SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter:
June 30, 1994 Commission File Number 0-13358
CAPITAL CITY BANK GROUP, INC.
(Exact name of registrant as specified in its charter)
Florida 59-2273542
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
217 North Monroe Street, Tallahassee, Florida 32301
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(904) 224-1171
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirement for
the past 90 days.
Yes __X___ No _____
At July 31, 1994, 2,845,815 shares of the Registrant's Common Stock, $.01 par
value, were outstanding.
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CAPITAL CITY BANK GROUP, INC.
I N D E X
PART I. FINANCIAL INFORMATION PAGE NUMBER
Consolidated Statements of Condition --
June 30, 1994 and December 31, 1993 3
Consolidated Statements of Income --
Three and Six Months Ended June 30, 1994 4
and 1993
Consolidated Statements of Cash Flows --
Six Months Ended June 30, 1994
and 1993 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
Index to Exhibits 17
Signatures 18
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF CONDITION
AS OF JUNE 30, 1994 AND DECEMBER 31, 1993
(Dollars In Thousands, Except Per Share Amounts)
June 30, December 31,
1994 1993
(Unaudited) (Audited)
ASSETS
Cash & Due From Banks $ 54,976 $56,665
Interest Bearing Deposits at Banks 100 1,257
Investment Securities, Market Value
$223,339 and $221,274 as of
June 30, 1994 and December 31,
1993, Respectively (Note 2) 226,119 218,623
Federal Funds Sold 38,925 55,970
Loans: (Note 3) 416,802 406,567
Unearned Interest (6,091) (7,143)
Allowance for Loan Losses (7,561) (7,594)
Loans, Net 403,150 391,830
Premises & Equipment 22,489 20,820
Accrued Interest Receivable 5,603 5,467
Intangible Assets 1,536 1,719
Other Assets 9,281 9,984
TOTAL ASSETS $762,179 $762,335
LIABILITIES
Deposits:
Noninterest Bearing Deposits 156,634 $171,985
Interest Bearing Deposits (Note 4) 510,096 490,760
Total Deposits 666,730 662,745
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 18,460 23,264
Other Short-Term Borrowings 1,000 1,202
Long-Term Debt 900 1,900
Other Liabilities 4,129 6,084
TOTAL LIABILITIES 691,219 695,195
SHAREHOLDERS' EQUITY
Common Stock, $.01 Par Value;
4,000,000 shares authorized;
3,105,243 issued 31 31
Surplus 5,852 5,857
Unrealized Gains and Losses (512) -
Retained Earnings 72,177 67,753
77,548 73,641
Treasury Stock: 259,428 shares at
June 30, 1994 and 255,927 at
December 31, 1993 (6,588) (6,501)
TOTAL SHAREHOLDERS' EQUITY 70,960 67,140
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY 762,179 $762,335
Book Value Per Share $24.93 $23.56
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<TABLE>
CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED JUNE 30
(Dollars in Thousands, Except Per Share Amounts)
<CAPTION>
THREE MONTHS ENDED JUNE SIX MONTHS ENDED JUNE
1994 1993 1994 1993
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $ 8,650 $8,430 $16,921 $16,391
Investment Securities:
U. S. Treasury 1,265 1,432 2,555 2,880
U. S. Government Agencies/Corp. 492 412 987 809
States and Political Subdivisions 889 892 1,771 1,738
Other Securities 58 52 138 106
Interest on Deposits in Other Banks 7 25 16 53
Federal Funds Sold 428 467 803 984
Total Interest Income 11,789 11,710 23,191 22,961
INTEREST EXPENSE
Deposits 3,351 3,619 6,654 7,279
Fed. Funds Purchased & Securities 140 126 283 259
Sold Under Repurchase Agreements
Long-Term Borrowings 15 17 35 37
Other Short-Term Debt 8 5 14 12
Total Interest Expense 3,514 3,767 6,986 7,587
Net Interest Income 8,275 7,943 16,205 15,374
Provision for Loan Losses 329 114 659 485
