GlobeNewswire Inc | Oct 27, 2020 07:00AM EDT

October 27, 2020

TALLAHASSEE, Fla., Oct. 27, 2020 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income of $10.4 million, or $0.62 per diluted share for the third quarter of 2020 compared to net income of $9.1 million, or $0.55 per diluted share for the second quarter of 2020, and $8.5 million, or $0.50 per diluted share for the third quarter of 2019. For the first nine months of 2020, net income totaled $23.8 million, or $1.42 per diluted share, compared to net income of $22.2 million, or $1.32 per diluted share, for the same period of 2019.

QUARTER HIGHLIGHTS

-- Return on assets improved to 1.17% and return on equity to 12.16% -- Diversified revenue and strong balance sheet continue to bufferimpact of pandemic and lower interest rates -- Strong performance by Capital City Home Loans (CCHL) contributed significantly ($0.23 per share) -- 11% increase in other fee revenues (deposit, bankcard, and wealth management) -- Credit quality remains strong with no significant problem loan migration -- 88% of loan balances extended in the first and second quarter have resumed payments

Although the environment remains challenging, Capital City reported a strong third quarter, up 12.7% over the second quarter, said William G. Smith, Jr., Chairman, President and CEO. I am proud of both our financial performance and how our team has responded to the COVID-19 pandemic. We continue to put the safety and well-being of our associates and clients first, as we reach out to assist our communities through the origination of SBA PPP loans, grants and volunteer hours, and endeavor to meet the needs of our clients through both in-person and virtual delivery channels. The mortgage market has been robust and we have benefitted from our alliance with CCHL, which contributed $0.23 per share in the third quarter up from $0.20 per share in the second quarter. Earnings from CCHL and SBA PPP loan fees have helped to mitigate the adverse impacts of a lower interest rate environment and reserve build attributable to the adoption of CECL and COVID-19. Hopefully, we will continue to experience economic improvement during the fourth quarter and into 2021. I am proud of what our team has accomplished in a very difficult year, and I remain optimistic about the long-term outlook for Capital City. Thank you for your continued support.

COVID-19 Update

-- Lobby access remains open for all of our banking offices and operations are subject to national guidelines and local safety ordinances to protect both clients and associates we will continue to monitor changing conditions with the pandemic and its impact on client and associate interactions within our banking offices -- Most operational associates returned to work in early June, but we have extended some remote work arrangements on a case-by-case basis -- Enhanced digital access options are available for banking products and access to sales associates -- We continue to monitor COVID-19 case count trends in our markets and respond appropriately to help ensure client and associate safety -- We continue to support clients with the Small Business Administration Payment Protection Program (SBA PPP) by actively assisting with the forgiveness process

Discussion of Operating Results

Summary Overview

Compared to the second quarter of 2020, the $2.1 million increase in operating profit was attributable to a $4.7 million increase in noninterest income and a $0.7 million decrease in the provision for credit losses, partially offset by higher noninterest expense of $3.0 million and lower net interest income of $0.3 million.

Compared to the third quarter of 2019, the $7.0 million increase in operating profit was attributable to a $21.1 million increase in noninterest income, partially offset by higher noninterest expense of $12.5 million, a $0.5 million increase in the provision for credit losses and lower net interest income of $1.1 million.

The $10.4 million increase in operating profit for the first nine months of 2020 versus the comparable period of 2019 was attributable to higher noninterest income of $41.4 million, partially offset by higher noninterest expense of $24.2 million, a $6.1 million increase in the provision for credit losses and lower net interest income of $0.7 million.

The aforementioned period over period variances reflect the acquisition of a 51% membership interest and consolidation of CCHL late in the first quarter of 2020.

Our return on average assets (ROA) was 1.17% and our return on average equity (ROE) was 12.16% for the third quarter of 2020. These metrics were 1.10% and 11.03% for the second quarter of 2020, respectively, and 1.14% and 10.51% for the third quarter of 2019, respectively. For the first nine months of 2020, our ROA was 0.96% and our ROE was 9.50% compared to 1.00% and 9.48%, respectively, for the same period of 2019.

