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, 1998
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 office) (Zip Code)
Registrant's telephone number, including area code:
(850) 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, 1998, there were 8,848,633 shares of the Registrant's
Common Stock, $.01 par value, outstanding.
CAPITAL CITY BANK GROUP, INC.
FORM 10-Q I N D E X
ITEM PART I. FINANCIAL INFORMATION PAGE NUMBER
1. Financial Statements 3
2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
3. Qualitative and Quantitative Disclosure of
Market Risk 19
ITEM PART II. OTHER INFORMATION
1. Legal Proceedings Not Applicable
2. Changes in Securities and Use of Proceeds Not Applicable
3. Defaults Upon Senior Securities Not Applicable
4. Submission of Matters to a Vote of
Security Holders Not Applicable
5. Other Information 21
6. Exhibits and Reports on Form 8-K 21
Signatures 21
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED SEPTEMBER 30
(UNAUDITED)
(Dollars In Thousands, Except Per Share Amounts)(1)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $16,768 $16,542 $50,625 $47,746
Investment Securities:
U.S. Treasury 484 904 1,299 2,943
U.S. Gov. Agencies/Corp. 661 684 2,150 2,286
States and Political Subdivisions 704 784 2,131 2,432
Other Securities 87 82 262 267
Funds Sold 779 366 2,309 982
Total Interest Income 19,483 19,362 58,776 56,656
INTEREST EXPENSE
Deposits 6,969 6,597 20,780 19,545
Short-Term Borrowings 449 514 1,500 1,400
Long-Term Debt 268 291 828 893
Total Interest Expense 7,686 7,402 23,108 21,838
Net Interest Income 11,797 11,960 35,668 34,818
Provision for Loan Losses 558 449 1,602 1,351
Net Interest Income After
Provision for Loan Losses 11,239 11,511 34,066 33,467
NONINTEREST INCOME
Service Charges on Deposit Accounts 1,885 2,021 5,851 6,075
Data Processing 740 724 2,581 2,461
Income from Fiduciary Activities 448 269 1,229 797
Securities Transactions 33 (3) 57
(5)
Other 1,953 1,383 5,966 4,368
Total Noninterest Income 5,059 4,394 15,684 13,696
NONINTEREST EXPENSE
Salaries and Employee Benefits 5,975 5,903 18,662 17,587
Occupancy, Net 826 771 2,406 2,252
Furniture and Equipment 1,325 1,241 3,718 3,665
Other 3,145 3,059 10,014 9,249
Total Noninterest Expense 11,271 10,974 34,800 32,753
Income Before Income Tax 5,027 4,931 14,950 14,410
Income Tax Expense 1,759 1,664 5,134 4,825
NET INCOME $ 3,268 $ 3,267 $ 9,816 $ 9,585
Net Income Per Basic Share $ .37 $ .37 $ 1.11 $ 1.10
Net Income Per Diluted Share $ .37 $ .37 $ 1.11 $ 1.10
Cash Dividends Per Share $ .11 $ .10 $ .33 $ .30
Average Shares Outstanding 8,848,628 8,745,632 8,830,451 8,709,710
(1) Prior period share and per share information have been restated to reflect a 3-
for-2 stock split effective June 1, 1998.
</TABLE>
<TABLE>
CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF CONDITION
AS OF SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
(Dollars In Thousands, Except Per Share Amounts)(1)
<CAPTION>
September 30, December 31,
1998 1997
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Cash and Due From Banks $ 60,858 $ 61,270
Funds Sold 61,916 52,519
Investment Securities, Available-for-Sale 146,298 148,514
Loans, Net of Unearned Interest 751,752 697,726
Allowance for Loan Losses (8,801) (8,322)
Loans, Net 742,951 689,404
Premises and Equipment, Net 31,118 31,613
Intangibles 10,240 7,703
Other Assets 23,889 18,650
Total Assets $1,077,270 $1,009,673
LIABILITIES
Deposits:
Noninterest Bearing Deposits $ 215,103 $ 191,797
Interest Bearing Deposits 684,474 643,015
Total Deposits 899,577 834,812
Short-Term Borrowings 39,675 46,114
Long-Term Debt 14,647 15,896
Other Liabilities 13,811 12,401
Total Liabilities 967,710 909,223
SHAREOWNERS' EQUITY
Preferred Stock, $.01 par value,
3,000,000 shares authorized, no
shares outstanding - -
Common Stock, $.01 par value; 90,000,000
shares authorized; 8,848,630 shares
outstanding at September 30,1998
and 8,776,085 outstanding at
December 31, 1997 88 88
Additional Paid In Capital 8,357 6,507
Retained Earnings 100,185 93,288
Net Unrealized Gain on
Available-for-Sale Securities 930 567
Total Shareowners' Equity 109,560 100,450
Total Liabilities and Shareowners' Equity $1,077,270 $1,009,673
(1) Prior period share and per share data have been restated to reflect a 3-for-2
stock split effective June 1, 1998.
</TABLE>
<TABLE>
CAPITAL CITY BANK GROUP, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30
(Dollars In Thousands)
<CAPTION>
1998 1997
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 9,816 $ 9,585
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Provision for Loan Losses 1,602 1,351
Depreciation 2,411 2,441
Net Securities Amortization 544 501
Amortization of Intangible Assets 773 714
Gain on Sales of Investment Securities (57) 5
Non-Cash Compensation 1,248 185
Net Increase in Interest Receivable (339) (119)
Net (Increase) Decrease in Other Assets (4,594) 1,753
Net Increase (Decrease) in Other
Liabilities 1,200 (341)
Net Cash Provided by Operating Activities 12,604 16,075
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Payments/Maturities of
Investment Securities Available-for-Sale 49,742 43,415
Purchase of Investment Securities
Available-for-Sale (47,438) (2,925)
Net Increase in Loans (10,712) (32,691)
Net Cash Received from Acquisition 7,022 -
Purchase of Premises & Equipment (1,772) (1,270)
Sales of Premises & Equipment 278 1,157
Net Cash Used in Investing Activities (2,880) 7,686
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase (Decrease) in Deposits 9,267 (40,849)
Net Increase (Decrease) Short-Term Borrowings (6,439) 1,499
Borrowing from Long-Term Debt 2,400
Repayment of Long-Term Debt (3,649) (1,632)
Dividends Paid (2,916) (2,613)
Issuance of Common Stock 598 1,217
Net Cash Used in Financing Activities (739) (42,378)
Net Increase (Decrease) in Cash and
Cash Equivalents 8,985 (18,617)
Cash and Cash Equivalents at Beginning of
Period 113,789 88,906
Cash and Cash Equivalents at End of Period $122,774 $ 70,289
Supplemental Disclosure:
Interest Paid $ 21,696 $ 19,926
Transfer of Loans to ORE $ 1,818 $ 1,312
Income Taxes Paid $ 5,727 $ 5,159
</TABLE>
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
S-X and S-K 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, including the
restatement of share and per share data to reflect a 3-for-2 stock split
effective June 1, 1998.
