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:
June 30, 1995 Commission File Number 0-13358
CAPITAL CITY BANK GROUP, INC.
(Exact name of registrant as specified in its charter)
Florida 59-2273542
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
217 North Monroe Street, Tallahassee, Florida 32301
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(904) 671-0610
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirement for
the past 90 days.
Yes __X___ No _____
At July 31, 1995, 2,853,701 shares of the Registrant's Common Stock, $.01 par
value, were outstanding.
CAPITAL CITY BANK GROUP, INC.
I N D E X
PART I. FINANCIAL INFORMATION PAGE NUMBER
Consolidated Statements of Condition --
June 30, 1995 and December 31, 1994 3
Consolidated Statements of Income --
Three and Six Months Ended June 30, 1995 4
and 1994
Consolidated Statements of Cash Flows --
Six Months Ended June 30, 1995
and 1994 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
Index to Exhibits 16
Signatures 16
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF CONDITION
AS OF JUNE 30, 1995 AND DECEMBER 31, 1994
(Dollars In Thousands, Except Per Share Amounts)
June 30, 1995 December 31, 1994
(Unaudited) (Audited)
ASSETS
Cash & Due From Banks $ 48,771 $ 63,327
Investment Securities, Market Value
$154,763 and $145,003 as of
June 30, 1995 and December 31,
1994, respectively (Note 2) 154,876 150,441
Investment Securities Available for Sale 54,953 48,847
Federal Funds Sold 53,050 25,740
Loans: (Note 3) 431,124 426,013
Unearned Interest (4,503) (5,209)
Allowance for Loan Losses (7,344) (7,551)
Loans, Net 419,277 413,253
Premises & Equipment 25,667 24,292
Accrued Interest Receivable 6,591 5,546
Intangible Assets 1,246 1,379
Other Assets 8,355 9,805
TOTAL ASSETS $772,786 $742,630
LIABILITIES
Deposits:
Noninterest Bearing Deposits $159,895 $167,711
Interest Bearing Deposits (Note 4) 506,618 480,463
Total Deposits 666,513 648,174
Federal Funds Purchased and Securities
Sold Under Repurchase Agreements 20,252 13,964
Other Short-Term Borrowings 1,630 999
Other Liabilities 6,694 7,093
TOTAL LIABILITIES $695,089 $670,230
SHAREHOLDERS' EQUITY
Common Stock, $.01 Par Value;
4,000,000 shares authorized;
3,105,243 issued 31 31
Surplus 5,868 5,852
Retained Earnings 78,025 73,989
Treasury Stock: 251,563 shares at
June 30, 1995 and 259,428 at
December 31, 1994 (6,368) (6,588)
Unrealized Gains and Losses 141 (884)
TOTAL SHAREHOLDERS' EQUITY 77,697 72,400
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $772,786 $742,630
Book Value Per Share $ 27.23 $ 25.44
CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED JUNE 30 (Dollars in Thousands, Except Per Share Amounts)
THREE MONTHS ENDED JUNE SIX MONTHS ENDED JUNE
1995 1994 1995 1994
INTEREST INCOME
Interest and Fees on Loans $10,062 $ 8,650 $19,799 $16,921
Investment Securities:
U. S. Treasury 1,032 1,265 2,119 2,555
U. S. Government Agencies/Corp. 744 492 1,300 987
States and Political Subdivisions 857 889 1,696 1,771
Other Securities 61 58 128 138
Federal Funds Sold 834 435 1,312 819
Total Interest Income 13,590 11,789 26,354 23,191
INTEREST EXPENSE
Deposits 5,064 3,351 9,269 6,654
Fed. Funds Purchased & Securities 303 140 528 283
Sold Under Repurchase Agreements
Long-Term Borrowings - 15 - 35
Other Short-Term Debt 12 8 24 14
Total Interest Expense 5,379 3,514 9,821 6,986
Net Interest Income 8,211 8,275 16,533 16,205
Provision for Loan Losses 17 329 291 659
Net Interest Income After Provision
for Loan Losses 8,194 7,946 16,242 15,546
NONINTEREST INCOME
Income from Fiduciary Activities 165 146 502 337
