Capital City Bank Group, Inc. Reports Second Quarter 2021 Results

Rhea-AI Summary

Capital City Bank Group (CCBG) reported a net income of $7.4 million ($0.44/share) for Q2 2021, down from $9.5 million ($0.56/share) in Q1 2021 and $9.1 million ($0.55/share) in Q2 2020. The results included a $2 million pension settlement charge, impacting earnings by $0.10/share. For H1 2021, net income reached $16.9 million ($1.00/share), up from $13.4 million ($0.80/share) in 2020. Loan balances grew by $74 million, with a negative credit loss provision of $0.6 million indicating solid credit quality. Average deposits rose by $148 million, reflecting economic recovery and stimulus inflows.

Positive

• Net interest income increased by 6% sequentially to $26.1 million.
• Return on average assets (ROA) improved to 0.75% in Q2 2021 from 0.88% in H1 2020.
• Loan balances (net of SBA PPP) rose by $74 million (4.0%) sequentially.
• Wealth management revenues increased by 6.0%.

Negative

• Net income decreased from $9.5 million in Q1 2021 to $7.4 million in Q2 2021.
• Noninterest income declined to $26.5 million, down from $29.8 million in Q1 2021.
• Noninterest expense increased by $1.6 million, including a $2 million pension settlement charge.

TALLAHASSEE, Fla., July 27, 2021 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income of $7.4 million, or $0.44 per diluted share, for the second quarter of 2021 compared to net income of $9.5 million, or $0.56 per diluted share, for the first quarter of 2021, and $9.1 million, or $0.55 per diluted share, for the second quarter of 2020. Net income for the second quarter of 2021 included a partial pension settlement charge of $2.0 million (pre-tax), or $0.10 per diluted share (after tax).

For the first six months of 2021, net income totaled $16.9 million, or $1.00 per diluted share, compared to net income of $13.4 million, or $0.80 per diluted share, for the same period of 2020.

Our return on average assets (“ROA”) was 0.75% and our return on average equity (“ROE”) was 9.05% for the second quarter of 2021. These metrics were 1.01% and 11.81% for the first quarter of 2021, respectively, and 1.10% and 11.03% for the second quarter of 2020, respectively. For the first six months of 2021, our ROA was 0.88% and our ROE was 10.42% compared to 0.85% and 8.12%, respectively, for the same period of 2020.

QUARTER HIGHLIGHTS

• Net interest income grew 6% sequentially driven by strong loan growth and higher SBA PPP fees
• Period-end loan balances (net of SBA PPP balances) grew by $74 million, or 4.0% sequentially
  • Remaining SBA PPP balances and deferred fees totaled $80 million and $3.5 million, respectively, at period-end
• Strong credit quality metrics and a net loan loss recovery drove a negative credit loss provision of $0.6 million
• Average deposit balances grew $148 million, or 4.6% sequentially and reflected additional stimulus inflows as well as strong core deposit growth
• Noninterest expense increased $1.6 million and included a partial pension settlement charge of $2.0 million – controllable expenses at CCB continued to be well managed
• Capital City Home Loans (“CCHL”) contributed $0.05 per share
  

“Challenges remain, but Capital City produced solid results for both the second quarter and first half of 2021,” said William G. Smith, Jr., Chairman, President and CEO of Capital City Bank Group. “Excluding PPP loans, our loan portfolio grew $74.3 million, or 3.8%, for the quarter with commercial mortgages and auto finance contributing a majority of the net growth. Continued improvement in the economy and favorable credit quality resulted in a negative credit loss provision of $570,000. Quarter over quarter, our fee based businesses performed well. Wealth management revenues increased 6.0%, and I am pleased to welcome Capital City Strategic Wealth (“CCSW” – formerly Strategic Wealth Group) to our team. CCSW offers financial planning services specializing in life insurance solutions and we are excited about the prospects it brings to our wealth management business. Debit and credit card fees were up 10% as consumer spending gains momentum. Although mortgage revenues were down for the quarter, CCHL continues to perform well above its historical norms. After adjusting for the pension settlement expense of $2.0 million, our total expenses were down quarter over quarter and continue to be well managed. Our management team focuses on those aspects of our business we can do something about and strives to implement strategies that are sustainable and produce long-term value for our shareowners. I am optimistic about our future and appreciate your support.”

COVID-19 Update

• We continue to closely monitor conditions including the rising case count in some of our communities.
• We have established a tentative return to work date for all associates, but we will adjust as necessary depending on changing conditions.
• All of our banking offices have returned to normal banking hours and lobby services.
• We are adhering to national guidelines and local safety ordinances to protect both clients and associates.
• We continue to support clients with the Small Business Administration Payment Protection Program (“SBA PPP”) by actively assisting with the Round 1 and 2 forgiveness process.
  

