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, 1999
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, 1999, there were 10,179,141 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 20
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 22
6. Exhibits and Reports on Form 8-K 22
Signatures 22
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,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $19,912 $18,952 $58,052 $56,950
Investment Securities:
U.S. Treasury 343 522 1,100 1,418
U.S. Gov. Agencies/Corp. 2,317 823 7,002 2,689
States and Political Subdivisions 1,099 737 3,253 2,228
Other Securities 614 132 1,870 340
Funds Sold 951 808 3,042 2,481
Total Interest Income 25,236 21,974 74,319 66,106
INTEREST EXPENSE
Deposits 9,495 7,921 28,942 23,609
Short-Term Borrowings 513 449 1,244 1,500
Long-Term Debt 279 303 890 915
Total Interest Expense 10,287 8,673 31,076 26,024
Net Interest Income 14,949 13,301 43,243 40,082
Provision for Loan Losses 610 618 1,930 1,782
Net Interest Income After
Provision for Loan Losses 14,339 12,683 41,313 38,300
NONINTEREST INCOME
Service Charges on Deposit Accounts 2,572 2,017 7,473 6,250
Data Processing 690 740 2,184 2,581
Income from Fiduciary Activities 560 448 1,522 1,229
Securities Transactions - 24 - 48
Other 2,447 2,042 7,378 6,217
Total Noninterest Income 6,269 5,271 18,557 16,325
NONINTEREST EXPENSE
Salaries and Employee Benefits 7,347 6,455 22,429 20,121
Occupancy, Net 1,169 874 3,317 2,540
Furniture and Equipment 1,368 1,387 4,159 3,897
Merger Expenses 74 0 1,351 0
Other 4,188 3,374 12,750 10,621
Total Noninterest Expense 14,146 12,090 44,006 37,179
Income Before Income Tax 6,462 5,864 15,864 17,446
Income Tax Expense 2,089 2,057 4,931 6,024
NET INCOME $ 4,373 $ 3,807 $10,933 $11,422
Net Income Per Basic Share $ .43 $ .37 $ 1.07 $ 1.13
Net Income Per Diluted Share $ .43 $ .37 $ 1.07 $ 1.13
Cash Dividends Per Share $ .12 $ .11 $ .42 $ .33
Average Basic Shares Outstanding 10,179,138 10,158,193 10,173,490 10,143,981
Average Diluted Shares Outstanding 10,194,666 10,158,193 10,189,021 10,143,981
(1) All share and per share data have been restated to reflect the
pooling-of-interests of Grady Holding Company and its subsidiaries and
adjusted to reflect the 3-for-2 stock split effective June 1, 1998.
</TABLE>
<TABLE>
CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF CONDITION
AS OF SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
(Dollars In Thousands, Except Per Share Amounts)(1)
<CAPTION>
September 30, December 31,
1999 1998
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Cash and Due From Banks $ 58,697 $ 68,398
Funds Sold 60,254 72,625
Investment Securities, Available-for-Sale 330,416 371,597
Loans, Net of Unearned Interest 899,960 844,217
Allowance for Loan Losses (10,035) (9,827)
Loans, Net 889,925 834,390
Premises and Equipment, Net 39,445 37,171
Intangibles 25,516 28,772
Other Assets 32,830 30,722
Total Assets $1,437,083 $1,443,675
LIABILITIES
Deposits:
Noninterest Bearing Deposits $ 258,105 $ 287,904
Interest Bearing Deposits 965,233 965,649
Total Deposits 1,223,338 1,253,553
Short-Term Borrowings 52,509 25,199
Long-Term Debt 14,448 18,746
Other Liabilities 16,495 17,315
Total Liabilities 1,306,790 1,314,813
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; 10,179,138 shares
outstanding at September 30, 1999
and 10,163,919 outstanding at
December 31, 1998 102 102
Additional Paid In Capital 9,013 8,561
Retained Earnings 126,085 119,521
Accumulated Other Comprehensive
Available-for-Sale Securities
(Loss) Gain, Net of Tax (4,907) 678
Total Shareowners' Equity 130,293 128,862
Total Liabilities and Shareowners' Equity $1,437,083 $1,443,675
(1) All share and per share data have been restated to reflect the
pooling-of-interests of Grady Holding Company and its subsidiaries and
adjusted to reflect the 3-for-2 stock split effective June 1, 1998.
</TABLE>
CAPITAL CITY BANK GROUP, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30
(Dollars In Thousands)
1999 1998
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 10,933 $ 11,422
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Provision for Loan Losses 1,930 1,782
Depreciation 2,698 2,571
Net Securities Amortization 1,040 519
Amortization of Intangible Assets 2,084 773
Gain on Sales of Investment Securities - (48)
Non-Cash Compensation 234 1,248
Net (Increase) in Interest Receivable (1,139) (529)
Net Decrease (Increase) in Other Assets 827 (4,570)
Net Increase in Other Liabilities 383 1,258
Net Cash Provided by Operating Activities 18,990 14,426
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Payments/Maturities of
Investment Securities Available-for-Sale 88,976 56,962
Purchase of Investment Securities
Available-for-Sale (57,646) (59,055)
Net Increase in Loans (57,466) (15,928)
Net Cash Received from Acquisition - 7,022
Purchase of Premises & Equipment (3,725) (1,872)
Sales of Premises & Equipment 152 278
Net Cash Used in Investing Activities (29,709) (12,593)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (Decrease) Increase in Deposits (30,213) 9,174
Net Increase (Decrease) Short-Term Borrowings 27,309 (6,438)
Borrowing from Long-Term Debt 2,262 2,400
Repayment of Long-Term Debt (6,560) (3,738)
Dividends Paid (4,369) (3,258)
Issuance of Common Stock 218 598
Net Cash Used in Financing Activities (11,353) (1,264)
Net (Decrease) Increase in Cash and
Cash Equivalents (22,072) 569
Cash and Cash Equivalents at Beginning of
Period 141,023 125,670
Cash and Cash Equivalents at End of Period 118,951 $126,239
Supplemental Disclosure:
Interest Paid $ 30,433 $ 24,426
Interest Paid on Debt $ 872 $ 909
Transfer of Loans to ORE $ 1,375 $ 1,919
Income Taxes Paid $ 5,536 $ 6,910
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
restatement to reflect the pooling of interest of Grady Holding Company and
its subsidiaries.