Service Charges on Deposit Accounts 1,407 1,365 2,730 2,668
Data Processing 780 715 1,386 1,308
Securities Transactions - 5 - 4
Other 1,047 1,074 2,159 2,535
Total Noninterest Income 3,399 3,305 6,777 6,852
NONINTEREST EXPENSE
Salaries and Employee Benefits 4,446 4,278 8,872 8,530
Occupancy, Net 634 564 1,232 1,118
Furniture and Equipment 806 698 1,651 1,378
Other 2,718 2,387 5,233 4,800
Total Noninterest Expense 8,604 7,927 16,988 15,826
Income Before Income Tax 2,989 3,324 6,031 6,572
Income Tax Expense 828 937 1,682 1,835
NET INCOME $ 2,161 $ 2,387 $4,349 $4,737
Net Income Per Share $ .75 $ .84 $ 1.52 $ 1.66
Cash Dividends Per Share $ .11 $ .11 $ .11 $ .11
Average Shares Outstanding 2,853,680 2,847,414 2,853,680 2,849,196
CAPITAL CITY BANK GROUP, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED JUNE 30
(Dollars In Thousands)
1995 1994
(Unaudited) (Unaudited)
NET INCOME $ 4,349 $ 4,737
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Provision for Loan Losses 291 659
Depreciation 1,197 836
Amortization of Intangible Assets 133 183
Net (Increase) Decrease in Interest
Receivable (1,045) (135)
Net (Increase) Decrease in Other Assets 1,466 697
Net Increase (Decrease) in Other
Liabilities 1,564 (136)
Net Cash From Operating Activities 7,955 6,841
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Payments/Maturities of
Investment Securities-Held to Maturity 20,368 32,682
Proceeds from Payments/Maturities of
Investment Securities-Available for Sale 7,435 7,350
Purchase of Investment Securities Held
to Maturity (24,868) (46,959)
Purchase of Investment Securities
Available for Sale (12,450) (1,081)
Net (Increase) Decrease in Loans (6,315) (11,979)
Purchase of Premises & Equipment (2,594) (2,560)
Sales of Premises & Equipment 22 55
Net Cash from Investing Activities (18,402) (22,492)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase (Decrease) in Deposits 18,339 3,986
Net Increase (Decrease) in Federal
Funds Purchased 6,288 (4,804)
Net Increase (Decrease) in Other Borrowed
Funds 631 (202)
Repayment of Long-Term Debt - (1,000)
Dividends Paid (2,277) (2,134)
Sale (Purchase) of Treasury Stock 220 (86)
Net Cash From Financing Activities 23,201 (4,240)
Net Increase (Decrease) in Cash and
Cash Equivalents 12,754 (19,891)
Cash and Cash Equivalents at Beginning of
Period 89,067 113,892
Cash and Cash Equivalents at End of Period $ 101,821 $ 94,001
Supplemental Disclosure:
Interest Paid $ 8,837 $ 6,913
Taxes Paid $ 1,542 $ 1,699
CAPITAL CITY BANK GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) MANAGEMENT'S OPINION AND ACCOUNTING POLICIES
The consolidated financial statements, included herein, have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. Prior year financial statements have
been reformatted and/or amounts reclassified, as necessary, to conform with the
current year presentation.
In the opinion of management, the consolidated financial statements contain all
adjustments, which are those of a recurring nature, and disclosures necessary to
present fairly the financial position of the Company as of June 30, 1995 and
December 31, 1994, and the results of operations and cash flows for the three
and six month periods ended June 30, 1995 and 1994.
The Company and its subsidiaries follow generally accepted accounting principles
and reporting practices applicable to the banking industry. The principles
which materially affect the financial position, results of operations and cash
flows are set forth in Notes to Financial Statements which are included in the
Company's 1994 Annual Report and Form 10K.