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, 1998 and December 31, 1997, the results of operations for the
three and nine month periods ended September 30, 1998 and 1997, and cash
flows for the nine month periods ended September 30, 1998 and 1997.
The Company and its subsidiaries follow generally accepted accounting
principles and reporting practices applicable to the banking industry.
The principles which materially affect its financial position, results of
operations and cash flows are set forth in Notes to Financial Statements
which are included in the Company's 1997 Annual Report and Form 10-K.
(2) INVESTMENT SECURITIES
The carrying value and related market value of investment securities at
September 30, 1998 and December 31, 1997 were as follows
(dollars in thousands):
September 30, 1998
Amortized Unrealized Unrealized Market
Available-For-Sale Cost Gains Losses Value
U.S. Treasury $ 33,139 $ 210 $ - $ 33,349
U.S. Government Agencies
and Corporations 26,245 135 60 26,320
States and Political
Subdivisions 63,198 953 1 64,150
Mortgage Backed Securities 17,142 220 5 17,357
Other Securities 5,105 17 - 5,122
Total $144,829 $1,535 $66 $146,298
December 31, 1997
Amortized Unrealized Unrealized Market
Available-For-Sale Cost Gains Losses Value
U.S. Treasury $ 24,345 $ 42 $ 4 $ 24,383
U.S. Government Agencies
and Corporations 32,036 55 60 32,031
States and Political
Subdivisions 63,661 593 10 64,244
Mortgage Backed Securities 22,644 326 48 22,922
Other Securities 4,933 4 - 4,937
Total $147,619 $1,020 $122 $148,51
(3) LOANS
The composition of the Company's loan portfolio at September 30, 1998 and
December 31, 1997 was as follows (dollars in thousands):
September 30, 1998 December 31, 1997
Commercial, Financial
and Agricultural $ 70,153 $ 53,888
Real Estate-Construction 43,747 45,563
Real Estate-Mortgage 489,475 456,499
Consumer 148,377 141,776
Loans, Net of Unearned Interest $751,752 $697,726
(4) ALLOWANCE FOR LOAN LOSSES
An analysis of the changes in the allowance for loan losses for the nine
month period ended September 30, 1998 and 1997, is as follows
(dollars in thousands):
September 30, 1998 September 30, 1997
Balance, Beginning of the Period $8,322 $8,179
Acquired Reserves - -
Provision for Loan Losses 1,602 1,351
Recoveries on Loans Previously
Charged-Off 699 523
Loans Charged-Off (1,822) (1,548)
Balance, End of Period $8,801 $8,505
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):
<TABLE>
<CAPTION>
September 30,
1998 1997
Impaired Loans: Valuation Valuation
Balance Allowance Balance Allowance
<S> <C> <C> <C> <C>
With Related Credit Allowance $2,786 $514 $ 158 $ 81
Without Related Credit Allowance 1,642 - 822 -
Average Recorded Investment
for the Period 5,405 N/A 2,236 N/A
Interest Income:
Recognized $ 64 $ 74
Collected $ 62 $ 72
The Company recognizes income on nonaccrual loans primarily on the cash basis.
Any change in the present value of expected cash flows is recognized through
the allowance for loan losses.
</TABLE>
(5) DEPOSITS
The composition of the Company's interest bearing deposits at
September 30, 1998 and December 31, 1997 was as follows
(dollars in thousands):
September 30, 1998 December 31, 1997
NOW Accounts $ 97,476 $113,163
Money Market Accounts 79,925 79,010
Savings Deposits 93,847 80,476
Other Time Deposits 413,226 370,366
Total Interest Bearing Deposits $684,474 $643,015
(6) ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards "SFAS" No. 130, "Reporting Comprehensive Income".
Statement 130 provides new accounting and reporting standards for reporting
and displaying comprehensive income and its components in a full set of
general-purpose financial statements. The adoption of this standard did not
have a material impact on reported results of operations of the Company.
In June 1998, the Financial Accounting Standards Board "FASB" issued
SFAS No. 133 "Accounting for Derivative Instruments of Hedging Activities".
The statement establishes accounting and reporting standards for derivative
instruments (including certain derivative instruments imbedded in other
contracts). The statement is effective for fiscal years beginning after
June 15, 1999. Management has not yet assessed the impact of this standard
on the reported results of operations of the company.
In October 1998, the FASB issued SFAS No. 134 "Accounting for Mortgage-Backed
Securities Retained after the Securitization of Mortgage Loans Held for Sale
by a Mortgage Banking Enterprise". The statement amends Statement 65 to
require that after the securitization of mortgage loans held for sale, an
entity engaged in mortgage banking activities classify the resulting
mortgage-baked securities or other retained interests based on its ability
and intent to sell or hold those investments. This statements shall be
effective for the first fiscal quarter beginning after December 15, 1998.
The adoption of this standard is not expected to have a material impact on
the reported results of operations of the Company.