Net Interest Income After Provision
for Loan Losses 7,946 7,829 15,546 14,889
NONINTEREST INCOME
Income from Fiduciary Activities 146 115 337 292
Service Charges on Deposit Accounts 1,365 l,434 2,668 2,811
Data Processing 715 730 1,308 1,272
Securities Transactions 5 (2) 4 6
Other 1,074 660 2,535 1,391
Total Noninterest Income 3,305 2,937 6,852 5,772
NONINTEREST EXPENSE
Salaries and Employee Benefits 4,278 4,072 8,530 7,965
Occupancy, Net 564 527 1,118 1,015
Furniture and Equipment 698 714 1,378 1,411
Other 2,387 2,385 4,800 4,490
Total Noninterest Expense 7,927 7,698 15,826 14,881
Income Before Income Tax and
Accounting Change 3,324 3,068 6,572 5,780
Income Tax Expense 937 830 1,835 1,566
Income Before Accounting Change 2,387 2,238 4,737 4,214
Cumulative Effect of a Change in
Accounting Principle - - - (484)
NET INCOME $2,387 $2,238 $4,737 $3,730
Net Income Per Share Before
Accounting Change $ .84 $ .76 $1.66 $1.44
Net Income Per Share $ .84 $ .76 $1.66 $1.27
Cash Dividends Per Share $ .11 $ .10 .11 $ .10
Average Shares Outstanding 2,847,414 2,924,660 2,849,196 2,925,242<PAGE>
CAPITAL CITY BANK GROUP, INC.
</TABLE>
<PAGE>
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED JUNE 30
(Dollars in Thousands)
1994 1993
(Unaudited) (Unaudited)
NET INCOME $ 4,737 $ 3,730
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Provision for Loan Losses 659 485
Depreciation 836 870
Amortization of Intangible Assets 183 119
Cumulative Effect of Accounting Change - 484
Net (Increase) Decrease in Interest
Receivable (135) (232)
Net (Increase) Decrease in Other Assets 697 (900)
Net Increase (Decrease) in Other
Liabilities (136) 304
Net Cash From Operating Activities 6,841 4,860
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Payments/Maturities of
Investment Securities 40,032 36,432
Purchase of Investment Securities (48,040) (63,034)
Net (Increase) Decrease in Loans (11,979) (5,313)
Purchase of Premises & Equipment (2,560) (971)
Sales of Premises & Equipment 55 5
Cash Acquired in Bank Acquisitions - 28,811
Net Cash from Investing Activities (22,492) (4,070)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase (Decrease) in Deposits 3,986 (19,011)
Net Increase (Decrease) in Federal
Funds Purchased (4,804) 1,706
Net Increase (Decrease) in Other Borrowed
Funds (202) (10)
Proceeds from Long-Term Debt - 200
Repayment of Long-Term Debt (1,000) (1,000)
Dividends Paid (2,134) (1,990)
Sale (Purchase) of Treasury Stock (86) (57)
Net Cash From Financing Activities (4,240) (20,162)
Net Increase (Decrease) in Cash and
Cash Equivalents (19,891) (19,372)
Cash and Cash Equivalents at Beginning of
Period 113,892 107,271
Cash and Cash Equivalents at End of Period $94,001 $ 87,899
Supplemental Disclosure:
Interest Paid $ 6,913 $ 7,405
Taxes Paid $ 1,699 $ 1,428
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CAPITAL CITY BANK GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) MANAGEMENT'S OPINION AND ACCOUNTING POLICIES
The consolidated financial statements, included herein, have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. Prior year financial statements have
been reformatted and/or amounts reclassified, as necessary, to conform with the
current year presentation.
In the opinion of management, the consolidated financial statements contain
all adjustments, which are those of a recurring nature, and disclosures
necessary to present fairly the financial position of the Company as of June 30,
1994 and December 31, 1993, and the results of operations and cash flows for the
three and six month periods ended June 30, 1994 and 1993.
