Capital City Bank Group, Inc. Reports Fourth Quarter and Full Year 2018 Results

TALLAHASSEE, Fla., Jan. 29, 2019 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income of $8.5 million, or $0.50 per diluted share for the fourth quarter of 2018 compared to net income of $6.0 million, or $0.35 per diluted share for the third quarter of 2018, and $3,000, or $0.00 per diluted share for the fourth quarter of 2017.  Earnings for the fourth quarter of 2017 included a $4.1 million, or $0.24 per diluted share, income tax expense related to the Tax Cuts and Jobs Act.   

For the full year 2018, net income totaled $26.2 million, or $1.54 per diluted share, compared to net income of $10.9 million, or $0.64 per diluted share for 2017.  Net income for 2018 included tax benefits totaling $3.3 million, or $0.19 per diluted share related to 2017 plan year pension plan contributions made during 2018.        

Fourth Quarter 2018 HIGHLIGHTS

• Earnings per diluted share of $0.50, included other real estate gain of $0.09 per share 
• Continued growth in net interest income, up $0.7 million, or 3.1 % sequentially
• Continued reduction in classified assets, 16% sequentially    
• Tangible capital ratio of 7.58%
• Repurchased 324,000 shares of common stock

Full Year 2018 HIGHLIGHTS

• Earnings per diluted share of $1.54, included tax benefits of $0.19 per share and higher other real estate gains of $0.05 per share
• Continued improvement in operating leverage driven by margin expansion
  - Net interest income up $9.5 million, or 11.5%
  - Net interest margin up 27 basis points to 3.64%
  - Average loan growth of $100 million, or 6.2%
• Continued reduction in classified assets, 28%

“2018 produced marked improvement and continues to move us closer to our historical performance levels,” said William G. Smith, Jr., Chairman, President and CEO. “Record loan growth, a rising rate environment and tax reform were all major contributors to our earnings growth.  Asset sensitivity and a strong core deposit base produced a net interest margin of 3.64%, up 27 basis points year over year.  Lowering our efficiency ratio is a top priority and we have multiple strategies in place to grow revenues and reduce expenses.  Florida is growing and we are once again on offense following a number of years playing defense after the crisis.  We appreciate our shareowners’ confidence in our management team and will remain focused on implementing strategies that produce long-term value for our shareowners.”

Compared to the third quarter of 2018, the $3.3 million increase in operating profit reflected a $2.2 million decrease in noninterest expense, a $0.7 million increase in net interest income, and a $0.5 million reduction in the loan loss provision, partially offset by lower noninterest income of $0.1 million.  During the fourth quarter of 2018, we sold a banking office and realized a $2.0 million gain, which was reflected in noninterest expense (other real estate).

Compared to the fourth quarter of 2017, the $4.0 million increase in operating profit reflected a $2.9 million increase in net interest income, a $0.4 million decrease in noninterest expense, a $0.4 million reduction in the loan loss provision, and  higher noninterest income of $0.3 million.

For the full year 2018, the $6.6 million increase in operating profit compared to 2017 was attributable to a $9.5 million increase in net interest income, partially offset by a $2.0 million increase in noninterest expense, a $0.7 million increase in the loan loss provision, and lower noninterest income of $0.2 million.

Our return on average assets (“ROA”) was 1.18% and our return on average equity (“ROE”) was 11.10% for the fourth quarter of 2018.  These metrics were 0.84% and 7.98% for the third quarter of 2018, respectively, and 0.00% and 0.00% for the fourth quarter of 2017, respectively.  For the full year 2018, our ROA was 0.92% and our ROE was 8.89% compared to 0.39% and 3.83%, respectively, for 2017.

Discussion of Operating Results

Tax-equivalent net interest income for the fourth quarter of 2018 was $24.5 million compared to $23.8 million for the third quarter of 2018 and $21.8 million for the fourth quarter of 2017.  For the full year 2018, tax-equivalent net interest income totaled $93.2 million compared to $84.2 million for 2017.  The increase in tax-equivalent net interest income compared to all prior periods reflected higher interest rates and a favorable shift in the earning asset mix. Higher rates were earned on overnight funds, investment securities and loans, partially offset by a higher cost on our negotiated rate deposits. 

The federal funds target rate ended the year at a range of 2.25%-2.50%. This was the result of four rates increases in 2018, which positively affected our net interest income due to favorable repricing of our variable and adjustable rate earning assets. Although these increases resulted in higher rates paid on our negotiated rate deposit products, we continue to prudently manage our overall cost of funds, which was 31 basis points for the fourth quarter of 2018 compared to 28 basis points for the third quarter of 2018 and 27 basis points for the full year 2018. In conjunction with our overall balance sheet management, we continue to review our deposit board rates to determine whether rate increases are appropriate. We have developed several new deposit products designed to attract new clients or help maintain existing relationships for clients seeking higher returns on their deposit balances.  While rising rates and client expectations will generally result in a higher cost of funds, we will continue to prudently manage the mix and costs of our deposit base as we have done in the past.   

