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Capital City Bank Group, Inc. Reports Third Quarter 2021 Results
المصدر: Nasdaq GlobeNewswire / 26 أكتوبر 2021 07:00:02 America/New_York
TALLAHASSEE, Fla., Oct. 26, 2021 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income of $10.1 million, or $0.60 per diluted share, for the third quarter of 2021 compared to net income of $7.4 million, or $0.44 per diluted share, for the second quarter of 2021, and $10.4 million, or $0.62 per diluted share, for the third quarter of 2020.
For the first nine months of 2021, net income totaled $27.0 million, or $1.60 per diluted share, compared to net income of $23.8 million, or $1.42 per diluted share, for the same period of 2020. Net income for 2021 included partial pre-tax pension settlement charges totaling $2.5 million (3Q - $0.5 million and 2Q - $2.0 million), or $0.12 per diluted share (after tax).
Our return on average assets (“ROA”) was 0.99% and our return on average equity (“ROE”) was 11.72% for the third quarter of 2021. These metrics were 0.75% and 9.05% for the second quarter of 2021, respectively, and 1.17% and 12.16% for the third quarter of 2020, respectively. For the first nine months of 2021, our ROA was 0.92% and our ROE was 10.87% compared to 0.96% and 9.50%, respectively, for the same period of 2020.
QUARTER HIGHLIGHTS
- Net interest income grew $1.7 million, or 6.5% sequentially, driven by higher loan fees of $1.3 million (primarily SBA PPP fees of $1.0 million) and a better earning asset mix
- Average loans, excluding PPP loans, grew $35 million and average investment securities increased $218 million
- Strong credit quality metrics resulted in no loan loss provision for the quarter
- Noninterest expense decreased $2.4 million due to lower pension settlement charges of $1.5 million and a $1.0 million gain from the sale of a banking office
- Capital City Home Loans (“CCHL”) contributed $0.06 per share
“Capital City posted strong third quarter results and, year over year, earnings have increased 13.4%,” said William G. Smith, Jr., Chairman, President and CEO of Capital City Bank Group. “Historically favorable credit quality continued to improve resulting in no provision for loan losses in the third quarter and a net provision credit year-to-date. Operating revenues improved as we experienced growth in both net interest income and noninterest income, while noninterest expense declined reflecting lower pension settlement charges and a gain on the sale of ORE (office building). Our recent addition of Capital City Strategic Wealth (a financial planning/advisory service) is gaining traction and expands our portfolio of wealth management businesses. We continue to focus our expansion efforts on markets in west Florida and the northern arc of Atlanta. While challenges remain, we are identifying opportunities and executing on strategies we believe are sustainable and add long-term value for our shareowners. I am optimistic about the future and appreciate your continued support.”
Discussion of Operating Results
Net Interest Income/Net Interest Margin
Tax-equivalent net interest income for the third quarter of 2021 totaled $27.7 million compared to $26.1 million for the second quarter of 2021 and $25.2 million for the third quarter of 2020. Compared to the second quarter of 2021, the increase reflected higher loan fees of $1.3 million (SBA PPP loan fees increased $1.0 million) and higher investment securities income of $0.3 million, which reflected deployment of excess overnight funds into the investment portfolio. Compared to the second quarter of 2021, lower loan interest income from SBA PPP loans was offset by loan interest income from growth in non-SBA PPP loans. Compared to the third quarter of 2020, the increase was primarily attributable to higher SBA PPP loan fees of $2.5 million. For the first nine months of 2021, tax-equivalent net interest income totaled $78.4 million compared to $76.7 million for the same period of 2020. The increase generally reflected higher SBA PPP loan fees and lower interest expense, partially offset by lower rates earned on investment securities and variable/adjustable rate loans.
Our net interest margin for the third quarter of 2021 was 2.98%, an increase of nine basis points over the second quarter of 2021 and a decrease of 14 basis points from the third quarter of 2020. Compared to the second quarter of 2021, the increase was primarily driven by higher SBA PPP loan fees. Compared to the third quarter of 2020, the decrease was primarily attributable to growth in earning assets (driven by deposit inflows), which negatively impacts our margin percentage. For the first nine months of 2021, the net interest margin decreased 51 basis points to 2.91%, which is generally reflective of growth in earning assets. Our net interest margin for the third quarter of 2021, excluding the impact of overnight funds in excess of $200 million, was 3.50%.
Provision for Credit Loss
We did not record a provision for credit losses for the third quarter of 2021. This compares to a negative provision of $0.6 million for the second quarter of 2021 and a provision expense of $1.3 million for the third quarter of 2020. For the first nine months of 2021, we recorded a negative provision of $1.6 million compared to provision expense of $8.3 million for the same period of 2020. The negative provision for the first nine months of 2021 generally reflected improving economic conditions, favorable loan migration and strong net loan recoveries totaling $0.7 million. We discuss the allowance for credit losses further below.
