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, 1995 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) 671-0610
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, 1995, 2,853,710 shares of the Registrant's Common Stock, $.01
par value, were outstanding.
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CAPITAL CITY BANK GROUP, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE NUMBER
Consolidated Statements of Condition --
September 30, 1995 and December 31, 1994 3
Consolidated Statements of Income --
Three and Nine Months Ended September 30, 1995 4
and 1994
Consolidated Statements of Cash Flows --
Nine Months Ended September 30, 1995
and 1994 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 15
Signatures 15
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF CONDITION
AS OF SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(Dollars In Thousands, Except Per Share Amounts)
September 30, December 31,
1995 1994
(Unaudited) (Audited)
ASSETS
Cash & Due From Banks $ 47,448 $ 63,327
Federal Funds Sold 19,550 25,740
Investment Securities, Market Value
$141,832 and $145,003 as of
September 30, 1995 and December 31,
1994, respectively (Note 2) 141,571 150,441
Investment Securities Available for Sale 83,992 48,847
Loans: (Note 3) 440,622 426,013
Unearned Interest (4,178) (5,209)
Allowance for Loan Losses (7,034) (7,551)
Loans, Net 429,410 413,253
Premises & Equipment 26,065 24,292
Accrued Interest Receivable 7,327 5,546
Intangible Assets 1,196 1,379
Other Assets 6,794 9,805
TOTAL ASSETS $763,353 $742,630
LIABILITIES
Deposits:
Noninterest Bearing Deposits $ 162,913 $167,711
Interest Bearing Deposits (Note 4) 494,962 480,463
Total Deposits 657,875 648,174
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 14,914 13,964
Other Short-Term Borrowings 2,237 999
Other Liabilities 7,865 7,093
TOTAL LIABILITIES $ 682,891 $670,230
SHAREHOLDERS' EQUITY
Common Stock, $.01 Par Value;
4,000,000 shares authorized;
3,105,243 issued 31 31
Surplus 5,868 5,852
Retained Earnings 80,739 73,989
Treasury Stock: 251,536 shares at
September 30, 1995 and 259,428 at
December 31, 1994 (6,367) (6,588)
Net Unrealized Gains (Losses) 191 (884)
TOTAL SHAREHOLDERS' EQUITY 80,462 72,400
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY $ 763,353 $742,630
Book Value Per Share $ 28.20 $ 25.44
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CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED SEPTEMBER 30
(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
THREE MONTHS ENDED SEPTEMBER NINE MONTHS ENDED SEPTEMBER
1995 1994 1995 1994
<CAPTION>
INTEREST INCOME
<S> <C> <C> <C> <C>
Interest and Fees on Loans $10,523 $ 9,118 $ 30,322 $26,039
Investment Securities:
U. S. Treasury 1,045 1,376 3,164 3,931
U. S. Government Agencies/Corp. 1,046 419 2,346 1,406
States and Political Subdivisions 883 862 2,579 2,633
Other Securities 60 63 188 201
Federal Funds Sold 502 397 1,814 1,216
Total Interest Income 14,059 12,235 40,413 35,426
INTEREST EXPENSE
Deposits 5,098 3,500 14,367 10,154
Fed. Funds Purchased & Securities 252 168 780 451
Sold Under Repurchase Agreements
Long-Term Borrowings - 12 - 47
Other Short-Term Debt 14 8 38 22
Total Interest Expense 5,364 3,688 15,185 10,674
Net Interest Income 8,695 8,547 25,228 24,752
Provision for Loan Losses 2 304 293 963
Net Interest Income After Provision
for Loan Losses 8,693 8,243 24,935 23,789
NONINTEREST INCOME
Income from Fiduciary Activities 183 150 685 487
Service Charges on Deposit Accounts 1,422 1,346 4,152 4,014
Data Processing 632 582 2,018 1,890
Securities Transactions (1) 3 (1) 7
Other 888 677 2,569 2,844
Total Noninterest Income 3,124 2,758 9,423 9,242
NONINTEREST EXPENSE
Salaries and Employee Benefits 4,461 4,273 13,333 12,803
Occupancy, Net 626 619 1,858 1,737
Furniture and Equipment 810 718 2,461 2,096
Other 2,045 2,315 6,800 6,747
Total Noninterest Expense 7,942 7,925 24,452 23,383
Income Before Income Tax 3,875 3,076 9,906 9,648
Income Tax Expense 1,160 870 2,842 2,705
NET INCOME $ 2,715 $ 2,206 $ 7,064 $ 6,943
Net Income Per Share $ .96 $ .78 $ 2.48 $ 2.44
Cash Dividends Per Share $ - $ - $ .11 $ .11
Average Shares Outstanding 2,853,699 2,845,815 2,853,073 2,848,056
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CAPITAL CITY BANK GROUP, INC.
