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:
September 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 October 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 --
September 30, 1994 and December 31, 1993 3
Consolidated Statements of Income --
Three and Nine Months Ended September 30, 1994 4
and 1993
Consolidated Statements of Cash Flows --
Nine Months Ended September 30, 1994
and 1993 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
Index to Exhibits 16
Signatures 16
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF CONDITION
AS OF SEPTEMBER 30, 1994 AND DECEMBER 31, 1993
(Dollars In Thousands, Except Per Share Amounts)
September 30, December 31,
1994 1993
(Unaudited) (Audited)
ASSETS
Cash & Due From Banks $ 58,473 $56,665
Interest Bearing Deposits at Banks - 1,257
Investment Securities, Market Value
$203,933 and $221,274 as of
September 30, 1994 and December 31,
1993, Respectively (Note 2) 207,085 218,623
Federal Funds Sold 36,650 55,970
Loans: (Note 3) 417,303 406,567
Unearned Interest (5,745) (7,143)
Allowance for Loan Losses (7,799) (7,594)
Loans, Net 403,759 391,830
Premises & Equipment 23,545 20,820
Accrued Interest Receivable 5,443 5,467
Intangible Assets 1,444 1,719
Other Assets 9,404 9,984
TOTAL ASSETS $745,803 $762,335
LIABILITIES
Deposits:
Noninterest Bearing Deposits $170,794 $171,985
Interest Bearing Deposits (Note 4) 480,374 490,760
Total Deposits 651,168 662,745
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 15,160 23,264
Other Short-Term Borrowings 1,000 1,202
Long-Term Debt 500 1,900
Other Liabilities 4,881 6,084
TOTAL LIABILITIES 672,709 695,195
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 (584) -
Retained Earnings 74,383 67,753
79,682 73,641
Treasury Stock: 259,428 shares at
September 30, 1994 and 255,927 at
December 31, 1993 (6,588) (6,501)
TOTAL SHAREHOLDERS' EQUITY 73,094 67,140
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY $745,803 $762,335
Book Value Per Share $ 25.68 $ 23.56
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<TABLE>
CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED SEPTEMBER 30 (Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
<CAPTION>
THREE MONTHS ENDED SEPT. 30 NINE MONTHS ENDED SEPT. 30
1994 1993 1994 1993
INTEREST INCOME
<S> <C> <C> <C> <C>
Interest and Fees on Loans $9,118 $8,698 $26,039 $25,089
Investment Securities:
U. S. Treasury 1,376 1,362 3,931 4,242
U. S. Government Agencies/Corp. 419 398 1,406 1,207
States and Political Subdivisions 862 920 2,633 2,658
Other Securities 63 49 201 155
Interest on Deposits in Other Banks 1 27 17 80
Federal Funds Sold 396 377 1,199 1,361
Total Interest Income 12,235 11,831 35,426 34,792
INTEREST EXPENSE
Deposits 3,500 3,514 10,154 10,793
Fed. Funds Purchased & Securities
Sold Under Repurchase Agreements 168 120 451 379
Long-Term Borrowings 12 12 47 49
Other Short-Term Debt 8 6 22 18
Total Interest Expense 3,688 3,652 10,674 11,239
Net Interest Income 8,547 8,179 24,752 23,553
Provision for Loan Losses 304 185 963 670
Net Interest Income After Provision
for Loan Losses 8,243 7,994 23,789 22,883
NONINTEREST INCOME
Income from Fiduciary Activities 150 145 487 437
Service Charges on Deposit Accounts 1,346 1,370 4,014 4,181
Data Processing 582 529 1,890 1,801
Securities Transactions 3 14 7 20
Other 890 1,058 3,425 2,449
Total Noninterest Income 2,971 3,116 9,823 8,888
NONINTEREST EXPENSE
Salaries and Employee Benefits 4,273 4,097 12,803 12,062
Occupancy, Net 619 576 1,737 1,591
Furniture and Equipment 718 731 2,096 2,142
Other 2,528 2,391 7,328 6,881
Total Noninterest Expense 8,138 7,795 23,964 22,676
Income Before Income Tax and
Accounting Change 3,076 3,315 9,648 9,095
Income Tax Expense 870 931 2,705 2,497
Income Before Accounting Change 2,206 2,384 6,943 6,598
Cumulative Effect of a Change in
Accounting Principle - 0 - (484)
NET INCOME $2,206 $ 2,384 $ 6,943 $6,114
Net Income Per Share Before