Our net interest margin for the fourth quarter of 2018 was 3.81%, an increase of nine basis points over the third quarter of 2018 and an increase of 36 basis points over the fourth quarter of 2017.  For the full year 2018, our net interest margin increased 27 basis points to 3.64%.  The increase in our margin compared to all prior periods noted above reflected rising interest rates and a favorable shift in our earning asset mix, which resulted in higher net interest income in each period. 

Our provision for loan losses for the fourth quarter of 2018 was $0.5 million compared to $0.9 million for the third quarter of 2018 and $0.8 million for the fourth quarter of 2017.  The reduction in our provision compared to the third quarter of 2018 was primarily attributable to a decrease in impaired loan reserves.  For the full year 2018, our loan loss provision was $2.9 million compared to $2.2 million for 2017 with the increase driven by growth in the loan portfolio.  At December 31, 2018, our allowance for loan losses of $14.2 million represented 0.80% of outstanding loans (net of overdrafts) and provided coverage of 207% of nonperforming loans compared to 0.80% and 207%, respectively, at September 30, 2018 and 0.80% and 186%, respectively, at December 31, 2017.
    
Noninterest income for the fourth quarter of 2018 totaled $13.2 million, a decrease of $0.1 million, or 0.5%, from the third quarter of 2018 and a $0.3 million, or 2.6%, increase over the fourth quarter of 2017.  Compared to the fourth quarter of 2017, the increase was attributable to higher deposit fees, wealth management fees, and other income.  For the full year 2018, noninterest income totaled $51.6 million, a $0.2 million, or 0.3%, decrease from 2017, and reflected lower mortgage banking fees of $1.0 million, partially offset by higher other income of $0.5 million and wealth management fees of $0.4 million.  The lower level of mortgage banking fees was due to a reduction in the volume of loans sold in secondary market as adjustable rate loan production has picked up momentum and is being retained in our loan portfolio instead of sold on the secondary market.  Total residential loan production (secondary market sales and portfolio) during 2018 was comparable to the prior year. The increase in other income reflected higher signing bonus income from processing contracts and miscellaneous income.  The increase in wealth management was attributable to higher trust fees and reflected growth in assets under management.   

Noninterest expense for the fourth quarter of 2018 totaled $26.5 million, a decrease of $2.2 million, or 7.6%, from the third quarter of 2018 and $0.4 million, or 1.5%, from the fourth quarter of 2017.  The decrease from the third quarter of 2018 was primarily attributable to lower other real estate owned (“OREO”) expense of $2.0 million and other expense of $0.7 million, partially offset by higher compensation expense of $0.4 million.  The lower OREO expense reflected a $2.0 million gain from the sale of a banking office in the fourth quarter of 2018.  The reduction in other expense was attributable to a decline in other losses, and lower professional fees and processing fees.  Higher cash incentive expense drove the increase in compensation expense.  For the full year 2018, noninterest expense totaled $111.5 million, an increase of $2.0 million, or 1.9%, over 2017 attributable to an increase in other expense of $1.4 million, compensation expense of $1.6 million, and occupancy expense of $0.7 million, partially offset by lower OREO expense of $1.6 million.  The increase in other expense was attributable to higher professional fees of $1.3 million.  The increase in professional fees reflected costs associated with several consulting projects, including both profit enhancements projects and the upgrading of ancillary systems, all of which were essentially complete at the end of the third quarter.  Higher salary expense, primarily cash incentives, drove the increase in compensation expense.  Slightly higher base salaries and contractual employment also contributed to the increase, but to a lesser extent.  Occupancy expense increased due to higher equipment/software maintenance agreement expense and to a lesser extent an increase in building maintenance costs (partly related to Hurricane Michael).  The aforementioned $2.0 million gain from the sale of a banking office drove the improvement in OREO expense.  The same factors drove the variances for the fourth quarter of 2018 versus fourth quarter of 2017.

For 2018, we realized income tax expense of $3.4 million, which reflected four discrete tax benefit items totaling $3.6 million resulting from the effect of federal tax reform enacted in December 2017.  Three items totaling $3.3 million related to pension plan contributions made in 2018 for the plan year 2017.  These pension related items were $1.5 million for the first quarter, $1.4 million for the second quarter and $0.4 million for the third quarter.  In addition, we realized a discrete tax item in the fourth quarter of 2018 for $0.3 million related to a cost segregation analysis for various properties we own that also benefited from the effects of federal tax reform.  Absent these discrete items, our effective tax rate would have been approximately 24%.  Income tax expense for the fourth quarter of 2017 included a $4.1 million discrete tax expense related to the Tax Cuts and Jobs Act.