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, 1999 and December 31, 1998, the results of operations for the
three and nine month periods ended September 30, 1999 and 1998, and cash
flows for the nine month periods ended September 30, 1999 and 1998.
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 1998 Annual Report and Form 10-K.
(2) INVESTMENT SECURITIES
The carrying value and related market value of investment securities at
September 30, 1999 and December 31, 1998 were as follows (dollars in
thousands):
September 30, 1999
Amortized Unrealized Unrealized Market
Available-For-Sale Cost Gains Losses Value
U.S. Treasury $ 24,579 $ 26 $ 4 $ 24,601
U.S. Government Agencies
and Corporations 79,242 4 2,054 77,192
States and Political
Subdivisions 103,688 166 1,672 102,182
Mortgage Backed Securities 88,131 90 3,223 84,998
Other Securities 42,514 - 1,071 41,443
Total $338,154 $ 286 $8,024 $330,416
December 31, 1998
Amortized Unrealized Unrealized Market
Available-For-Sale Cost Gains Losses Value
U.S. Treasury $ 30,618 $ 203 $ - $ 30,821
U.S. Government Agencies
and Corporations 74,035 247 319 73,963
States and Political
Subdivisions 94,917 1,159 24 96,052
Mortgage Backed Securities 93,183 205 443 92,945
Other Securities 77,770 159 113 77,816
Total $370,523 $1,973 $899 $371,597
(3) LOANS
The composition of the Company's loan portfolio at September 30, 1999 and
December 31, 1998 was as follows (dollars in thousands):
September 30, 1999 December 31, 1998
Commercial, Financial
and Agricultural $ 96,292 $ 91,246
Real Estate-Construction 58,066 51,790
Real Estate-Mortgage 578,391 542,044
Consumer 167,211 159,137
Loans, Net of Unearned Interest $899,960 $844,217
(4) ALLOWANCE FOR LOAN LOSSES
An analysis of the changes in the allowance for loan losses for the nine
month period ended September 30, 1999 and 1998, is as follows (dollars in
thousands):
September 30, 1999 September 30, 1998
Balance, Beginning of the Period $ 9,827 $ 9,662
Provision for Loan Losses 1,930 1,782
Recoveries on Loans Previously
Charged-Off 556 766
Loans Charged-Off (2,278) (2,033)
Balance, End of Period $10,035 $10,177
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,
1999 1998
Impaired Loans: Valuation Valuation
Balance Allowance Balance Allowance
With Related Credit Allowance $ 120 $ 10 $2,972 $305
Without Related Credit Allowance 276 1,297 -
Average Recorded Investment
for the Period 1,986 4,680 *
Interest Income:
Recognized $ 70 $ 48
Collected $ 55 $ 12
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.
(5) DEPOSITS
The composition of the Company's interest bearing deposits at September 30,
1999 and December 31, 1998 was as follows (dollars in thousands):
September 30, 1999 December 31, 1998
NOW Accounts $151,485 $154,069
Money Market Accounts 163,644 124,691
Savings Deposits 115,952 118,570
Other Time Deposits 534,152 568,319
Total Interest Bearing Deposits $965,233 $965,649
(6) ACCOUNTING PRONOUNCEMENTS
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, 2000. The adoption of this standard is not expected to have a
material impact on 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, 1999 and 1998, as follows (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net Income $4,373 $3,807 $10,933 $11,422
Other Comprehensive Income, Net of Tax
Unrealized Gains (Losses) on Securities:
Unrealized Gains (Losses) on Securities
Arising During the Period (1,119) 568 (5,585) 492
Less: Reclassification Adjustments for
Gains (Losses) Included in Net Income - 16 - 31
Total Unrealized Gains (Losses)
On Securities , Net of Tax (1,119) 552 (5,585) 461
Total Comprehensive Income, Net of Tax $3,254 $4,359 $5,348 $11,883
These changes reflect a market value decrease in available-for-sale
securities for the three and nine months ended September 30, 1999 and a
market value increase for the three and nine months ended September 30, 1998.
</TABLE>
(8) ACQUISITION OF GRADY HOLDING COMPANY
The Company completed its acquisition of Grady Holding Company and its
majority-owned subsidiary First National Bank of Grady County on May 7,
1999. First National Bank of Grady County is a $112 million asset
institution with offices in Cairo and Whigham, Georgia. The transaction
was accounted for as a pooling-of-interests. First National Bank of Grady
County shareowners received 21.5 shares and Grady Holding Company
shareowners received 115.885 shares of CCBG common stock in exchange for
each of their respective shares. A total of 1,309,560 shares of CCBG were
issued in the transaction.