Accounting Change $ .78 $ 0.82 2.44 $ 2.26
Net Income Per Share $ .78 $ 0.82 2.44 $ 2.09
Cash Dividends Per Share $ - $ - .11 $ 0.10
Average Shares Outstanding 2,845,815 2,923,778 2,848,056 2,924,703
</TABLE>
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CAPITAL CITY BANK GROUP, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED SEPTEMBER 30
(Dollars in Thousands)
1994 1993
(Unaudited) (Unaudited)
NET INCOME $ 6,943 $ 6,114
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Provision for Loan Losses 963 670
Depreciation 1,334 1,401
Amortization of Intangible Assets 275 211
Cumulative Effect of Accounting Change - 484
Net (Increase) Decrease in Interest
Receivable 24 (218)
Net (Increase) Decrease in Other Assets 575 (763)
Net Increase (Decrease) in Other
Liabilities 931 728
Net Cash From Operating Activities 11,045 8,627
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Payments/Maturities of
Investment Securities 70,092 61,122
Purchase of Investment Securities (59,139) (80,115)
Net (Increase) Decrease in Loans (12,892) (7,193)
Purchase of Premises & Equipment (4,143) (5,120)
Sales of Premises & Equipment 85 6
Cash Acquired in Bank Acquisitions - 28,811
Net Cash from Investing Activities (5,997) (2,489)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase (Decrease) in Deposits (11,577) 2,267
Net Increase (Decrease) in Federal
Funds Purchased (8,104) 9,887
Net Increase (Decrease) in Other Borrowed
Funds (202) 212
Proceeds from Long-Term Debt - 200
Repayment of Long-Term Debt (1,400) (1,500)
Dividends Paid (2,447) (2,282)
Sale (Purchase) of Treasury Stock (87) (62)
Net Cash From Financing Activities (23,817) 4,188
Net Increase (Decrease) in Cash and
Cash Equivalents (18,769) 10,326
Cash and Cash Equivalents at Beginning of
Period 113,892 107,271
Cash and Cash Equivalents at End of Period $ 95,123 $117,597
Supplemental Disclosure:
Interest Paid $ 10,714 $ 11,062
Taxes Paid $ 2,659 $ 2,386
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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 September 30, 1994 and December 31, 1993, and the results of operations
and cash flows for the three and nine month periods ended September 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
$584,000 at September 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
<PAGE>
in 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 September 30, 1994
and the held-for-investment portfolio at December 31, 1993 were as follows
(dollars in thousands):
September 30, 1994
Amortized Unrealized Unrealized Market
Held-To-Maturity Cost Gains Losses Value
U. S. Treasury $ 75,399 $ 6 $ 1,083 $ 74,322
U. S. Government Agencies
and Corporations 24,038 16 942 23,112
States and Political Subdivisions 50,705 299 1,286 49,718
Mortgage Backed Securities 3,161 1 138 3,024
Other Securities 2,789 - 25 2,764
Total $156,092 $ 322 $3,474 $152,940
September 30, 1994
Amortized Unrealized Unrealized Market
Available-For-Sale Cost Gains Losses Value
U. S. Treasury $18,019 $ 6 $ 210 $17,815
U. S. Government Agencies
and Corporations 7,046 15 350 6,711
States and Political Subdivisions 21,941 184 566 21,559
Mortgage Backed Securities 3,014 9 7 3,016
Other Securities 1,889 3 - 1,892
Total $51,909 $ 217 $ 1,133 $50,993
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 September 30, 1994
and December 31, 1993 was as follows (dollars in thousands):
September 30, 1994 December 31, 1993
Commercial, Financial
and Agricultural $ 38,721 $ 46,963
Real Estate-Construction 22,859 22,968
Real Estate-Mortgage 254,335 242,741
Consumer 101,388 93,895
Gross Loans $417,303 $406,567
(4) DEPOSITS
The composition of the Company's interest bearing deposits at September
30, 1994 and December 31, 1993 was as follows (dollars in thousands):
September 30, 1994 December 31, 1993
NOW Accounts $ 94,805 $100,184
Money Market Accounts 73,618 77,302
Savings Deposit 105,525 110,128
Other Time Deposits 206,426 203,146