The Company and its subsidiaries follow generally accepted accounting
principles and reporting practices applicable to the banking industry. The
principles which materially affect the financial position, results of operations
and cash flows are set forth in Notes to Financial Statements which are included
in the Company's 1993 Annual Report and Form 10K.
(2) INVESTMENT SECURITIES
On January 1, 1994, the Company adopted Statement of Financial Accounting
Standards No. 115 ("Accounting for Certain Investments in Debt and Equity
Securities") and management transferred approximately 30% of the Company's
portfolio to the "Available-for-Sale" category. Securities transferred to the
Available-for-Sale category on the date the statement was adopted were as
follows:
Amortized Cost
U. S. Treasury $31,364,293
U. S. Government Agencies and Corporations 6,246,822
States & Political Subdivisions 20,853,825
Mortgage Backed Securities 3,842,192
Other Securities 500,000
Total Available for Sale $62,807,132
Securities in this category are recorded at fair value with unrealized
gains and losses, net of deferred taxes, reported as a separate component of
equity capital. At the time the new accounting standard was adopted the Company
recorded an unrealized gain, net of deferred taxes, of $847,000. As a result of
rising interest rates, the Company had a net unrealized loss of $512,000 at June
30, 1994
Prior to 1994, all securities were held for investment and carried at
amortized cost. It is not management's intention nor practice to participate in
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the trading of securities and sales of securities have been minimal. With the
recent change in accounting standards, management believes it is prudent to
transfer a portion of its investment portfolio to the available-for-sale
category in order to properly manage its liquidity position and interest rate
risk. Securities in the available-for-sale portfolio will be recorded at fair
value while securities in the held-to-maturity portfolio will continue to be
carried at amortized cost.
The carrying value and related market value of investment securities in the
held-to-maturity and available-for-sale portfolios at June 30, 1994 and the
held-for-investment portfolio at December 31, 1993 were as follows (dollars in
thousands):
June 30, 1994
Amortized Unrealized Unrealized Market
Held-To-Maturity Cost Gains Losses Value
U. S. Treasury $ 85,904 $ 32 $ 999 $ 84,937
U.S. Government Agencies
and Corporations 24,546 16 821 23,741
States and Political Subdivisions 50,587 419 1,297 49,709
Mortgage Backed Securities 3,282 2 110 3,174
Other Securities 3,046 1 23 3,024
Total $167,365 $ 470 $ 3,250 $164,585
June 30, 1994
Amortized Unrealized Unrealized Market
Available-For-Sale Cost Gains Losses Value
U. S. Treasury $ 25,162 $ 51 $ 204 $25,009
U. S. Government Agencies
and Corporations 7,054 14 302 6,766
States and Political Subdivisions 22,282 221 585 21,918
Mortgage Backed Securities 3,151 17 3 3,165
Other Securities 1,896 - - 1,896
Total $ 59,545 $ 303 $ 1,094 $ 58,754
December 31, 1993
Amortized Unrealized Unrealized Market
Held-For-Investment Cost Gains Losses Value
U. S. Treasury $111,233 $ 578 $ 88 $111,723
U.S. Government Agencies and
Corporations 26,811 185 76 26,920
States and Political
Subdivisions 67,070 1,991 112 68,949
Mortgage Backed Securities 8,504 135 6 8,633
Other Securities 5,005 48 4 5,049
Total $218,623 $ 2,937 $ 286 $221,274
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(3) LOANS
The composition of the Company's loan portfolio at June 30, 1994 and
December 31, 1993 was as follows (dollars in thousands):
June 30, 1994 December 31, 1993
Commercial, Financial
and Agricultural $ 43,032 $ 46,963
Real Estate-Construction 24,982 22,968
Real Estate-Mortgage 253,083 242,741
Consumer 95,705 93,895
Gross Loans $416,802 $406,567
(4) DEPOSITS
The composition of the Company's interest bearing deposits at June 30, 1994
and December 31, 1993 was as follows (dollars in thousands):
June 30, 1994 December 31, 1993
NOW Accounts $108,139 $100,184
Money Market Accounts 74,999 77,302
Savings Deposit 109,557 110,128
Other Time Deposits 217,401 203,146
Total Interest Bearing Deposits $510,096 $490,760
ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion sets forth the major factors that have affected
the Company's financial condition and results of operations and should be read
in conjunction with the accompanying financial statements. The year-to-date
averages used in this report are based on daily balances for each respective
period.