Noninterest Income and Noninterest Expense
Noninterest income for the third quarter of 2021 totaled $26.6 million compared to $26.5 million for the second quarter of 2021 and $35.0 million for the third quarter of 2020. The slight increase over the second quarter of 2021 was primarily due to higher deposit fees of $0.8 million and wealth management fees of $0.3 million, partially offset by lower mortgage banking revenues of $0.9 million. The $8.4 million decrease from the third quarter of 2020 was primarily attributable to lower mortgage banking revenues at CCHL of $10.7 million, partially offset by higher deposit fees of $0.8 million, wealth management fees of $0.8 million, and bank card fees of $0.4 million. The decline in mortgage banking revenues was driven by lower production volume (primarily re-finance activity) and a lower gain on sale margin (additional information on CCHL is provided on Page 11). The increase in deposit fees reflected the conversion of the remaining free checking accounts to a monthly maintenance fee account type. The increase in wealth management fees was attributable to higher retail brokerage transaction volume and advisory accounts added from the acquisition of Capital City Strategic Wealth on May 1, 2021. The increase in bank card fees generally reflected an increase in card-not-present debit card transactions as well increased consumer spending. For the first nine months of 2021, noninterest income totaled $82.9 million compared to $80.6 million for the same period of 2020 with the increase driven by higher wealth management fees of $2.0 million, bank card fees of $1.8 million, deposit fees of $0.5 million, and other income of $0.9 million (primarily loan servicing income at CCHL), partially offset by lower mortgage banking revenues of $3.0 million. These variances were generally due to the same aforementioned factors noted in the year over year quarterly comparison.
Noninterest expense for the third quarter of 2021 totaled $39.7 million compared to $42.1 million for the second quarter of 2021 and $40.3 million for the third quarter of 2020. The $2.4 million decrease from the second quarter of 2021 reflected a pension settlement charge of $2.0 million in the second quarter of 2021 versus $0.5 million in the third quarter of 2021. In addition, OREO expense declined by $0.9 million due to a gain on the sale of a banking office in the third quarter of 2021. Compared to the third quarter of 2020, the $0.6 million decrease was primarily attributable to lower compensation expense of $0.9 million (primarily incentive compensation at CCHL) and OREO expense of $1.3 million partially offset by higher other expense of $1.0 million and a pension settlement charge of $0.5 million. For the first nine months of 2021, noninterest expense totaled $122.3 million compared to $108.6 million for the same period of 2020. The $13.7 million increase was attributable to the addition of expenses at CCHL of $6.7 million as well as higher expenses at the core bank totaling $7.0 million. The increase in expenses at the core bank were primarily due to higher compensation expense of $1.5 million (primarily merit raises), processing fees of $0.6 million (debit card volume), professional fees of $0.5 million, occupancy expense of $0.4 million, and FDIC insurance of $0.4 million (higher asset size), partially offset by lower OREO expense of $1.1 million (gains from the sale of two banking offices). In addition, we have realized pension settlement charges totaling $2.5 million so far in 2021 and other expense increased $1.5 million, which reflected higher expense for our base pension plan attributable to the utilization of a lower discount rate for plan liabilities. We anticipate additional settlement expense in the fourth quarter of 2021.
Income Taxes
We realized income tax expense of $2.9 million (effective rate of 20%) for the third quarter of 2021 compared to $2.1 million (effective rate of 19%) for the second quarter of 2021 and $3.2 million (effective rate of 17%) for the third quarter of 2020. For the first nine months of 2021, we realized income tax expense of $7.8 million (effective rate of 19%) compared to $7.4 million (effective rate of 19%) for the same period of 2020. Absent discrete items, we expect our annual effective tax rate to approximate 18%-19%.
Discussion of Financial Condition
Earning Assets
Average earning assets totaled $3.693 billion for the third quarter of 2021, an increase of $69.2 million, or 1.9%, over the second quarter of 2021, and an increase of $355.7 million, or 10.7%, over the fourth quarter of 2020. The increase over both prior periods was primarily driven by higher deposit balances, which funded growth in the investment portfolio. Deposit balances increased as a result of strong core deposit growth, SBA PPP loan proceeds deposited in client accounts, and various other stimulus programs.
We maintained an average net overnight funds (deposits with banks plus FED funds sold less FED funds purchased) sold position of $741.9 million in the third quarter of 2021 compared to an average net overnight funds sold position of $818.6 million in the second quarter of 2021 and $705.1 million in the fourth quarter of 2020. The decrease compared to the second quarter of 2021 was primarily due to growth in the investment portfolio. The increase compared to the fourth quarter 2020 was driven by strong core deposit growth, in addition to pandemic related stimulus programs (see below – Funding).
Average loans held for investment (“HFI”) decreased $62.6 million, or 3.1%, from the second quarter of 2021 and $19.3 million, or 1.0%, from the fourth quarter of 2020. Over these same prior periods, average loans (excluding SBA PPP loans) increased $34.9 million and $125.2 million and period end loans increased $5.1 million and $102.8 million, respectively. Compared to the second quarter of 2021, the increase in period end loans reflected growth in construction and indirect loans, partially offset by a decline in commercial real estate. Compared to the fourth quarter of 2020, we realized growth in construction, residential, commercial real estate and indirect loans. At September 30, 2021, SBA PPP loan balances totaled $7.5 million and remaining deferred SBA PPP net loan fees totaled $0.3 million. SBA PPP loan forgiveness applications are expected to be completed in the fourth quarter 2021.