(7) COMPREHENSIVE INCOME
Total comprehensive income is defined as net income and all other changes
in equity which, for Capital City Bank Group, consists solely of changes in
unrealized gains (losses) on available-for-sale securities. The Company
reported total comprehensive income, net of tax, for the three and nine month
periods ended September 30, 1998 and 1997, as follows (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net Income $3,268 $3,267 $ 9,816 $9,585
Other Comprehensive Income, Net of Tax
Unrealized Gains (Losses) on Securities:
Unrealized Gains (Losses) on Securities
Arising During the Period 371 258 420 405
Less: Reclassification Adjustments for
Gains (Losses) Included in Net Income 33 (3) 57 (5)
Total Unrealized Gains (Losses)
On Securities , Net of Tax 338 261 363 410
Total Comprehensive Income, Net of Tax $3,606 $3,528 $10,179 $9,995
</TABLE>
<TABLE>
SELECTED QUARTERLY FINANCIAL DATA
UNAUDITED
(Dollars in Thousands, Except Per Share Data)(1)
<CAPTION>
1998 1997 1996
Third Second First Fourth Third Second First Fourth
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations:
Interest Income $ 19,483 $ 19,933 $ 19,360 $ 19,008 $ 19,362 $ 18,865 $ 18,429 $ 18,850
Interest Expense 7,686 7,831 7,590 7,302 7,402 7,360 7,076 7,651
Net Interest Income 11,797 12,102 11,770 11,706 11,960 11,505 11,353 11,199
Provision for
Loan Loss 558 558 486 437 449 446 456 606
Net interest Income
After Provision
for Loan Loss 11,239 11,544 11,284 11,269 11,511 11,059 10,897 10,593
Noninterest Income 5,059 5,644 4,986 4,895 4,394 4,852 4,450 4,497
Noninterest Expense 11,271 11,966 11,569 12,012 10,974 10,978 10,801 10,740
Income Before
Provision for
Income Taxes 5,027 5,222 4,701 4,152 4,931 4,933 4,546 4,350
Provision for
Income Taxes 1,759 1,775 1,600 1,299 1,664 1,657 1,504 1,384
Net Income $ 3,268 $ 3,447 $ 3,101 $ 2,853 $ 3,267 $ 3,276 $ 3,042 $ 2,966
Net Interest
Income (FTE) $ 12,147 $ 12,445 $ 12,131 $ 12,059 $ 12,366 $ 11,929 $ 11,780 $ 11,676
Per Common Share:
Net Income Basic $ .37 $ .39 $ .35 $ .33 $ .37 $ .38 $ .35 $ .35
Net Income Diluted .37 .39 .35 .32 .37 .38 .35 .35
Dividends Declared .11 .11 .11 .11 .10 .10 .10 .10
Book Value 12.38 12.08 11.77 11.45 11.23 10.91 10.55 10.33
Market Price(2):
High 33.13 32.67 32.67 27.33 23.50 21.50 21.33 14.00
Low 19.00 29.75 29.25 23.00 20.83 19.33 14.00 14.00
Close 29.13 31.38 31.67 27.00 23.17 20.83 20.16 14.00
Selected Average
Balances:
Total Assets $1,052,301 $1,046,842 $1,038,806 $1,001,661 $1,003,170 $999,888 $999,837 $1,029,891
Earning Assets 946,601 938,970 933,052 898,383 905,722 902,970 896,130 926,169
Loans, Net of Unearned 745,257 741,914 731,204 700,158 704,222 687,280 678,730 672,672
Total Deposits 875,938 872,087 862,875 828,239 838,732 842,847 839,959 858,301
Total Shareowners'
Equity 107,545 104,580 102,393 98,920 96,448 92,375 90,621 87,580
Common Equivalent
Shares 8,848 8,830 8,812 8,757 8,745 8,694 8,688 8,616
Ratios:
ROA 1.23% 1.32% 1.21% 1.13% 1.29% 1.31% 1.23% 1.15%
ROE 12.06% 13.22% 12.28% 11.45% 13.44% 14.22% 13.61% 13.47%
Net Interest
Margin (FTE) 5.10% 5.31% 5.27% 5.33% 5.42% 5.30% 5.32% 5.03%
(1) All share and per share data have been adjusted to reflect the three-for-two stock split effective
June 1, 1998.
(2) Prior to February 3, 1997, there was not an established trading market for the common stock of
Capital City Bank Group, Inc.
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following analysis discusses important factors affecting the financial
condition and results of operations of Capital City Bank Group, Inc., for the
three and nine month periods ended September 30, 1998 and 1997. This report
contains forward-looking statements within the meaning of the federal
securities laws such as interest rate sensitivity projections, revenue and
expense trends, and long-term objectives. The forward looking statements in
this report are subject to risks and uncertainties that could cause actual
results to differ materially from those expressed in or implied by the
statements.
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. All prior period
share and per share data have been adjusted to reflect a three-for-two stock
split effective June 1, 1998. The year-to-date averages used in this report
are based on daily balances for each respective period.
The Financial Review is divided into three subsections entitled Earnings
Analysis, Financial Condition, and Liquidity and Capital Resources.
Information therein should facilitate a better understanding of the major
factors and trends which affect the Company's earnings performance and
financial condition, and how the Company's performance during 1998 compares
with prior years. Throughout this section, Capital City Bank Group, Inc.,
and its subsidiary, collectively, are referred to as "CCBG" or the "Company."
On January 31, 1998, the Company completed its purchase and assumption
transaction with First Federal Savings & Loan Association of Lakeland, Florida
("First Federal-Florida") and acquired five of First Federal-Florida's branch
facilities which included loans and deposits. The transaction created
approximately $3.3 million in goodwill and other intangible assets and the
Company assumed $55 million in deposits and purchased $44 million of loans.
Four of the five offices were merged into existing offices of Capital City
Bank. The goodwill is being amortized over fifteen years.
On August 27, 1998, the Company entered into a definitive purchase and
assumption agreement with First Union National Bank ("First Union") to
acquire eight of First Union's branch facilities which includes deposits.
The Company agreed to pay a deposit premium of approximately $19.2 million,
to assume approximately $218 million in deposits and acquire certain real
estate. The transaction will be completed before year-end.
RESULTS OF OPERATIONS
Net Income
Net income of $3.3 million, or $.37 per basic and diluted share for the third
quarter of 1998, was constant with the comparable period in 1997. Net income
was $9.8 million, or $1.11 per basic and diluted share for the nine months
ended September 30, 1998, a per share increase of 0.9% over the $9.6 million,
or $1.10 per basic and diluted share for comparable period in 1997. Operating
revenue, which includes net interest income and noninterest income, increased
$2.8 million, or 5.8%, over the first nine months of 1997, and was the most
significant factor contributing to the increase in earnings.