Discussion of Financial Condition

Average earning assets were $2.554 billion for the fourth quarter of 2018, an increase of $19.2 million, or 0.8%, over the third quarter of 2018, and an increase of $42.5 million, or 1.7%, over the fourth quarter of 2017.  The increase in average earning assets compared to both prior periods reflects a higher level of deposits.

We maintained an average net overnight funds (deposits with banks plus fed funds sold less fed funds purchased) sold position of $80.8 million during the fourth quarter of 2018 compared to an average net overnight funds sold position of $63.6 million in the third quarter of 2018 and $174.6 million in the fourth quarter of 2017.  Compared to the third quarter of 2018, the increase in average net overnight funds primarily reflected an increase in noninterest bearing deposits and a decrease in our investment portfolio. The decrease compared to the fourth quarter 2017 was primarily attributable to growth in our loan portfolio. 

Average loans increased $38.5 million, or 2.2% compared to the third quarter of 2018, and have grown $144.8 million, or 8.8% compared to the fourth quarter of 2017.  The increase compared to the third quarter 2018 reflected growth in all loan types except home equity loans and construction loans. The increase compared to the fourth quarter 2017 reflected growth in all loan types except home equity loans. Over the course of 2018, we purchased both adjustable rate residential loans and fixed and adjustable rate commercial real estate loan pools totaling $26.1 million based on principal balances at the time of purchase.

We continue to make minor modifications on some of our lending programs to try to mitigate the impact that consumer and business deleveraging has had on our portfolio.  These programs, coupled with economic improvements in our anchor markets and strategic loan purchases, have helped to increase overall loan growth.  In the current rising rate environment, our fixed rate offerings are reviewed frequently and rate increases are implemented as appropriate.

Nonperforming assets (nonaccrual loans and OREO) totaled $9.1 million at December 31, 2018, representing a decrease of $0.5 million, or 5.1%, from September 30, 2018, and a decrease of $2.0 million, or 18.0%, from December 31, 2017.  Nonaccrual loans totaled $6.9 million at December 31, 2018, comparable to September 30, 2018 and a $0.3 million decrease from December 31, 2017.  The balance of OREO totaled $2.2 million at December 31, 2018, a decrease of $0.5 million from September 30, 2018 and a decrease of $1.7 million from December 31, 2017.  For 2018, we added properties totaling $2.1 million, sold properties totaling $2.8 million and recorded valuation adjustments totaling $1.0 million.  Nonperforming assets represented 0.31% of total assets at December 31, 2018 compared to 0.34% at September 30, 2018 and 0.38% at December 31, 2017.

Average total deposits were $2.412 billion for the fourth quarter of 2018, an increase of $20.1 million, or 0.8%, over the third quarter of 2018, and an increase of $34.0 million, or 1.4%, over the fourth quarter of 2017.  The increase in deposits compared to the third quarter of 2018 reflected higher noninterest bearing deposit and savings accounts, partially offset by lower money market accounts and certificates of deposit balances. The increase in deposits compared to the fourth quarter of 2017 reflected growth in noninterest bearing accounts, public fund deposits, and savings accounts, partially offset by declines in certificates of deposit. Average public fund balances typically peak in the first quarter and trend downward through the middle of the fourth quarter due to the cycle of tax receipts.

Deposit levels continue to be closely monitored and managed in conjunction with runoff from the investment portfolio.  We monitor deposit rates on an ongoing basis as prudent pricing discipline remains the key to managing our mix of deposits.

Shareowners’ equity was $302.6 million at December 31, 2018, compared to $298.0 million at September 30, 2018 and $284.2 million at December 31, 2017.  At December 31, 2018, our common stock had a book value of $18.00 per diluted share compared to $17.40 at September 30, 2018 and $16.65 at December 31, 2017.  During the fourth quarter of 2018, we repurchased 324,441 shares of our stock at $24.75 per share.  Book value is impacted through other comprehensive income by the net unrealized gains and losses in our available for sale investment portfolio.  At December 31, 2018, the net after tax unrealized loss was $2.0 million compared to $3.4 million at September 30, 2018 and $1.7 million at December 31, 2017.  Book value is also impacted by the recording of our unfunded pension liability through other comprehensive income during the fourth quarter.  At December 31, 2018, the net after tax pension liability reflected in accumulated other comprehensive loss was $26.8 million compared to $30.3 million at December 31, 2017. 

At December 31, 2018, our leverage ratio was 10.89% compared to 10.99% and 10.47% at September 30, 2018 and December 31, 2017, respectively.  Further, our risk-adjusted capital ratio was 17.13%, 16.94%, and 17.10% on these respective dates.  Our common equity tier 1 ratio was 13.58% at December 31, 2018, compared to 13.43% at September 30, 2018 and 13.42% at December 31, 2017.  At December 31, 2018, all of our capital ratios exceeded the threshold to be designated as “well-capitalized” under the Basel III capital standards.