STATEMENT OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30
(Dollars in Thousands)
CASH FLOW FROM OPERATING ACTIVITIES 1995 1994
(Unaudited) (Unaudited)
Net Income $ 7,064 $ 6,943
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Provision for Loan Losses 293 963
Depreciation 1,650 1,334
Amortization of Intangible Assets 183 275
Net (Increase) Decrease in Interest
Receivable (1,781) 24
Net (Increase) Decrease in Other Assets 3,027 575
Net Increase (Decrease) in Other
Liabilities 3,049 931
Net Cash From Operating Activities 13,485 11,045
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Payments/Maturities of
Investment Securities-Held to Maturity 36,571 57,223
Proceeds from Payments/Maturities of
Investment Securities-Available for Sale 13,552 12,869
Purchase of Investment Securities-Held
to Maturity (27,701) (57,061)
Purchase of Investment Securities
Available for Sale (47,621) (2,078)
Net (Increase) Decrease in Loans (16,451) (12,892)
Purchase of Premises & Equipment (3,517) (4,143)
Sales of Premises & Equipment 94 85
Net Cash from Investing Activities (45,073) (5,997)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase (Decrease) in Deposits 9,701 (11,577)
Net Increase (Decrease) in Federal
Funds Purchased 950 (8,104)
Net Increase (Decrease) in Other Borrowed
Funds 1,238 (202)
Repayment of Long-Term Debt - (1,400)
Dividends Paid (2,591) (2,447)
Issuance (Purchase) of Treasury Stock 221 (87)
Net Cash From Financing Activities 9,519 (23,817)
Net Increase (Decrease) in Cash and
Cash Equivalents (22,069) (18,769)
Cash and Cash Equivalents at Beginning of
Period 89,067 113,892
Cash and Cash Equivalents at End of Period $ 66,998 $ 95,123
Supplemental Disclosure:
Interest Paid $ 13,604 $ 10,714
Taxes Paid $ 2,066 $ 2,659
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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, 1995 and December 31, 1994, and the results of operations
and cash flows for the three and nine month periods ended September 30, 1995
and 1994.
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 1994 Annual Report on Form 10K.
(2) INVESTMENT SECURITIES
The carrying value and related market value of investment securities in
the held-to-maturity and available-for-sale portfolios at September 30, 1995
and December 31, 1994 were as follows (dollars in thousands):
September 30, 1995
Amortized Unrealized Unrealized Market
Held-To-Maturity Cost Gains Losses Value
U. S. Treasury $ 54,912 $ 146 $ 158 $ 54,900
U. S. Government Agencies
and Corporations 32,090 181 354 31,917
States and Political
Subdivisions 49,358 649 179 49,828
Mortgage Backed Securities 3,449 1 24 3,426
Other Securities 1,762 4 5 1,761
Total $141,571 $ 981 $ 720 $141,832
September 30, 1995
Amortized Unrealized Unrealized Market
Available-For-Sale Cost Gains Losses Value
U. S. Treasury $ 21,809 $ 198 $ 17 $ 21,990
U. S. Government Agencies
and Corporations 32,224 70 89 32,205
States and Political
Subdivisions 23,293 269 94 23,468
Mortgage Backed Securities 3,514 19 67 3,466
Other Securities 2,863 11 11 2,863
Total $ 83,703 $ 567 $ 278 $83,992
<PAGE>
December 31, 1994
Amortized Unrealized Unrealized Market
Held To Maturity Cost Gains Losses Value
U.S. Treasury $ 72,979 $ - $ 1,681 $ 71,298
U.S. Government Agencies
and Corporations 23,018 3 1,415 21,606
States and Political
Subdivisions 49,125 135 2,027 47,233
Mortgaged Backed Securities 3,005 1 182 2,824
Other Securities 2,314 - 272 2,042
Total $150,441 $ 139 $ 5,577 $145,003
December 31, 1994
Amortized Unrealized Unrealized Market
Available For Sale Cost Gains Losses Value
U.S. Treasury $ 18,634 $ - $ 180 $ 18,454
U.S. Government Agencies
and Corporations 7,041 2 443 6,600
States and Political
Subdivisions 19,641 77 805 18,913
Mortgaged Backed Securities 2,932 - 32 2,900
Other Securities 1,981 1 2 1,980
Total $ 50,229 $ 80 $ 1,462 $ 48,847
(3) LOANS
The composition of the Company's loan portfolio at September 30, 1995
and December 31, 1994 was as follows (dollars in thousands):
September 30, 1995 December 31, 1994