For The Three For The Nine
Months Ended Months Ended
September 30, September 30,
1998 1997 1998 1997
Interest and Dividend Income $19,483 $19,362 $58,776 $56,656
Taxable Equivalent Adjustment(1) 351 406 1,055 1,257
19,834 19,768 59,831 57,913
Interest Expense 7,686 7,402 23,108 21,838
Net Interest Income (FTE) 12,148 12,366 36,723 36,075
Provision for Loan Losses 558 449 1,602 1,351
Taxable Equivalent Adjustment 351 406 1,055 1,257
Net Interest Income
After Provision 11,239 11,511 34,066 33,467
Noninterest Income 5,059 4,394 15,684 13,696
Noninterest Expense 11,271 10,974 34,800 32,753
Income Before Income Taxes 5,027 4,931 14,950 14,410
Income Taxes 1,759 1,664 5,134 4,825
Net Income $ 3,268 $ 3,267 $ 9,816 $ 9,585
Percent Change over comparable
prior year period .03% 7.29% 2.41% 14.19%
Return on Average Assets (2) 1.23% 1.29% 1.25% 1.28%
Return on Average Equity (2) 12.06% 13.44% 12.52% 13.76%
(1) Computed using a statutory tax rate of 35%
(2) Annualized
Net Interest Income
Third quarter taxable equivalent net interest income declined $218,000,
or 1.8%, over the comparable quarter in 1997. This decline is attributable
to a 32 basis point decline in the net yield on earning assets, more than
offsetting the increase in net interest income attributable to growth.
Taxable equivalent net interest income for the nine month period of 1998
increased $648,000 million, or 1.8%, over the same period of 1997. This
increase is attributable to a higher level of earning assets, reflecting
growth in the loan portfolio. Loans purchased in the First Federal-Florida
transaction account for approximately 75% of the total growth in the
average loan portfolio. Partially offsetting the increase due to loan volume
was a reduction of 13 basis points in the net yield on earning assets.
Table I on page 18 provides a comparative analysis of the Company's average
balances and interest rates.
For the three and nine month periods ended September 30, 1998,
taxable-equivalent interest income increased $66,000, or 0.3%, and
$1.9 million, or 3.3%, respectively, over the comparable prior year periods.
The increase in both periods is due to growth in the loan portfolio resulting
from the First Federal-Florida acquisition. Partially offsetting these
favorable variances attributable to growth, was a decrease in the yield on
earning assets of 34 and 8 basis points, respectively, reflecting the general
decline in interest rates. Loans which represent the Company's highest
yielding asset, increased (on average) $49.4 million, or 7.2% and represented
78.7% of total earning assets for the nine months ended September 30, 1998
versus 76.6% for the comparable period in 1997. This shift in the mix of
earning assets and reduction of interest rates, led to a 8 basis point
decrease in the yield on earning assets which declined from 8.59% during the
first nine months of 1997 to 8.51% for the comparable period in 1998.
Interest expense for the three and nine month periods ended September 30, 1998,
increased $284,000, or 3.8%, and $1.3 million, or 5.8%, respectively, over the
comparable prior year periods. The increase in both periods is primarily due
to growth in deposits. Certificates of deposit, which generally represent a
higher cost of funds than other deposit offerings, increased as a percent of
average deposits from 45.8% in the nine months of 1997 to 46.8% in 1998.
This shift in deposit mix is attributable to the mix of deposits acquired
from First Federal-Florida and led to a 10 basis point increase in the
average rate paid on interest bearing liabilities, which rose from 4.11% in
the first nine months of 1997 to 4.21% in 1998.
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) for the three and nine month periods ended September 30, 1998
was 4.17% and 4.30%, respectively, compared to 4.48% and 4.47% for the
comparable periods in 1997. The decline in spread is attributable to lower
yields on earning assets reflecting the general decline in interest rates.
The Company's net yield on earning assets (defined as taxable-equivalent net
interest income divided by average earning assets) for the three and nine
month periods ended September 30, 1998 was 5.10% and 5.22%, respectively,
compared to 5.42% and 5.35% for the comparable periods in 1997. The decline
in the margin is due to lower yields on earning assets and an increase
in the costs of interest bearing liabilities.
Provision for Loan Losses
The provision for loan losses was $558,000 and $1.6 million, respectively,
for the three and nine month periods ended September 30, 1998, compared to
$449,000 and $1.4 million for the comparable periods in 1997. Net charge-offs
were up from the first nine months of 1997, but remain at low levels relative
to the size of the loan portfolio. Nonperforming loans increased $4.2 million,
or 255.1%, during the first nine months of 1998. As compared to year-end, the
reserve for loan losses increased slightly to $8.8 million, and represented
1.17% of total loans versus 1.19%.
Based on current economic conditions, the low level of nonperforming loans,
and net charge-offs, it is management's opinion the allowance for loan losses
as of September 30, 1998 is sufficient to provide for losses inherent in the
loan portfolio as of that date.
For a discussion of the Company's nonperforming loans, see the section
entitled "Financial Condition."
Charge-off activity for the respective periods is set forth below.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
9/30/98 9/30/97 9/30/98 9/30/97
<S> <C> <C> <C> <C>
Net Charge-Offs $504,000 $393,000 $1,123,000 $1,025,000
Net Charge-Offs (Annualized)
as a percent of Average
Loans Outstanding, Net of
Unearned Interest .27% .22% .20% .20%
</TABLE>
Noninterest Income
Noninterest income increased $665,000 million, or 15.1%, in the third quarter
of 1998 versus the comparable quarter for 1997, and $2.0 million, or 14.5%,
for the nine months ended September 30, 1998 versus the comparable period for
1997. All major categories except service charges reflected an increase.
Service charges on deposit accounts declined $136,000, or 6.7%, and $224,000,
or 3.7%, respectively, over the comparable three and nine month periods for
1997. The decline for the first nine months of 1998, reflects a reduction in
the number of deposit accounts, higher compensating balances and an increase
in charged-off deposit accounts. During the third quarter, the Company
reviewed its fee structure for service charges and will implement a new fee
structure in the fourth quarter.
Data processing revenues increased $16,000, or 2.2%, and $120,000, or 4.9%,
respectively, over the comparable three and nine month periods in 1997. The
increase reflects higher processing revenues associated with third party banks.
Investment management and trust revenues increased $179,000, or 66.5%,
and $432,000, or 54.2%, respectively, over the comparable three and nine
month periods in 1997. At September 30, 1998, assets under management
totaled $238.7 million compared to $185.7 million at year-end.