Net Interest Income/Net Interest Margin

Tax-equivalent net interest income for the third quarter of 2020 was $25.2 million compared to $25.6 million for the second quarter of 2020 and $26.3 million for the third quarter of 2019. For the first nine months of 2020, tax-equivalent net interest income totaled $76.7 million compared to $77.5 million in 2019. The decrease compared to all prior periods reflected lower rates earned on overnight funds, investment securities and variable rate loans, partially offset by lower cost for deposits.

The federal funds target rate has remained in the range of 0.00%-0.25% since March 2020 when the Fed reduced its overnight rate by 150 basis points, and as a result we continue to experience lower repricing of our variable/adjustable rate earning assets and investment securities. Our overall cost of funds remained low during the third quarter of 2020 at 0.13% compared to 0.14% for the second quarter of 2020. Due to highly competitive fixed-rate loan pricing in our markets, we continue to review our loan pricing and make adjustments where we believe appropriate and prudent.

Our net interest margin for the third quarter of 2020 was 3.12%, a decrease of 29 basis points from the second quarter of 2020 and 80 basis points from the third quarter of 2019. For the first nine months of 2020, the net interest margin decreased 42 basis points to 3.42%. The decrease compared to all prior periods was primarily attributable to considerable growth in overnight funds which reduced our margin. Our net interest margin for the third quarter of 2020, excluding the impact of SBA PPP loans, was 3.17%. We discuss the effect of the pandemic related stimulus programs on our balance sheet in more detail below under Discussion of Financial Condition.

Provision for Credit Loss

The provision for credit losses for the third quarter of 2020 was $1.3 million compared to $2.0 million for the second quarter of 2020 and $0.8 million for the third quarter of 2019. For the first nine months of 2020, the provision was $8.3 million compared to $2.2 million in 2019. The higher provision in 2020 reflected expected losses due to deterioration in economic conditions related to COVID-19. We discuss the allowance for credit losses and COVID-19 exposure further below.

Noninterest Income and Noninterest Expense

CCHLs mortgage banking operations impacted our noninterest income and noninterest expense for the three and nine month periods ended September 30, 2020, and thus, the period over period comparisons reflect the impact of the CCHL consolidation, which occurred late in the first quarter 2020. The table below provides an overview of CCHLs impact on our noninterest income and noninterest expense for 2020.

Noninterest income for the third quarter of 2020 totaled $35.0 million compared to $30.2 million for the second quarter of 2020 and $13.9 million for the third quarter of 2019. For the first nine months of 2020, noninterest income totaled $80.6 million compared to $39.2 million for same period of 2019. The improvement over all prior periods was primarily attributable to higher mortgage banking revenues at CCHL. Higher deposit fees, bank card fees, and wealth management fees contributed to the increase over the second quarter of 2020. Compared to both prior year periods, deposit fees declined primarily due to the impact of government stimulus during the second quarter related to the COVID-19 pandemic, but were partially offset by higher debit card activity which drove improvement in bank card fees. The downward trend in deposit fees we realized in the second quarter of 2020 reversed in the third quarter of 2020 reflecting higher utilization of our overdraft product.

Noninterest expense for the third quarter of 2020 totaled $40.3 million compared to $37.3 million for the second quarter of 2020 and $27.9 million for the third quarter of 2019. The increase over the second quarter of 2020 was primarily attributable to higher compensation expense of $2.5 million and other expense of $0.4 million. The increase in compensation reflected higher commission expense of $1.6 million related to higher mortgage production volume at CCHL and lower realized loan cost (credit offset to salary expense) of $1.0 million related to the high level of SBA PPP loan originations in the second quarter. Higher amortization expense for mortgage servicing rights at CCHL and Core CCBG expenses (debit card losses, activity based costs, and miscellaneous expenses) drove the increase in other expense.

For the first nine months of 2020, noninterest expense totaled $108.6 million, an increase of $24.2 million over the same period of 2019 primarily attributable to the addition of expenses at CCHL, including compensation expense of $21.8 million, occupancy expense of $1.8 million, and other expense of $3.0 million. Core CCBG noninterest expense decreased $2.6 million and reflected lower compensation expense of $1.2 million, ORE expense of $0.9 million, and other expense of $1.6 million, partially offset by higher occupancy expense of $1.1 million. The decrease in compensation expense was primarily attributable to higher realized loan cost of $0.6 million related to the aforementioned increase in SBA PPP loan originations and lower stock compensation expense of $0.5 million. A $1.0 million gain from the sale of a banking office in the first quarter of 2020 drove the reduction in ORE expense. The decline in other expense was primarily attributable to lower service cost expense for our pension plan. Higher expense for FF&E depreciation and maintenance agreements (related to technology investment and upgrades), deferred maintenance for premises, and pandemic related cleaning/supply costs drove the increase in occupancy. The same aforementioned factors drove the increase over the third quarter of 2019.