<TABLE>
QUARTERLY FINANCIAL DATA (UNAUDITED)
(Dollars in Thousands, Except Per Share Data)(1)
<CAPTION>
__________ 1999____________ __________________1998___________________ _1997_
Third Second First Fourth Third Second First Fourth
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations:
Interest Income $ 25,236 $ 24,816 $ 24,267 $ 22,904 $ 21,974 $ 22,402 $ 21,730 $ 21,431
Interest Expense 10,287 10,476 10,313 9,224 8,673 8,822 8,529 8,261
Net Interest Income 14,949 14,340 13,954 13,680 13,301 13,580 13,201 13,170
Provision for
Loan Loss 610 580 740 657 618 618 546 597
Net interest Income
After Provision
for Loan Loss 14,339 13,760 13,214 13,023 12,683 12,962 12,655 12,573
Noninterest Income 6,269 6,185 6,103 6,260 5,271 5,847 5,206 5,066
Merger Expense 74 1,277 - 115 - - - -
Noninterest Expense 14,072 14,591 13,992 13,150 12,090 12,747 12,342 12,757
Income Before
Provision for
Income Taxes 6,462 4,077 5,325 6,018 5,864 6,062 5,519 4,882
Provision for
Income Taxes 2,089 1,182 1,660 2,146 2,057 2,065 1,901 1,563
Net Income $ 4,373 $ 2,895 $ 3,665 $ 3,872 $ 3,807 $ 3,997 $ 3,618 $ 3,319
Net Interest
Income (FTE) $ 15,435 $ 14,822 $ 14,420 $ 14,046 $ 13,640 $ 13,922 $ 13,557 $ 13,523
Per Common Share:
Net Income Basic $ .43 $ .28 $ .36 $ .38 $ .37 $ .39 $ .36 $ .33
Net Income Diluted .43 .28 .36 .38 .37 .39 .36 .32
Dividends Declared .12 .12 .18 .12 .11 .11 .11 .11
Book Value 12.85 12.59 12.82 12.69 12.43 12.10 11.80 11.45
Market Price:
High 31.00 25.00 27.63 31.00 33.13 32.67 32.67 27.33
Low 21.00 20.25 22.00 24.13 19.00 29.75 29.25 23.00
Close 22.75 25.00 23.31 27.63 29.13 31.38 31.67 27.00
Selected Average
Balances:
Total Assets $1,446,505 $1,452,215 $1,430,533 $1,257,934 $1,148,404 $1,156,186 $1,147,054 $1,108,788
Earning Assets 1,297,481 1,304,093 1,282,679 1,131,933 1,038,981 1,043,578 1,035,971 998,037
Loans, Net of Unearned 892,161 878,976 850,161 834,315 819,755 823,432 809,949 777,895
Total Deposits 1,234,360 1,247,452 1,232,816 1,059,192 954,652 962,719 952,511 916,952
Total Shareowners'
Equity 130,134 131,234 130,929 128,250 123,728 121,686 119,455 113,752
Common Equivalent
Shares:
Basic 10,179 10,172 10,170 10,158 10,158 10,140 10,123 10,067
Diluted 10,195 10,187 10,185 10,179 10,158 10,140 10,123 10,167
Ratios:
ROA 1.20% .80% 1.04% 1.22% 1.31% 1.39% 1.28% 1.19%
ROE 13.33% 8.85% 11.35% 11.98% 12.20% 13.18% 12.28% 11.58%
Net Interest
Margin (FTE) 4.72% 4.56% 4.56% 4.92% 5.21% 5.35% 5.31% 5.38%
(1) All share and per share data have been restated to reflect the
pooling-of-interests of Grady Holding Company and its subsidiaries and
adjusted to reflect the 3-for-2 stock split effective June 1, 1998.
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following analysis reviews important factors affecting the financial
condition and results of operations of Capital City Bank Group, Inc., for
the periods shown below. The Company, has made, and may continue to make,
various forward-looking statements with respect to financial and business
matters that involve numerous assumptions, risks and uncertainties. The
following is a list of factors, among others, that could cause actual
results to differ materially from the forward-looking statements: general
and local economic conditions, competition for the Company's customers from
other banking and financial institutions, government legislation and
regulation, changes in interest rates, the impact of rapid growth,
significant changes in the loan portfolio composition, and other risks
described in the Company's filings with the Securities and Exchange
Commission, all of which are difficult to predict and many of which are
beyond the control of the Company.
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 financial information has been restated to reflect the pooling-of-
interests of Grady Holding Company and its subsidiaries. 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 subsidiaries, collectively, are referred to as "CCBG" or the
"Company." The two subsidiary banks are referred to as the "Capital City
Bank" or "CCB", and "First National Bank of Grady County" or "FNBGC".
On May 7, 1999, the Company completed its acquisition of Grady Holding
Company and its majority-owned subsidiary First National Bank of Grady
County. FNBGC is a $112 million asset institution with offices in Cairo
and Whigham, Georgia. The transaction was accounted for as a pooling-of-
interests. FNBGC shareowners received 21.5 shares and Grady Holding
Company shareowners received 115.885 shares of CCBG common stock in
exchange for each of their respective shares. A total of 1,309,560 shares
of CCBG were issued in the transaction.