Commercial, Financial
and Agricultural $ 39,376 $ 39,288
Real Estate-Construction 27,749 24,315
Real Estate-Mortgage 258,041 255,754
Consumer 115,456 106,656
Gross Loans $440,622 $426,013
(4) ALLOWANCE FOR LOAN LOSSES
An analysis of the changes in the allowance for loan losses for the nine
month period ended September 30, 1995 and 1994, is as follows (dollars in
thousands):
September 30, 1995 September 30, 1994
Balance, Beginning of the Period $7,551 $7,594
Provision for Loan Losses 293 963
Recoveries on Loans Previously
Charged-Off 417 385
Loans Charged-Off 1,227 1,143
Balance, End of Period $7,034 $7,799
Effective January 1, 1995, the Company adopted Statement of Financial
Accounting Standards ("SFAS 114"), "Accounting by Creditors for Impairment of
a Loan," as amended. In accordance with SFAS 114, the value of a loan which
is deemed "impaired" is measured based on the present value of expected
<PAGE>
future cash flows discounted at the loan's initial effective interest rate or
the fair value of the collateral, if the loan is collateral dependent. If
the value of a loan is less than its recorded investment, a valuation allowance
is established. This valuation allowance is included in the total allowance for
loan losses, which is established to cover losses inherent in the portfolio
as a whole. Certain loan categories including residential, consumer and credit
card loans are excluded from the scope of this Statement. Adoption of SFAS 114
did not have a material impact on the level of the allowance for loan losses.
The definition of insubstance foreclosure loans was also changed by SFAS 114.
As of January, 1995, loans which were previously deemed insubstance
foreclosures and classified as other real estate have been reclassified as
loans. Insubstance foreclosures are not material and have not been
reclassified for prior periods.
Impaired loans are primarily defined as all nonaccruing loans for the loan
categories which are included within the scope of SFAS 114. Selected
information pertaining to impaired loans is depicted in the table below
(dollars in thousands).
September 30, 1995
Valuation
Balance Allowance
Impaired Loans:
With Related Credit Allowance $ 1,330 $ 334
Without Related Credit Allowance $ 1,236 $ -
Average Recorded Investment for the Period $ 3,450 $ *
* Not Applicable
The Company recognizes income on impaired loans primarily on the cash basis.
Any change in the present value of expected cash flows is recognized through
the allowance for loan losses. For the period ended September 30, 1995, the
Company recognized $82,179 in interest income on impaired loans, of which
$67,223 was collected in cash.
(5) DEPOSITS
The composition of the Company's interest bearing deposits at September
30, 1995 and December 31, 1994 was as follows (dollars in thousands):
September 30, 1995 December 31, 1994
NOW Accounts $ 85,943 $ 95,540
Money Market Accounts 69,667 71,763
Savings Deposit 80,692 101,009
Other Time Deposits 258,660 212,151
Total Interest Bearing Deposits $494,962 $480,463
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.
On January 1, 1995, the Company completed its corporate reorganization
in which seven independently chartered banks were combined to form Capital
City Bank, which operates 20 offices and represents in excess of 80% of the
Company's total assets. The impetus for the reorganization was to provide
greater convenience by enabling customers to transact business in multiple
locations which was limited under the Company's previous structure, and to
enhance to Company's marketing efforts in the north Florida area by marketing
its products and services under a single name. Over the long run, management
<PAGE>
anticipates achieving operational efficiencies through the centralization of
various functional areas. In the short run, however, management anticipates
incurring some additional costs associated with completing the reorganization
and promoting the newly formed Capital City Bank. These costs will continue
to be reflected in current year operations.