Discussion of Operating Results

Net Interest Income/Net Interest Margin

Tax-equivalent net interest income for the second quarter of 2021 totaled $26.1 million compared to $24.6 million for the first quarter of 2021 and $25.6 million for the second quarter of 2020. Compared to the first quarter of 2021, the increase reflected higher SBA PPP loan fees of $0.7 million, higher loan interest of $0.5 million driven by loan growth, and higher investment securities income of $0.2 million which reflected deployment of excess overnight funds into the investment portfolio. Compared to the second quarter of 2020, the increase was driven by higher SBA PPP loan fees of $1.3 million partially offset by lower interest earned on investment securities and variable/adjustable rate loans. For the first six months of 2021, tax-equivalent net interest income totaled $50.7 million compared to $51.4 million for the same period of 2020. The decrease generally reflected lower rates earned on investment securities and variable/adjustable rate loans partially offset by higher SBA PPP loan fees and lower interest expense.

Our net interest margin for the second quarter of 2021 was 2.89%, an increase of three basis points over the first quarter of 2021 and a decrease of 52 basis points from the second quarter of 2020. Compared to the first quarter of 2021, the increase was driven by higher SBA PPP loan fees. Compared to the second quarter of 2020, the decrease was primarily attributable to downward re-pricing of earning assets and significant growth in overnight funds (driven by deposit inflows) which negatively impacts our margin percentage. For the first six months of 2021, the net interest margin decreased 72 basis points to 2.87% generally reflective of downward re-pricing of our earning assets (variable/adjustable rate loans and securities portfolio) partially offset by a lower cost of funds and higher SBA PPP loan fees. Our net interest margin for the second quarter of 2021, excluding the impact of overnight funds in excess of $200 million, was 3.46%.

Provision for Credit Loss

We recorded a negative provision for credit losses of $0.6 million for the second quarter of 2021 compared to a negative provision of $1.0 million for the first quarter of 2021 and provision expense of $2.0 million for the second quarter of 2020. For the first six months of 2021, we recorded a negative provision of $1.6 million compared to provision expense of $7.0 million for the same period of 2020. The negative provision for the first half of 2021 generally reflected improving economic conditions and strong net loan recoveries totaling $0.9 million. We discuss the allowance for credit losses further below.

Noninterest Income and Noninterest Expense

Noninterest income for the second quarter of 2021 totaled $26.5 million compared to $29.8 million for the first quarter of 2021 and $30.2 million for the second quarter of 2020. The aforementioned declines were primarily due to lower mortgage banking revenues at CCHL, partially offset by improvements in wealth management and bank card fees. The decline in mortgage banking revenues reflected lower production volume (primarily re-finance activity) and a lower gain on sale margin. For the first six months of 2021, noninterest income totaled $56.3 million compared to $45.7 million for the same period of 2020 with the increase driven by the addition of CCHL mortgage banking revenues late in the first quarter of 2020, and higher bank card and wealth management fees which grew $1.4 million and $1.2 million, respectively. Additional detail on CCHL’s operations and key performance metrics is provided on page 11.

Noninterest expense for the second quarter of 2021 totaled $42.1 million compared to $40.5 million for the first quarter of 2021 and $37.3 million for the second quarter of 2020. For the first six months of 2021, noninterest expense totaled $82.6 million compared to $68.3 million for the same period of 2020. The $1.6 million increase over the first quarter of 2021 reflected a $2.0 million partial pension settlement charge that was partially offset by lower commission expense at CCHL and lower legal fees and other real estate owned (“OREO”) expense at CCB. The partial pension settlement charge was attributable to a higher level of lump sum pay-outs, a trend that we expect will continue for the remainder of the year. Compared to the prior year periods, the increase was primarily attributable to the partial pension settlement charge of $2.0 million, lower realized loan cost (credit offset to salary expense), higher pension plan expense (driven by a lower discount rate for plan liabilities), and performance based compensation. Additionally, the increase for the first half of 2021 reflects the inclusion of CCHL expenses for a full six month period versus only four months in 2020.

Income Taxes

We realized income tax expense of $2.1 million (effective rate of 19%) for the second quarter of 2021 compared to $2.8 million (effective rate of 19%) for the first quarter of 2021 and $2.9 million (effective rate of 18%) for the second quarter of 2020. For the first six months of 2021, we realized income tax expense of $4.8 million (effective rate of 19%) compared to $4.2 million (effective rate of 20%) 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 $3.624 billion for the second quarter of 2021, an increase of $126.0 million, or 3.6%, over the first quarter of 2021, and an increase of $286.5 million, or 8.6%, over the fourth quarter of 2020. The increase over both prior periods was primarily driven by higher deposit balances, which funded growth in both overnight funds sold and the investment portfolio. Deposit balances increased as a result of strong core deposit growth, in addition to funding retained at the bank from SBA PPP loans, 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 $818.6 million in the second quarter of 2021 compared to an average net overnight funds sold position of $814.6 million in the first quarter of 2021 and $705.1 million in the fourth quarter of 2020. The increase compared to both prior periods was driven by strong core deposit growth, in addition to pandemic related stimulus programs (see below – Funding).