On December 4, 1998, the Company completed its purchase and assumption
transaction with First Union National Bank ("First Union") and acquired
eight of First Union's branch offices which included deposits. The Company
paid a deposit premium of $16.9 million, and assumed $219 million in
deposits and acquired certain real estate. The deposit premium is being
amortized over ten years.
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 Company
paid a premium of $3.6 million, or 6.33%, and assumed $55 million in
deposits and purchased loans equal to $44 million. Four of the five
offices were merged into existing offices of Capital City Bank. The
deposit premium is being amortized over fifteen years.
RESULTS OF OPERATIONS
Net Income
Net income was $4.4 million, or $.43 per basic and diluted share for the
third quarter of 1999, a per share increase of 16.2% over the $3.8 million,
or $.37 per basic and diluted share for the comparable period in 1998. Net
income was $10.9 million, or $1.07 per basic and diluted share for the nine
months ended September 30, 1999, a per share decrease of 5.6% over the
$11.4 million, or $1.13 per basic and diluted share for comparable period
in 1998. Net income before merger related expense for the three and nine
month periods were $4.4 million and $11.9 million, or $.44 and $1.16 per
basic and diluted share, respectively. This was a 18.9% and 2.7% increase
from the comparable three and nine months periods in 1998. Merger related
expenses related to the acquisition of Grady Holding Company reduced
earnings $50,000 after tax, or $.01 per share for the three months ended
and $917,000, or $.09 per share for the nine months ended September 30,
1999. Additionally interest income for the nine month period ended
September 30, 1998 included a one-time increase in interest income of
$400,000 ($246,000, after taxes), related to the recovery of a previously
charged-off loan. Operating revenue, which includes net interest income
and noninterest income, increased $5.4 million, or 9.6%, over the first
nine months of 1998. Offsetting this increase was higher noninterest
expense primarily attributable to the addition of eight offices acquired
from First Union.
For The Three For The Nine
Months Ended Months Ended
September 30, September 30,
1999 1998 1999 1998
Interest and Dividend Income $25,236 $21,974 $74,319 $66,106
Taxable Equivalent Adjustment(1) 486 339 1,435 1,036
Interest Income 25,722 22,313 75,754 67,142
Interest Expense 10,287 8,673 31,076 26,024
Net Interest Income (FTE) 15,435 13,640 44,678 41,118
Provision for Loan Losses 610 618 1,930 1,782
Taxable Equivalent Adjustment 486 339 1,435 1,036
Net Interest Income
After Provision 14,339 12,683 41,313 38,300
Noninterest Income 6,269 5,271 18,557 16,325
Merger Expense 74 0 1,351 0
Noninterest Expense 14,072 12,090 42,656 37,179
Income Before Income Taxes 6,462 5,864 15,863 17,446
Income Taxes 2,089 2,057 4,930 6,024
Net Income $ 4,373 $ 3,807 $10,933 $11,422
Percent Change over comparable
prior year period 14.91% 4.76% (4.28)% 3.14%
Return on Average Assets (2) 1.21% 1.31% 1.01% 1.32%
Return on Average Equity (2) 13.48% 12.20% 11.18% 12.51%
(1) Computed using a statutory tax rate of 35%
(2) Annualized
Net Interest Income
Third quarter taxable equivalent net interest income increase $1.8 million,
or 13.2%, over the comparable quarter in 1998. Taxable equivalent net
interest income for the nine month period of 1999 increased $3.6 million,
or 8.7%, over the same period of 1998. This increase in both periods is
attributable to a higher level of earning assets attributable to the
assumption of deposits from First Union. Table I on page 19 provides a
comparative analysis of the Company's average balances and interest rates.
For the three and nine month periods ended September 30, 1999, taxable-
equivalent interest income increased $3.4 million, or 15.3%, and $8.6
million, or 12.9%, respectively, over the comparable prior year periods.
Loans which represent the Company's highest yielding asset, increased (on
average) $53.1 million, or 6.5% and represented 67.5% of total earning
assets for the nine months ended September 30, 1999 versus 78.7% for the
comparable period in 1998. The Company's investment income increased
significantly due the purchase of $200 million of investment securities
during the fourth quarter of 1998 as a result of the assumption of deposits
from First Union. This shift in the mix of earning assets, resulting in a
higher level of liquidity, contributed to a 78 basis point decrease in the
yield on earning assets which declined from 8.60% during the first nine
months of 1998 to 7.82% for the comparable period in 1999.
Interest expense for the three and nine month periods ended September 30,
1999, increased $1.6 million, or 18.6%, and $5.1 million, or 19.4%,
respectively, over the comparable prior year periods. The increase in both
periods is primarily due to the assumption of $219 million of deposits from
First Union during the fourth quarter of 1998. The 53 basis point decline
in the average rate is the result of lower volume and average rate paid on
promotional certificate of deposits. Certificates of deposit, which
generally represent a higher cost deposit product to the Company, decreased
from 48.0% of average deposits in the nine months of 1998 to 44.9% in 1999.