RESULTS OF OPERATIONS
Net Income
Net income was $2.7 million, or $.96 per share for the third quarter of
1995, a 23.1% increase on a per share basis over the comparable period for
1994. Net income was $7.1 million, or $2.48 per share for the nine months
ended September 30, 1995, a 1.6% increase on a per share basis over the
comparable period in 1994. Some of the factors which impacted earnings
include: (1) higher net interest income attributable to loan growth, and
(2) a reduction in the provision for loan losses reflecting improved asset
quality, and (3) a rebate of FDIC insurance premiums.
Condensed statements of income for the respective periods are presented below:
For The Three For The Nine
Months Ended Months Ended
Sept. 30, Sept. 30,
1995 1994 1995 1994
Interest and Dividend Income $14,059 $12,235 $40,413 $35,426
Taxable Equivalent Adjustment(1) 409 403 1,188 1,256
14,468 12,638 41,601 36,682
Interest Expense 5,364 3,688 15,185 10,674
Net Interest Income (FTE) 9,104 8,950 26,416 26,008
Provision for Loan Losses 2 304 293 963
Taxable Equivalent Adjustment 409 403 1,188 1,256
Net Int. Inc. After Provision 8,693 8,243 24,935 23,789
Noninterest Income 3,124 2,758 9,423 9,242
Noninterest Expense 7,942 7,925 24,452 23,383
Income Before Income Taxes 3,875 3,076 9,906 9,648
Income Taxes 1,160 870 2,842 2,705
Net Income $ 2,715 $ 2,206 $ 7,064 $ 6,943
Percent Change 23.07% (7.47%) 1.74% 5.23%
Return on Average Assets (2) 1.40% 1.17% 1.25% 1.24%
Return on Average Equity (2) 13.73% 12.29% 12.43% 13.30%
(1) Computed using a statutory tax rate of 34%
(2) Annualized
Net Interest Income
Through September 30, 1995, taxable equivalent net interest income
increased over the prior year $154,000, or 1.7%, and $408,000, or 1.5%,
respectively, for the three and nine month periods. 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 $1.8 million, or 14.5%, and $4.9 million, or 13.4%, respectively,
for the three and nine month periods ended September 30, 1995. The increase
in each period is due to higher interest rates and loan growth. From January
of 1994 through September of 1995, the prime rate increased 275 basis points
and the three-year Treasury Bill index increased 141 basis points. Loans,
which generally represent the Company's highest yielding asset, increased
on average $27.1 million, or 6.74%. As a percent of average earning assets,
the loan portfolio increased from 60.1% to 63.5%. Higher interest rates
and loan growth led to an 86 to 89 basis points improvement in the yield on
earning assets over the comparable three and nine month periods in 1994.
<PAGE>
Interest expense increased $1.7 million, or 45.4%, and $4.5 million, or
42.3%, respectively, as compared to the three and nine month periods in 1994.
This increase is attributable to a 123 and 118 basis points increase in the
average rate paid, reflecting the increase in interest rates and a shift in
the mix of deposits. A significant portion of the deposit shift occurred
during the second quarter. Certificates of deposit, which generally
represent a higher cost of funds than other deposit offering, increased to
39.3% of average deposits during the third quarter of 1995, compared to
34.4% for the comparable quarter in 1994. The shift in mix further
accentuated the overall increase in cost of funds attributable to rising
rates.
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) decreased from 4.57% in the first nine months of 1994 to 4.29%
in 1995. The Company's net interest margin percentage (defined as taxable-
equivalent net interest income divided by average earning assets) increased
from 5.20% in the first nine months of 1994 to 5.23% for the comparable
period in 1995.
Provision for Loan Losses
The provision for loan losses was $2,000 and $293,000, respectively,
for the three and nine month periods ended September 30, 1995, compared to
$304,000 and $963,000 for the comparable periods in 1994. The lower
provision reflects improved credit quality, low charge-off levels and slower
than budgeted loan growth during 1995. As of September 30, 1995, the
reserve for loan losses totaled $7.0 million compared to $7.8 million at
September 30, 1994. As a percent of loans, these reserves represented 1.61%
and 1.89%, respectively. Charge-off activity for the respective periods is
set forth below.