Average loans held for investment (HFI) decreased $7.6 million, or 0.4%, from the first quarter of 2021 and increased $43.3 million, or 2.2%, over the fourth quarter of 2020. Excluding SBA PPP loans, average core loans grew $54.4 million and $90.4 million over both respective periods and period end loans grew $74.3 million and $97.7 million over both respective periods. Growth in period end loans was driven primarily in the commercial mortgage, indirect, and construction categories. At June 30, 2021, SBA PPP loan balances totaled $79.9 million and remaining deferred SBA PPP net loan fees totaled $3.5 million. SBA PPP loan forgiveness applications are expected to remain strong for the remainder of 2021.

Allowance for Credit Losses

At June 30, 2021, the allowance for credit losses for HFI loans totaled $22.2 million compared to $22.0 million at March 31, 2021 and $23.8 million at December 31, 2020. Activity within the allowance is provided on Page 9. At June 30, 2021, the allowance represented 1.10% of HFI loans and provided coverage of 434% of nonperforming loans compared to 1.07% and 411%, respectively, at March 31, 2021, and 1.19% and 406%, respectively, at December 31, 2020. At June 30, 2021, excluding SBA PPP loans (100% government guaranteed), the allowance represented 1.15% of HFI loans compared to 1.30% at December 31, 2020.

Credit Quality

Nonperforming assets (nonaccrual loans and OREO) totaled $6.3 million at June 30, 2021 compared to $5.5 million at March 31, 2021 and $6.7 million at December 31, 2020. Nonaccrual loans totaled $5.1 million at June 30, 2021, a $0.3 million decrease from March 31, 2021 and a $0.8 million decrease from December 31, 2020. The balance of OREO totaled $1.2 million at June 30, 2021, a $1.0 million increase over March 31, 2021 and $0.4 million increase over December 31, 2020.

Funding (Deposits/Debt)

Average total deposits were $3.387 billion for the second quarter of 2021, an increase of $147.8 million, or 4.6%, over the first quarter of 2021 and $321.2 million, or 10.5%, 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 second quarter 2021 increased compared to the fourth quarter 2020, but declined compared to the first quarter 2021 due to the seasonality of these deposits. 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 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 $15.9 million over the first quarter of 2021 and declined $44.1 million over 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 $335.9 million at June 30, 2021 compared to $324.4 million at March 31, 2021 and $320.8 million at December 31, 2020. For the first six months of 2021, shareowners’ equity was positively impacted by net income of $16.9 million, a $0.9 million increase in fair value of the interest rate swap related to subordinated debt, net adjustments totaling $1.0 million related to transactions under our stock compensation plans, stock compensation accretion of $0.4 million, and reclassification of $1.2 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 $5.1 million ($0.30 per share) and a $1.8 million decrease in the unrealized gain on investment securities.

At June 30, 2021, our total risk-based capital ratio was 16.48% compared to 17.20% at March 31, 2021 and 17.30% at December 31, 2020. Our common equity tier 1 capital ratio was 13.14%, 13.63%, and 13.71%, respectively, on these dates. Our leverage ratio was 8.84%, 8.97%, 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 6.19% at June 30, 2021 compared to 6.13% and 6.25% at March 31, 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 (“CCB”), 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)		Jun 30, 2021			Mar 31, 2021			Dec 31, 2020			Sep 30, 2020			Jun 30, 2020
Shareowners' Equity (GAAP)		$	335,880		$	324,426		$	320,837		$	339,425		$	335,057
Less: Goodwill and Other Intangibles (GAAP)			93,333			89,095			89,095			89,095			89,095
Tangible Shareowners' Equity (non-GAAP)	A		242,547			235,331			231,742			250,330			245,962
Total Assets (GAAP)			4,011,459			3,929,884			3,798,071			3,587,041			3,499,524
Less: Goodwill and Other Intangibles (GAAP)			93,333			89,095			89,095			89,095			89,095
Tangible Assets (non-GAAP)	B	$	3,918,126		$	3,840,789		$	3,708,976		$	3,497,946		$	3,410,429
Tangible Common Equity Ratio (non-GAAP)	A/B		6.19	%		6.13	%		6.25	%		7.16	%		7.21	%
Actual Diluted Shares Outstanding (GAAP)	C		16,901,375			16,875,719			16,844,997			16,800,563			16,821,743
Tangible Book Value per Diluted Share (non-GAAP)	A/C	$	14.35		$	13.94		$	13.76		$	14.90		$	14.62