RESULTS OF OPERATIONS
Net Income
Net income was $2.4 million, or $.84 per share, for the second quarter of
1994, a 10.5% increase on a per share basis over the comparable period for 1993.
Net income was $4.7 million, or $1.66 per share, for the six months ended June
30, 1994, a 30.7% increase on a per share basis over the comparable period in
1993. Earnings for the first half of 1993 included a one-time, non-cash charge
of $484,000, or $.17 per share, attributable to the adoption of Financial
Accounting Standards Statement No. 109. Other factors which impacted earnings
include a higher net interest margin, gains on the sale of real estate and
higher noninterest expense. Condensed statements of income for the respective
periods are presented below:
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For The Three For The Six
Months Ended Months Ended
June 30, June 30,
1994 1993 1994 1993
Interest and Dividend Income $11,789 $11,710 $23,191 $22,961
Taxable Equivalent Adjustment(1) 433 404 853 827
12,222 12,114 24,044 23,788
Interest Expense 3,514 3,767 6,986 7,587
Net Interest Income (FTE) 8,708 8,347 17,058 16,201
Provision for Loan Losses 329 114 659 485
Taxable Equivalent Adjustment 433 404 853 827
Net Int. Inc. After Provision 7,946 7,829 15,546 14,889
Noninterest Income 3,305 2,937 6,852 5,772
Noninterest Expense 7,927 7,698 15,826 14,881
Income Before Income Taxes and
Cumulative Effect of a Change
in Accounting Principle 3,324 3,068 6,572 5,780
Income Taxes 937 830 1,835 1,566
Inc. Before Cumulative Effect of
Change in Accounting Principle 2,387 2,238 4,737 4,214
Cumulative Effect of a Change in
Accounting Principle - - - (484)
Net Income $2,387 $2,238 $4,737 $3,730
Percent Change
Before Cumulative Adjustment 6.66% 6.67% 12.41% 1.13%
After Cumulative Adjustment 6.66% 6.67% 27.00% (10.49%)
Return on Average Assets (2)
Before Cumulative Adjustment 1.28% 1.24% 1.28% 1.19%
After Cumulative Adjustment 1.28% 1.24% 1.28% 1.06%
Return on Average Equity (2)
Before Cumulative Adjustment 13.81% 13.66% 13.87% 13.04%
After Cumulative Adjustment 13.81% 13.66% 13.87% 11.64%
(1) Computed using a statutory tax rate of 34%
(2) Annualized
Net Interest Income
Second quarter taxable equivalent net interest income increased $361,000,
or 4.3% over the same period for 1993. Through June 30, 1994, taxable
equivalent net interest income increased $857,000, or 5.3%, over the first half
of 1993. The increase in each respective period is attributable to the growth
in earning assets and improvement in the net interest margin. Table I on page
14 provides a comparative analysis of the Company's average balances and
interest rates.
As compared to the prior year, taxable-equivalent interest income increased
$108,000, or .9%, and $256,000, or 1.1%, respectively, for the three and six
month periods ended June 30, 1994. The increase in each period is due to the
growth in earning assets, a significant portion of which is attributable to loan
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growth. Average earning assets for the first half of 1994 increased $29.0
million over the first half of 1993 due primarily to acquisitions which were
consummated in March of 1993. Interest income generated through asset growth
was partially offset by lower yields on earning assets. The average yield
declined 17 and 25 basis points, respectively, for the three and six month
periods ended June 30, 1994. Although rates began to rise in the first half of
1994, the lower yield reflects the general decline in interest rates in recent
years.