Three Months Ended Nine Months Ended
9/30/95 9/30/94 9/30/95 9/30/94
Net Charge-Offs $312,000 $66,000 $810,000 $758,000
Net Charge-Offs (Annualized)
as a percent of Average
Loans Outstanding, Net of
Unearned Interest .29% .06% .25% .25%
Noninterest Income
Noninterest income increased $366,000 or 13.3%, in the third quarter of
1995 versus the comparable quarter for 1994, and increased $181,000 or 2.0%,
for the nine months ended September 30, 1995 versus the comparable period for
1994.
All major categories of noninterest income increased with the exception
of "Other" noninterest income which declined $275,000, or 9.7% in 1995. The
decrease in this category is primarily attributable to gains on the sale of
real estate and bank owned premises which were recognized during the first nine
months of 1994. Additionally, mortgage origination fees declined due to lower
origination volume which fell by 32.4%, in the nine months ended September 30,
1995.
In January 1995, the Company changed its method of income recognition
for Capital City Trust Company ("CCTC") from cash to accrual. This change in
method resulted in a one-time adjustment which increased CCTC revenues by
$166,000 during the first quarter of 1995.
Service charges on deposit accounts increased $76,000, or 5.64%, and
$138,000, or 3.44%, over the comparable three and nine month periods for
1994. The increase primarily reflects a higher level of activity subject to
service charge assessments.
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Noninterest income as a percent of average earning assets was stable at
1.9% for the first nine months of 1995 and 1994.
Noninterest Expense
Noninterest expense increased $17,000, or .2%, and increased $1.1
million, or 4.6%, respectively, over the comparable three and nine month
periods in 1994.
Through the first nine months, compensation expense increased $530,000,
or 4.1%, reflecting annual raises and an increase in full-time equivalent
employees of 13.
Occupancy expense, including premises, furniture, fixtures and equipment
increased $99,000, or 7.4%, and $486,000, or 12.7%, respectively, over the
comparable three and nine month periods in 1994. The increase is primarily
attributable to depreciation expense which is up $393,000, or 22.6% year-to-
date in 1995. The increase reflects major capital additions placed into
service in 1994 including a new operations center, a new office, renovations
and the purchase of furniture and equipment. Further capital add additions
are planned for the remainder of 1995 which will add to the current level of
depreciation expense.
Effective June 1, 1995, the Federal Deposit Insurance Corporation ("FDIC")
reduced deposit insurance premiums from $.23 per $100 in deposits to $.04 per
$100. In September the Company received $407,000 from the FDIC which
represented a rebate of prepaid premiums for the period June 1 through
September 30. This amount was recorded as a credit against premium expense
during the third quarter. On a prospective basis, at the Company's current
level of deposits, the premium reduction represents a pre-tax savings of
approximately $100,000 per month.
Other noninterest expense increased $53,000, or .79%, during the first
nine months of 1995. Excluding the FDIC rebate, the increase is $460,000, or
6.7%. A portion of this increase in associated with the recently completed
corporate reorganization and the newly consolidated Capital City Bank. The
expense categories which were primarily affected include advertising,
printing/supplies, telephone and postage.
Annualized net noninterest expense (noninterest income minus noninterest
expense) as a percent of average earning assets was 3.0% in 1995 versus 2.8%
for 1994. The increase in this percentage is attributable to nonrecurring
gains recognized in 1994 and the higher level of noninterest expense
discussed above.
Income Taxes
The provision for income taxes increased $290,000, or 33.3%, during the
third quarter and $137,000, or 5.1%, during the first nine months of 1995.
The Company's effective tax rate for the first nine months of 1995 was 28.7%
compared to 28.0% in 1994.
FINANCIAL CONDITION
The Company's average assets increased to $757.7 million in the first
nine months of 1995 from $745.7 million in 1994. Average earning assets were
$675.3 million for the nine months ended September 30, 1995 versus $668.7
million for the comparable period in 1994. Average loans are up $27.1
million, or 6.7%. The increase in loans was funded primarily through a
reduction in the investment portfolio. U.S. Government securities decreased
$15.0 million, or 10.2%, while municipal securities decreased $2.3 million,
or 3.2%. Table I on page 14, presents average balances for the three and
nine month periods of 1995 and 1994.