CAPITAL CITY BANK GROUP, INC.
EARNINGS HIGHLIGHTS
Unaudited
		Three Months Ended								Six Months Ended
(Dollars in thousands, except per share data)		Jun 30, 2021			Mar 31, 2021			Jun 30, 2020		Jun 30, 2021			Jun 30, 2020
EARNINGS
Net Income Attributable to Common Shareowners	$	7,427		$	9,506		$	9,146	$	16,933		$	13,433
Diluted Net Income Per Share	$	0.44		$	0.56		$	0.55	$	1.00		$	0.80
PERFORMANCE
Return on Average Assets		0.75		%	1.01		%	1.10	%	0.88		%	0.85	%
Return on Average Equity		9.05			11.81			11.03		10.42			8.12
Net Interest Margin		2.89			2.85			3.41		2.87			3.59
Noninterest Income as % of Operating Revenue		50.47			54.90			54.26		52.73			47.13
Efficiency Ratio		80.18		%	74.36		%	66.90	%	77.22		%	70.30	%
CAPITAL ADEQUACY
Tier 1 Capital		15.44		%	16.08		%	16.59	%	15.44		%	16.59	%
Total Capital		16.48			17.20			17.60		16.48			17.60
Leverage		8.84			8.97			10.12		8.84			10.12
Common Equity Tier 1		13.14			13.63			14.01		13.14			14.01
Tangible Common Equity (1)		6.19			6.13			7.21		6.19			7.21
Equity to Assets		8.37		%	8.26		%	9.57	%	8.37		%	9.57	%
ASSET QUALITY
Allowance as % of Non-Performing Loans		433.93		%	410.78		%	322.37	%	433.93		%	322.37	%
Allowance as a % of Loans HFI		1.10			1.07			1.11		1.10			1.11
Net Charge-Offs as % of Average Loans HFI		(0.08	)		(0.10	)		0.05		(0.08	)		0.14
Nonperforming Assets as % of Loans HFI and OREO		0.31			0.27			0.40		0.31			0.40
Nonperforming Assets as % of Total Assets		0.16		%	0.14		%	0.23	%	0.16		%	0.23	%
STOCK PERFORMANCE
High	$	27.39		$	28.98		$	23.99	$	28.98		$	30.62
Low		24.55			21.42			16.16		21.42			15.61
Close	$	25.79		$	26.02		$	20.95	$	25.79		$	20.95
Average Daily Trading Volume		28,958			30,303			49,569		29,620			45,089
(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)	Second Quarter				First Quarter			Fourth Quarter			Third Quarter			Second Quarter
ASSETS
Cash and Due From Banks	$	78,894		$	73,973		$	67,919		$	76,509		$	75,155
Funds Sold and Interest Bearing Deposits		766,920			851,910			860,630			626,104			513,273
Total Cash and Cash Equivalents		845,814			925,883			928,549			702,613			588,428
Investment Securities Available for Sale		480,890			406,245			324,870			328,253			341,180
Investment Securities Held to Maturity		325,559			199,109			169,939			202,593			232,178
Total Investment Securities		806,449			605,354			494,809			530,846			573,358
Loans Held for Sale ("HFS")		80,821			82,081			114,039			116,561			76,610
Loans Held for Investment ("HFI"):
Commercial, Financial, & Agricultural		292,953			413,819			393,930			402,997			421,270
Real Estate - Construction		149,884			138,104			135,831			125,804			117,794
Real Estate - Commercial		707,599			669,158			648,393			656,064			662,434
Real Estate - Residential		362,018			358,849			342,664			335,713			353,831
Real Estate - Home Equity		190,078			202,099			205,479			197,363			194,479
Consumer		298,464			267,666			269,520			268,393			266,417
Other Loans		6,439			7,082			9,879			10,488			4,883
Overdrafts		1,227			950			730			1,339			1,069
Total Loans Held for Investment		2,008,662			2,057,727			2,006,426			1,998,161			2,022,177
Allowance for Credit Losses		(22,175	)		(22,026	)		(23,816	)		(23,137	)		(22,457	)
Loans Held for Investment, Net		1,986,487			2,035,701			1,982,610			1,975,024			1,999,720
Premises and Equipment, Net		85,745			86,370			86,791			87,192			87,972
Goodwill and Other Intangibles		93,333			89,095			89,095			89,095			89,095
Other Real Estate Owned		1,192			110			808			1,227			1,059
Other Assets		111,618			105,290			101,370			84,483			83,282
Total Other Assets		291,888			280,865			278,064			261,997			261,408
Total Assets	$	4,011,459		$	3,929,884		$	3,798,071		$	3,587,041		$	3,499,524
LIABILITIES
Deposits:
Noninterest Bearing Deposits	$	1,552,864		$	1,473,891		$	1,328,809		$	1,378,314		$	1,377,033
NOW Accounts		970,705			993,571			1,046,408			827,506			808,244
Money Market Accounts		280,805			269,041			266,649			247,823			240,754
Regular Savings Accounts		539,477			518,373			474,100			451,944			423,924
Certificates of Deposit		103,070			103,232			101,594			103,859			105,041
Total Deposits		3,446,921			3,358,108			3,217,560			3,009,446			2,954,996
Short-Term Borrowings		47,200			55,687			79,654			90,936			63,958