Overall, CCHL has contributed significantly to the improvement in our efficiency ratio for 2020.

Three Months Ended Nine Months Ended Sep 30, 2020 Jun 30, 2020 Sep 30, 2019 Sep 30, 2020 Sep 30, 2019(Dollars in Core CCHL Core CCHL Core CCHL Core CCHL Core CCHLthousands) CCBG CCBG CCBG CCBG CCBGDeposit Fees $ 4,316 - $ 3,756 $ - $ 4,961 $ - $ 13,087 $ - $ 14,492 $ -Bank Card 3,389 - 3,142 - 2,972 - 9,582 - 8,863 -FeesWealthManagement 2,808 - 2,554 - 2,992 - 7,966 - 7,719 -FeesMortgage 208 22,775 241 19,156 1,587 - 1,587 44,046 3,779 -Banking FeesOther 1,182 287 1,147 203 1,391 - 3,787 587 4,372 -TotalNoninterest $ 11,903 $ 23,062 $ 10,840 $ 19,359 $ 13,903 $ - $ 36,009 $ 44,633 $ 39,225 $ -Income Salaries $ 11,603 $ 10,753 $ 11,596 $ 8,381 $ 12,533 $ - $ 36,687 $ 21,376 $ 37,314 $ -OtherAssociate 3,616 192 3,477 204 3,670 - 11,049 446 11,675 -BenefitsTotal 15,219 10,945 15,073 8,585 16,203 - 47,736 21,822 48,989 -Compensation Occupancy, 5,061 845 5,030 768 4,710 - 14,839 1,844 13,756 -NetOther 6,930 1,342 6,599 1,248 6,960 - 19,325 3,048 21,722 -TotalNoninterest $ 27,210 $ 13,132 $ 26,702 $ 10,601 $ 27,873 $ - $ 81,900 $ 26,714 $ 84,467 $ -Expense

Income Taxes

We realized income tax expense of $3.2 million (effective rate of 17%) for the third quarter of 2020 compared to $2.9 million (effective rate of 18%) for the second quarter of 2020 and $3.0 million (effective rate of 26%) for the third quarter of 2019. For the first nine months of 2020, we realized income tax expense of $7.4 million (effective rate of 18%) compared to $7.4 million (effective rate of 25%) for the same period of 2019. The decrease in our effective tax rate in 2020 reflected the impact of converting CCHL to a partnership for tax purposes in the second quarter of 2020. Absent discrete items, we expect our annual effective tax rate to approximate 18%-19% for the remainder of 2020.

Discussion of Financial Condition

Earning Assets

Average earning assets were $3.224 billion for the third quarter of 2020, an increase of $207.1 million, or 6.9% over the second quarter of 2020, and an increase of $529.1 million, or 19.6% over the fourth quarter of 2019. The increase over both prior periods was primarily driven by higher deposit balances which funded growth in the loan portfolio and overnight funds sold. Deposit balances increased as a result of strong core deposit growth, in addition to funding retained at the bank from SBA PPP loans, and various other stimulus programs.

We maintained an average net overnight funds (deposits with banks plus FED funds sold less FED funds purchased) sold position of $567.9 million during the third quarter of 2020 compared to an average net overnight funds sold position of $351.5 million in the second quarter of 2020 and $228.1 million in the fourth quarter of 2019. The increase compared to both prior periods was driven by strong core deposit growth, in addition to pandemic related stimulus programs (see below Funding).