(2) INVESTMENT SECURITIES
The carrying value and related market value of investment securities in the
held-to-maturity and available-for-sale portfolios at June 30, 1995 and December
31, 1994 were as follows (dollars in thousands):
June 30, 1995
Amortized Unrealized Unrealized Market
Held-To-Maturity Cost Gains Losses Value
U. S. Treasury $ 62,096 $ 206 $ 279 $ 62,023
U. S. Government Agencies
and Corporations 38,602 198 375 38,425
States and Political
Subdivisions 49,526 558 409 49,675
Mortgage Backed Securities 2,883 26 38 2,871
Other Securities 1,769 6 6 1,769
Total $154,876 $ 994 $ 1,107 $154,763
June 30, 1995
Amortized Unrealized Unrealized Market
Available-For-Sale Cost Gains Losses Value
U. S. Treasury $ 14,527 $ 218 $ 33 $ 14,712
U. S. Government Agencies
and Corporations 12,260 105 108 12,257
States and Political
Subdivisions 22,368 232 213 22,387
Mortgage Backed Securities 3,563 20 15 3,568
Other Securities 2,014 15 - 2,029
Total $ 54,732 $ 590 $ 369 $ 54,953
December 31, 1994
Amortized Unrealized Unrealized Market
Held To Maturity Cost Gains Losses Value
U.S. Treasury $ 72,979 $ - $ 1,681 $ 71,298
U.S. Government Agencies
and Corporations 23,018 3 1,415 21,606
States and Political
Subdivisions 49,125 135 2,027 47,233
Mortgaged Backed Securities 3,005 1 182 2,824
Other Securities 2,314 - 272 2,042
Total $150,441 $ 139 $ 5,577 $145,003
December 31, 1994
Amortized Unrealized Unrealized Market
Available For Sale Cost Gains Losses Value
U.S. Treasury $ 18,634 $ - $ 180 $ 18,454
U.S. Government Agencies
and Corporations 7,041 2 443 6,600
States and Political
Subdivisions 19,641 77 805 18,913
Mortgaged Backed Securities 2,932 - 32 2,900
Other Securities 1,981 1 2 1,980
Total $ 50,229 $ 80 $ 1,462 $ 48,847
(3) LOANS
The composition of the Company's loan portfolio at June 30, 1995 and December
31, 1994 was as follows (dollars in thousands):
June 30, 1995 December 31, 1994
Commercial, Financial
and Agricultural $ 42,042 $ 39,288
Real Estate-Construction 25,222 24,315
Real Estate-Mortgage 255,941 255,754
Consumer 107,919 106,656
Gross Loans $431,124 $426,013
(4) ALLOWANCE FOR LOAN LOSSES
An analysis of the changes in the allowance for loan losses for the six month
period ended June 30, 1995 and 1994, is as follows:
June 30, 1995 June 30, 1994
Balance, Beginning of the Period $ 7,551 $ 7,594
Provision for Loan Losses 291 659
Recoveries on Loans Previously
Charged-Off 297 229
Loans Charged-Off 795 921
Balance, End of Period $ 7,344 $ 7,561
Effective January 1, 1995, the Company adopted Statement of Financial Accounting
Standards ("SFAS 114"), "Accounting by Creditors for Impairment of a Loan," as
amended. In accordance with SFAS 114, the value of a loan which is deemed
"impaired" is measured based on the present value of expected future cash flows
discounted at the loan's initial effective interest rate or the fair value of
the collateral, if the loan is collateral dependent. If the value of a loan is
less than its recorded investment, a valuation allowance is established. This
valuation allowance is included in the total allowance for loan losses, which is
established to cover losses inherent in the portfolio as a whole. Certain loan
categories including residential, consumer and credit card loans are excluded
from the scope of this Statement. Adoption of SFAS 114 did not have a material
impact on the level of the allowance for loan losses.
The definition of insubstance foreclosure loans was also changed by SFAS 114.
As of June 30, 1995, loans which were previously deemed insubstance foreclosures
and classified as other real estate have been reclassified as loans.
Insubstance foreclosures are not material and have not been reclassified for
prior periods.
Impaired loans are primarily defined as all nonaccruing loans for the loan
categories which are included within the scope of SFAS 114. Selected
information pertaining to impaired loans is depicted in the table below.
June 30, 1995
Valuation
Balance Allowance
Impaired Loans:
With Related Credit Allowance $1,356 $ 327
Without Related Credit Allowance $1,227 $ ---
Average Recorded Investment for the Period $3,783 $ *
* Not Applicable
The Company recognizes income on impaired loans primarily on the cash basis.