The Company's interest rate spread (defined as the average federal taxable
equivalent yield on earning assets less the average rate paid on interest
bearing liabilities) declined from 4.33% in the first nine months of 1998
to 3.80% in the comparable period of 1999 due to the lower yield on earning
assets. The Company's net interest margin percentage (defined as taxable-
equivalent net interest income divided by average earning assets) was 4.72%
and 4.61%, respectively, for the three and nine months ended of 1999,
versus 5.21% and 5.27%, respectively, for the comparable periods in 1998.
The decrease in margin represents the lower yield on earning assets
resulting from the high level of liquidity. The net interest margin for
the three months period in 1999 increased 16 basis points from the second
quarter in 1999. This was attributable to higher yields on earning assets
during the third quarter due to a change in earning asset mix resulting
from loan growth and a higher interest rate environment.
Provision for Loan Losses
The provision for loan losses was $610,000 and $1.9 million, respectively,
for the three and nine month periods ended September 30, 1999, compared to
$618,000 and $1.8 million for the comparable periods in 1998. Net charge-
offs were up from the first nine months of 1998, but remain at low levels
relative to the size of the loan portfolio. Nonperforming loans decreased
$2.5 million, or 48.6%, during the first nine months of 1999. The
Company's nonperforming asset ratio declined from .79% at year-end to .45%
at September 30, 1999. As compared to year-end, the reserve for loan
losses increased slightly to $10.0 million, and represented 1.12% of total
loans versus 1.16%.
For a discussion of the Company's nonperforming loans, see the section
entitled "Financial Condition."
Based on current economic conditions, the low level of nonperforming loans
and net charge-offs, it is management's opinion that the reserve for loan
losses as of September 30, 1999, is sufficient to provide for losses
inherent in the portfolio as of that date. While the company anticipates
providing loan loss provisions in the fourth quarter of 1999 due to
continued growth in the size of the loan portfolio, these amounts could be
lower than that posted in the first nine months of 1999 due to continuing
improvements in credit quality.
Charge-off activity for the respective periods is set forth below (dollars
in thousands)
Three Months Ended Nine Months Ended
9/30/99 9/30/98 9/30/99 9/30/98
Net Charge-Offs $634 $581 $1,722 $1,267
Net Charge-Offs (Annualized)
as a percent of Average
Loans Outstanding, Net of
Unearned Interest .28% .28% .26% .21%
Noninterest Income
Noninterest income increased $998,000, or 18.9%, in the third quarter of
1999 versus the comparable quarter for 1998, and $2.2 million, or 13.7%,
for the nine months ended September 30, 1999 versus the comparable period
for 1998. All major categories except data processing revenues posted
gains in both periods.
Service charges on deposit accounts increased $555,000, or 27.5%, and $1.2
million, or 19.6%, respectively, over the comparable three and nine month
periods for 1998. Service charge revenues in any one year are dependent on
the number of accounts, primarily transaction accounts, and the level of
activity subject to service charges. The increase in the first three
quarters of 1999 compared to 1998, reflects a service fee increase
implemented in the fourth quarter of 1998 and an increase in the number of
accounts.
Data processing revenues decreased $51,000, or 6.8%, and $397,000, or
15.4%, respectively, over the comparable three and nine month periods in
1998. The decrease reflects lower processing revenues associated with
government agencies.
Revenue from trust activities increased $112,000, or 25.1%, and $293,000,
or 23.9%, respectively, over the comparable three and nine month periods in
1998. At September 30, 1999, assets under management totaled $279.8
million compared to 238.7 million at September 30, 1998.
Other income increased $438,000, or 27.5%, and $916,000, or 18.0%,
respectively, for the three and nine month periods ended September 30, 1999
over the comparable prior year periods. Gains on the sale of residential
real estate loans increased $245,000, reflecting increased volume and a
higher level of fixed rate lending which the Company experienced during the
first half of 1999. Rising rates during the third quarter resulted in a
reduction of fixed rate originaitons and thus, gains on the sale of real
estate loans. Additionally, the Company recorded $164,000 of gains on the
disposal of assets during the second and third quarters . ATM fees,
interchange commissions, safe deposit rentals and check printing income
account for the remaining favorable variance.
Noninterest income as a percent of tax equivalent operating revenues was
29.3% and 28.49%, respectively, for the first three quarters of 1999 and
1998.
Noninterest Expense
Noninterest expense increased $2.1 million, or 17.0%, and $6.8 million, or
18.4%, respectively, over the comparable three and nine month periods in
1998. The increase reflects higher costs in all major expense categories
plus merger expense associated with the Grady Holding Company acquisition.
Compensation expense increased $892,000, or 13.8%, and $2.3 million, or
11.5%, respectively, over the comparable three and nine month periods of
1998, reflecting annual raises and an increase in full-time equivalent
employees of 52. During the fourth quarter of 1998, the Company increased
staff due to the addition of eight offices as a result of the assumption of
deposits from First Union.
Occupancy expense, including premises, furniture, fixtures and equipment
increased $276,000, or 12.2%, and $1.0 million, or 16.1%, respectively,
over the comparable three and nine month periods in 1998. The addition of
the eight offices acquired from First Union resulted in higher costs in all
occupancy categories. The most significant increases have occurred in
premises rental, utilities and maintenance costs.
Other noninterest expense increased $889,000, or 26.4%, and $3.5 million,
or 32.8%, respectively, over the comparable three and nine month periods in
1998. Merger expenses for the three and nine month periods in 1999 of
$74,000 and $1.4 million, respectively, were attributable to the
acquisition of Grady Holding Company and its subsidiaries. The remaining
increase was attributable to telephone expense of $383,000, resulting from
the addition of new offices and implementing a wide-area network,
intangible amortization of $1.3 million, postage of $148,000 and courier
service of $81,000.