Average loans held for investment (HFI) increased $22.2 million, or 1.1%, over the second quarter of 2020 and $171.1 million, or 9.3%, over the fourth quarter of 2019. We originated SBA PPP loans totaling $190 million (reflected in the commercial loan category) which averaged $190 million in the third quarter and $134 million in the second quarter. Period-end HFI loans decreased $24.0, or 1.2%, from the second quarter of 2020 and increased $162.2 million, or 8.8%, over the fourth quarter of 2019. The decline in the core loan portfolio (ex-SBA PPP loans) has been driven by residential real estate loan run-off reflective of the lower rate environment and refinancing activity as well as lower utilization of commercial lines of credit reflective of the economic slowdown.

To date, our borrowers have submitted a nominal level of SBA PPP forgiveness applications, but these applications are expected to accelerate over the next six months. Amortized SBA PPP loan fees totaled approximately $0.6 million for the third quarter of 2020 and $0.4 million for the second quarter of 2020. At September 30, 2020, we had approximately $4.0 million (net) in deferred SBA PPP loan fees.

Allowance for Credit Losses

At September 30, 2020, the allowance for credit losses totaled $23.1 million compared to $22.5 million at June 30, 2020 and $13.9 million at December 31, 2019. At September 30, 2020, the allowance represented 1.16% of outstanding loans held for investment (HFI) and provided coverage of 420% of nonperforming loans compared to 1.11% and 322%, respectively, at June 30, 2020 and 0.75% and 311%, respectively, at December 31, 2019. At September 30, 2020, excluding SBA PPP loans (100% government guaranteed), the allowance represented 1.28% of loans held for investment.

The adoption of ASC 326 (CECL) on January 1, 2020 had an impact of $4.0 million ($3.3 million increase in the allowance for credit losses and $0.7 million increase in the allowance for unfunded loan commitments (other liability account)). The $6.4 million build (provision of $8.3 million less net charge-offs of $1.9 million) in the allowance for credit losses for the first nine months of 2020 was attributable to deterioration in economic conditions, primarily a higher rate of unemployment due to the COVID-19 pandemic and its potential effect on rates of default.

Credit Quality/COVID-19 Exposure

Nonperforming assets (nonaccrual loans and OREO) totaled $6.7 million at September 30, 2020, a $1.3 million decrease from June 30, 2020, and a $1.3 million increase over December 31, 2019. Nonaccrual loans totaled $5.5 million at September 30, 2020, a $1.5 million decrease from June 30, 2020 and a $1.0 million increase over December 31, 2019. The balance of OREO totaled $1.2 million at September 30, 2020, an increase of $0.2 million over June 30, 2020 and a $0.3 million increase over December 31, 2019.

We continue to analyze our loan portfolio for segments that have been affected by the stressed economic and business conditions caused by the pandemic. Certain at-risk segments total 8% of our loan balances at September 30, 2020, including hotel (3%), restaurant (1%), retail and shopping centers (3%), and other (1%). The other segment includes churches, non-profits, education, and recreational. To assist our clients, in mid-March of 2020, we began allowing short term 60 to 90 day loan extensions for affected borrowers. A roll-forward of loan extension activity is provided in the table below. Approximately 83% of the $325 million in loans extended were for commercial borrowers and 17% for consumer borrowers. Approximately $285 million, or 88% of the loan balances associated with these borrowers have resumed making regularly scheduled payments. Of the $40 million that remains on extension, approximately $2 million was classified at September 30, 2020 and $26 million is related to six hotel loans which were not classified, but continue to be monitored closely.

% Loans ExtendedAt October 2, 2020 (Dollars in # Loans Loan Amount # $thousands) Loans LoansLoans Extended 2,333 $ 325,014 Loans Resuming Payments (2,129 ) (284,548 ) 91 % 88 %Loans Still on Extension 204 $ 40,466 9 % 12 %

Funding (Deposits/Debt)

Average total deposits were $2.971 billion for the third quarter of 2020, an increase of $187.8 million, or 6.8% over the second quarter of 2020, and an increase of $446.3 million, or 17.7% over the fourth quarter of 2019. Period end deposit balances grew $54.4 million and $364.0 million over the second quarter of 2020 and fourth quarter of 2019, respectively, indicating strong growth in core deposit balances. The estimated deposit inflows related to the two pandemic related stimulus programs that occurred primarily during the second quarter were $179 million (SBA PPP) and $64 million (Economic Impact Payment stimulus checks). Given these large increases, the potential exists for our deposit levels to be volatile over the coming quarters due to the uncertain timing of the outflows of the stimulus related deposits and the economic recovery. It is anticipated that current liquidity levels will remain robust due to our strong overnight funds sold position. We monitor deposit rates on an ongoing basis and adjust if necessary, as a prudent pricing discipline remains the key to managing our mix of deposits.