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
<PAGE>
securities in the "Held-to-Maturity" portfolio, which are recorded at amortized
cost. Securities in the available-for-sale portfolio are recorded at fair
value with unrealized gains and losses, net of deferred taxes, reported as a
seperate component of equity capital. See Note 2 in Notes to Consolidated
Financial Statements for further disclosure.
At September 30, 1995, the Company's nonperforming loans were $4.3
million versus $6.0 million at year-end and $6.9 million at September 30,
1994. As a percent of nonperforming loans, the allowance for loan losses
represented 164.4% at September 30, 1995 versus 126.6% at year-end and 113.6%
at September 30, 1994. 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
$750,000 at September 30, 1995, versus $1.6 million at December 31, 1994 and
$1.8 million at September 30, 1994.
Effective January 1, 1995, the Company adopted Statement of Financial
Accounting Standards No. 114 ("SFAS 114"), "Accounting by Creditors for
Impairment of a Loan," as amended. In accordance with SFAS 114, the
valuation allowance for loans which are deemed "impaired" is measured based
on the present value of expected future cash flows discounted at the loan's
initial effective interest rate or the fair value of the collateral, if the
loan is collateral dependent. See Note 4 in the Notes to Consolidated
Financial Statements for further information.
Average deposits increased from $650.0 million for the first nine months
of 1994, to $653.3 million in 1995. Although interest rates increased
significantly during 1994, there was little competitive pressure to increase
pricing and total deposits remained relatively stable. However, during the
first quarter of 1995, as competition increased and depositors sought higher
yields, the Company experienced a decline in average deposits. To combat the
deposit outflow management became more aggressive on pricing and by the end
of the first quarter had increased deposits to a level which exceeded that of
the fourth quarter of 1994. Average deposits during the third quarter of
1995 were $660.9 million compared to $635.1 million during the first quarter.
Although the level of deposits remained relatively constant during 1994,
there was a gradual shift from transaction and savings accounts to
certificates of deposits as interest rates rose and depositors become more
willing to invest in longer term, fixed rate maturities. During the first
nine months of 1995, this shift was further accentuated. Certificates of
deposit, on average, as a percent of total deposits increased to 39.3% in the
third quarter versus 34.4% for the comparable quarter in 1994 which impacted
the Company's net interest margin.
The ratio of average noninterest bearing deposits to total deposits was
24.3% for the first nine months of 1995 compared to 23.7% in 1994. For the
same periods, the ratio of average interest bearing liabilities to average
earning assets was 76.3% and 77.2%, 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 September 30, 1995, there
was no debt outstanding under either line.
The Company's equity capital was $80.5 million as of September 30, 1995,
compared to $72.4 million as of December 31, 1994. The Company's management
<PAGE>
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 10.4% at September 30, 1995 versus 9.6% at December 31, 1994.
Further, the Company's risk-adjusted capital ratio of 19.6% significantly
exceeds the 8.0% minimum requirement under the risk-based regulatory guide-
lines.
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 September 30, 1995, 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 1995, shareholders' equity increased
$8.1 million, or 14.8%, on an annualized basis. A portion of the increase
in equity is attributable to "unrealized gains and losses" on the available-
for-sale investment portfolio which improved from an unrealized loss of
$884,000 at year-end to an unrealized gain of $191,000 at September 30, 1995.
The Company's common stock had a book value of $28.20 per share at September
30, 1995 compared to $25.44 at December 31, 1994. Pursuant to the Company's
stock repurchase program adopted in 1989, the Company has repurchased 251,536
shares of its common stock, net of shares subsequently reissued. In the first
nine months of 1995, there were no shares repurchased and 7,892 treasury shares
were reissued, a majority of which were performance awards issued in accordance
with the Company's Stock Incentive Plan.
In March of 1995, the Financial Accounting Standards Board issued SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of". The statement must be adopted by the company on or
before January 1, 1996. The company has not yet adopted the standard. The
company is currently evaluating the impact of adoption.
In May 1995, the Financial Accounting Standards Board issued SFAS No. 122,
"Accounting for Mortgage Servicing Rights". The statement eliminates the
distinction between rights to service mortgage loans for others that are acquired
through origination and those acquired through purchase transactions. The
company must adopt the statement prospectively by January 1, 1996, but may adopt
earlier. The company has not yet adopted the standard. Adoption of the
standard will result in recognition of additional servicing right assets and
related income. The company is currently evaluating the impact of adoption.