Subordinated Notes Payable		52,887			52,887			52,887			52,887			52,887
Other Long-Term Borrowings		1,720			1,829			3,057			5,268			5,583
Other Liabilities		105,534			109,487			102,076			71,880			75,702
Total Liabilities		3,654,262			3,577,998			3,455,234			3,230,417			3,153,126
Temporary Equity		21,317			27,460			22,000			17,199			11,341
SHAREOWNERS' EQUITY
Common Stock		169			169			168			168			168
Additional Paid-In Capital		33,560			32,804			32,283			31,425			31,575
Retained Earnings		345,574			335,324			332,528			333,545			328,570
Accumulated Other Comprehensive Loss, Net of Tax		(43,423	)		(43,871	)		(44,142	)		(25,713	)		(25,256	)
Total Shareowners' Equity		335,880			324,426			320,837			339,425			335,057
Total Liabilities, Temporary Equity and Shareowners' Equity	$	4,011,459		$	3,929,884		$	3,798,071		$	3,587,041		$	3,499,524
OTHER BALANCE SHEET DATA
Earning Assets	$	3,662,852		$	3,597,071		$	3,475,904		$	3,271,672		$	3,185,418
Interest Bearing Liabilities		1,995,864			1,994,620			2,024,349			1,780,223			1,700,391
Book Value Per Diluted Share	$	19.87		$	19.22		$	19.05		$	20.20		$	19.92
Tangible Book Value Per Diluted Share(1)		14.35			13.94			13.76			14.90			14.62
Actual Basic Shares Outstanding		16,874			16,852			16,791			16,761			16,780
Actual Diluted Shares Outstanding		16,901			16,876			16,845			16,801			16,822
(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									June 30,
(Dollars in thousands, except per share data)		Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			2021			2020
INTEREST INCOME
Interest and Fees on Loans	$	24,582		$	23,350		$	23,878		$	23,594		$	23,687		$	47,932		$	47,280
Investment Securities		2,054			1,883			2,096			2,426			2,737			3,937			5,752
Funds Sold		200			213			180			146			88			413			845
Total Interest Income		26,836			25,446			26,154			26,166			26,512			52,282			53,877
INTEREST EXPENSE
Deposits		208			208			201			190			218			416			1,157
Short-Term Borrowings		324			412			639			498			421			736			553
Subordinated Notes Payable		308			307			311			316			374			615			845
Other Long-Term Borrowings		16			21			30			40			41			37			91
Total Interest Expense		856			948			1,181			1,044			1,054			1,804			2,646
Net Interest Income		25,980			24,498			24,973			25,122			25,458			50,478			51,231
Provision for Credit Losses		(571	)		(982	)		1,342			1,308			2,005			(1,553	)		6,995
Net Interest Income after Provision for Credit Losses		26,551			25,480			23,631			23,814			23,453			52,031			44,236
NONINTEREST INCOME
Deposit Fees		4,236			4,271			4,713			4,316			3,756			8,507			8,771
Bank Card Fees		3,998			3,618			3,462			3,389			3,142			7,616			6,193
Wealth Management Fees		3,274			3,090			3,069			2,808			2,554			6,364			5,158
Mortgage Banking Revenues		13,217			17,125			17,711			22,983			19,397			30,342			22,650
Other		1,748			1,722			1,568			1,469			1,350			3,470			2,905
Total Noninterest Income		26,473			29,826			30,523			34,965			30,199			56,299			45,677
NONINTEREST EXPENSE
Compensation		25,378			26,064			26,722			26,164			23,658			51,442			43,394
Occupancy, Net		5,973			5,967			5,976			5,906			5,798			11,940			10,777
Other Real Estate, Net		(270	)		(118	)		567			219			116			(388	)		(682	)
Pension Adjustment		2,000			-			-			-			-			2,000			-
Other		9,042			8,563			8,083			8,053			7,731			17,605			14,783
Total Noninterest Expense		42,123			40,476			41,348			40,342			37,303			82,599			68,272
OPERATING PROFIT		10,901			14,830			12,806			18,437			16,349			25,731			21,641
Income Tax Expense		2,059			2,787			2,833			3,165			2,950			4,846			4,232
Net Income		8,842			12,043			9,973			15,272			13,399			20,885			17,409
Pre-Tax Income Attributable to Noncontrolling Interest		(1,415	)		(2,537	)		(2,227	)		(4,875	)		(4,253	)		(3,952	)		(3,976	)
NET INCOME ATTRIBUTABLE TO COMMON SHAREOWNERS	$	7,427		$	9,506		$	7,746		$	10,397		$	9,146		$	16,933		$	13,433
PER COMMON SHARE
Basic Net Income	$	0.44		$	0.56		$	0.46		$	0.62		$	0.55		$	1.00		$	0.80
Diluted Net Income		0.44			0.56			0.46			0.62			0.55			1.00			0.80
Cash Dividend	$	0.15		$	0.15		$	0.15		$	0.14		$	0.14		$	0.30		$	0.28
AVERAGE SHARES
Basic		16,858			16,838			16,763			16,771			16,797			16,848			16,803
Diluted		16,885			16,862			16,817			16,810			16,839			16,874			16,844