About Capital City Bank Group, Inc.

Capital City Bank Group, Inc. (NASDAQ: CCBG) is one of the largest publicly traded financial holding companies headquartered in Florida and has approximately $3.0 billion in assets.  We provide a full range of banking services, including traditional deposit and credit services, mortgage banking, asset management, trust, merchant services, bankcards, and securities brokerage services.  Our bank subsidiary, Capital City Bank, was founded in 1895 and now has 59 banking offices and 82 ATMs in Florida, Georgia and Alabama.  For more information about Capital City Bank Group, Inc., visit www.ccbg.com.

FORWARD-LOOKING STATEMENTS

Forward-looking statements in this Press Release are based on current plans and expectations that are subject to uncertainties and risks, which could cause our future results to differ materially.  The following factors, among others, could cause our actual results to differ: the accuracy of the our financial statement estimates and assumptions; legislative or regulatory changes, and the ability to repay and qualified mortgage standards; fluctuations in inflation, interest rates, or monetary policies; the effects of security breaches and computer viruses that may affect our computer systems or fraud related to debit card products; changes in consumer spending and savings habits; our growth and profitability; the strength of the U.S. economy and the local economies where we conduct operations; the effects of a non-diversified loan portfolio, including the risks of geographic and industry concentrations; harsh weather conditions and man-made disasters; changes in the stock market and other capital and real estate markets; customer acceptance of third-party products and services; increased competition and its effect on pricing, including the long-term impact on our net interest margin from the repeal of Regulation Q; negative publicity and the impact on our reputation; technological changes, especially changes that allow out of market competitors to compete in our markets; changes in accounting; and our ability to manage the risks involved in the foregoing.  Additional factors can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and our other filings with the SEC, which are available at the SEC’s internet site (http://www.sec.gov).  Forward-looking statements in this Press Release speak only as of the date of the Press Release, and we assume no obligation to update forward-looking statements or the reasons why actual results could differ.

USE OF NON-GAAP FINANCIAL MEASURES

We present a tangible common equity ratio and a tangible book value per diluted share that removes the effect of goodwill resulting from merger and acquisition activity.  We believe these measures are useful to investors because it allows investors to more easily compare our capital adequacy to other companies in the industry.  The GAAP to non-GAAP reconciliation is provided below.

(Dollars in Thousands)		Dec 31, 2018			Sep 30, 2018			Jun 30, 2018			Mar 31, 2018			Dec 31, 2017
Shareowners' Equity (GAAP)		$	302,587		$	298,016		$	293,571		$	288,360		$	284,210
Less: Goodwill (GAAP)			84,811			84,811			84,811			84,811			84,811
Tangible Shareowners' Equity (non-GAAP)	A		217,776			213,205			208,760			203,549			199,399
Total Assets (GAAP)			2,959,183			2,819,190			2,880,278			2,924,832			2,898,794
Less: Goodwill (GAAP)			84,811			84,811			84,811			84,811			84,811
Tangible Assets (non-GAAP)	B	$	2,874,372		$	2,734,379		$	2,795,467		$	2,840,021		$	2,813,983
Tangible Common Equity Ratio (non-GAAP)	A/B		7.58	%		7.80	%		7.47	%		7.17	%		7.09	%
Actual Diluted Shares Outstanding (GAAP)	C		16,808,542			17,127,846			17,114,380			17,088,419			17,071,107
Tangible Book Value per Diluted Share (non-GAAP)	A/C	$	12.96		$	12.45		$	12.20		$	11.91		$	11.68