Any change in the present value of expected cash flows is recognized through the
allowance for loan losses. For the period ended June 30, 1995, the Company
recognized $38,573 in interest income on impaired loans, of which $32,282 was
collected in cash.
(5) DEPOSITS
The composition of the Company's interest bearing deposits at June 30, 1995 and
December 31, 1994 was as follows (dollars in thousands):
June 30, 1995 December 31, 1994
NOW Accounts $ 93,315 $ 95,540
Money Market Accounts 69,354 71,763
Savings Deposit 83,213 101,009
Other Time Deposits 260,736 212,151
Total Interest Bearing Deposits $506,618 $480,463
ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion sets forth the major factors that have affected the
Company's financial condition and results of operations and should be read in
conjunction with the accompanying financial statements. The year-to-date
averages used in this report are based on daily balances for each respective
period.
On January 1, 1995, the Company completed its corporate reorganization in which
seven independently chartered banks were combined to form Capital City Bank,
which operates 20 offices and represents in excess of 80% of the Company's total
assets. The impetus for the reorganization was to provide greater convenience
by enabling customers to transact business in multiple locations which was
limited under the Company's previous structure, and to enhance to Company's
marketing efforts in the north Florida area by marketing its products and
services under a singular name. Over the long run management anticipates
achieving operational efficiencies through the centralization of various
functional areas. However, it is not expected that these efficiencies will be
realized immediately. In the short run, management anticipates incurring some
additional costs associated with completing the reorganization and promoting the
newly formed Capital City Bank and these costs will be reflected in current year
operations.
RESULTS OF OPERATIONS
Net Income
Net income was $2.2 million, or $.75 per share for the second quarter of 1995, a
10.7% decrease on a per share basis over the comparable period for 1994. Net
income was $4.3 million, or $1.52 per share for the six months ended June 30,
1995, an 8.4% decrease on a per share basis over the comparable period in 1994.
The decrease in earnings is directly attributable to higher noninterest expense
reflecting an increase in occupancy costs and expenses associated with
completion of the Company's corporate reorganization which was consummated on
January 1, 1995. Other factors which impacted earnings include: (1) higher net
interest income attributable to improvement in the margin, and (2) a reduction
in the provision for loan losses reflecting improved asset quality. Condensed
statements of income for the respective periods are presented below:
For The Three For The Six
Months Ended Months Ended
June 30, June 30,
1995 1994 1995 1994
Interest and Dividend Income $13,590 $11,789 $26,354 $23,191
Taxable Equivalent Adjustment(1) 389 433 779 853
13,979 12,222 27,133 24,044
Interest Expense 5,379 3,514 9,821 6,986
Net Interest Income (FTE) 8,600 8,708 17,312 17,058
Provision for Loan Losses 17 329 291 659
Taxable Equivalent Adjustment 389 433 779 853
Net Int. Inc. After Provision 8,194 7,946 16,242 15,546
Noninterest Income 3,399 3,305 6,777 6,852
Noninterest Expense 8,604 7,927 16,988 15,826
Income Before Income Taxes 2,989 3,324 6,031 6,572
Income Taxes 828 937 1,682 1,835
Income Before Taxes 2,161 2,387 4,349 4,737
Net Income $ 2,161 $ 2,387 $ 4,349 $ 4,737
Percent Change (9.47%) 6.66% (8.19%) 27.00%
Return on Average Assets (2) 1.13% 1.28% 1.17% 1.28%
Return on Average Equity (2) 11.40% 13.81% 11.73% 13.87%
(1) Computed using a statutory tax rate of 34%
(2) Annualized
Net Interest Income
Through June 30, 1995, taxable equivalent net interest income increased
$254,000, or 1.5%, over the first half of 1994. However, second quarter taxable
equivalent net interest income decreased $108,000, or 1.2%, over the comparable
quarter in 1994. The decrease in the second quarter is attributable to a
contraction in the Company's net interest margin. Table I on page 14 provides a
comparative analysis of the Company's average balances and interest rates.