Other income increased $570,000, or 41.2%, and $1.6 million or 36.6%,
respectively, for the three and nine month periods ended September 30, 1998,
over the comparable prior year periods. Gains on the sale of residential
real estate loans increased $541,000, reflecting increased volume of loans
sold to the secondary market due to the higher level of fixed rate loan
production during 1998. The Company recorded a $226,000 gain on the sale of
other real estate during the second quarter. ATM fees, interchange
commissions, credit life commissions and VISA cardholder fees account
for the remaining favorable variance.
Noninterest income as a percent of average assets was 2.00% and 1.83%,
respectively for the first nine months of 1998 and 1997.
Noninterest Expense
Noninterest expense increased $297,000, or 2.7%, and $2.0 million, or 6.3%,
respectively, over the comparable three and nine month periods in 1997. The
increase reflects higher costs in all major expense categories for the three
and nine months ended September 30, 1998.
Compensation expense increased $72,000, or 1.2%, and $1.1 million, or 6.1%,
respectively, over the comparable three and nine month periods of 1997,
reflecting annual raises and increases in commissions and incentives.
During the first quarter of 1998, the Company added staff to capitalize on
competitive opportunities arising as a result of mergers of other commercial
banks within its market.
Occupancy expense, including premises, furniture, fixtures and equipment
increased $139,000, or 6.9%, and $207,000, or 3.5%, respectively, over the
comparable three and nine month periods in 1997. The increase is primarily
attributable to increased costs for maintenance and repairs offset partially
by a reduction in other FF&E costs.
Other noninterest expense increased $86,000, or 2.8%, and $765,000, or 8.3%,
respectively, over the comparable three and nine month periods in 1997. The
increase was attributable to professional fees of $176,000, advertising of
$325,000, printing and supplies cost of $77,000, telephone of $76,000 and
intangible amortization of $126,000. Professional fees reflect costs
associated with the completion of an extensive review of the Bank's operations.
The increase in advertising is attributable to greater product and market
development.
Annualized net noninterest expense (noninterest income minus noninterest
expense, net of intangibles) as a percent of average assets was 2.34% in the
first nine months of 1998 versus 2.46% for the first nine months of 1997.
The Company's efficiency ratio (noninterest expense, net of intangibles,
expressed as a percent of the sum of taxable-equivalent net interest income
plus noninterest income) was 64.93% for the first nine months of 1998 compared
to 64.44% for the comparable period in 1997. The increase in the efficiency
ratio reflects rising costs noted above.
Income Taxes
The provision for income taxes increased $95,000, or 5.7%, during the third
quarter and $309,000, or 6.4%, during the first nine months of 1998. The
increase in the provision over the prior year is attributable to higher
taxable income. The Company's effective tax rate for the first nine months
of 1998 was 34.3%, versus 33.5% for the comparable period in 1997. The
increase in the effective tax rate is attributable to a decrease in tax
exempt income as a percent of taxable income.
FINANCIAL CONDITION
Average balances for the first nine months of 1998 reflect the acquisition of
First Federal-Florida which was completed on January 31, 1998. Table I on
Page 18 presents average balances for the three and nine month periods ended
September 30, 1998 and 1997.
For the first nine months of 1998, the Company's average assets increased
$45.2 million, or 4.5%, compared to the comparable period in 1997. Average
earning assets were $939.7 million for the nine months ended September 30, 1998
versus $901.7 million for the comparable period in 1997. The most significant
shift in the mix of earning assets occurred through growth in the loan
portfolio. The increase in the loan portfolio reflects the First Federal-
Florida acquisition and internal loan growth. Maturities in the investment
portfolio were used to fund loan growth and improve overall liquidity.
Average loans increased $49.4 million, or 7.2%, over the comparable period
in 1997. Loan growth has occurred in all of the portfolios, with the most
significant increase in real estate. Loans as a percent of average assets
increased to 78.7% for the third quarter of 1998, compared to 76.6% for the
third quarter of 1997.
The investment portfolio is a significant component of the Company's
operations and, as such, it functions as a key element of liquidity and
asset/liability management. As of September 30, 1998, the average investment
portfolio declined $42.8 million, or 22.9%, from the comparable period in 1997.
The decline in the investment portfolio was used to fund loan growth and
provide additional liquidity. Securities in the Available-for-Sale portfolio
are recorded at fair value and unrealized gains and losses associated with
these securities are recorded, net of tax, as a separate component of
shareowners' equity. At September 30, 1998, shareowners' equity included a
net unrealized gain of $930,000 compared to a net gain of $567,000 at
December 31, 1997. The increase in value reflects a decline in interest
rates which occurred during the third quarter.
At September 30, 1998, the Company's nonperforming loans were $5.8 million
versus $1.6 million at year-end 1997 and $2.4 million at September 30, 1997.
As a percent of nonperforming loans, the allowance for loan losses represented
152% at September 30, 1998 versus 512% at December 31, 1997 and 355% at
September 30, 1997. 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 $1.5 million at
September 30, 1998 versus $1.2 million at December 31, 1997 and $2.3 million
at September 30, 1997. The ratio of nonperforming assets to loans plus other
real estate was .97% at September 30, 1998 compared to .41% at December 31,
1997 and .66% at September 30, 1997.
Average deposits increased 3.6% from the $840.4 million for the first
nine months of 1997, to 870.4 million for the first nine months of 1998.
The growth in deposits is attributable to the acquisition of First Federal-
Florida. During the first nine months of 1998, average certificates of
deposit represented 46.8% of total deposits compared to 45.8% for the
comparable prior year period. This shift in mix has contributed to a slight
increase in the Company's cost of funds that averaged 3.29% in the first nine
months of 1998 versus 3.24% in 1997. Starting in the fourth quarter, the
Company added a high yielding money market account to its array of products.
The ratio of average noninterest bearing deposits to total deposits was 22.0%
for the first nine months of 1998 compared to 21.9% for the first nine months
of 1997. For the same periods, the ratio of average interest bearing
liabilities to average arning assets was 78.1% and 78.7%, respectively.
The change in both ratios is primarily attributable to the increase in
noninterest bearing deposits.
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 bank 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 and the Federal Home Loan Bank.
Additionally, the parent company maintains a $25.0 million revolving line of
credit. As of September 30, 1998, there was $9.5 million outstanding and
$15.5 million available under this credit facility.