CAPITAL CITY BANK GROUP, INC.
EARNINGS HIGHLIGHTS
Unaudited
		Three Months Ended									Twelve Months Ended
(Dollars in thousands, except per share data)		Dec 31, 2018			Sep 30, 2018			Dec 31, 2017			Dec 31, 2018			Dec 31, 2017
EARNINGS
Net Income	$	8,458		$	5,990		$	3		$	26,224		$	10,863
Net Income Per Common Share	$	0.50		$	0.35		$	0.00		$	1.54		$	0.64
PERFORMANCE
Return on Average Assets		1.18	%		0.84	%		0.00	%		0.92	%		0.39	%
Return on Average Equity		11.10	%		7.98	%		0.00	%		8.89	%		3.83	%
Net Interest Margin		3.81	%		3.72	%		3.45	%		3.64	%		3.37	%
Noninterest Income as % of Operating Revenue		35.22	%		36.04	%		37.51	%		35.79	%		38.41	%
Efficiency Ratio		70.21	%		77.37	%		77.50	%		77.05	%		80.50	%
CAPITAL ADEQUACY
Tier 1 Capital Ratio		16.36	%		16.17	%		16.33	%		16.36	%		16.33	%
Total Capital Ratio		17.13	%		16.94	%		17.10	%		17.13	%		17.10	%
Tangible Common Equity Ratio		7.58	%		7.80	%		7.09	%		7.58	%		7.09	%
Leverage Ratio		10.89	%		10.99	%		10.47	%		10.89	%		10.47	%
Common Equity Tier 1 Ratio		13.58	%		13.43	%		13.42	%		13.58	%		13.42	%
Equity to Assets		10.23	%		10.57	%		9.80	%		10.23	%		9.80	%
ASSET QUALITY
Allowance as % of Non-Performing Loans		206.79	%		207.06	%		185.87	%		206.79	%		185.87	%
Allowance as a % of Loans		0.80	%		0.80	%		0.80	%		0.80	%		0.80	%
Net Charge-Offs as % of Average Loans		0.10	%		0.06	%		0.21	%		0.12	%		0.14	%
Nonperforming Assets as % of Loans and ORE		0.51	%		0.54	%		0.67	%		0.51	%		0.67	%
Nonperforming Assets as % of Total Assets		0.31	%		0.34	%		0.38	%		0.31	%		0.38	%
STOCK PERFORMANCE
High	$	26.95		$	25.91		$	26.01		$	26.95		$	26.01
Low		19.92			23.19			22.21			19.92			17.68
Close	$	23.21		$	23.34		$	22.94		$	23.21		$	22.94
Average Daily Trading Volume		21,455			16,500			19,112			21,082			23,793

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
Unaudited
		2018												2017
(Dollars in thousands, except per share data)		Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter
ASSETS
Cash and Due From Banks	$	62,032		$	48,423		$	56,573		$	47,804		$	58,419
Funds Sold and Interest Bearing Deposits		213,968			26,839			107,066			250,821			227,023
Total Cash and Cash Equivalents		276,000			75,262			163,639			298,625			285,442
Investment Securities Available for Sale		446,157			484,243			493,662			471,836			480,911
Investment Securities Held to Maturity		217,320			227,923			236,764			225,552			216,679
Total Investment Securities		663,477			712,166			730,426			697,388			697,590
Loans Held for Sale		6,869			8,297			8,246			4,845			4,817
Loans, Net of Unearned Interest
Commercial, Financial, & Agricultural		233,689			239,044			222,406			198,775			218,166
Real Estate - Construction		89,527			87,672			88,169			80,236			77,966
Real Estate - Commercial		602,061			596,391			575,993			551,309			535,707
Real Estate - Residential		334,197			333,896			320,296			307,050			308,159
Real Estate - Home Equity		210,111			212,942			218,851			223,994			229,513
Consumer		295,040			294,040			285,599			284,356			278,622
Other Loans		8,018			8,167			11,648			14,988			3,747
Overdrafts		1,582			1,602			1,513			1,187			1,612
Total Loans, Net of Unearned Interest		1,774,225			1,773,754			1,724,475			1,661,895			1,653,492
Allowance for Loan Losses		(14,210	)		(14,219	)		(13,563	)		(13,258	)		(13,307	)
Loans, Net		1,760,015			1,759,535			1,710,912			1,648,637			1,640,185
Premises and Equipment, Net		87,190			89,567			90,000			90,939			91,698
Goodwill		84,811			84,811			84,811			84,811			84,811
Other Real Estate Owned		2,229			2,720			3,373			3,330			3,941
Other Assets		78,592			86,832			88,871			96,257			90,310
Total Other Assets		252,822			263,930			267,055			275,337			270,760
Total Assets	$	2,959,183		$	2,819,190		$	2,880,278		$	2,924,832		$	2,898,794
LIABILITIES
Deposits:
Noninterest Bearing Deposits	$	947,858		$	934,146		$	937,241		$	890,482		$	874,583
NOW Accounts		867,209			713,967			778,131			859,704			877,820
Money Market Accounts		237,739			254,099			257,965			257,422			239,212
Regular Savings Accounts		358,306			352,508			354,156			353,996			335,140
Certificates of Deposit		120,744			126,496			131,697			137,280			143,122
Total Deposits		2,531,856			2,381,216			2,459,190			2,498,884			2,469,877
Short-Term Borrowings		13,541			16,644			7,021			4,893			7,480
Subordinated Notes Payable		52,887			52,887			52,887			52,887			52,887
Other Long-Term Borrowings		8,568			12,456			12,897			13,333			13,967
Other Liabilities		49,744			57,971			54,712			66,475			70,373
Total Liabilities		2,656,596			2,521,174			2,586,707			2,636,472			2,614,584
SHAREOWNERS' EQUITY
Common Stock		167			171			171			171			170
Additional Paid-In Capital		31,058			38,325			37,932			37,343			36,674
Retained Earnings		300,177			293,254			288,800			283,990			279,410
Accumulated Other Comprehensive Loss, Net of Tax		(28,815	)		(33,734	)		(33,332	)		(33,144	)		(32,044	)
Total Shareowners' Equity		302,587			298,016			293,571			288,360			284,210
Total Liabilities and Shareowners' Equity	$	2,959,183		$	2,819,190		$	2,880,278		$	2,924,832		$	2,898,794
OTHER BALANCE SHEET DATA
Earning Assets	$	2,658,539		$	2,521,056		$	2,570,213		$	2,614,949		$	2,582,922
Interest Bearing Liabilities		1,658,994			1,529,057			1,594,754			1,679,515			1,669,628
Book Value Per Diluted Share	$	18.00		$	17.40		$	17.15		$	16.87		$	16.65
Tangible Book Value Per Diluted Share		12.96			12.45			12.20			11.91			11.68
Actual Basic Shares Outstanding		16,748			17,059			17,056			17,044			16,989
Actual Diluted Shares Outstanding		16,809			17,128			17,114			17,088			17,071