Allowance for Credit Losses
At September 30, 2021, the allowance for credit losses for HFI loans totaled $21.5 million compared to $22.2 million at June 30, 2021 and $23.8 million at December 31, 2020. Activity within the allowance is provided on Page 9. At September 30, 2021, the allowance represented 1.11% of HFI loans and provided coverage of 710% of nonperforming loans compared to 1.10% and 434%, respectively, at June 30, 2021, and 1.19% and 406%, respectively, at December 31, 2020. At September 30, 2021, excluding SBA PPP loans (100% government guaranteed), the allowance represented 1.12% of HFI loans compared to 1.30% at December 31, 2020.
Credit Quality
Nonperforming assets (nonaccrual loans and OREO) totaled $3.2 million at September 30, 2021 compared to $6.3 million at June 30, 2021 and $6.7 million at December 31, 2020. Nonaccrual loans totaled $3.0 million at September 30, 2021, a $2.1 million decrease from June 30, 2021 and a $2.8 million decrease from December 31, 2020. The balance of OREO totaled $0.2 million at September 30, 2021, a $1.0 million decrease from June 30, 2021 and $0.6 million decrease from December 31, 2020.
Funding (Deposits/Debt)
Average total deposits were $3.448 billion for the third quarter of 2021, an increase of $60.3 million, or 1.8%, over the second quarter of 2021 and $381.6 million, or 12.4%, over the fourth quarter of 2020. The strongest growth over both comparable periods occurred in our noninterest bearing deposits and savings account balances. Average public deposits in the third quarter 2021 decreased slightly compared to the second quarter of 2021, but increased compared to the fourth quarter of 2020. Over the past 12 months, multiple government stimulus programs have been implemented, including those under the CARES Act and the American Rescue Plan Act, which are responsible for a large part of the growth in average deposits. Given these increases, the potential exists for our deposit levels to be volatile for the remainder of 2021 and into 2022 due to the uncertain timing of the outflows of the stimulus related balances and the economic recovery. It is anticipated that current liquidity levels will remain robust due to our strong overnight funds sold position. The Bank continues to strategically consider ways to safely deploy a portion of this liquidity.
Average short-term borrowings decreased $1.4 million over the second quarter of 2021 and declined $45.5 million from the fourth quarter of 2020, both of which reflected a seasonal fluctuation in warehouse line borrowing needs to support CCHL’s loans held for sale.
Capital
Shareowners’ equity was $348.9 million at September 30, 2021 compared to $335.9 million at June 30, 2021 and $320.8 million at December 31, 2020. For the first nine months of 2021, shareowners’ equity was positively impacted by net income of $27.0 million, a $1.0 million increase in fair value of the interest rate swap related to subordinated debt, net adjustments totaling $2.2 million related to transactions under our stock compensation plans, and reclassification of $7.8 million from temporary equity to decrease the redemption value of the non-controlling interest in CCHL. In addition, $1.6 million was reclassified from accumulated other comprehensive loss to pension expense in conjunction with the partial pension settlement charge reflected in earnings, therefore, the charge had no net effect on equity. Shareowners’ equity was reduced by common stock dividends of $7.8 million ($0.46 per share), a $3.2 million decrease in the unrealized gain on investment securities, and stock compensation of $0.5 million.
At September 30, 2021, our total risk-based capital ratio was 16.70% compared to 16.48% at June 30, 2021 and 17.30% at December 31, 2020. Our common equity tier 1 capital ratio was 13.45%, 13.14%, and 13.71%, respectively, on these dates. Our leverage ratio was 9.05%, 8.84%, and 9.33%, respectively, on these dates. All of our regulatory capital ratios exceeded the threshold to be designated as “well-capitalized” under the Basel III capital standards. Further, our tangible common equity ratio was 6.46% at September 30, 2021 compared to 6.19% and 6.25% at June 30, 2021 and December 31, 2020, respectively.
About Capital City Bank Group, Inc.
Capital City Bank Group, Inc. (NASDAQ: CCBG) is one of the largest publicly traded financial holding companies headquartered in Florida and has approximately $4.0 billion in assets. We provide a full range of banking services, including traditional deposit and credit services, mortgage banking, asset management, trust, merchant services, bankcards, securities brokerage services and life insurance. Our bank subsidiary, Capital City Bank, was founded in 1895 and now has 57 banking offices and 86 ATMs/ITMs in Florida, Georgia and Alabama. For more information about Capital City Bank Group, Inc., visit www.ccbg.com.
FORWARD-LOOKING STATEMENTS
Forward-looking statements in this Press Release are based on current plans and expectations that are subject to uncertainties and risks, which could cause our future results to differ materially. The following factors, among others, could cause our actual results to differ: 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; the accuracy of the our financial statement estimates and assumptions; legislative or regulatory changes; fluctuations in inflation, interest rates, or monetary policies; the effects of security breaches and computer viruses that may affect our computer systems or fraud related to debit card products; changes in consumer spending and savings habits; our growth and profitability; the strength of the U.S. economy and the local economies where we conduct operations; the effects of a non-diversified loan portfolio, including the risks of geographic and industry concentrations; natural disasters, widespread health emergencies, military conflict, terrorism or other geopolitical events; changes in the stock market and other capital and real estate markets; customer acceptance of third-party products and services; increased competition and its effect on pricing; negative publicity and the impact on our reputation; technological changes, especially changes that allow out of market competitors to compete in our markets; changes in accounting; and our ability to manage the risks involved in the foregoing. Additional factors can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and our other filings with the SEC, which are available at the SEC’s internet site (http://www.sec.gov). Forward-looking statements in this Press Release speak only as of the date of the Press Release, and we assume no obligation to update forward-looking statements or the reasons why actual results could differ.