Interest expense declined $253,000, or 6.7%, and $601,000, or 7.9%,
respectively, as compared to the three and six periods in 1993. This decrease
is attributable to a 25 and 36 basis points decline in the average rate paid,
reflecting the decline in interest rates during the latter half of 1993 and
early 1994, and a shift in the mix of deposits. Noninterest bearing deposits
and N.O.W. accounts gained as a percent of total deposits while the other,
higher cost, categories declined. Relative to the first half of 1993,
certificates of deposit as a percent of total deposits declined from 33.6% to
32.6%. In a rising interest rate environment, management anticipates this shift
in mix may begin to reverse as depositors become more willing to invest in
longer term, fixed rate instruments.
The Company's interest rate spread (defined as the average taxable equivalent
yield on earning assets less the average rate paid on interest bearing
liabilities) increased from 4.42% in the first half of 1993 to 4.53% in 1994.
The Company's net interest margin percentage (defined as taxable-equivalent net
interest income divided by average earning assets) increased from 5.10% in the
first half of 1993 to 5.15% in 1994.
Provisions for Loan Losses
The provision for loan losses was $329,000 and $659,000, respectively, for
the three and six month periods ended June 30, 1994, compared to $114,000 and
$485,000 for the comparable periods in 1993. As of June 30, 1994 and 1993, the
reserve for loan losses totalled $7.6 million. Loan growth and higher net
charge-offs combined to reduce the reserve level, as a percent of total loans,
from 1.97% at June 30, 1993 to 1.84% at June 30, 1994. The significant increase
in net charge-offs during the second quarter is primarily attributable to one
credit. Charge-off activity for the respective periods is set forth below.
Three Months Ended Six Months Ended
6/30/94 6/30/93 6/30/94 6/30/93
Net Charge-Offs $538,000 $209,000 $692,000 $441,000
Net Charge-Offs (Annualized)
as a percent of Average
Loans Outstanding, Net of
Unearned Interest .54% .22% .35% .24%
Noninterest Income
Noninterest income increased $368,000, or 12.5%, and $1.1 million, or
18.7%, respectively, over the comparable three and six month periods for 1993.
A majority of the increase is attributable to gains on the sale of real estate,
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credit card merchant fees and mortgage origination fees. During the first half
of 1994, the Company recognized gains, including gains from the sale of OREO and
bank premises, totalling $548,000 which represented a $538,000 increase over the
first half of 1993. While mortgage origination fees increased $72,000, or
19.8%, through the first six months, the Company experienced a net decrease of
$35,000 during the second quarter due to lower origination volume. Origination
volume during the second quarter declined $2.9 million, or 26.3%. Credit card
merchant fees were up $302,000, or 64.7%, reflecting an increase in the number
of accounts and higher volume. However, the increase was partially offset by a
$176,000, or 68.9%, increase in credit card processing expense which is recorded
in "Other" noninterest expense.
Service charges on deposit accounts declined $69,000, or 4.8%, and
$143,000, or 5.1%, over the comparable three and six month periods for 1993.
The decline in service charge income reflects a decrease in number of accounts,
primarily transaction accounts, and a lower level of activity subject to service
charge assessments.
Noninterest income as a percent of average earning assets was 2.1% for the
first half of 1994 versus 1.8% for the comparable quarter in 1993.
Noninterest Expense
Noninterest expense increased $229,000, or 3.0%, and $945,000, or 6.3%,
respectively, over the comparable three and six month periods in 1993. Through
the first six months, compensation expense increased $565,000, or 7.1%,
reflecting additional personnel expense associated with the new branches
acquired in March of 1993, an increase in commission-based pay tied to mortgage
origination volume and higher pension expense. The pension plan's rate
assumptions were revised to reflect the lower level of interest rates. The
revisions in assumptions contributed to the overall increase in pension expense
which is up $120,000, or 36.7%, through the first six months.
Occupancy expense, including premises, furniture, fixtures and equipment is
up just slightly over 1993. The increases attributable to the new branch
facilities which were added in March 1993 were partially offset by a reduction
in depreciation expense as certain pieces of data processing equipment have
become fully depreciated. With the recent renovation of First National's main
facility and purchase of an operations center which is expected to go on line in
the third quarter, management is projecting an increase in occupancy expense
during the latter part of 1994.