Total Interest Bearing Deposits $480,374 $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 $2.2 million, or $.78 per share, for the third quarter of
1994, a 4.9% decrease on a per share basis over the comparable period for
1993. Net income was $6.9 million, or $2.44 per share, for the nine months
ended September 30, 1994, a 16.7% increase on a per share basis over the
comparable period in 1993. Earnings for the first nine months 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 Nine
Months Ended Months Ended
September 30, September 30,
1994 1993 1994 1993
Interest and Dividend Income $12,235 $11,831 $35,426 $34,792
Taxable Equivalent Adjustment(1) 403 427 1,256 1,254
12,638 12,258 36,682 36,046
Interest Expense 3,688 3,652 10,674 11,239
Net Interest Income (FTE) 8,950 8,606 26,008 24,807
Provision for Loan Losses 304 185 963 670
Taxable Equivalent Adjustment 403 427 1,256 1,254
Net Int. Inc. After Provision 8,243 7,994 23,789 22,883
Noninterest Income 2,971 3,116 9,823 8,888
Noninterest Expense 8,138 7,795 23,964 22,676
Income Before Income Taxes and
Cumulative Effect of a Change
in Accounting Principle 3,076 3,315 9,648 9,095
Income Taxes 870 931 2,705 2,497
Income Before Change in
Accounting Principle 2,206 2,384 6,943 6,598
Cumulative Effect of a Change in
Accounting Principle - - - (484)
Net Income $2,206 $2,384 $6,943 $6,114
Percent Change
Before Cumulative Adjustment (7.47%) 7.48% 5.23% 3.34%
After Cumulative Adjustment (7.47%) 7.48% 13.56% (4.24%)
Return on Average Assets (2)
Before Cumulative Adjustment 1.17% 1.31% 1.24% 1.24%
After Cumulative Adjustment 1.17% 1.31% 1.24% 1.15%
Return on Average Equity (2)
Before Cumulative Adjustment 12.29% 14.05% 13.30% 13.47%
After Cumulative Adjustment 12.29% 14.05% 13.30% 12.48%
(1) Computed using a statutory tax rate of 34%
(2) Annualized
Net Interest Income
Third quarter taxable equivalent net interest income increased $344,000,
or 4.0% over the same period for 1993. Through September 30, 1994, taxable
equivalent net interest income increased $1,201,000, or 4.8%, over the same
period for 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 $380,000, or 3.1% and $636,000, or 1.8%, respectively, for the
three and nine month periods ended September 30, 1994. This increase is
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attributable to loan growth. Average loans for the first nine months of 1994
increased $25.4 million, or 6.7%, as compared to the same period in 1993.
This growth in loans equalled the total growth in average earning assets of
$25.4 million, or 3.9%. Although interest rates have increased significantly
during 1994, i.e., the prime rate has risen 175 basis points from 6.00% to
7.75%, overall portfolio yields are still slightly below their 1993 levels.
The average yield on earning assets during the first nine months on 1994 was
7.34% compared to 7.50% in 1993.
Interest expense increased $36,000, or 1.0%, in the third quarter and
decreased $565,000, or 5.0% for the first nine months, as compared to the
comparable periods in 1993. Although interest rates have increased sharply
during 1994, growth in transaction accounts, primarily noninterest bearing
and N.O.W. accounts, enabled management to maintain a lower cost of funds as
compared to the comparable nine-month period in 1993. During the third
quarter, however, the mix of deposits began to shift into higher cost
certificates of deposit as noninterest bearing, N.O.W. account and savings
balances declined. Although still slightly below 1993 levels, the shift in
deposits coupled with higher interest rates increased the average rate paid
on interest bearing liabilities eleven basis points over the second quarter
of 1994, from 2.73% to 2.84%. If interest rates remain at their current
level or higher, management anticipates this shift in mix will continue and
the general repricing of deposits will result in a higher cost of funds in
the fourth quarter.