USE OF NON-GAAP FINANCIAL MEASURES
We present a tangible common equity ratio and a tangible book value per diluted share that removes the effect of goodwill and other intangibles resulting from merger and acquisition activity. We believe these measures are useful to investors because it allows investors to more easily compare our capital adequacy to other companies in the industry.
The GAAP to non-GAAP reconciliations are provided below.
(Dollars in Thousands, except per share data) Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Shareowners' Equity (GAAP) $ 348,868 $ 335,880 $ 324,426 $ 320,837 $ 339,425 Less: Goodwill and Other Intangibles (GAAP) 93,293 93,333 89,095 89,095 89,095 Tangible Shareowners' Equity (non-GAAP) A 255,575 242,547 235,331 231,742 250,330 Total Assets (GAAP) 4,048,733 4,011,459 3,929,884 3,798,071 3,587,041 Less: Goodwill and Other Intangibles (GAAP) 93,293 93,333 89,095 89,095 89,095 Tangible Assets (non-GAAP) B $ 3,955,440 $ 3,918,126 $ 3,840,789 $ 3,708,976 $ 3,497,946 Tangible Common Equity Ratio (non-GAAP) A/B 6.46 % 6.19 % 6.13 % 6.25 % 7.16 % Actual Diluted Shares Outstanding (GAAP) C 16,911,715 16,901,375 16,875,719 16,844,997 16,800,563 Tangible Book Value per Diluted Share (non-GAAP) A/C $ 15.11 $ 14.35 $ 13.94 $ 13.76 $ 14.90 CAPITAL CITY BANK GROUP, INC. EARNINGS HIGHLIGHTS Unaudited Three Months Ended Nine Months Ended (Dollars in thousands, except per share data) Sep 30, 2021 Jun 30, 2021 Sep 30, 2020 Sep 30, 2021 Sep 30, 2020 EARNINGS Net Income Attributable to Common Shareowners $ 10,091 $ 7,427 $ 10,397 $ 27,024 $ 23,830 Diluted Net Income Per Share $ 0.60 $ 0.44 $ 0.62 $ 1.60 $ 1.42 PERFORMANCE Return on Average Assets 0.99 % 0.75 % 1.17 % 0.92 % 0.96 % Return on Average Equity 11.72 9.05 12.16 10.87 9.50 Net Interest Margin 2.98 2.89 3.12 2.91 3.42 Noninterest Income as % of Operating Revenue 48.99 50.47 58.19 51.47 51.37 Efficiency Ratio 73.09 % 80.18 % 67.01 % 75.83 % 69.04 % CAPITAL ADEQUACY Tier 1 Capital 15.69 % 15.44 % 16.77 % 15.69 % 16.77 % Total Capital 16.70 16.48 17.88 16.70 17.88 Leverage 9.05 8.84 9.64 9.05 9.64 Common Equity Tier 1 13.45 13.14 14.20 13.45 14.20 Tangible Common Equity (1) 6.46 6.19 7.16 6.46 7.16 Equity to Assets 8.62 % 8.37 % 9.46 % 8.62 % 9.46 % ASSET QUALITY Allowance as % of Non-Performing Loans 710.39 % 433.93 % 420.30 % 710.39 % 420.30 % Allowance as a % of Loans HFI 1.11 1.10 1.16 1.11 1.16 Net Charge-Offs as % of Average Loans HFI 0.03 (0.07 ) 0.11 (0.05 ) 0.13 Nonperforming Assets as % of Loans HFI and OREO 0.17 0.31 0.34 0.17 0.34 Nonperforming Assets as % of Total Assets 0.08 % 0.16 % 0.19 % 0.08 % 0.19 % STOCK PERFORMANCE High $ 26.10 $ 27.39 $ 21.71 $ 28.98 $ 30.62 Low 22.02 24.55 17.55 21.42 15.61 Close $ 24.74 $ 25.79 $ 18.79 $ 24.74 $ 18.79 Average Daily Trading Volume 30,515 28,958 28,517 29,925 39,477 (1) Tangible common equity ratio is a non-GAAP financial measure. For additional information, including a reconciliation to GAAP, refer to Page 5. CAPITAL CITY BANK GROUP, INC. CONSOLIDATED STATEMENT OF FINANCIAL CONDITION Unaudited 2021 2020 (Dollars in thousands) Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter ASSETS Cash and Due From Banks $ 73,132 $ 78,894 $ 73,973 $ 67,919 $ 76,509 Funds Sold and Interest Bearing Deposits 708,988 766,920 851,910 860,630 626,104 Total Cash and Cash Equivalents 782,120 845,814 925,883 928,549 702,613 Investment Securities Available for Sale 645,844 480,890 406,245 324,870 328,253 Investment Securities