Other noninterest expense increased $310,000, or 6.9%, during the first six
months of 1994, a majority of which was realized in the first quarter. A
significant portion of the increase is attributable to items such as printing
and supplies, telephone, postage and the amortization of intangibles which are
associated with the operation of the branches acquired in March of 1993.
Additionally, commission and service fees were up $176,000 due to higher costs
associated with credit card processing.
Annualized net noninterest expense (noninterest income minus noninterest
expense) as a percent of average earning assets was 2.71% in the first half of
1994 versus 2.87% for the first half of 1993. The decrease in this percentage
is primarily attributable to nonrecurring gains recognized during the first half
of 1994.
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Income Taxes
The provision for income taxes increased $107,000, or 12.9%, during the
second quarter and $269,000, or 17.2%, during the first six months of 1994. The
increase in the provision is attributable to higher taxable income. The
Company's effective tax rate for the first half of 1994 was 27.9% compared to
27.1% for the same period in 1993.
During the first quarter of 1993, he Company adopted Statement of Financial
Accounting Standards NO. 109, "Accounting for Income Taxes", which changed the
accounting for income taxes to the "liability" method from the "deferral" method
previously required by Accounting Principals Board Opinion No. 11. A tax
expense of $484,000 resulting from the cumulative effect of adopting this new
standard is included in net income for the first half of 1993.
FINANCIAL CONDITION
The Company's average assets increased to $746.4 million in the first half
of 1994 from $709.5 million in the first half of 1993. Average earning assets
were $668.4 million for the six months ended June 30, 1994 versus $639.4 million
for the comparable period in 1993. Relative to 1993, average loans and
investments have increased while balances in federal funds sold have declined.
Average loans are up $26.2 million, or 7.1%, of which a portion is attributable
to loans purchased in conjunction with branch acquisitions. U.S. Government
securities increased $14.6 million, or 10.7%, while municipal securities
increased $10.7 million, or 17.3%. The increase in municipal securities reflects
a more favorable tax-exempt market and an opportunity to extend maturities.
Growth in earning assets has been funded through branch acquisitions which were
consummated during the first quarter of 1993. Table I on page 14, presents
average balances for the three and six month periods of 1994 and 1993.
During the first quarter of 1994, the Company adopted Statement of
Financial Accounting Standards No. 115 ("Accounting for Certain Investments in
Debt and Equity Securities"). To afford greater flexibility in managing the
portfolio, management transferred approximately 30% of the portfolio to the
"Available-for-Sale" category. The available-for-sale securities portfolio will
enable the Company to better manage its liquidity position and interest rate
risk without adversely affecting the classification of securities in the "Held-
to-Maturity" portfolio, which are recorded at amortized costs. Securities in
the available-for-sale portfolio are recorded at fair value with unrealized
gains and losses, net of deferred taxes, reported as a separate component of
equity capital. See Note 2 in Notes to Consolidated Financial Statements for
further discussion.
At June 30, 1994, the Company's nonperforming loans were $8.7 million
versus $9.4 million at year-end and $11.1 million at June 30, 1993. As a
percent of nonperforming loans, the allowance for loan losses represented 87.4%
at June 30, 1994 versus 80.6% at December 31, 1993 and 68.7% at June 30, 1993.
Nonperforming loans include nonaccruing and restructured loans. Other real
estate, which includes property acquired either through foreclosure or by
receiving a deed in lieu of foreclosure, was $2.2 million at June 30, 1994,
versus $3.5 million at December 31, 1993, and $4.0 million at June 30, 1993.