CAPITAL CITY BANK GROUP, INC.
ALLOWANCE FOR CREDIT LOSSES ("ACL")
AND RISK ELEMENT ASSETS
Unaudited
		2021						2020									June 30,
(Dollars in thousands, except per share data)		Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			2021			2020
ACL - HELD FOR INVESTMENT
Balance at Beginning of Period	$	22,026		$	23,816		$	23,137		$	22,457		$	21,083		$	23,816		$	13,905
Impact of Adopting ASC 326 (CECL)		-			-			-			-			-			-			3,269
Provision for Credit Losses		(184	)		(2,312	)		1,165			1,265			1,615			(2,496	)		6,605
Net Charge-Offs (Recoveries)		(333	)		(522	)		486			585			241			(855	)		1,322
Balance at End of Period	$	22,175		$	22,026		$	23,816		$	23,137		$	22,457		$	22,175		$	22,457
As a % of Loans HFI		1.10	%		1.07	%		1.19	%		1.16	%		1.11	%		1.10	%		1.11	%
As a % of Nonperforming Loans		433.93	%		410.78	%		405.66	%		420.30	%		322.37	%		433.93	%		322.37	%
ACL - UNFUNDED COMMITMENTS
Balance at Beginning of Period		2,974		$	1,644		$	1,467		$	1,424		$	1,033		$	1,644		$	157
Impact of Adopting ASC 326 (CECL)		-			-			-			-			-			-			876
Provision for Credit Losses		(387	)		1,330			177			43			391			943			391
Balance at End of Period(1)		2,587			2,974			1,644			1,467			1,424			2,587			1,424
CHARGE-OFFS
Commercial, Financial and Agricultural	$	32		$	69		$	104		$	137		$	186		$	101		$	548
Real Estate - Construction		-			-			-			-			-			-			-
Real Estate - Commercial		-			-			-			17			-			-			11
Real Estate - Residential		65			6			38			1			1			71			111
Real Estate - Home Equity		74			5			10			58			52			79			83
Consumer		230			564			668			619			634			794			1,498
Overdrafts		440			492			564			450			541			932			1,243
Total Charge-Offs	$	841		$	1,136		$	1,384		$	1,282		$	1,414		$	1,977		$	3,494
RECOVERIES
Commercial, Financial and Agricultural	$	103		$	136		$	64		$	74		$	74		$	239		$	114
Real Estate - Construction		-			-			50			-			-			-			-
Real Estate - Commercial		26			645			27			30			70			671			261
Real Estate - Residential		244			75			153			35			51			319			91
Real Estate - Home Equity		70			124			40			41			64			194			97
Consumer		332			311			306			280			365			643			633
Overdrafts		399			367			258			237			549			766			976
Total Recoveries	$	1,174		$	1,658		$	898		$	697		$	1,173		$	2,832		$	2,172
NET CHARGE-OFFS (RECOVERIES)	$	(333	)	$	(522	)	$	486		$	585		$	241		$	(855	)	$	1,322
Net Charge-Offs as a % of Average Loans HFI(2)		(0.07	)%		(0.10	)%		0.09	%		0.11	%		0.05	%		(0.08	)%		0.14	%
RISK ELEMENT ASSETS
Nonaccruing Loans	$	5,110		$	5,362		$	5,871		$	5,505		$	6,966
Other Real Estate Owned		1,192			110			808			1,227			1,059
Total Nonperforming Assets ("NPAs")	$	6,302		$	5,472		$	6,679		$	6,732		$	8,025
Past Due Loans 30-89 Days	$	3,745		$	2,622		$	4,594		$	3,191		$	2,948
Past Due Loans 90 Days or More		-			-			-			-			-
Classified Loans		19,397			20,608			17,631			16,772			17,091
Performing Troubled Debt Restructurings	$	8,992		$	13,597		$	13,887		$	14,693		$	15,133
Nonperforming Loans as a % of Loans HFI		0.25	%		0.26	%		0.29	%		0.28	%		0.34	%
NPAs as a % of Loans HFI and Other Real Estate		0.31	%		0.27	%		0.33	%		0.34	%		0.40	%
NPAs as a % of Total Assets		0.16	%		0.14	%		0.18	%		0.19	%		0.23	%
(1) Recorded in other liabilities
(2) Annualized