Held to Maturity 341,228 325,559 199,109 169,939 202,593 Total Investment Securities 987,072 806,449 605,354 494,809 530,846 Loans Held for Sale 77,036 80,821 82,081 114,039 116,561 Loans Held for Investment ("HFI"): Commercial, Financial, & Agricultural 218,929 292,953 413,819 393,930 402,997 Real Estate - Construction 177,443 149,884 138,104 135,831 125,804 Real Estate - Commercial 683,379 707,599 669,158 648,393 656,064 Real Estate - Residential 355,958 362,018 358,849 342,664 335,713 Real Estate - Home Equity 187,642 190,078 202,099 205,479 197,363 Consumer 309,983 298,464 267,666 269,520 268,393 Other Loans 6,792 6,439 7,082 9,879 10,488 Overdrafts 1,299 1,227 950 730 1,339 Total Loans Held for Investment 1,941,425 2,008,662 2,057,727 2,006,426 1,998,161 Allowance for Credit Losses (21,500 ) (22,175 ) (22,026 ) (23,816 ) (23,137 ) Loans Held for Investment, Net 1,919,925 1,986,487 2,035,701 1,982,610 1,975,024 Premises and Equipment, Net 84,750 85,745 86,370 86,791 87,192 Goodwill and Other Intangibles 93,293 93,333 89,095 89,095 89,095 Other Real Estate Owned 192 1,192 110 808 1,227 Other Assets 104,345 111,618 105,290 101,370 84,483 Total Other Assets 282,580 291,888 280,865 278,064 261,997 Total Assets $ 4,048,733 $ 4,011,459 $ 3,929,884 $ 3,798,071 $ 3,587,041 LIABILITIES Deposits: Noninterest Bearing Deposits $ 1,592,345 $ 1,552,864 $ 1,473,891 $ 1,328,809 $ 1,378,314 NOW Accounts 926,201 970,705 993,571 1,046,408 827,506 Money Market Accounts 286,065 280,805 269,041 266,649 247,823 Regular Savings Accounts 559,714 539,477 518,373 474,100 451,944 Certificates of Deposit 101,637 103,070 103,232 101,594 103,859 Total Deposits 3,465,962 3,446,921 3,358,108 3,217,560 3,009,446 Short-Term Borrowings 51,410 47,200 55,687 79,654 90,936 Subordinated Notes Payable 52,887 52,887 52,887 52,887 52,887 Other Long-Term Borrowings 1,610 1,720 1,829 3,057 5,268 Other Liabilities 113,720 105,534 109,487 102,076 71,880 Total Liabilities 3,685,589 3,654,262 3,577,998 3,455,234 3,230,417 Temporary Equity 14,276 21,317 27,460 22,000 17,199 SHAREOWNERS' EQUITY Common Stock 169 169 169 168 168 Additional Paid-In Capital 33,876 33,560 32,804 32,283 31,425 Retained Earnings 359,550 345,574 335,324 332,528 333,545 Accumulated Other Comprehensive Loss, Net of Tax (44,727 ) (43,423 ) (43,871 ) (44,142 ) (25,713 ) Total Shareowners' Equity 348,868 335,880 324,426 320,837 339,425 Total Liabilities, Temporary Equity and Shareowners' Equity $ 4,048,733 $ 4,011,459 $ 3,929,884 $ 3,798,071 $ 3,587,041 OTHER BALANCE SHEET DATA Earning Assets $ 3,714,521 $ 3,662,852 $ 3,597,071 $ 3,475,904 $ 3,271,672 Interest Bearing Liabilities 1,979,524 1,995,864 1,994,620 2,024,349 1,780,223 Book Value Per Diluted Share $ 20.63 $ 19.87 $ 19.22 $ 19.05 $ 20.20 Tangible Book Value Per Diluted Share(1) 15.11 14.35 13.94 13.76 14.90 Actual Basic Shares Outstanding 16,878 16,874 16,852 16,791 16,761 Actual Diluted Shares Outstanding 16,912 16,901 16,876 16,845 16,801 (1) Tangible book value per diluted share is a non-GAAP financial measure. For additional information, including a reconciliation to GAAP, refer to Page 5. CAPITAL CITY BANK GROUP, INC. CONSOLIDATED STATEMENT OF OPERATIONS Unaudited 2021 2020 September 30, (Dollars in thousands, except per share data) Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter 2021 2020 INTEREST INCOME Interest and Fees on Loans $ 25,885 $ 24,582 $ 23,350 $ 23,878 $ 23,594 $ 73,817 $ 70,874 Investment Securities 2,350 2,054 1,883 2,096 2,426 