As compared to the prior year, taxable-equivalent interest income increased $1.8
million, or 14.4%, and $3.1 million, or 12.8%, respectively, for the three and
six month periods ended June 30, 1995. The increase in each period is due to
rising interest rates and loan growth. From January of 1994 through March of
1995, the Prime rate increased 300 basis points and the three-year Treasury Bill
index increased over 200 basis points. Loans, which generally represent the
Company's highest yielding asset, increased (on average) $30.0 million, or 7.6%.
As a percent of average earning assets, the loan portfolio increased from 59.4%
to 63.8%. Higher interest rates and loan growth lead to an 84 and 91 basis
points improvement in the yield on earning assets over the comparable three and
six month periods in 1994.
Interest expense increased $1.9 million, or 53.1%, and $2.8 million, or 40.6%,
respectively, as compared to the three and six month periods in 1994. This
increase is attributable to a 139 and 115 basis points increase in the average
rate paid, reflecting the increase in interest rates and a shift in the mix of
deposits. A significant portion of the deposit shift occurred during the second
quarter. Certificates of deposit, which generally represent a higher cost of
funds than other deposit offerings, increased to 39.1% of average deposits
during the second quarter of 1995, compared to 32.7% for the comparable quarter
in 1994. The shift in mix further accentuated the overall increase in cost of
funds attributable to rising rates.
The Company's interest rate spread (defined as the average taxable equivalent
yield on earning assets less the average rate paid on interest bearing
liabilities) decreased from 4.53% in the first half of 1994 to 4.29% in 1995.
The Company's net interest margin percentage (defined as taxable-equivalent net
interest income divided by average earning assets) increased from 5.15% in the
first half of 1994 to 5.21% in 1995. Although the net interest margin
percentage increased through the first six months, the margin declined
significantly during the second quarter. Between the first and second quarter
of 1995, the margin declined 39 basis points due primarily to the shift in
deposits discussed above.
Provisions for Loan Losses
The provision for loan losses was $17000 and $291,000, respectively, for the
three and six month periods ended June 30, 1995, compared to $329,000 and
$659,000 for the comparable periods in 1994. The lower provision reflects
improved credit quality, a reduction in net charge-offs and slower than
anticipated loan growth during 1995. As of June 30, 1995, the reserve for loan
losses totalled $7.3 million compared to $7.6 million at June 30, 1994. As a
percent of loans, the reserve represented 1.72% and 1.84%, respectively.
Charge-off activity for the respective periods is set forth below.
Three Months Ended Six Months Ended
6/30/95 6/30/94 6/30/95 6/30/94
Net Charge-Offs $393,000 $538,000 $498,000 $692,000
Net Charge-Offs (Annualized)
as a percent of Average
Loans Outstanding, Net of
Unearned Interest .36% .54% .23% .35%
Noninterest Income
Noninterest income increased $94,000, or 2.8%, in the second quarter of 1995
versus the comparable quarter for 1994, and decreased $75,000, or 1.1%, for the
six months ended June 30, 1995 versus the comparable period for 1994.
All major categories of noninterest income increased with the exception of
"Other" noninterest income which declined $376,000, or 14.8%. The decrease in
this category is primarily attributable to gains on the sale of real estate of
$548,000 which were recognized during the first half of 1994 compared to $82,000
in 1995. Additionally, mortgage origination fees declined $279,000 due to
origination volume which declined by 49.0%. These decreases were partially
offset by higher credit card merchant fee income.
In January 1995, the Company changed its method of income recognition for
Capital City Trust Company ("CCTC") from cash to accrual. This change in method
resulted in a one-time adjustment which increased CCTC revenues by $166,000
during the first quarter of 1995.
Service charges on deposit accounts increased $42,000, or 3.1%, and $62,000, or
2.3%, over the comparable three and six month periods for 1994. The increase
primarily reflects a higher level of activity subject to service charge
assessments.
Noninterest income as a percent of average earning assets was 2.0% for the first
half of 1995 versus 2.1% for the comparable quarter in 1994.
Noninterest Expense
Noninterest expense increased $677,000, or 8.5%, and $1.1 million, or 7.3%,
respectively, over the comparable three and six month periods in 1994.
Through the first six months, compensation expense increased $342,000, or 4.0%,
reflecting annual raises and an increase in full-time equivalent employees of
15.