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited
														Twelve Months Ended
		2018										2017		December 31,
(Dollars in thousands, except per share data)		Fourth Quarter			Third Quarter		Second Quarter		First Quarter			Fourth Quarter		2018			2017
INTEREST INCOME
Interest and Fees on Loans	$	22,431		$	21,618	$	20,533	$	19,535		$	19,513	$	84,117		$	75,717
Investment Securities		3,478			3,472		3,156		2,762			2,520		12,868			9,147
Funds Sold		461			302		730		917			594		2,410			2,066
Total Interest Income		26,370			25,392		24,419		23,214			22,627		99,395			86,930
INTEREST EXPENSE
Deposits		1,312			1,068		995		868			590		4,243			1,789
Short-Term Borrowings		53			41		8		8			5		110			82
Subordinated Notes Payable		572			568		552		475			431		2,167			1,634
Other Long-Term Borrowings		85			92		94		100			112		371			443
Total Interest Expense		2,022			1,769		1,649		1,451			1,138		6,891			3,948
Net Interest Income		24,348			23,623		22,770		21,763			21,489		92,504			82,982
Provision for Loan Losses		457			904		815		745			826		2,921			2,215
Net Interest Income after Provision for   Loan Losses		23,891			22,719		21,955		21,018			20,663		89,583			80,767
NONINTEREST INCOME
Deposit Fees		5,172			5,207		4,842		4,872			5,040		20,093			20,335
Bank Card Fees		2,830			2,828		2,909		2,811			2,830		11,378			11,191
Wealth Management Fees		2,320			2,181		2,037		2,173			2,172		8,711			8,284
Mortgage Banking Fees		1,129			1,343		1,206		1,057			1,410		4,735			5,754
Other		1,787			1,749		1,548		1,564			1,445		6,648			6,182
Total Noninterest Income		13,238			13,308		12,542		12,477			12,897		51,565			51,746
NONINTEREST EXPENSE
Compensation		16,322			15,891		15,797		15,911			15,102		63,921			62,312
Occupancy, Net		4,804			4,645		4,503		4,551			4,400		18,503			17,837
Other Real Estate, Net		(1,663	)		347		248		626			355		(442	)		1,135
Other		7,042			7,816		7,845		6,818			7,040		29,521			28,163
Total Noninterest Expense		26,505			28,699		28,393		27,906			26,897		111,503			109,447
OPERATING PROFIT		10,624			7,328		6,104		5,589			6,663		29,645			23,066
Income Tax Expense (Benefit)		2,166			1,338		101		(184	)		6,660		3,421			12,203
NET INCOME	$	8,458		$	5,990	$	6,003	$	5,773		$	3	$	26,224		$	10,863
PER SHARE DATA
Basic Net Income	$	0.50		$	0.35	$	0.35	$	0.34		$	0.00	$	1.54		$	0.64
Diluted Net Income		0.50			0.35		0.35		0.34			0.00		1.54			0.64
Cash Dividend	$	0.09		$	0.09	$	0.07	$	0.07		$	0.07	$	0.32		$	0.24
AVERAGE SHARES
Basic		16,989			17,056		17,045		17,028			16,967		17,029			16,952
Diluted		17,050			17,125		17,104		17,073			17,050		17,072			17,013