6,287 8,178 Funds Sold 285 200 213 180 146 698 991 Total Interest Income 28,520 26,836 25,446 26,154 26,166 80,802 80,043 INTEREST EXPENSE Deposits 210 208 208 201 190 626 1,347 Short-Term Borrowings 317 324 412 639 498 1,053 1,051 Subordinated Notes Payable 307 308 307 311 316 922 1,161 Other Long-Term Borrowings 14 16 21 30 40 51 131 Total Interest Expense 848 856 948 1,181 1,044 2,652 3,690 Net Interest Income 27,672 25,980 24,498 24,973 25,122 78,150 76,353 Provision for Credit Losses - (571 ) (982 ) 1,342 1,308 (1,553 ) 8,303 Net Interest Income after Provision for Credit Losses 27,672 26,551 25,480 23,631 23,814 79,703 68,050 NONINTEREST INCOME Deposit Fees 5,075 4,236 4,271 4,713 4,316 13,582 13,087 Bank Card Fees 3,786 3,998 3,618 3,462 3,389 11,402 9,582 Wealth Management Fees 3,623 3,274 3,090 3,069 2,808 9,987 7,966 Mortgage Banking Revenues 12,283 13,217 17,125 17,711 22,983 42,625 45,633 Other 1,807 1,748 1,722 1,568 1,469 5,277 4,374 Total Noninterest Income 26,574 26,473 29,826 30,523 34,965 82,873 80,642 NONINTEREST EXPENSE Compensation 25,245 25,378 26,064 26,722 26,164 76,687 69,558 Occupancy, Net 6,032 5,973 5,967 5,976 5,906 17,972 16,683 Other Real Estate, Net (1,126 ) (270 ) (118 ) 567 219 (1,514 ) (463 ) Pension Adjustment 500 2,000 - - - 2,500 - Other 9,051 9,042 8,563 8,083 8,053 26,656 22,836 Total Noninterest Expense 39,702 42,123 40,476 41,348 40,342 122,301 108,614 OPERATING PROFIT 14,544 10,901 14,830 12,806 18,437 40,275 40,078 Income Tax Expense 2,949 2,059 2,787 2,833 3,165 7,795 7,397 Net Income 11,595 8,842 12,043 9,973 15,272 32,480 32,681 Pre-Tax Income Attributable to Noncontrolling Interest (1,504 ) (1,415 ) (2,537 ) (2,227 ) (4,875 ) (5,456 ) (8,851 ) NET INCOME ATTRIBUTABLE TO
COMMON SHAREOWNERS$ 10,091 $ 7,427 $ 9,506 $ 7,746 $ 10,397 $ 27,024 $ 23,830 PER COMMON SHARE Basic Net Income $ 0.60 $ 0.44 $ 0.56 $ 0.46 $ 0.62 $ 1.60 $ 1.42 Diluted Net Income 0.60 0.44 0.56 0.46 0.62 1.60 1.42 Cash Dividend $ 0.16 $ 0.15 $ 0.15 $ 0.15 $ 0.14 $ 0.46 $ 0.42 AVERAGE SHARES Basic 16,875 16,858 16,838 16,763 16,771 16,857 16,792 Diluted 16,909 16,885 16,862 16,817 16,810 16,886 16,823 CAPITAL CITY BANK GROUP, INC. ALLOWANCE FOR CREDIT LOSSES ("ACL") AND RISK ELEMENT ASSETS Unaudited 2021 2020 September 30, (Dollars in thousands, except per share data) Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter 2021 2020 ACL - HELD FOR INVESTMENT LOANS Balance at Beginning of Period $ 22,175 $ 22,026 $ 23,816 $ 23,137 $ 22,457 $ 23,816 $ 13,905 Impact of Adopting ASC 326 (CECL) - - - - - - 3,269 Provision for Credit Losses (546 ) (184 ) (2,312 ) 1,165 1,265 (3,042 ) 7,870 Net Charge-Offs (Recoveries) 129 (333 ) (522 ) 486 585 (726 ) 1,907 Balance at End of Period $ 21,500 $ 22,175 $ 22,026 $ 23,816 $ 23,137 $ 21,500 $ 23,137 As a % of Loans HFI 1.11 % 1.10 % 1.07 % 1.19 % 1.16 % 1.11 % 1.16 % As a % of Nonperforming Loans 710.39 % 433.93 % 410.78 % 405.66 % 420.30 % 710.39 % 420.30 % ACL - DEBT SECURITIES Provision for Credit Losses $ 16 $ - $ - $ - $ - $ 16 $ - ACL - UNFUNDED COMMITMENTS Balance at Beginning of Period 2,587 $ 2,974 $ 1,644 $ 1,467 $ 1,424 $ 1,644 $ 157 Impact of Adopting ASC 326 (CECL) - - - - - - 876 Provision for Credit Losses 530 (387 ) 1,330 177 43 1,473 434 Balance at End of Period(1) 3,117 2,587 2,974 1,644 1,467 3,117 1,467 CHARGE-OFFS Commercial, Financial and Agricultural $ 37 $ 32 $ 69 $ 104 $ 137 $ 138 $ 685 Real Estate - Construction - - - - - - - Real Estate - Commercial 405 - - - 