The Company's equity capital was $109.6 million as of September 30, 1998,
compared to $100.5 million as of December 31, 1997. Management continues to
monitor its capital position in relation to its level of assets with the
objective of maintaining a "Well Capitalized" position. The leverage ratio
was 9.2% at September 30, 1998 and December 31, 1997, respectively. Further,
the Company's risk-adjusted capital ratio of 13.8% 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 agreement
place certain restrictions on the payment of dividends by both the Company and
its subsidiary bank. At September 30, 1998, these regulations and covenants
did not impair the Company's (or its subsidiary's) ability to declare and pay
dividends or to meet other existing obligations.
During the first nine months of 1998, shareowners' equity increased $9.1
million, or 12.1%, on an annualized basis. Growth in equity during the first
nine months was positively impacted by net income of $9.8 million, stock
issuances of $1.8 million and a net unrealized gain on available-for-sale
securities of $363,000. Dividends paid during the first three quarters
totaled $2.9 million, or $.33 per share.
The Company's common stock had a book value of $12.38 per share at
September 30, 1998 compared to $11.45 per share at December 31, 1997. Pursuant
to the Company's stock repurchase program adopted in 1989, the Company has
repurchased 790,740 (split adjusted) shares of its common stock. In the first
nine months of 1998, there were no shares repurchased.
Year 2000 Compliance
Introduction
The YEAR 2000 issue creates challenges with respect to the automated systems
used by financial institutions and other companies. Many programs and systems
are not able to recognize the year 2000, or that the new millennium is a leap
year. The problem is not limited to computer systems. YEAR 2000 issues will
potentially affect every system that has an embedded microchip containing
this flaw.
The YEAR 2000 challenge impacts the Company as many of its transactions are
date sensitive. The Company also is affected by the ability of its vendors,
suppliers, customers and other third parties to be YEAR 2000 compliant.
State of Readiness
The Company is committed to addressing the YEAR 2000 challenges in a prompt
and responsible manner and has dedicated significant resources to do so. An
assessment of the Company's automated systems and third party operations was
completed and a plan has been implemented. The Company's YEAR 2000 compliance
plan ("Y2K Plan") has six phases. These phases are (1) project management,
(2) awareness, (3) assessment, (4) testing, (5) renovation and implementation,
and (6) customer awareness, verification and risk assessment. The Company has
substantially completed phases one through three, and six, although appropriate
follow-up activities are continuing to occur. The Company will continue the
testing and implementation phases of the Y2K Plan.
1. Project Management. The Company has assigned primary responsibility for
the YEAR 2000 project to the President of Capital City Services Company, a
wholly-owned subsidiary of Capital City Bank Group, Inc. Also, the Company
has hired an outside consultant to assist in the implementation of the project.
Monthly updates are provided to senior management and quarterly updates are
provided to the Board of Directors in order to assist them in overseeing the
Company's readiness.
2. Awareness. The Company implemented several projects designed to promote
awareness of YEAR 2000 issues throughout the organization and with its customer
base. These projects include providing training for electronic data processing
("EDP") associates, responding to inquiries from customers, vendors and
shareowners, and providing YEAR 2000 information on the Company's web site
(www.ccbg.com).
3. Assessment. The Company has completed this phase of the compliance plan.
Information Technology ("IT") and non-IT systems have been assessed and mission
critical applications that could potentially be affected have been identified.
Mission critical is defined as anything that may have a material adverse
effect on the Company if not YEAR 2000 compliant.
The Company's operations are intertwined with the operations of certain third
parties. Accordingly, the Company's operations could be materially affected by
the operations of the third parties that provide the Company with mission
critical IT and Non-IT systems. In response to this concern, the Company has
identified and contacted the third parties who provide mission critical
applications. The Company has received YEAR 2000 compliance assurances from
third parties who provide mission critical applications and will continue to
monitor and test their efforts for Year 2000 compliance.
4. Testing. The Company's testing of mission critical systems will be 90%
complete by December 31, 1998 and will be completed by March 1999.
5. Renovation and implementation. The Company is upgrading and replacing IT
and Non-IT systems where appropriate and all such replacements should be
substantially complete by March 31, 1999. As IT and Non-IT systems and
applications are implemented, the Company will continue to test them for
YEAR 2000 compliance.
6. Customer Awareness, Verification and Risk Assessment. The Company has
incorporated into its web site information regarding YEAR 2000. Lending
officers have been trained on YEAR 2000 issues and have documented YEAR 2000
readiness of borrowers. Significant borrowers were mailed a questionnaire
and have been assigned a YEAR 2000 risk rating by the Company. Appropriate
response to current and future credit requests will take their YEAR 2000
status into consideration. Continuation of these and additional activities
are planned for the remainder of 1998 and 1999.
Estimated Costs to Address the Company's YEAR 2000 Issues
Costs directly related to YEAR 2000 issues are estimated to be $750,000 from
1998 to 2000, of which 21% has been spent to date. Approximately 75% of the
total spending represents costs to modify existing systems. Costs incurred
by the Company prior to 1998 were immaterial. This estimate assumes that the
Company will not incur significant YEAR 2000 related costs on behalf of its
vendors, suppliers, customers and other third parties.
Risks of the Company's YEAR 2000 Issues
The year 2000 presents certain risks to the Company and its operations.
Some risks are present because the Company purchased technology applications
from other parties who face YEAR 2000 challenges and additional risks that
are inherent in the business of banking. Management has identified the
following potential risks which could have a material adverse effect on the
Company's business.
1. The Company's subsidiary bank may experience a liquidity problem if
there is a significant amount of deposits withdrawn by customers who have
uncertainties associated with the YEAR 2000. The Company has implemented a
contingency plan to ensure there are appropriate levels of funding available.
2. The Company's operations could be materially affected by the failure of
third parties who provide mission critical IT and Non-IT systems. The Company
has identified its mission critical third parties and will monitor their
Y2K Plan progress.
3. The Company's ability to operate effectively in the year 2000 could be
adversely affected by the ability to communicate and access to utilities.
The Company is in the process of incorporating a contingency plan for
addressing this situation.
4. The Company's subsidiary bank lends significant amounts to businesses and
contractors in our market area. If the businesses are adversely affected by
the YEAR 2000 issues, their ability to repay loans could be impaired and
increased credit risk could affect the Company's financial performance. As
part of the Company's Y2K Plan, the Company has identified its significant
borrowers, and has documented their YEAR 2000 readiness and risk to the
Company.