The Company's efficiency ratio (noninterest expense, net of intangibles and
merger expense, expressed as a percent of the sum of taxable-equivalent net
operating revenues) was 64.16% in the first three quartes of 1999 compared
to 63.38% for the comparable period in 1998. The increase in the
efficiency ratio reflects rising costs as noted above.
Income Taxes
The provision for income taxes increased $32,000, or 1.6%, during the third
quarter of 1999 and decreased $1.1 million, or 18.1%, during the first nine
months of 1999, relative to the comparable prior year period. The
Company's effective tax rate for the first nine months of 1999 was 31.1%
versus 34.5% for the comparable period in 1998. The decrease in the
effective tax rate is attributable to an increase in tax-exempt income as a
percent of pre-tax income which was 20.5% in the first nine months of 1999
as compared to 12.7% in the comparable period in 1998.
FINANCIAL CONDITION
Average balances for the first nine months of 1999 reflect the assumption
of deposits from First Union completed during the fourth quarter of 1998.
Table I on Page 19 presents average balances for the three and nine month
periods ended September 30, 1999 and 1998.
The Company's average assets increased to $1.4 billion at the end of the
third quarter of 1999 from $1.2 billion in the first nine months of 1998.
Average earning assets were $1.3 billion for the nine months ended
September 30, 1999 versus $1.0 billion for the comparable period in 1998.
The change in the mix of earning assets reflects the purchase of $200
million in investment securities to offset the deposits assumed from First
Union.
Average loans increased $53.1 million, or 6.5%, over the comparable period
in 1998. Price and product competition remain strong and there continues
to be an increased demand for fixed-rate, longer term financing. Loan
growth has occurred in all of the portfolios, with the most significant
increase in real estate. Loans as a percent of average earning assets
decreased to 67.5% for the third quarter of 1999, compared to 78.7% for the
third quarter of 1998.
At September 30, 1999, the Company's nonperforming loans were $2.7 million
versus $5.2 million at year-end 1998. As a percent of nonperforming loans,
the allowance for loan losses represented 372% at September 30, 1999. This
compares to 159% and 187%, at December 31, and September 30, 1998,
respectively. 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 $1.4
million at September 30, 1999, compared to $1.5 million at December 31,
1998, and $1.5 million at September 30, 1998. The ratio of nonperforming
assets as a percent of loans plus other real estate was .45% at September
30, 1999, compared to .79% at December 31, 1998, and .95% at September 30,
1998.
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, 1999, the average
investment portfolio increased $173.7 million, or 106.9%, from the
comparable period in 1998. The increase in the investment portfolio was
used to invest the deposits acquired from First Union. 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, 1999,
shareowners' equity included an accumulated other comprehensive loss of
$4.9 million compared to a net gain of $678,000 at December 31, 1998,
reflecting the rise in interest rates.
Average deposits increased 28.9% from $960.2 million for the first nine
months of 1998, to $1.22 billion for the first nine months of 1999. The
growth in deposits is attributable to the assumption of deposits acquired
from First Union and the success of the CashPower money market account.
Certificate of deposits during the first nine months of 1999 have decline
partially due to the maturities of high yielding, promotional certificates.
The Company continues to see a noticeable increase in competition for
deposit accounts, in terms of both rate and product.
The ratio of average noninterest bearing deposits to total deposits was
21.2% for both the first nine months of 1999 and 1998, respectively. For
the same periods, the ratio of average interest bearing liabilities to
average earning assets was 79.8% and 78.1%, respectively. The change in
both ratios is primarily attributable to the assumption of First Union
deposits and the CashPower money market account.
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 deposits, sources of funds available to meet
liquidity demands for the subsidiary banks include federal funds sold, near-
term loan maturities, securities held in the available-for-sale portfolio,
and the ability to purchase federal funds through established lines of
credit with correspondent banks. Additionally, the parent company maintains
a $25 million revolving line of credit. As of September 30, 1999 there was
$3.0 million outstanding under this facility. During the first nine months
of 1999, principal reductions on the line of credit totaled $5.0 million.
The Company's equity capital was $130.3 million as of September 30, 1999,
compared to $128.9 million as of December 31, 1998. 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 7.26% at September 30, 1999 versus 7.23% at December 31, 1998.
Further, the Company's risk-adjusted capital ratio of 12.06% significantly
exceeds the 8.0% minimum requirement under the risk-based regulatory
guidelines.
During the first nine months of 1999, shareowners' equity increased $1.4
million, or 1.5%, on an annualized basis. The increase was primarily
attributable to net income of $10.9 million and stock issuances of
$452,000. Partially offsetting these increase was a $5.6 million reduction
in accumulated other comprehensive income. This was a result of an
unrealized loss in the investment portfolio due to a rise in interest
rates. Dividends declared during the first nine months totaled $4.3
million, or $.42 per share.
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 Group banks. At September 30, 1999, 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.