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 4.47% in the first nine months of 1993 to
4.57% in 1994. The Company's net interest margin percentage (defined as
taxable-equivalent net interest income divided by average earning assets)
increased from 5.16% in the first nine months of 1993 to 5.20% in 1994.
Provisions for Loan Losses
The provision for loan losses was $304,000 and $963,000, respectively,
for the three and nine month periods ended September 30, 1994, compared to
$185,000 and $670,000 for the comparable periods in 1993. Loan growth and
slightly higher net charge-offs contributed to the increase in the loan loss
provision. Charge-offs through the first nine months of 1994 totalled
$758,000 of which $435,000 is attributable to one credit. At September 30,
1994, the allowance for loan losses was $7.8 million, or 1.89%, of total
loans compared to $7.6 million, or 1.90%, at December 31, 1993. Charge-off
activity for the respective periods is set forth below.
Three Months Ended Nine Months Ended
9/30/94 9/30/93 9/30/94 9/30/93
Net Charge-Offs $ 66,000 $293,000 $758,000 $734,000
Net Charge-Offs (Annualized)
as a percent of Average
Loans Outstanding, Net of
Unearned Interest .06% .30% .25% .26%
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Noninterest Income
Relative to the comparable periods in 1993, noninterest income decreased
$145,000, or 4.7%, in the third quarter and increased $935,000, or 10.5%,
through the first nine months of 1994. As discussed below, the decrease in
the third quarter reflects lower mortgage origination fees. A majority of
the year-to-date increase is attributable to gains on the sale of real estate
(recognized during the first and second quarter) and credit card merchant
fees. During the first nine months of 1994, the Company recognized gains,
including gains from the sale of OREO and bank premises, totalling $627,000,
which represented a $408,000 increase over the first nine months of 1993.
Credit card merchant fees were up $447,000, or 55.9%, primarily reflecting an
increase in the number of accounts and higher volume. However, the increase
is partially offset by a $304,000, or 91.8%, increase in credit card
processing expense which is recorded in "Other" noninterest expense.
Mortgage origination volume declined significantly during the second and
third quarter of 1994. Through the first nine months of 1994 mortgage volume
totalled $29.1 million ($15.3 million closed in the first quarter) versus
$35.9 million for the comparable period in 1993. Reflecting the lower
volume, mortgage fees have declined $121,000, or 18.5%, through the first
nine months of 1994 as compared to the comparable period in 1993.
Service charges on deposit accounts declined $24,000, or 1.8%, and
$167,000, or 4.0%, over the comparable three and nine 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 1.96% for
the first nine months of 1994 versus 1.85% for the comparable quarter in 1993
due primarily to the nonrecurring gains which were recognized in 1994.
Noninterest Expense
Noninterest expense increased $343,000, or 4.4%, and $1.3 million, or
5.7%, respectively, over the comparable three and nine month periods in 1993.
Through the first nine months, compensation expense increased $741,000, or
6.1%, partially attributable to personnel expense associated with additional
branch locations and higher pension expense. During the fourth quarter of
1993, 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 $165,000, or 32.9%, through
the first nine months.
Occupancy expense (including premises, furniture, fixtures and
equipment) increased $43,000, or 7.5%, in the third quarter and $146,000, or
9.2%, through the first nine months. Increases associated with additional
branch facilities 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 Capital City First National's
main facility and purchase of an operations center which was placed into
service in August 1994, management is projecting that occupancy expense will
continue to increase during the fourth quarter of 1994.
Other noninterest expense increased $137,000, or 5.7%, in the third
quarter and $447,000, or 6.5% through the first nine months. A significant
<PAGE>
portion of the increase is attributable to commission and service fees which
were up $359,000, or 45.3%, due primarily to an increase in credit card
processing fees of $304,000, or 91.8%. Additionally, the Company incurred
approximately $86,000 in non-recurring expense items during the first and
second quarters associated with the conversion of credit card processing.