5. Sanctions could be imposed against the Company if it does not meet
deadlines or ollow timetables established by the federal and state governmental
agencies which regulate the Company and its subsidiaries. The Company has
incorporated the regulatory guidelines for YEAR 2000 into its Y2K Plan.
Contingency Plan
Contingency plans for YEAR 2000 related interruptions are being developed and
will include, but not be limited to, the development of emergency backup and
recovery procedures, remediation of existing systems parallel with installation
of new systems, replacing electronic applications with manual processes, and
identification of alternate suppliers. All plans are expected to be completed
by December 31, 1998.
<TABLE>
AVERAGES BALANCES & INTEREST RATES
(Taxable Equivalent Basis - Dollars in Thousands)
<CAPTION>
FOR THREE MONTHS ENDED SEPTEMBER 30,
1998 1997
Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans, Net of Unearned Interest(1) 745,257 $16,797 8.94% $ 704,222 $16,580 9.34%
Taxable Investment Securities 82,331 1,232 5.94% 106,684 1,670 6.20%
Tax-Exempt Investment Securities(2) 62,819 1,026 6.53% 68,192 1,152 6.76%
Funds Sold 56,194 779 5.50% 26,623 366 5.49%
Total Earning Assets 946,601 19,834 8.32% 905,721 19,768 8.66%
Cash & Due From Banks 48,558 46,796
Allowance for Loan Losses (8,950) (8,476)
Other Assets 66,092 59,129
TOTAL ASSETS $1,052,301 $1,003,170
LIABILITIES
NOW Accounts $ 99,677 $ 407 1.62% $ 100,740 $ 408 1.61%
Money Market Accounts 78,875 573 2.88% 81,528 627 3.05%
Savings Accounts 91,500 520 2.25% 83,294 420 2.00%
Other Time Deposits 412,730 5,469 5.26% 384,783 5,142 5.30%
Total Int. Bearing Deposits 682,782 6,969 4.05% 650,345 6,597 4.02%
Funds Purchased 35,044 432 4.89% 29,096 416 5.67%
Other Borrowed Funds 1,416 17 4.72% 6,187 98 6.26%
Long-Term Debt 15,886 268 6.71% 16,935 291 6.83%
Total Interest Bearing
Liabilities 735,128 7,686 4.15% 702,563 7,402 4.18%
Noninterest Bearing Deposits 193,156 188,387
Other Liabilities 16,472 15,773
TOTAL LIABILITIES 944,756 906,723
SHAREOWNERS' EQUITY
Common Stock 88 58
Surplus 8,342 6,169
Retained Earnings 99,115 90,220
TOTAL SHAREOWNERS' EQUITY 107,545 96,447
TOTAL LIABILITIES & EQUITY $1,052,301 $1,003,170
Interest Rate Spread 4.17% 4.48%
Net interest Income $12,148 $12,366
Net Yield on Earning Assets 5.10% 5.42%
FOR NINE MONTHS ENDED SEPTEMBER 30,
1998 1997
Balance Interest Rate Balance Interest Rate
ASSETS
Loans, Net of Unearned Interest(1) 739,599 $50,716 9.17% $ 690,175 $47,859 9.27%
Taxable Investment Securities 81,262 3,711 5.68% 116,658 5,496 6.30%
Tax-Exempt Investment Securities(2) 62,835 3,096 6.57% 70,189 3,576 6.79%
Funds Sold 55,983 2,308 5.51% 24,630 982 5.33%
Total Earning Assets 939,679 59,831 8.51% 901,652 57,913 8.59%
Cash & Due From Banks 49,395 47,188
Allowance for Loan Losses (8,655) (8,371)
Other Assets 65,699 60,488
TOTAL ASSETS $1,046,118 $1,000,957
LIABILITIES
NOW Accounts 104,942 1,477 1.88% 103,572 1,331 1.72%
Money Market Accounts 77,436 1,654 2.85% 80,720 1,826 3.03%
Savings Accounts 88,604 1,432 2.16% 87,124 1,307 2.01%
Other Time Deposits 407,603 16,217 5.32% 384,742 15,081 5.24%
Total Int. Bearing Deposits 678,585 20,780 4.09% 656,158 19,545 3.98%
Funds Purchased 38,481 1,455 5.06% 29,607 1,166 5.26%
Other Borrowed Funds 1,155 45 5.15% 6,319 234 4.95%
Long-Term Debt 16,075 828 6.89% 17,480 893 6.83%
Total Int. Bearing Liabilities 734,296 23,108 4.21% 709,564 21,838 4.11%
Noninterest Bearing Deposits 191,767 184,291
Other Liabilities 15,211 13,954
TOTAL LIABILITIES 941,274 907,809
SHAREOWNERS' EQUITY
Common Stock 88 87
Surplus 7,881 6,140
Retained Earnings 96,875 86,921
TOTAL SHAREOWNERS' EQUITY 104,844 93,148
TOTAL LIABILITIES & EQUITY $1,046,118 $1,000,957
Interest Rate Spread 4.30% 4.47%
Net Interest Income $36,723 $36,075
Net Yield on Earning Assets 5.22% 5.35%
(1) Average balances include nonaccrual loans. Interest income includes fees on loans of approximately $614,000 and $2,103,000,
for the three and nine months ended September 30, 1998, versus $741,000 and $2,215,000, for the comparable periods ended
September 30, 1997.
(2) Interest income includes the effects of taxable equivalent adjustments using a 35% federal tax rate
</TABLE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Overview
Market risk management arises from changes in interest rates, exchange rates,
commodity prices and equity prices. The Company has risk management policies
to monitor and limit exposure to market risk. Capital City Bank Group does
not actively participate in exchange rates, commodities or equities. In asset
and liability management activities, policies are in place which are designed
to minimize structural interest rate risk.
Interest Rate Risk Management
The normal course of business activity exposes Capital City Bank Group to
interest rate risk. Fluctuations in interest rates may result in changes in
the fair market alue of the Company's financial instruments, cash flows and
net interest income. Capital City Bank Group's asset/liability management
process manages the Company's interest rate risk.
The financial assets and liabilities of the Company are classified as
other-than-trading. An analysis of the other-than-trading financial
components, including the fair values, are presented in Table II on page 20.