Occupancy expense, including premises, furniture, fixtures and equipment
increased $178,000, or 14.1%, and $387,000, or 15.5%, respectively, over the
comparable three and six month periods in 1994. The increase is primarily
attributable to depreciation expense which is up $331,000, or 38.6%
year-to-date. The increase reflects major capital additions placed into service
in 1994 including a new operations center, a new office, renovations and the
purchase of furniture and equipment. Further capital additions are planned for
1995 which will add to the current level of depreciation expense.
Other noninterest expense increased $433,000, or 9.0%, during the first six
months of 1995, a majority of which was realized in the second quarter. A
portion of this increase in associated with the recently completed corporate
reorganization and the newly consolidated Capital City Bank. The expense
categories which were primarily affected include advertising, printing/supplies,
telephone and postage.
Annualized net noninterest expense (noninterest income minus noninterest
expense) as a percent of average earning assets was 3.07% in the first half of
1995 versus 2.71% for the first half of 1994. The increase in this percentage
is primarily attributable to nonrecurring gains recognized during the first half
of 1994 and the higher level of noninterest expense discussed above.
Income Taxes
The provision for income taxes decreased $109,000, or 11.6%, during the second
quarter and $153,000, or 8.3%, during the first six months of 1995. The
decrease in the provision is attributable to lower taxable income. The
Company's effective tax rate for the first half of 1995 and 1994 was 27.9%.
FINANCIAL CONDITION
The Company's average assets increased to $751.0 million in the first half of
1995 from $746.4 million in the first half of 1994. Average earning assets were
$669.8 million for the six months ended June 30, 1995 versus $668.4 million for
the comparable period in 1994. Average loans are up $30.0 million, or 7.6%.
The increase in loans was funded primarily through a reduction in the investment
portfolio. U.S. Government securities decreased $20.5 million, or 14.0%, while
municipal securities decreased $3.9 million, or 5.4%. Table I on page 15,
presents average balances for the three and six month periods of 1995 and 1994.
During the first quarter of 1994, the Company adopted Statement of Financial
Accounting Standards No. 115 ("Accounting for Certain Investments in Debt and
Equity Securities"). To afford greater flexibility in managing the portfolio,
management transferred approximately 30% of the portfolio to the
"Available-for-Sale" category. The available-for-sale securities portfolio will
enable the Company to better manage its liquidity position and interest rate
risk without adversely affecting the classification of securities in the
"Held-to-Maturity" portfolio, which are recorded at amortized cost. Securities
in the available-for-sale portfolio are recorded at fair value with unrealized
gains and losses, net of deferred taxes, reported as a separate component of
equity capital. See Note 2 in Notes to Consolidated Financial Statements for
further disclosure.
At June 30, 1995, the Company's nonperforming loans were $4.1 million versus
$6.0 million at year-end and $8.7 million at June 30, 1994. As a percent of
nonperforming loans, the allowance for loan losses represented 181.3% at June
30, 1995 versus 126.6% at year-end and 87.4% at June 30, 1994. Nonperforming
loans include nonaccruing and restructured loans. Other real estate, which
includes property acquired either through foreclosure or by receiving a deed in
lieu of foreclosure, was $749,000 million at June 30, 1995, versus $1.6 million
at December 31, 1994 and $2.2 million at June 30, 1994.
Effective January 1, 1995, the Company adopted Statement of Financial Accounting
Standards No. 114 ("SFAS 114"), "Accounting by Creditors for Impairment of a
Loan," as amended. In accordance with SFAS 114, the valuation allowance for
loans which are deemed "impaired" is measured based on the present value of
expected future cash flows discounted at the loan's initial effective interest
rate or the fair value of the collateral, if the loan is collateral dependent.
See Note 4 in the Notes to Consolidated Financial Statements for further
information.
Average deposits decreased from $650.8 million for the first half of 1994, to
$647.7 million for the first half of 1995. Although interest rates increased
significantly during 1994, there was little competitive pressure to increase
pricing and total deposits remained relatively stable. However, during the
first quarter of 1995, as competition increased and depositors sought higher
yields, the Company experienced a decline in average deposits. To combat the
deposit outflow management become more aggressive on pricing and by the end of
the first quarter had increased deposits to a level which exceeded that of the
fourth quarter of 1994. Average deposits during the second quarter of 1995 were
$660.5 million compared to $635.1 million during the first quarter.