CAPITAL CITY BANK GROUP, INC.
AVERAGE BALANCE AND INTEREST RATES
Unaudited
		Second Quarter 2021								First Quarter 2021								Fourth Quarter 2020								Third Quarter 2020								Second Quarter 2020									Jun 2021 YTD								Jun 2020 YTD
(Dollars in thousands)		Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate				Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate
ASSETS:
Loans Held for Sale	$	77,101		$	566		2.94	%	$	106,242		$	970		3.70	%	$	121,052		$	878		3.85	%	$	92,522			671		3.64	%	$	74,965		$	550		3.41	%		$	91,591		$	1,536		3.38	%	$	55,181		$	906		3.30	%
Loans Held for Investment(1)		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			1,982,960			23,235		4.70				2,040,551			46,578		4.71			1,915,370			46,571		4.89
Investment Securities
Taxable Investment Securities		687,882			2,036		1.18			528,842			1,863		1.41			513,277			2,072		1.61			553,395			2,401		1.73			601,509			2,708		1.80				608,801			3,899		1.28			615,511			5,703		1.86
Tax-Exempt Investment Securities(1)		3,530			23		2.58			3,844			25		2.61			4,485			30		2.71			4,860			32		2.66			5,865			37		2.51				3,686			48		2.60			5,579			62		2.20
Total Investment Securities		691,412			2,059		1.19			532,686			1,888		1.42			517,762			2,102		1.62			558,255			2,433		1.74			607,374			2,745		1.81				612,487			3,947		1.29			621,090			5,765		1.86
Funds Sold		818,616			200		0.10			814,638			214		0.11			705,125			180		0.10			567,883			146		0.10			351,473			88		0.10				816,638			414		0.10			292,922			845		0.58
Total Earning Assets		3,623,910		$	26,920		2.98	%		3,497,929		$	25,555		2.96	%		3,337,409		$	26,263		3.14	%		3,223,838		$	26,277		3.25	%		3,016,772		$	26,618		3.55	%			3,561,267		$	52,475		2.97	%		2,884,563		$	54,087		3.77	%
Cash and Due From Banks		74,076								68,978								73,968								69,893								72,647									71,541								64,802
Allowance for Loan Losses		(22,794	)							(24,128	)							(23,725	)							(22,948	)							(21,642	)								(23,457	)							(18,015	)
Other Assets		281,157								278,742								264,784								268,549								261,449									279,956								252,657
Total Assets	$	3,956,349							$	3,821,521							$	3,652,436							$	3,539,332							$	3,329,226								$	3,889,307							$	3,184,007
LIABILITIES:
Interest Bearing Deposits
NOW Accounts	$	966,649		$	74		0.03	%	$	985,517		$	76		0.03	%	$	879,564		$	66		0.03	%	$	826,776		$	61		0.03	%	$	789,378		$	78		0.04	%		$	976,031		$	150		0.03	%	$	799,094		$	803		0.20	%
Money Market Accounts		272,138			33		0.05			269,829			33		0.05			261,543			34		0.05			247,185			32		0.05			222,377			40		0.07				270,990			66		0.05			217,295			157		0.15
Savings Accounts		529,844			64		0.05			492,252			60		0.05			466,116			57		0.05			438,762			54		0.05			409,366			50		0.05				511,152			124		0.05			394,301			96		0.05
Time Deposits		102,995			37		0.15			102,089			39		0.15			102,809			44		0.17			104,522			43		0.16			104,718			50		0.19				102,544			76		0.15			105,130			101		0.19
Total Interest Bearing Deposits		1,871,626			208		0.04	%		1,849,687			208		0.05	%		1,710,032			201		0.05	%		1,617,245			190		0.05	%		1,525,839			218		0.06	%			1,860,717			416		0.05	%		1,515,820			1,157		0.15	%
Short-Term Borrowings		51,152			324		2.54	%		67,033			412		2.49	%		95,280			639		2.67	%		74,557			498		2.66	%		73,377			421		2.31	%			59,049			736		2.51	%		53,146			553		2.09	%
Subordinated Notes Payable		52,887			308		2.30			52,887			307		2.32			52,887			311		2.30			52,887			316		2.34			52,887			374		2.80				52,887			615		2.31			52,887			845		3.16
Other Long-Term Borrowings		1,762			16		3.38			2,736			21		3.18			3,700			30		3.18			5,453			40		2.91			5,766			41		2.84				2,246			37		3.26			6,039			91		3.03