Average borrowings increased $0.9 million over the second quarter of 2020 and $65.8 million over the fourth quarter of 2019 as short-term borrowings (warehouse lines used to support HFS loans) were added as part of the CCHL integration.

Capital

Shareowners equity was $339.4 million at September 30, 2020 compared to $335.1 million at June 30, 2020 and $327.0 million at December 31, 2019. For the first nine months of 2020, shareowners equity was positively impacted by net income of $23.8 million, a $2.4 million increase in the unrealized gain on investment securities, net adjustments totaling $0.9 million related to transactions under our stock compensation plans, and stock compensation accretion of $0.6 million. Shareowners equity was reduced by common stock dividends of $7.1 million ($0.42 per share), a $3.1 million (net of tax) adjustment to retained earnings for the adoption of CECL, reclassification of $3.1 million to temporary equity to increase the redemption value of the non-controlling interest in CCHL, and share repurchases of $2.0 million (99,952 shares).

At September 30, 2020, our total risk-based capital ratio was 17.88% compared to 17.60% at June 30, 2020 and 17.90% at December 31, 2019. Our common equity tier 1 capital ratio was 14.20%, 14.01%, and 14.47%, respectively, on these dates. Our leverage ratio was 9.64%, 10.12%, and 11.25%, respectively, on these dates. All of our regulatory capital ratios exceeded the threshold to be designated as well-capitalized under the Basel III capital standards. Further, our tangible common equity ratio was 7.16% at September 30, 2020 compared to 7.21% and 8.06% at June 30, 2020 and December 31, 2019, respectively.

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 $3.6 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 57 banking offices and 85 ATMs/ITMs 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 magnitude and duration of the COVID-19 pandemic and its impact on the global economy and financial market conditions and our business, results of operations and financial condition, including the impact of our participation in government programs related to COVID-19; the accuracy of the our financial statement estimates and assumptions; legislative or regulatory changes; 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; natural disasters, widespread health emergencies, military conflict, terrorism or other geopolitical events; 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; 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, 2019, and our other filings with the SEC, which are available at the SECs 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 reconciliations are provided below.

(Dollars inThousands, Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019except pershare data)Shareowners'Equity $ 339,425 $ 335,057 $ 328,507 $ 327,016 $ 321,562 (GAAP)Less:Goodwill 89,095 89,095 89,275 84,811 84,811 (GAAP)TangibleShareowners' A 250,330 245,962 239,232 242,205 236,751 Equity(non-GAAP)Total Assets 3,587,041 3,499,524 3,086,523 3,088,953 2,934,513 (GAAP)Less:Goodwill 89,095 89,095 89,275 84,811 84,811 (GAAP)TangibleAssets B $ 3,497,946 $ 3,410,429 $ 2,997,248 $ 3,004,142 $ 2,849,702 (non-GAAP)TangibleCommon A/ 7.16 % 7.21 % 7.98 % 8.06 % 8.31 %Equity Ratio B(non-GAAP)ActualDilutedShares C 16,800,563 16,821,743 16,845,462 16,855,161 16,797,241 Outstanding(GAAP)TangibleBook Value A/per Diluted C $ 14.90 $ 14.62 $ 14.20 $ 14.37 $ 14.09 Share(non-GAAP)