Although the level of deposits remained relatively constant during 1994, there
was a gradual shift from transaction and savings accounts to certificates of
deposits as interest rates rose and depositors become more willing to invest in
longer term, fixed rate maturities. During the first half of 1995, this shift
was further accentuated. Certificates of deposit, on average, as a percent of
total deposits increased to 39.1% in the second quarter versus 32.7% for the
comparable quarter in 1994 which has adversely impacted the Company's net
interest margin.
The ratio of average noninterest bearing deposits to total deposits was 24.4%
for the first half of 1995 compared to 23.7% for the first half of 1994. For the
same periods, the ratio of average interest bearing liabilities to average
earning assets was 76.3% and 77.4%, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity, for a financial institution, is the availability of funds to meet
increased loan demand and/or excessive deposit withdrawals. Management has
implemented a financial structure that provides ready access to sufficient
liquid funds to meet normal transaction requirements, take advantage of
investment opportunities and cover unforeseen liquidity demands. In addition to
core deposit growth, sources of funds available to meet liquidity demands for
the subsidiary banks include federal funds sold, near-term loan and investment
maturities, including the "Available for Sale" investment portfolio, and the
ability to purchase federal funds through established lines of credit with
correspondent banks. Additionally, the parent company maintains two $6.0
million revolving lines of credit. As of June 30, 1995, there was no debt
outstanding under either line.
The Company's equity capital was $77.7 million as of June 30, 1995, compared to
$72.4 million as of December 31, 1994. The Company's management continues to
monitor its capital position in relation to its level of assets with the
objective of maintaining a strong capital position. The leverage ratio was 9.9%
at June 30, 1995 versus 9.6% at December 31, 1994. Further, the Company's
risk-adjusted capital ratio of 17.4% significantly exceeds the 8.0% minimum
requirement under the risk-based regulatory guidelines.
State and federal regulations as well as the Company's long-term debt agreements
place certain restrictions on the payment of dividends by both the Company and
its Group banks. At June 30, 1995, these regulations and covenants did not
impair the Company's (or its Group banks') ability to declare and pay dividends
or to meet other existing obligations.
During the first six months of 1995, shareholders' equity increased $5.3
million, or 14.6%, on an annualized basis. A portion of the increase in equity
is attributable to "unrealized gains and losses" on the available-for-sale
investment portfolio which improved from an unrealized loss of $884,000 at
year-end to an unrealized gain of $141,000 at June 30, 1995. The Company's
common stock had a book value of $27.23 per share at June 30, 1995 compared to
$25.44 at December 31, 1994. Pursuant to the Company's stock repurchase program
adopted in 1989, the Company has repurchased 251,563 shares of its common stock,
net of shares subsequently reissued. In the first half of 1995, there were no
shares repurchased and 7,865 treasury shares were reissued, a majority of which
were performance awards issued in accordance with the Company's Stock Incentive
Plan.