This table presents the Company's consolidated interest rate sensitivity
position as of September 30, 1998 based upon certain assumptions as set-forth
in the notes to the Table. The objective of interest rate sensitivity analysis
is to measure the impact on the Company's net interest income due to
fluctuations in interest rates. The asset and liability fair values
presented in Table II may not necessarily be indicative of the Company's
interest rate sensitivity over an extended period of time.
The Company is currently liability sensitive which generally indicates that
in a period of rising or falling interest rates the net interest margin will
be impacted as the velocity and/or volume of liabilities being repriced
exceeds assets. However, as general interest rates rise or fall, other factors
such as current market conditions and competition may impact how the Company
responds to changing rates and thus impact the magnitude of change in net
interest income.
<TABLE>
Table II
FINANCIAL ASSETS AND LIABILITIES MARKET RISK ANALYSIS(1)
(Dollars in Thousands)
<CAPTION>
Other Than Trading Portfolio September 30, 1998 Market
Year 1 Year 2 Year 3 Year 4 Year 5 Beyond Total Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loans
Fixed Rate $ 46,038 $ 23,907 $ 42,839 $ 43,571 $ 41,438 $ 63,650 $261,443 $266,288
Average Interest Rate 9.11% 10.23% 9.71% 9.16% 8.89% 7.47% 8.88%
Floating Rate(2) 386,300 44,439 24,646 11,790 12,534 10,600 490,309 499,396
Average Interest Rate 8.75% 7.71% 8.59% 8.43% 8.54% 9.36% 8.65%
Investment Securities(3)
Fixed Rate 61,175 22,081 20,191 7,524 4,905 17,230 133,106 133,106
Average Interest Rate 6.09% 5.55% 6.35% 6.44% 6.53% 5.97% 6.06%
Floating Rate 0 12,676 0 0 0 516 13,192 13,192
Average Interest Rate 0 6.54% 0 0 0 5.85% 6.51%
Other Earning Assets
Fixed Rates 0 0 0 0 0 0 0 0
Average Interest Rates 0 0 0 0 0 0 0
Floating Rates 55,000 0 0 0 0 6,916 61,916 61,916
Average Interest Rates 5.25% 0 0 0 0 5.10% 5.23%
Total Financial Assets $548,513 $103,103 $ 87,676 $ 62,885 $ 58,877 $ 98,912 $959,966 973,898
Average Interest Rates 8.13% 7.69% 8.62% 8.70% 8.62% 7.24% 8.10%
Deposits(4)
Fixed Rate Deposits $353,233 $ 44,407 $ 10,703 $ 3,439 $ 1,444 $ 0 $413,226 414,607
Average Interest Rates 5.18% 5.55% 5.44% 5.57% 5.50% 0 5.23%
Floating Rate Deposits 271,248 0 0 0 0 0 271,248 271,248
Average Interest Rates 2.16% 0 0 0 0 0 2.16%
Other Interest Bearing
Liabilities
Fixed Rate Debt 315 324 333 343 352 3,480 5,147 5,056
Average Interest Rate 6.01% 6.01% 6.00% 6.00% 6.00% 6.00% 6.00%
Floating Rate Debt 49,175 0 0 0 0 0 49,175 49,175
Average Interest Rate 5.33% 0 0 0 0 0 5.33%
Total Financial Liabilities $673,971 $ 44,731 $ 11,036 $ 3,782 $ 1,796 $ 3,480 $738,796 $743,086
Average interest Rate 3.98% 5.55% 5.46% 5.61% 5.60% 6.00% 4.12%
(1) Based upon expected cash-flows, unless otherwise indicated.
(2) Based upon a combination of expected maturities and repricing opportunities.
(3) Based upon contractual maturity, except for callable and floating rate securities, which are based on expected
maturity and weighted average life, respectively.
(4) Savings, NOW and money market accounts can be repriced at any time, therefore, all such balances are included as
floating rate deposits in 1998. Other time deposit balances are classified according to maturity.
</TABLE>
PART II. OTHER INFORMATION
ITEMS 1-4
Not applicable
ITEM 5. OTHER INFORMATION
On August 27, 1998, the Company entered into a definitive purchase and
assumption agreement with First Union National Bank ("First Union") to acquire
eight of First Union's branch facilities which includes deposits. The Company
agreed to pay a goodwill of approximately $19.2 million, to assume approximately
$218 million in deposits and acquire certain real estate. The transaction
will be completed before year-end.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
(3b) Amended and Restated Bylaws of Capital City Bank Group, Inc.
27 Financial Data Schedule
(B) Reports on Form 8-K
On September 10, 1998, the Company filed a Form 8-K to report on August 27,
1998, it entered into a definitive purchase and assumption agreement with
First Union National Bank to acquire eight branch offices including deposits.
SIGNATURES
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
J. Kimbrough Davis
Executive Vice President and
Chief Financial Officer
Date: November 16, 1998
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000726601
<NAME> CAPITAL CITY BANK GROUP, INC.
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 60,858
<INT-BEARING-DEPOSITS> 6,916
<FED-FUNDS-SOLD> 55,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 144,829
<INVESTMENTS-MARKET> 146,298
<LOANS> 751,752
<ALLOWANCE> (8,801)
<TOTAL-ASSETS> 1,077,270
<DEPOSITS> 899,577
<SHORT-TERM> 39,675
<LIABILITIES-OTHER> 13,811
<LONG-TERM> 14,647
0
0
<COMMON> 88
<OTHER-SE> 109,472
<TOTAL-LIABILITIES-AND-EQUITY> 1,077,270
<INTEREST-LOAN> 50,625
<INTEREST-INVEST> 5,842
<INTEREST-OTHER> 2,309
<INTEREST-TOTAL> 58,776
<INTEREST-DEPOSIT> 20,780
<INTEREST-EXPENSE> 23,108
<INTEREST-INCOME-NET> 35,688
<LOAN-LOSSES> 1,602
<SECURITIES-GAINS> 57
<EXPENSE-OTHER> 34,800
<INCOME-PRETAX> 14,950
<INCOME-PRE-EXTRAORDINARY> 5,134
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,816
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 1.11
<YIELD-ACTUAL> 5.10
<LOANS-NON> 5,596
<LOANS-PAST> 853
<LOANS-TROUBLED> 200
<LOANS-PROBLEM> 378
<ALLOWANCE-OPEN> 8,322
<CHARGE-OFFS> 1,822
<RECOVERIES> 699
<ALLOWANCE-CLOSE> 8,801
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