<PAGE>
TABLE I
AVERAGES BALANCES & INTEREST RATES
(Taxable Equivalent Basis - Dollars in Thousands)
</TABLE>
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED SEPTEMBER 30 FOR NINE MONTHS ENDED SEPTEMBER 30
Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans, Net of Unearned Interest $432,791 $10,536 9.66 $410,819 $ 9,124 8.81% $429,061 $30,354 9.46% $401,965 $ 26,055 8.67%
Taxable Investment Securities 146,754 2,151 5.82 152,105 1,858 4.95% 135,681 5,698 5.62% 151,691 5,538 4.93%
Tax-Exempt Investment Securities 72,249 1,279 7.08 71,908 1,259 7.00% 69,993 3,735 7.11% 72,327 3,873 7.14%
Funds Sold 34,335 502 5.80 35,555 397 4.42% 40,576 1,814 5.98% 42,757 1,216 3.80%
Total Earning Assets 686,129 14,468 8.37 670,387 12,638 7.51% 675,311 $41,601 8.23% 668,740 36,682 7.34%
Cash & Due From Banks 48,440 43,013 48,496 46,223
Allowance for Loan Losses (7,254) (7,665) (7,528) (7,744)
Other Assets 41,295 39,233 41,423 38,475
TOTAL ASSETS $768,610 $744,968 $757,702 $745,694
LIABILITIES
NOW Accounts $ 91,435 422 1.83 $ 90,081 $483 2.13% $ 91,245 1,412 2.07% $ 94,012 $ 1,341 1.93%
Money Market Accounts 70,747 527 2.96 75,374 431 2.27% 69,841 1,586 3.04% 76,972 1,220 2.14%
Savings Accounts 81,443 436 2.12 107,151 652 2.42% 87,172 1,520 2.33% 109,527 1,971 2.41%
Other Time Deposits 259,581 3,713 5.68 222,838 1,934 3.44% 246,200 9,849 5.35% 215,500 5,622 3.49%
Total Int. Bearing Deposits 503,206 5,098 4.02 495,444 3,500 2.80% 494,458 14,367 3.88% 496,011 10,154 2.74%
Funds Purchased 18,953 252 5.27 17,175 168 3.88% 19,521 780 5.34% 17,925 451 3.36%
Other Borrowed Funds 1,407 14 3.85 872 8 3.88% 1,184 38 4.25% 947 22 3.17%
Long-Term Debt - - - 889 12 5.30% - - - 1,378 47 4.53%
Total Interest Bearing
Liabilities 523,566 5,364 4.07 514,380 3,688 2.84% 515,163 15,185 3.94% 516,261 10,674 2.77%
Noninterest Bearing Deposits 157,677 153,301 158,817 154,024
Other Liabilities 8,960 6,083 7,723 5,601
TOTAL LIABILITIES 690,203 673,764 681,703 675,886
SHAREHOLDERS' EQUITY
Common Stock 31 31 31 31
Surplus 5,868 5,852 5,866 5,853
Retained Earnings 72,508 65,321 70,102 63,924
TOTAL S'HOLDERS' EQUITY 78,407 71,204 75,999 69,808
TOTAL LIAB. & EQUITY $768,610 $744,968 $757,702 $745,694
Interest Rate Spread 4.31% 4.67% 4.29% 4.57%
Net interest Income $9,104 $8,950 $26,416 $26,008
Net Interest Margin 5.27% 5.33% 5.23% 5.20%
(1) Average balances include nonaccrual loans. Interest income includes fees on loans of approximately $422,000 and $1,119,000,
for the three and nine months ended September 30, 1995, versus $477,000 and $1,266,000, for the comparable periods ended September
30, 1994.
(2) Interest income includes the effects of taxable equivalent adjustments using a 34% tax rate.
</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, 1995.
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)
/S/___________________________
J. Kimbrough Davis
Senior Vice President and
Chief Financial Officer
Date: November 10, 1995
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<CIK> 0000726601
<NAME> CAPITAL CITY BANK GROUP, INC.
<MULTIPLIER> 1000
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<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
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<EPS-PRIMARY> 2.48
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<LOANS-NON> 2575
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