AVERAGES BALANCES & INTEREST RATES
(Taxable Equivalent Basis - Dollars in Thousands)
FOR THREE MONTHS ENDED JUNE 30 FOR SIX MONTHS ENDED JUNE 30
1995 1994 1995 1994
Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate
ASSETS
Loans, Net of Unearned Interest $431,237 $10,069 9.37% $400,665 $ 8,655 8.66% $427,072 $19,818 9.36% $397,076 $16,931 8.60%
Taxable Investment Securities 131,823 1,837 5.59% 150,495 1,815 4.89% 130,121 3,547 5.49% 151,790 3,680 4.91%
Tax-Exempt Investment Securities 69,691 1,238 7.11% 72,772 1,317 7.24% 68,845 2,456 7.13% 72,740 2,614 7.19%
Funds Sold 55,269 834 6.05% 47,839 435 3.65% 43,749 1,312 6.05% 46,805 819 3.53%
Total Earning Assets 688,020 13,978 8.15% 671,771 12,222 7.31% 669,787 27,133 8.16% 668,411 24,044 7.25%
Cash & Due From Banks 45,953 46,484 48,533 47,679
Allowance for Loan Losses (7,688) (7,858) (7,667) (7,779)
Other Assets 39,142 37,042 40,358 38,134
TOTAL ASSETS $765,427 $747,439 $751,011 $746,445
LIABILITIES
NOW Accounts $ 88,886 461 2.08% $ 95,337 429 1.80% $ 91,148 990 2.19% $95,964 857 1.80%
Money Market Accounts 68,025 518 3.05% 76,506 402 2.11% 69,380 1,059 3.08% 77,821 789 2.04%
Savings Accounts 85,047 506 2.39% 110,814 662 2.40% 90,085 l,084 2.43% 110,792 1,319 2.40%
Other Time Deposits 258,336 3,578 5.55% 214,474 1,858 3.47% 239,400 6,135 5.17% 211,942 3,689 3.51%
Total Int. Bearing Deposits 500,294 5,063 4.06% 497,131 3,351 2.70% 490,013 9,268 3.81% 496,519 6,654 2.70%
Funds Purchased 21,777 303 5.58% 16,137 140 3.47% 19,810 529 5.38% 18,511 283 3.08%
Other Borrowed Funds 1,262 12 3.89% 900 8 3.38% 1,256 24 3.85% 985 14 2.85%
Long-Term Debt - - - 1,372 15 4.44% - - - 1,629 35 4.31%
Total Interest Bearing
Liabilities 523,333 5,378 4.12% 515,540 3,514 2.73% 511,079 9,821 3.87% 517,644 6,986 2.72%
Noninterest Bearing Deposits 160,168 157,902 157,733 154,290
Other Liabilities 5,880 4,666 7,435 5,662
TOTAL LIABILITIES $689,381 $678,108 $676,247 $677,596
SHAREHOLDERS' EQUITY
Common Stock 31 31 31 31
Surplus 5,868 5,852 5,865 5,853
Retained Earnings 70,147 63,448 68,868 62,965
TOTAL S'HOLDERS' EQUITY 76,046 69,331 74,764 68,849
TOTAL LIAB. & EQUITY $765,427 $747,439 $751,011 $746,445
Interest Rate Spread 4.03% 4.58% 4.29% 4.53%
Net interest Income $8,600 $8,708 17,312 $17,058
Net Interest Margin 5.02% 5.21% 5.21% 5.15%
(1) Average balances include nonaccrual loans. Interest income includes fees on
loans of approximately $278,000 and $697,000, for the three and six months ended June 30, 1994, versus $398,000
and $789,000, for the comparable periods ended June 30, 1994.
(2) Interest income includes the effects of taxable equivalent adjustments using
a 34% tax rate.
PART II. OTHER INFORMATION
Items 1-3.
Not applicable
Item 4.
The Annual Meeting of Shareholders of Capital City Bank Group, Inc. was held on
April 26, 1995. Proxies for the meeting were solicited pursuant to Regulation
14A under the Securities Exchange Act of 1934, and there was no solicitation in
opposition to management's solicitations. The following summarizes all matters
voted upon at this meeting.
1. The following directors were elected for terms expiring in 1996. These
individuals served as the Board of Directors prior to the Annual Meeting. The
number of votes cast were as follows:
Number of Votes Cast
Against/ Abstentions/
For Withheld Broker Non-Votes
DuBose Ausley 2,490,724 0 2,263
Thomas A. Barron 2,491,909 0 1,078
Cader B. Cox, III 2,491,909 0 1,078
John K. Humphress 2,491,306 603 1,078
Payne H. Midyette, Jr. 2,491,909 0 1,078
Godfrey Smith 2,491,909 0 1,078
William G. Smith, Jr. 2,491,909 0 1,078
2. The shareholders ratified the selection of Arthur Andersen LLP as the
independent auditors for the Company for 1995. The number of votes cast were as
follows:
Number of Votes Cast
Against/ Abstentions/
For Withheld Broker Non-Votes
2,491,275 0 1,712
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
Not applicable
(B) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the
period ended June 30, 1995.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to
be signed on its behalf by the undersigned Chief Financial Officer hereunto duly
authorized.
CAPITAL CITY BANK GROUP, INC.
(Registrant)
/s/J. Kimbrough Davis
J. Kimbrough Davis
Senior Vice President and
Chief Financial Officer
Date: August 11, 1995