The addition of four branch offices during 1993 and 1994 has also increased
the expense level for items such as telephone, deposit insurance and the
amortization of intangible assets.
During the first quarter of 1995, the Company plans to complete its
corporate reorganization in which seven of its ten affiliate banks will be
merged into one state bank affiliate. The resulting bank will constitute
approximately 80% of the Company's total assets. Management anticipates the
Company will incur some additional expense during the fourth quarter of 1994
associated with this corporate reorganization.
Annualized net noninterest expense (noninterest income minus noninterest
expense) as a percent of average earning assets was 2.83% in the first nine
months of 1994 versus 2.87% for the first nine months of 1993. Real estate
gains recognized in the first and second quarter of 1994 have enabled the
Company to maintain the net noninterest expense ratio at a level below that
of last year.
Income Taxes
The provision for income taxes decresed $61,000, or 6.6%, during the
third quarter and increased $208,000, or 8.3 %, during the first nine months
of 1994. Third quarter taxable income declined resulting in a lower tax
provision for the quarter. Higher taxable income during the first and second
quarter, however, contributed to the overall increase in the tax provision
through the first nine months. The Company's effective tax rate for the
first nine months of 1994 was 28.0% compared to 27.5% for the same period in
1993. The higher effective rate is primarily attributable to the level of
tax-exempt interest, which has declined as a percent of operating profits,
and recent tax law changes impacting the deductibility of certain expenses,
including meals and entertainment, club dues and association dues.
During the first quarter of 1993, the 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 nine
months of 1993.
FINANCIAL CONDITION
For the first nine months of 1994, the Company's assets averaged $745.7
million compared to $712.5 million in 1993. During this same nine month
period, earning assets averaged $668.7 million versus $643.4 million in 1993.
The most significant event during 1994 has been the growth in the loan
portfolio. On average, loans increased $25.4 million, or 6.7% over 1993.
The loan portfolio as a percent of average earning assets is 60.1% versus
58.5% in 1993. This loan growth has had a very positive impact on the
Company's net interest income during 1994. U.S. Government securities
increased $8.3 million, or 6.0%, while municipal securities increased $7.7
<PAGE>
million, or 11.9%. The increase in the investment portfolios reflects
management's decision to take advantage of the higher interest rates and
reduce the Company's position in federal funds sold, which decreased $19.5
million, or 31.5%.
Growth in earning assets has been funded through both internal deposit
generation and branch acquisitions. Table I on page 15, presents average
balances for the three and nine 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 September 30, 1994, the Company's nonperforming loans, which include
nonaccruing and restructured, were $6.9 million versus $9.4 million at year-
end and $10.6 million at September 30, 1993. As a percent of nonperforming
loans, the allowance for loan losses represented 113.6% at September 30, 1994
versus 80.6% at December 31, 1993 and 70.9% at September 30, 1993. Other
real estate, which includes property acquired either through foreclosure or
by receiving a deed in lieu of foreclosure, was $1.8 million at September 30,
1994, versus $3.5 million at December 31, 1993, and $3.0 million at September
30, 1993. Total nonperforming assets have been reduced by $4.9 million, or
36.2% since September 30, 1993.
Average deposits increased from $623.0 million for the first nine months
of 1993, to $650.0 million for the first nine months of 1994. Relative to
the first nine months of 1993, the most significant deposit growth has been
in the categories of noninterest bearing and NOW accounts. Average
noninterest bearing deposits have increased $9.6 million, or 6.7%, and NOW
accounts have increased $17.7 million, or 23.3%. 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 and third
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 nine months of 1994 compared to 23.2% for the first nine
months of 1993. For the same periods, the ratio of average interest bearing
liabilities to average earning assets was 77.2% and 77.4%, 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.
<PAGE>
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
September 30, 1994, there was $500,000 drawn under the two facilities,
leaving available credit of $11.5 million.
The Company's equity capital was $73.1 million as of September 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 9.6% at September 30, 1994 versus 8.6% at December 31, 1993.