Total Interest Bearing Liabilities		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	%		1,657,869		$	1,054		0.26	%			1,974,899		$	1,804		0.18	%		1,627,892		$	2,646		0.33	%
Noninterest Bearing Deposits		1,515,726								1,389,821								1,356,104								1,354,032								1,257,614									1,453,121								1,152,251
Other Liabilities		107,801								111,050								74,605								83,192								72,073									109,417								65,830
Total Liabilities		3,600,954								3,473,214								3,292,608								3,187,366								2,987,556									3,537,437								2,845,973
Temporary Equity		26,355								21,977								16,154								11,893								8,155									24,178								5,331
SHAREOWNERS' EQUITY:		329,040								326,330								343,674								340,073								333,515									327,692								332,703
Total Liabilities, Temporary Equity and Shareowners' Equity	$	3,956,349							$	3,821,521							$	3,652,436							$	3,539,332							$	3,329,226								$	3,889,307							$	3,184,007
Interest Rate Spread				$	26,064		2.81	%				$	24,607		2.77	%				$	25,082		2.88	%				$	25,233		3.01	%				$	25,564		3.30	%					$	50,671		2.79	%				$	51,441		3.44	%
Interest Income and Rate Earned(1)					26,920		2.98						25,555		2.96						26,263		3.14						26,277		3.25						26,618		3.55							52,475		2.97						54,087		3.77
Interest Expense and Rate Paid(2)					856		0.09						948		0.11						1,181		0.14						1,044		0.13						1,054		0.14							1,804		0.10						2,646		0.18
Net Interest Margin				$	26,064		2.89	%				$	24,607		2.85	%				$	25,082		3.00	%				$	25,233		3.12	%				$	25,564		3.41	%					$	50,671		2.87	%				$	51,441		3.59	%
(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									Six Months Ended
(Dollars in thousands)		Jun 30, 2021			Mar 31, 2021			Jun 30, 2020			Jun 30, 2021			Jun 30, 2020
Net Interest Income	$	19		$	(153	)	$	109			$	(134	)	$	125
Mortgage Banking Fees		13,116			16,846			19,156				29,962			21,271
Other		425			426			203				851			299
Total Noninterest Income		13,541			17,272			19,359				30,813			21,570
Salaries		8,538			10,276			8,381				18,814			10,623
Other Associate Benefits		210			221			204				431			253
Total Compensation		8,748			10,497			8,585				19,245			10,876
Occupancy, Net		854			861			768				1,715			999
Other		1,359			1,101			1,248				2,460			1,705
Total Noninterest Expense		10,961			12,459			10,601				23,420			13,580
Operating Profit	$	2,599		$	4,660		$	8,867			$	7,259		$	8,115
Key Performance Metrics
Total Loans Closed	$	406,859		$	463,126		$	407,118			$	869,985		$	510,008
Total Loans Closed - Mix
Purchase		76	%		60	%		51	%			68	%		53	%
Refinance		24	%		40	%		49	%			32	%		47	%

For Information Contact:
J. Kimbrough Davis
Executive Vice President and Chief Financial Officer
850.402.7820

FAQ

What were Capital City Bank Group's earnings for Q2 2021?

Capital City Bank Group reported net income of $7.4 million, or $0.44 per diluted share, for Q2 2021.

How did Capital City Bank Group's net income in Q2 2021 compare to previous quarters?

Net income decreased from $9.5 million in Q1 2021 and $9.1 million in Q2 2020.

What contributed to the rise in loan balances for Capital City Bank Group?

Loan balances increased by $74 million, or 4.0% sequentially, driven by strong loan growth and higher SBA PPP fees.

What is the current state of Capital City Bank Group's credit quality?

Capital City Bank Group reported a negative credit loss provision of $0.6 million, indicating strong credit quality.

What factors influenced Capital City Bank Group's noninterest income in Q2 2021?

Noninterest income fell to $26.5 million, primarily due to lower mortgage banking revenues.