CAPITAL CITY BANK GROUP, INC.
ALLOWANCE FOR LOAN LOSSES
AND RISK ELEMENT ASSETS
Unaudited
																	Twelve Months Ended
		2018												2017			December 31,
(Dollars in thousands, except per share data)		Fourth Quarter			Third Quarter			Second Quarter			First Quarter			Fourth Quarter			2018			2017
ALLOWANCE FOR LOAN LOSSES
Balance at Beginning of Period	$	14,219		$	13,563		$	13,258		$	13,307		$	13,339		$	13,307		$	13,431
Provision for Loan Losses		457			904			815			745			826			2,921			2,215
Net Charge-Offs		466			248			510			794			858			2,018			2,339
Balance at End of Period	$	14,210		$	14,219		$	13,563		$	13,258		$	13,307		$	14,210		$	13,307
As a % of Loans		0.80	%		0.80	%		0.78	%		0.80	%		0.80	%		0.80	%		0.80	%
As a % of Nonperforming Loans		206.79	%		207.06	%		236.25	%		181.26	%		185.87	%		206.79	%		185.87	%
CHARGE-OFFS
Commercial, Financial and Agricultural	$	53		$	268		$	141		$	182		$	664		$	644		$	1,357
Real Estate - Construction		-			-			-			7			-			7			-
Real Estate - Commercial		-			25			-			290			42			315			685
Real Estate - Residential		111			106			456			107			126			780			411
Real Estate - Home Equity		106			112			157			158			48.00			533			190
Consumer		728			463			509			695			577			2,395			2,193
Total Charge-Offs	$	998		$	974		$	1,263		$	1,439		$	1,457		$	4,674		$	4,836
RECOVERIES
Commercial, Financial and Agricultural	$	128		$	78		$	87		$	166		$	113		$	459		$	313
Real Estate - Construction		25			-			-			1			-			26			50
Real Estate - Commercial		13			222			15			123			24			373			174
Real Estate - Residential		106			107			346			84			141			643			616
Real Estate - Home Equity		61			47			22			61			67			191			219
Consumer		199			272			283			210			254			964			1,125
Total Recoveries	$	532		$	726		$	753		$	645		$	599		$	2,656		$	2,497
NET CHARGE-OFFS	$	466		$	248		$	510		$	794		$	858		$	2,018		$	2,339
Net Charge-Offs as a % of Average Loans (1)		0.10	%		0.06	%		0.12	%		0.20	%		0.21	%		0.12	%		0.14	%
RISK ELEMENT ASSETS
Nonaccruing Loans	$	6,872		$	6,867		$	5,741		$	7,314		$	7,159
Other Real Estate Owned		2,229			2,720			3,373			3,330			3,941
Total Nonperforming Assets	$	9,101		$	9,587		$	9,114		$	10,644		$	11,100
Past Due Loans 30-89 Days	$	4,757		$	3,684		$	3,472		$	4,268		$	4,543
Past Due Loans 90 Days or More (accruing)		-			126			-			-			36
Classified Loans		22,888			27,039			29,583			31,709			31,002
Performing Troubled Debt Restructuring's	$	22,084		$	28,661		$	29,981		$	31,472		$	32,164
Nonperforming Loans as a % of Loans		0.39	%		0.39	%		0.33	%		0.44	%		0.43	%
Nonperforming Assets as a % of Loans and
Other Real Estate		0.51	%		0.54	%		0.52	%		0.64	%		0.67	%
Nonperforming Assets as a % of Total Assets		0.31	%		0.34	%		0.32	%		0.36	%		0.38	%
(1) Annualized