<PAGE>
Average deposits increased from $617.8 million for the first half of 1993,
to $650.8 million for the first half of 1994. Relative to the first half of
1993, the most significant deposit growth has been in the categories of
noninterest bearing and NOW accounts. Average noninterest bearing deposits have
increased $12.7 million, or 9.0%, and NOW accounts have increased $20.6 million,
or 27.4%. The lower interest rate environment in recent years has reduced the
incentive for depositors to invest in longer term, fixed rate deposits, thereby
leaving higher balances in transaction accounts. As interest rates rose during
the second quarter, the Company experienced growth in its certificates of
deposit reflecting the more attractive rates.
The ratio of average noninterest bearing deposits to total deposits was
23.7% for the first half of 1994 compared to 22.9% for the first half of 1993.
For the same periods, the ratio of average interest bearing liabilities to
average earning assets was 77.4% and 78.0%, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity, for a financial institution, is the availability of funds to
meet increased loan demand and/or excessive deposit withdrawals. Management has
implemented a financial structure that provides ready access to sufficient
liquid funds to meet normal transaction requirements, take advantage of
investment opportunities and cover unforeseen liquidity demands. In addition to
core deposit growth, sources of funds available to meet liquidity demands for
the subsidiary banks include federal funds sold, near-term loan and investment
maturities, including the "Available for Sale" investment portfolio, and the
ability to purchase federal funds through established lines of credit with
correspondent banks. Additionally, the parent company maintains two $6.0
million revolving lines of credit. As of June 30, 1994, there was $900,000
drawn under the two facilities, leaving available credit of $11.1 million.
The Company's equity capital was $71.0 million as of June 30, 1994 compared
to $67.1 million as of December 31, 1993. The Company's management continues to
monitor its capital position in relation to its level of assets with the
objective of maintaining a strong capital position. The leverage ratio was 9.1%
at June 30, 1994 versus 8.6% at December 31, 1993. Further, the Company's risk-
adjusted capital ratio of 16.7% significantly exceeds the 8.0% minimum
requirement under the risk-based regulatory guidelines.
State and federal regulations as well as the Company's long-term debt
agreements place certain restrictions on the payment of dividends by both the
Company and its Group banks. At June 30, 1994, these regulations and covenants
did not impair the Company's (or its Group banks') ability to declare and pay
dividends or to meet other existing obligations.
During the first six months of 1994, shareholders' equity increased $3.8
million, or 11.4%, on an annualized basis. At June 30, 1994, the Company's
common stock had a book value of $24.93 per share compared to $23.56 at December
31, 1993. Pursuant to the Company's stock repurchase program adopted in 1989,
the Company has repurchased 259,428 shares of its common stock, net of shares
subsequently reissued. In the first half of 1994, 5,819 shares were repurchased
and 2,318 treasury shares were reissued as performance awards in accordance with
the Company's Stock Incentive Plan.
<PAGE>
<TABLE>
AVERAGES BALANCES & INTEREST RATES
(Taxable Equivalent Basis - Dollars in Thousands)
<CAPTION>
FOR THREE MONTHS ENDED JUNE 30 FOR SIX MONTHS ENDED JUNE 30
1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate
ASSETS
Loans, Net of Unearned Interest $400,665 $ 8,655 8.66% $379,394 $8,437 8.92% $397,076 $16,931 8.60% $370,913 $16,405 8.92%