The Company's common stock had a book value of $12.85 per share at
September 30, 1999 compared to $12.68 at December 31, 1998. Pursuant to
the Company's stock repurchase program adopted in 1989, the Company has
repurchased 790,740 shares (split adjusted) of its common stock. In the
first three quarters of 1999, 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 effect 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 effected 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 nine phases. These phases are (1) project
management, (2) awareness, (3) assessment, (4) renovation, (5) testing and
implementation, (6) risk assessment, (7) customer awareness, (8)
contingency planning, and (9) verification. The Company has completed
phases one, two, three, four, five, six, and eight. The Company's
comprehensive customer awareness program (phase seven), will continue
throughout the remainder of the year.
(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 project
administration. 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 has defined the YEAR 2000 problem and gained
executive level support for allocation of the resources necessary to
renovate and/or upgrade all systems. A YEAR 2000 team has been established
and meets regularly. The strategy developed for YEAR 2000 compliance
covers in-house systems, service bureaus for systems that are outsourced,
vendors, auditors, customers, and suppliers.
(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.
(4) Renovation: The Company has upgraded and replaced IT and non-IT
systems where appropriate, and all such replacements were complete by
September 30, 1999.
(5) Testing and Implementation: The Company's testing and implementation
of Mission Critical systems is complete.
(6) Risk Assessment: 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. A
similar assessment was conducted of deposit customers relative to liquidity
risk. Investment and funding strategies have been planned to ameliorate
any potential risk in this area.
(7) Customer Awareness: During the third quarter of 1999, the Company
continued its comprehensive plan to increase customer awareness of the YEAR
2000 issue and to inform customers of the bank's efforts to become
compliant. This plan includes posting information on the Company's web
site, distribution of quarterly press releases, statement stuffers and
lobby brochures. Associate training was conducted to assure that customers
are provided with accurate information about the Company's Y2K readiness.
Company officials participated in a community question and answer program.
(8) Contingency Planning: The Company has drafted a Business
Resumption/Contingency Plan for the YEAR 2000. This plan will incorporate
back-up systems and procedures for Core business processes, should any
unforeseen disruptions occur. This plan was substantially completed by
September 30, 1999.
(9) Verification: The Verification process will take place subsequent to
the actual Century Date Change. This will involve verifying successful
transition to the YEAR 2000 of all systems and applications, at all
critical dates and functions to the YEAR 2000. Monitoring and reporting
protocol has been established for this phase.
Estimated Costs to Address the Company's YEAR 2000 Issues
Costs directly related to YEAR 2000 issues are estimated to be $780,000
from 1998 to 2000, of which approximately 95% has been spent as of
September 30, 1999. 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 are 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. 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.
3. The Company's ability to operate effectively in the YEAR 2000 could be
adversely affected by the ability to communicate and to access 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 follow 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 have been developed
and include, but are not 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 were
substantially completed by September 30, 1999.
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 value 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 21. This
table presents the Company's consolidated interest rate sensitivity
position as of September 30, 1999 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>
AVERAGES BALANCES & INTEREST RATES
(Taxable Equivalent Basis - Dollars in Thousands)
<CAPTION>
FOR THREE MONTHS ENDED SEPTEMBER 30,
1999 1998
Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans, Net of Unearned Interest(1) 889,161 $19,982 8.89% $ 819,755 $19,014 9.20%
Taxable Investment Securities 226,769 3,274 5.68% 97,302 1,477 6.02%
Tax-Exempt Investment Securities(2) 101,859 1,516 5.90% 64,944 1,014 6.19%
Funds Sold 74,691 950 5.05% 56,980 808 5.63%
Total Earning Assets 1,297,480 25,722 7.86% 1,038,981 22,313 8.52%
Cash & Due From Banks 62,769 50,701
Allowance for Loan Losses (10,139) (10,236)
Other Assets 96,395 68,958
TOTAL ASSETS $1,446,505 $1,148,404
LIABILITIES
NOW Accounts $ 155,441 $ 728 1.86% $ 109,439 $ 467 1.69%
Money Market Accounts 161,532 1,501 3.69% 81,611 597 2.90%