CAPITAL CITY BANK GROUP, INC.
AVERAGE BALANCE AND INTEREST RATES(1)
Unaudited
		Fourth Quarter 2018								Third Quarter 2018								Second Quarter 2018								First Quarter 2018								Fourth Quarter 2017								Dec 2018 YTD								Dec 2017 YTD
(Dollars in thousands)		Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate			Average Balance			Interest		Average Rate
ASSETS:
Loans, Net of Unearned Interest	$	1,785,570			22,556		5.01	%	$	1,747,093			21,733		4.94	%	$	1,691,287			20,625		4.89	%	$	1,647,612			19,636		4.83	%	$	1,640,738			19,696		4.76	%	$	1,718,348			84,550		4.92	%	$	1,618,583			76,385		4.72	%
Investment Securities
Taxable Investment Securities		637,735			3,325		2.08			663,639			3,290		1.98			643,516			2,945		1.83			619,137			2,523		1.64			602,353			2,263		1.50			641,120			12,083		1.88			595,790			8,095		1.36
Tax-Exempt Investment Securities		50,362			193		1.54			60,952			229		1.50			72,478			266		1.47			84,800			318		1.50			94,329			393		1.67			67,037			1,006		1.50			97,867			1,610		1.65
Total Investment Securities		688,097			3,518		2.04			724,591			3,519		1.94			715,994			3,211		1.79			703,937			2,841		1.62			696,682			2,656		1.52			708,157			13,089		1.85			693,657			9,705		1.40
Funds Sold		80,815			461		2.26			63,608			302		1.88			158,725			730		1.84			240,916			917		1.54			174,565			594		1.35			135,379			2,410		1.78			189,991			2,066		1.09
Total Earning Assets		2,554,482		$	26,535		4.12	%		2,535,292		$	25,554		4.00	%		2,566,006		$	24,566		3.84	%		2,592,465		$	23,394		3.66	%		2,511,985		$	22,946		3.63	%		2,561,884		$	100,049		3.91	%		2,502,231		$	88,156		3.52	%
Cash and Due From Banks		52,344								49,493								50,364								52,711								51,235								51,222								51,091
Allowance for Loan Losses		(14,642	)							(14,146	)							(13,521	)							(13,651	)							(13,524	)							(13,993	)							(13,541	)
Other Assets		257,061								256,285								258,255								260,595								272,755								258,035								276,315
Total Assets	$	2,849,245							$	2,826,924							$	2,861,104							$	2,892,120							$	2,822,451							$	2,857,148							$	2,816,096
LIABILITIES:
Interest Bearing Deposits
NOW Accounts	$	739,225		$	995		0.53	%	$	733,255		$	773		0.42	%	$	790,335		$	725		0.37	%	$	863,175		$	659		0.31	%	$	782,133		$	400		0.20	%	$	781,026		$	3,152		0.40	%	$	805,861		$	1,094		0.14	%
Money Market Accounts		248,486			216		0.34			254,440			190		0.30			255,143			166		0.26			246,576			103		0.17			249,953			80		0.13			251,175			675		0.27			258,304			252		0.10
Savings Accounts		356,723			44		0.05			352,833			43		0.05			351,664			43		0.05			343,987			42		0.05			333,703			41		0.05			351,341			172		0.05			323,928			159		0.05
Time Deposits		123,193			57		0.18			129,927			62		0.19			134,171			61		0.18			140,359			64		0.18			145,622			69		0.19			131,860			244		0.18			151,301			284		0.19
Total Interest Bearing Deposits		1,467,627			1,312		0.37	%		1,470,455			1,068		0.30	%		1,531,313			995		0.27	%		1,594,097			868		0.23	%		1,511,411			590		0.16	%		1,515,402			4,243		0.29	%		1,539,394			1,789		0.12	%
Short-Term Borrowings		15,424			53		1.36	%		12,949			41		1.24	%		6,633			8		0.49	%		8,869			8		0.37	%		8,074			5		0.25	%		10,992			110		0.99	%		9,927			82		0.82	%
Subordinated Notes Payable		52,887			572		4.23			52,887			568		4.20			52,887			552		4.13			52,887			475		3.60			52,887			431		3.19			52,887			2,167		4.04			52,887			1,634		3.05
Other Long-Term Borrowings		9,918			85		3.40			12,729			92		2.87			13,151			94		2.88			13,787			100		2.93			14,726			112		3.01			12,387			371		3.00			15,174			443		2.92
Total Interest Bearing Liabilities		1,545,856		$	2,022		0.54	%		1,549,020		$	1,769		0.47	%		1,603,984		$	1,649		0.43	%		1,669,640		$	1,451		0.37	%		1,587,098		$	1,138		0.29	%		1,591,668		$	6,891		0.45	%		1,617,382		$	3,948		0.25	%
Noninterest Bearing Deposits		944,748								921,817								900,643								862,009								867,000								907,571								832,477
Other Liabilities		56,445								58,330								64,671								72,969								80,309								63,045								82,833
Total Liabilities		2,547,049								2,529,167								2,569,298								2,604,618								2,534,407								2,562,284								2,532,692
SHAREOWNERS' EQUITY:		302,196								297,757								291,806								287,502								288,044								294,864								283,404
Total Liabilities and Shareowners' Equity	$	2,849,245							$	2,826,924							$	2,861,104							$	2,892,120							$	2,822,451							$	2,857,148							$	2,816,096
Interest Rate Spread				$	24,513		3.58	%				$	23,785		3.53	%				$	22,917		3.41	%				$	21,943		3.29	%				$	21,808		3.33	%				$	93,158		3.46	%				$	84,208		3.27	%
Interest Income and Rate Earned(1)					26,535		4.12						25,554		4.00						24,566		3.84						23,394		3.66						22,946		3.63						100,049		3.91						88,156		3.52
Interest Expense and Rate Paid(2)					2,022		0.31						1,769		0.28						1,649		0.26						1,451		0.23						1,138		0.18						6,891		0.27						3,948		0.16
Net Interest Margin				$	24,513		3.81	%				$	23,785		3.72	%				$	22,917		3.58	%				$	21,943		3.43	%				$	21,808		3.45	%				$	93,158		3.64	%				$	84,208		3.37	%
(1)  Interest and average rates are calculated on a tax-equivalent basis using a 21% Federal tax rate for 2018 and a 35% Federal tax rate for 2017.
(2)  Rate calculated based on average earning assets.

For Information Contact:
J. Kimbrough Davis
Executive Vice President and Chief Financial Officer 
850.402.7820