBG's acquisition of First Financial. Item 6. Exhibits and Reports on Form 8-K (A) Exhibits Not applicable (B) Reports on Form 8-K The Company did not file any reports on Form 8-K during the period ended March 31, 1996. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned Chief Financial Officer hereunto duly authorized. CAPITAL CITY BANK GROUP, INC. (Registrant) By:___________________________ J. Kimbrough Davis Senior Vice President and Chief Financial Officer Date: May 13, 1996