CAPITAL CITYBANK GROUP, INC.EARNINGS HIGHLIGHTSUnaudited Three Months Ended Nine Months Ended (Dollars in Sep Jun Sep Sep Septhousands, 30, 30, 30, 30, 30, except per 2020 2020 2019 2020 2019share data)EARNINGS Net IncomeAttributable $ 10,397 $ 9,146 $ 8,481 $ 23,830 $ 22,242 to CommonShareownersDiluted NetIncome Per $ 0.62 $ 0.55 $ 0.50 $ 1.42 $ 1.32 SharePERFORMANCE Return on 1.17 % 1.10 % 1.14 % 0.96 % 1.00 %Average AssetsReturn on 12.16 11.03 10.51 9.50 9.48 Average EquityNet Interest 3.12 3.41 3.92 3.42 3.84 MarginNoninterestIncome as % of 58.19 54.26 34.67 51.37 33.72 OperatingRevenueEfficiency 67.01 % 66.90 % 69.27 % 69.04 % 72.37 %RatioCAPITAL ADEQUACYTier 1 Capital 16.77 % 16.59 % 16.83 % 16.77 % 16.83 %Total Capital 17.88 17.60 17.59 17.88 17.59 Leverage 9.64 10.12 11.09 9.64 11.09 Common Equity 14.20 14.01 14.13 14.20 14.13 Tier 1TangibleCommon Equity 7.16 7.21 8.31 7.16 8.31 ^(1)Equity to 9.46 % 9.57 % 10.96 % 9.46 % 10.96 %AssetsASSET QUALITY Allowance as %of 420.30 % 322.37 % 290.55 % 420.30 % 290.55 %Non-PerformingLoansAllowance as a 1.16 1.11 0.78 1.16 0.78 % of Loans HFINetCharge-Offs as 0.11 0.05 0.23 0.13 0.15 % of AverageLoans HFINonperformingAssets as % of 0.34 0.40 0.30 0.34 0.30 Loans HFI andOREONonperformingAssets as % of 0.19 % 0.23 % 0.19 % 0.19 % 0.19 %Total AssetsSTOCK PERFORMANCEHigh $ 21.71 $ 23.99 $ 28.00 $ 30.62 $ 28.00 Low 17.55 16.16 23.70 15.61 21.04 Close $ 18.79 $ 20.95 $ 27.45 $ 18.79 $ 27.45 Average Daily 28,517 49,569 25,596 39,477 22,815 Trading Volume ^(1) Tangible common equity ratio is a non-GAAP financial measure. Foradditional information, including a reconciliation to GAAP, refer toPage 6.