Further, the Company's risk-adjusted capital ratio of 17.15% 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 restrictive covenants on both the Company and its
Group banks. At September 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 nine months of 1994, shareholders' equity increased
$6.0 million, or 11.9%, on an annualized basis. At September 30, 1994, the
Company's common stock had a book value of $25.68 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 nine months
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>
TABLE I
AVERAGES BALANCES & INTEREST RATES
(Taxable Equivalent Basis - Dollars in Thousands)
<CAPTION>
FOR THREE MONTHS ENDED SEPTEMBER 30 FOR NINE MONTHS ENDED SEPTEMBER 30
1994 1993 1994 1993
Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate
ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans, Net of Unearned Interest $410,819 $ 9,124 8.81% $387,614 $8,705 8.91% $401,965 $ 26,055 8.67% $376,595 $25,107 8.91%
Taxable Investment Securities 152,105 1,859 4.95% 139,314 1,809 5.26% 151,691 5,539 4.93% 138,310 5,604 5.48%
Tax-Exempt Investment Securities 71,908 1,259 7.00% 69,919 1,339 7.66% 72,327 3,873 7.14% 64,656 3,892 8.03%
Funds Sold 35,555 396 4.42% 51,961 405 3.09% 42,757 1,215 3.80% 63,793 1,442 3.02%
Total Earning Assets 670,387 12,638 7.51% 648,808 12,258 7.53% 668,740 36,682 7.34% 643,354 36,045 7.50%
Cash & Due From Banks 43,013 44,715 46,223 44,752
Allowance for Loan Losses (7,665) (7,678) (7,744) (7,654)
Other Assets 39,233 34,252 38,475 32,055
TOTAL ASSETS $744,968 $720,097 $745,694 $712,507
LIABILITIES
NOW Accounts $ 90,081 $483 2.13% $ 76,727 $ 391 2.02% $ 94,012 $ 1,341 1.93% $ 76,267 $ 1,196 2.12%
Money Market Accounts 75,374 431 2.27% 82,575 455 2.19% 76,972 1,220 2.14% 79,584 1,367 2.32%
Savings Accounts 107,151 652 2.42% 112,589 704 2.48% 109,527 1,971 2.41% 114,614 2,281 2.66%
Other Time Deposits 222,838 1,933 3.44% 209,403 1,964 3.72% 215,500 5,622 3.49% 208,175 5,949 3.82%
Total Int. Bearing Deposits 495,444 3,499 2.80% 481,294 3,514 2.90% 496,011 10,154 2.74% 478,640 10,793 3.02%
Funds Purchased 17,175 168 3.88% 18,188 120 2.62% 17,925 451 3.36% 16,294 379 3.11%
Other Borrowed Funds 872 9 3.88% 1,013 6 2.40% 947 22 3.17% 1,131 18 2.18%
Long-Term Debt 889 12 5.30% 1,184 12 4.05% 1,378 47 4.53% 1,602 49 4.08%
Total Interest Bearing
Liabilities 514,380 3,688 2.84% 501,679 3,652 2.89% 516,261 10,674 2.77% 497,667 11,239 3.03%
Noninterest Bearing Deposits 153,301 146,362 154,024 144,389
Other Liabilities 6,083 4,718 5,601 4,954
TOTAL LIABILITIES 673,764 652,759 675,886 647,010
SHAREHOLDERS' EQUITY
Common Stock 31 31 31 31
Surplus 5,852 5,857 5,853 5,857
Retained Earnings 65,321 61,450 63,924 59,609
TOTAL S'HOLDERS' EQUITY 71,204 67,338 69,808 65,497
TOTAL LIAB. & EQUITY $744,968 $720,097 $745,694 $712,507
Interest Rate Spread 4.67% 4.64% 4.57% 4.47%
Net interest Income $8,950 $8,606 $26,008 $24,807
Net Interest Margin 5.33% 5.29% 5.20% 5.16%
(1) Average balances include nonaccrual loans. Interest income includes fees on loans of approximately $477,000 and
$1,266,000, for the nine months ended September 30, 1994 and $510,000 and $1,214,000, for the three and nine month
periods ended September 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 1-5.
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
EX-27 Financial Data Schedule
(B) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
period ended September 30, 1994.
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: November 10, 1994
<TABLE> <S> <C>
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<NAME> CAPITAL CITY BANK GROUP, INC.
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