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

Rhea-AI Summary

Capital City Bank Group (CCBG) reported net income of $10.1 million, or $0.60 per diluted share, for Q3 2021, up from $7.4 million in Q2 2021. Year-to-date net income for 2021 reached $27.0 million, an increase from $23.8 million in 2020. Net interest income rose by 6.5% to $27.7 million, driven by higher loan fees, particularly from SBA PPP loans. The return on average assets was 0.99%, up from 0.75% in Q2 2021. Noninterest expense decreased by $2.4 million due to lower pension settlement charges. The company indicated strong credit quality with no loan loss provisions recorded.

Positive

• Net income for Q3 2021 increased to $10.1 million, up from $7.4 million in Q2 2021.
• Net interest income grew by 6.5% sequentially, reaching $27.7 million.
• Return on average assets improved to 0.99%, up from 0.75% in Q2 2021.
• Noninterest expense decreased by $2.4 million, reflecting lower pension settlement charges.
• Strong credit quality metrics resulted in no loan loss provision for the quarter.

Negative

• Net income for Q3 2021 decreased compared to $10.4 million in Q3 2020.
• Average loans held for investment decreased by 3.1% from Q2 2021.
• Noninterest income fell to $26.6 million, down from $35.0 million in Q3 2020, primarily due to lower mortgage banking revenues.

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 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	$	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

FAQ

What were Capital City Bank Group's earnings in Q3 2021?

Capital City Bank Group reported net income of $10.1 million, or $0.60 per diluted share, for Q3 2021.

How did CCBG's net interest income change in Q3 2021?

Net interest income for CCBG increased by 6.5% to $27.7 million in Q3 2021.

What is CCBG's return on average assets for Q3 2021?

CCBG's return on average assets for Q3 2021 was 0.99%, up from 0.75% in Q2 2021.

Did CCBG record any loan loss provisions in Q3 2021?

No, Capital City Bank Group did not record a provision for loan losses for Q3 2021.

What were the challenges faced by CCBG in Q3 2021?

CCBG experienced a decrease in net income compared to Q3 2020 and a decline in average loans held for investment by 3.1% from Q2 2021.