Savings Accounts 115,628 622 2.13% 99,971 591 2.35%
Other Time Deposits 541,967 6,644 4.86% 460,963 6,266 5.39%
Total Int. Bearing Deposits 974,568 9,495 3.87% 751,984 7,921 4.18%
Funds Purchased 45,826 497 4.30% 34,680 432 4.94%
Other Borrowed Funds 1,569 16 4.05% 1,399 17 4.82%
Long-Term Debt 17,525 279 6.32% 17,812 303 6.75%
Total Interest Bearing
Liabilities 1,039,488 10,287 3.93% 805,875 8,673 4.27%
Noninterest Bearing Deposits 259,792 202,667
Other Liabilities 17,091 16,134
TOTAL LIABILITIES 1,316,371 1,024,676
SHAREOWNERS' EQUITY
Common Stock 102 100
Surplus 8,998 8,288
Other Comprehensive Income (4,246) 580
Retained Earnings 125,280 114,760
TOTAL SHAREOWNERS' EQUITY 130,134 123,728
TOTAL LIABILITIES & EQUITY $1,446,505 $1,148,404
Interest Rate Spread 3.93% 4.25%
Net Interest Income $15,435 $13,640
Net Yield on Earning Assets 4.72% 5.21%
FOR NINE MONTHS ENDED SEPTEMBER 30,
1998 1999
Balance Interest Rate Balance Interest Rate
ASSETS
Loans, Net of Unearned Interest(1) 873,920 $58,253 8.91% $ 820,788 $57,152 9.31%
Taxable Investment Securities 234,510 9,971 5.68% 97,168 4,446 6.12%
Tax-Exempt Investment Securities(2) 101,653 4,488 5.90% 65,326 3,063 6.27%
Funds Sold 84,722 3,042 4.80% 60,066 2,481 5.52%
Total Earning Assets 1,294,805 75,754 7.82% 1,043,348 67,142 8.60%
Cash & Due From Banks 63,407 52,240
Allowance for Loan Losses (10,141) (10,033)
Other Assets 95,072 69,231
TOTAL ASSETS $1,443,143 $1,154,786
LIABILITIES
NOW Accounts 150,833 $ 2,235 1.89% $ 116,521 $ 1,656 1.90%
Money Market Accounts 153,240 4,224 3.69% 81,175 1,724 2.84%
Savings Accounts 115,497 1,797 2.08% 98,243 1,648 2.24%
Other Time Deposits 555,736 20,686 4.98% 460,816 18,581 5.39%
Total Int. Bearing Deposits 975,306 28,942 3.97% 756,755 23,609 4.17%
Funds Purchased 38,921 1,201 4.13% 38,485 1,455 5.05%
Other Borrowed Funds 1,387 43 4.14% 1,155 45 5.21%
Long-Term Debt 18,255 890 6.52% 18,224 915 6.71%
Total Interest Bearing
Liabilities 1,033,869 31,076 4.02% 814,619 26,024 4.27%
Noninterest Bearing Deposits 262,909 203,401
Other Liabilities 15,603 14,671
TOTAL LIABILITIES 1,312,381 1,032,691
SHAREOWNERS' EQUITY
Common Stock 101 101
Surplus 8,834 7,917
Other Comprehensive Income (1,574) 629
Retained Earnings 123,401 113,448
TOTAL SHAREOWNERS' EQUITY 130,762 122,095
TOTAL LIABILITIES & EQUITY $1,443,143 $1,154,786
Interest Rate Spread 3.80% 4.33%
Net interest Income $44,678 $41,118
Net Yield on Earning Assets 4.61% 5.27%
(1) Average balances include nonaccrual loans. Interest income includes
fees on loans of approximately $927,000 and $2.6 million for the three
and nine months ended September 30, 1999, versus $702,000 and $2.4
million, for the comparable periods ended September 30, 1998.
(2) Interest income includes the effects of taxable equivalent adjustments
using a 35% federal tax rate.
</TABLE>
<TABLE>
Table II
FINANCIAL ASSETS AND LIABILITIES MARKET RISK ANALYSIS(1)
(Dollars in Thousands)
<CAPTION>
Other Than Trading Portfolio September 30, 1999 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 $103,074 $ 32,318 $ 48,224 $ 46,321 $ 41,280 $ 61,351 $ 332,568 $ 333,042
Average Interest Rate 9.59% 10.00% 7.70% 8.58% 7.98% 7.80% 9.14%
Floating Rate(2) 360,499 31,686 43,405 14,727 35,110 81,965 567,392 568,201
Average Interest Rate 8.42% 8.27% 8.03% 8.41% 7.96% 7.36% 8.20%
Investment Securities(3)
Fixed Rate 68,997 61,721 28,659 26,741 24,787 109,367 320,272 320,272
Average Interest Rate 5.80% 5.73% 5.62% 5.60% 5.70% 6.16% 5.88%
Floating Rate 0 0 9,639 0 0 505 10,144 10,144
Average Interest Rate 0 0 5.93% 0 0 6.29% 5.95%
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 60,254 0 0 0 0 0 60,254 60,254
Average Interest Rates 4.90% 0 0 0 0 0 4.90%
Total Financial Assets $592,824 $125,725 $129,927 $ 87,789 $101,177 $266,442 $1,290,630 1,291,913
Average Interest Rates 7.96% 7.47% 7.22% 7.64% 7.42% 6.79% 7.69%
Deposits(4)
Fixed Rate Deposits $468,074 $ 46,331 $ 12,390 $ 4,263 $ 3,045 $ 49 $ 534,152 534,251
Average Interest Rates 4.75% 4.98% 5.16% 5.02% 5.14% 4.89% 4.78%
Floating Rate Deposits 431,081 0 0 0 0 0 431,081 431,081
Average Interest Rates 2.65% 0 0 0 0 0 2.65%
Other Interest Bearing
Liabilities
Fixed Rate Debt 822 694 662 678 698 7,894 11,448 11,764
Average Interest Rate 6.18% 6.05% 6.10% 6.10% 6.09% 5.98% 6.00%
Floating Rate Debt 55,509 0 0 0 0 0 55,509 57,042
Average Interest Rate 4.57% 0 0 0 0 0 4.57%
Total Financial Liabilities $955,454 $ 44,025 $ 13,052 $ 4,941 $ 3,743 $ 7,943 $1,032,190 $1,034,138
Average interest Rate 3.79% 5.00% 5.21% 5.17% 5.32% 5.97% 3.89%
(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
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
27 Financial Data Schedule
(B) Reports on Form 8-K
On September 16, 1999, the Company an 8-K restating the financial
statements to reflect the acquisition of Grady Holding Company
and its subsidiaries. The acquisition was accounted for as a
pooling-of-interests.
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)
J. Kimbrough Davis
Executive Vice President and
Chief Financial Officer
Date: November 15, 1999
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