17 405 28 Real Estate - Residential 17 65 6 38 1 88 112 Real Estate - Home Equity 15 74 5 10 58 94 141 Consumer 221 230 564 668 619 1,015 2,117 Overdrafts 1,093 440 492 564 450 2,025 1,693 Total Charge-Offs $ 1,788 $ 841 $ 1,136 $ 1,384 $ 1,282 $ 3,765 $ 4,776 RECOVERIES Commercial, Financial and Agricultural $ 66 $ 103 $ 136 $ 64 $ 74 $ 305 $ 188 Real Estate - Construction 10 - - 50 - 10 - Real Estate - Commercial 169 26 645 27 30 840 291 Real Estate - Residential 401 244 75 153 35 720 126 Real Estate - Home Equity 46 70 124 40 41 240 138 Consumer 334 332 311 306 280 977 913 Overdrafts 633 399 367 258 237 1,399 1,213 Total Recoveries $ 1,659 $ 1,174 $ 1,658 $ 898 $ 697 $ 4,491 $ 2,869 NET CHARGE-OFFS (RECOVERIES) $ 129 $ (333 ) $ (522 ) $ 486 $ 585 $ (726 ) $ 1,907 Net Charge-Offs as a % of Average Loans HFI(2) 0.03 % (0.07 )% (0.10 )% 0.09 % 0.11 % (0.05 )% 0.13 % RISK ELEMENT ASSETS Nonaccruing Loans $ 3,026 $ 5,110 $ 5,362 $ 5,871 $ 5,505 Other Real Estate Owned 192 1,192 110 808 1,227 Total Nonperforming Assets ("NPAs") $ 3,218 $ 6,302 $ 5,472 $ 6,679 $ 6,732 Past Due Loans 30-89 Days $ 3,360 $ 3,745 $ 2,622 $ 4,594 $ 3,191 Past Due Loans 90 Days or More - - - - - Classified Loans 16,310 19,397 20,608 17,631 16,772 Performing Troubled Debt Restructurings $ 7,919 $ 8,992 $ 13,597 $ 13,887 $ 14,693 Nonperforming Loans as a % of Loans HFI 0.16 % 0.25 % 0.26 % 0.29 % 0.28 % NPAs as a % of Loans HFI and Other Real Estate 0.17 % 0.31 % 0.27 % 0.33 % 0.34 % NPAs as a % of Total Assets 0.08 % 0.16 % 0.14 % 0.18 % 0.19 % (1) Recorded in other liabilities (2) Annualized CAPITAL CITY BANK GROUP, INC. AVERAGE BALANCE AND INTEREST RATES Unaudited Third Quarter 2021 Second Quarter 2021 First Quarter 2021 Fourth Quarter 2020 Third Quarter 2020 Sep 2021 YTD Sep 2020 YTD (Dollars in thousands) Average
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RateASSETS: Loans Held for Sale $ 67,753 $ 497 2.91 % $ 77,101 $ 566 2.94 % $ 106,242 $ 970 3.70 % $ 121,052 878 3.85 % $ 92,522 $ 671 3.64 % $ 83,558 $ 2,033 3.24 % $ 67,719 $ 1,577 3.50 % Loans Held for Investment(1) 1,974,132 25,458 5.12 2,036,781 24,095 4.74 2,044,363 22,483 4.46 1,993,470 23,103 4.55 2,005,178 23,027 4.53 2,018,168 72,036 4.76 1,945,524 69,598 4.77 Investment Securities Taxable Investment Securities 904,962 2,333 1.03 687,882 2,036 1.18 528,842 1,863 1.41 513,277 2,072 1.61 553,395 2,401 1.73 708,606 6,232 1.17 594,654 8,104 1.82 Tax-Exempt Investment Securities(1) 4,332 25 2.31 3,530 23 2.58 3,844 25 2.61 4,485 30 2.71 4,860 32 2.66 3,904 73 2.49 5,338 94 2.34 Total Investment Securities 909,294 2,358 1.03 691,412 2,059 1.19 532,686 1,888 1.42 517,762 2,102 1.62 558,255 2,433 1.74 712,510 6,305 1.18 599,992 8,198 1.82 Funds Sold 741,944 285 0.15 818,616 200 0.10 814,638 213 0.11 705,125 180 0.10 567,883 146 0.10 791,466 698 0.12 385,245 991 0.34 Total Earning Assets 3,693,123 $ 28,598 3.07 % 3,623,910 $ 26,920 2.98 % 3,497,929 $ 25,554 2.96 % 3,337,409 $ 26,263 3.14 % 3,223,838 $ 26,277 3.25 % 3,605,702 $ 81,072 3.01 % 2,998,480 $ 80,364 3.58 % Cash and Due From Banks 72,773 74,076 68,978 73,968 69,893 71,956 66,512 Allowance for Loan Losses (22,817 ) (22,794 ) (24,128 ) (23,725 ) (22,948 ) (23,241 ) (19,672 ) Other Assets 283,534 281,157 278,742 264,784 268,549 281,162 257,993 Total Assets $ 4,026,613 $ 3,956,349 $ 3,821,521 $ 3,652,436 $ 3,539,332 $ 3,935,579 $ 3,303,313 LIABILITIES: Interest Bearing Deposits NOW Accounts $ 945,788 $ 72 0.03 % $ 966,649 $ 74 0.03 % $ 985,517 $ 