Taxable Investment Securities 150,495 1,815 4.89% 140,836 1,897 5.46% 151,790 3,680 4.91% 137,168 3,794 5.61%
Tax-Exempt Investment Securities 72,772 1,317 7.24% 64,782 1,289 7.96% 72,740 2,614 7.19% 62,017 2,552 8.23%
Funds Sold 47,839 435 3.65% 65,923 491 3.09% 46,805 819 3.53% 69,320 1,037 3.06%
Total Earning Assets 671,771 12,222 7.31% 650,935 12,114 7.48% 668,411 24,044 7.25% 639,418 23,788 7.50%
Cash & Due From Banks 46,484 46,296 47,679 46,051
Allowance for Loan Losses (7,858) (7,895) (7,779) (7,861)
Other Assets 37,042 32,884 38,134 31,930
TOTAL ASSETS $747,439 $722,220 $746,445 $709,538
LIABILITIES
NOW Accounts $ 95,337 429 1.80% $76,443 $ 391 2.05% $ 95,964 857 1.80% $ 75,317 $ 805 2.19%
Money Market Accounts 76,506 402 2.11% 82,522 477 2.32% 77,821 789 2.04% 78,031 912 2.40%
Savings Accounts 110,814 662 2.40% 115,865 728 2.52% 110,792 1,319 2.40% 115,399 1,577 2.76%
Other Time Deposits 214,474 1,858 3.47% 212,169 2,022 3.82% 211,942 3,689 3.51% 207,437 3,985 3.87%
Total Int. Bearing Deposits 497,131 3,351 2.70% 486,999 3,618 2.98% 496,519 6,654 2.70% 476,184 7,279 3.09%
Funds Purchased 16,137 140 3.47% 18,347 126 2.76% 18,511 283 3.08% 19,872 259 2.63%
Other Borrowed Funds 900 8 3.38% 1,036 6 2.19% 985 14 2.85% 1,191 12 2.12%
Long-Term Debt 1,372 15 4.44% 1,500 17 4.50% 1,629 35 4.31% 1,796 37 4.13%
Total Interest Bearing
Liabilities 515,540 3,514 2.73% 507,882 3,767 2.98% 517,644 6,986 2.72% 499,043 7,587 3.08%
Noninterest Bearing Deposits 157,902 144,593 154,290 141,571
Other Liabilities 4,666 4,042 5,662 4,298
TOTAL LIABILITIES $678,108 $656,517 677,596 $644,912
SHAREHOLDERS' EQUITY
Common Stock 31 31 31 31
Surplus 5,852 5,857 5,853 5,858
Retained Earnings 63,448 59,815 62,965 58,737
TOTAL S'HOLDERS' EQUITY 69,331 65,703 68,849 64,626
TOTAL LIAB. & EQUITY $747,439 $722,220 $746,445 $709,538
Interest Rate Spread 4.58% 4.50% 4.53% 4.42%
Net interest Income $8,708 $8,347 $17,058 $16,201
Net Interest Margin 5.21% 5.15% 5.15% 5.10%
(1) Average balances include nonaccrual loans. Interest income includes fees on loans of approximately $398,000 and $789,000, for
the six months ended June 30, 1994 $369,000 and $704,000, for the three and six months periods ended June 30, 1993.
(2) Interest income includes the effects of taxable equivalent adjustments using a 34% tax rate.<PAGE>
</TABLE>
<PAGE>
PART II. OTHER INFORMATION
Items 1-3.
Not applicable
Item 4.
The Annual Meeting of Shareholders of Capital City Bank Group, Inc.
was held on April 27, 1994. Proxies for the meeting were solicited
pursuant to Regulation 14A under the Securities Exchange Act of 1934, and
there was no solicitation in opposition to management's solicitations. The
following summarizes all matters voted upon at this meeting.
1. The following directors were elected for terms expiring in 1995. These
individuals served as the Board of Directors prior to the Annual Meeting.
The number of votes cast were as follows:
Number of Votes Cast
Against/ Abstentions/
For Withheld Broker Non-Votes
Dubose Ausley 2,511,477 803 0
Thomas A. Barron 2,511,477 803 0
Payne H. Midyette, Jr. 2,511,677 603 0
Godfrey Smith 2,511,677 603 0
William G. Smith, Jr. 2,511,677 603 0
2. The shareholders ratified the selection of Arthur Andersen & Co. as the
independent auditors for the Company for 1994. The number of votes cast
were as follows:
Number of Votes Cast
Against/ Abstentions/
For Withheld Broker Non-Votes
2,497,905 13,572 803
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
Not applicable
(B) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
period ended June 30, 1994.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by
the undersigned Chief Financial Officer hereunto duly authorized.
CAPITAL CITY BANK GROUP, INC.
(Registrant)
By:___________________________
J. Kimbrough Davis
Senior Vice President and
Chief Financial Officer
Date: August 8, 1994