76 0.03 % $ 879,564 $ 66 0.03 % $ 826,776 $ 61 0.03 % $ 965,839 $ 222 0.03 % $ 808,389 $ 864 0.14 % Money Market Accounts 282,860 34 0.05 272,138 33 0.05 269,829 33 0.05 261,543 34 0.05 247,185 32 0.05 274,990 100 0.05 227,331 189 0.11 Savings Accounts 551,383 68 0.05 529,844 64 0.05 492,252 60 0.05 466,116 57 0.05 438,762 54 0.05 524,710 192 0.05 409,230 150 0.05 Time Deposits 102,765 36 0.14 102,995 37 0.15 102,089 39 0.15 102,809 44 0.17 104,522 43 0.16 102,619 112 0.15 104,925 144 0.18 Total Interest Bearing Deposits 1,882,796 210 0.04 % 1,871,626 208 0.04 % 1,849,687 208 0.05 % 1,710,032 201 0.05 % 1,617,245 190 0.05 % 1,868,158 626 0.04 % 1,549,875 1,347 0.12 % Short-Term Borrowings 49,773 317 2.53 % 51,152 324 2.54 % 67,033 412 2.49 % 95,280 639 2.67 % 74,557 498 2.66 % 55,923 1,053 2.52 % 60,335 1,051 2.33 % Subordinated Notes Payable 52,887 307 2.27 52,887 308 2.30 52,887 307 2.32 52,887 311 2.30 52,887 316 2.34 52,887 922 2.30 52,887 1,161 2.89 Other Long-Term Borrowings 1,652 14 3.37 1,762 16 3.38 2,736 21 3.18 3,700 30 3.18 5,453 40 2.91 2,046 51 3.29 5,842 131 3.00 Total Interest Bearing Liabilities 1,987,108 $ 848 0.17 % 1,977,427 $ 856 0.17 % 1,972,343 $ 948 0.19 % 1,861,899 $ 1,181 0.25 % 1,750,142 $ 1,044 0.24 % 1,979,014 $ 2,652 0.18 % 1,668,939 $ 3,690 0.30 % Noninterest Bearing Deposits 1,564,892 1,515,726 1,389,821 1,356,104 1,354,032 1,490,787 1,220,002 Other Liabilities 112,707 107,801 111,050 74,605 83,192 110,526 71,661 Total Liabilities 3,664,707 3,600,954 3,473,214 3,292,608 3,187,366 3,580,327 2,960,602 Temporary Equity 20,446 26,355 21,977 16,154 11,893 22,920 7,534 SHAREOWNERS' EQUITY: 341,460 329,040 326,330 343,674 340,073 332,332 335,177 Total Liabilities, Temporary Equity and Shareowners' Equity $ 4,026,613 $ 3,956,349 $ 3,821,521 $ 3,652,436 $ 3,539,332 $ 3,935,579 $ 3,303,313 Interest Rate Spread $ 27,750 2.91 % $ 26,064 2.81 % $ 24,606 2.77 % $ 25,082 2.88 % $ 25,233 3.01 % $ 78,420 2.83 % $ 76,674 3.29 % Interest Income and Rate Earned(1) 28,598 3.07 26,920 2.98 25,554 2.96 26,263 3.14 26,277 3.25 81,072 3.01 80,364 3.58 Interest Expense and Rate Paid(2) 848 0.09 856 0.09 948 0.11 1,181 0.14 1,044 0.13 2,652 0.10 3,690 0.16 Net Interest Margin $ 27,750 2.98 % $ 26,064 2.89 % $ 24,606 2.85 % $ 25,082 3.00 % $ 25,233 3.12 % $ 78,420 2.91 % $ 76,674 3.42 % (1) Interest and average rates are calculated on a tax-equivalent basis using a 21% Federal tax rate. (2) Rate calculated based on average earning assets. CAPITAL CITY HOME LOANS MORTGAGE BANKING ACTIVITY Unaudited Three Months Ended Nine Months Ended (Dollars in thousands) Sep 30, 2021 Jun 30, 2021 Sep 30, 2020 Sep 30, 2021 Sep 30, 2020 Net Interest Income $ (30 ) $ 19 $ 17 $ (165 ) $ 142 Mortgage Banking Fees 12,293 13,116 22,775 42,255 44,046 Other 455 425 287 1,306 587 Total Noninterest Income 12,748 13,541 23,062 43,561 44,633 Salaries 7,600 8,538 10,753 26,414 21,376 Other Associate Benefits 215 210 192 646 446 Total Compensation 7,815 8,748 10,945 27,060 21,822 Occupancy, Net 849 854 845 2,564 1,844 Other 1,292 1,359 1,342 3,751 3,048 Total Noninterest Expense 9,956 10,961 13,132 33,375 26,714 Operating Profit $ 2,762 $ 2,599 $ 9,947 $ 10,021 $ 18,061 Key Performance Metrics Total Loans Closed $ 360,167 $ 406,859 $ 526,252 $ 1,230,151 $ 1,139,681 Total Loans Closed - Mix Purchase 71 % 76 % 60 % 69 % 59 % Refinance 29 % 24 % 40 % 31 % 41 % For Information Contact:
J. Kimbrough Davis
Executive Vice President and Chief Financial Officer
850.402.7820