CAPITAL CITYBANK GROUP, INC.CONSOLIDATED STATEMENT OF FINANCIAL CONDITION Unaudited 2020 2019 (Dollars in Third Quarter Second First Fourth Thirdthousands) Quarter Quarter Quarter QuarterASSETS Cash and Due $ 76,509 $ 75,155 $ 72,676 $ 60,087 $ 61,151 From BanksFunds Soldand Interest 626,104 513,273 196,936 318,336 177,389 BearingDepositsTotal Cashand Cash 702,613 588,428 269,612 378,423 238,540 Equivalents InvestmentSecurities 328,253 341,180 382,514 403,601 376,981 Available forSaleInvestmentSecurities 202,593 232,178 251,792 239,539 240,303 Held toMaturityTotalInvestment 530,846 573,358 634,306 643,140 617,284 Securities Loans Heldfor Sale 116,561 76,610 82,598 9,509 13,075 ("HFS") Loans Heldfor Investment("HFI"):Commercial,Financial, & 402,997 421,270 249,020 255,365 259,870 AgriculturalReal Estate - 125,804 117,794 122,595 115,018 111,358 ConstructionReal Estate - 656,064 662,434 656,084 625,556 610,726 CommercialReal Estate - 335,713 353,831 354,150 353,642 354,545 ResidentialReal Estate - 197,363 194,479 196,443 197,360 197,326 Home EquityConsumer 268,393 266,417 275,982 279,565 277,970 Other Loans 10,488 4,883 6,580 7,808 14,248 Overdrafts 1,339 1,069 1,533 1,615 1,710 Total LoansHeld for 1,998,161 2,022,177 1,862,387 1,835,929 1,827,753 InvestmentAllowance for (23,137 ) (22,457 ) (21,083 ) (13,905 ) (14,319 )Credit LossesLoans Heldfor 1,975,024 1,999,720 1,841,304 1,822,024 1,813,434 Investment,Net Premises andEquipment, 87,192 87,972 87,684 84,543 85,810 NetGoodwill 89,095 89,095 89,275 84,811 84,811 Other Real 1,227 1,059 1,463 953 526 Estate OwnedOther Assets 84,483 83,282 80,281 65,550 81,033 Total Other 261,997 261,408 258,703 235,857 252,180 AssetsTotal Assets $ 3,587,041 $ 3,499,524 $ 3,086,523 $ 3,088,953 $ 2,934,513 LIABILITIES Deposits: NoninterestBearing $ 1,378,314 $ 1,377,033 $ 1,066,607 $ 1,044,699 $ 1,022,774 DepositsNOW Accounts 827,506 808,244 779,467 902,499 728,395 Money Market 247,823 240,754 210,124 217,839 239,410 AccountsRegularSavings 451,944 423,924 384,480 374,396 372,601 AccountsCertificates 103,859 105,041 104,907 106,021 109,827 of DepositTotal 3,009,446 2,954,996 2,545,585 2,645,454 2,473,007 Deposits Short-Term 90,936 63,958 76,516 6,404 10,622 BorrowingsSubordinated 52,887 52,887 52,887 52,887 52,887 Notes PayableOtherLong-Term 5,268 5,583 5,896 6,514 6,963 BorrowingsOther 71,880 75,702 70,044 50,678 69,472 LiabilitiesTotal 3,230,417 3,153,126 2,750,928 2,761,937 2,612,951 Liabilities Temporary 17,199 11,341 7,088 - - Equity SHAREOWNERS' EQUITYCommon Stock 168 168 168 168 167 AdditionalPaid-In 31,425 31,575 32,100 32,092 31,075 CapitalRetained 333,545 328,570 321,772 322,937 316,551 EarningsAccumulatedOtherComprehensive (25,713 ) (25,256 ) (25,533 ) (28,181 ) (26,231 )Loss, Net ofTaxTotalShareowners' 339,425 335,057 328,507 327,016 321,562 EquityTotalLiabilities,Temporary $ 3,587,041 $ 3,499,524 $ 3,086,523 $ 3,088,953 $ 2,934,513 Equity andShareowners'Equity OTHER BALANCE SHEET DATAEarning $ 3,271,672 $ 3,185,418 $ 2,776,228 $ 2,806,913 $ 2,635,501 AssetsInterestBearing 1,780,223 1,700,391 1,614,277 1,666,560 1,520,705 LiabilitiesBook ValuePer Diluted $ 20.20 $ 19.92 $ 19.50 $ 19.40 $ 19.14 ShareTangible BookValue Per 14.90 14.62 14.20 14.37 14.09 Diluted Share^(1)Actual BasicShares 16,761 16,780 16,812 16,772 16,749 OutstandingActualDiluted 16,801 16,822 16,845 16,855 16,797 SharesOutstanding^(1) Tangible book value per diluted share is a non-GAAP financial measure. Foradditional information, including a reconciliation to GAAP, refer to Page 6.

CAPITAL CITYBANK GROUP, INC.CONSOLIDATED STATEMENT OF OPERATIONSUnaudited Nine Months Ended 2020 2019 September 30,(Dollars inthousands, Third Second First Fourth Third 2020 2019except per Quarter Quarter Quarter Quarter Quartershare data) INTEREST INCOMEInterest andFees on $ 23,594 $ 23,687 $ 23,593 $ 23,842 $ 23,992 $ 70,874 $ 70,373LoansInvestment 2,426 2,737 3,015 3,221 3,307 8,178 10,213SecuritiesFunds Sold 146 88 757 945 1,142 991 4,242TotalInterest 26,166 26,512 27,365 28,008 28,441 80,043 84,828Income INTEREST EXPENSEDeposits 190 218 939 1,157 1,596 1,347 5,683Short-Term 498 421 132 16 27 1,051 93BorrowingsSubordinatedNotes 316 374 471 525 558 1,161 1,762PayableOtherLong-Term 40 41 50 56 63 131 201BorrowingsTotalInterest 1,044 1,054 1,592 1,754 2,244 3,690 7,739ExpenseNet Interest 25,122 25,458 25,773 26,254 26,197 76,353 77,089IncomeProvisionfor Credit 1,308 2,005 4,990 (162 ) 776 8,303 2,189LossesNet InterestIncome afterProvision 23,814 23,453 20,783 26,416 25,421 68,050 74,900for CreditLosses NONINTEREST INCOMEDeposit Fees 4,316 3,756 5,015 4,980 4,961 13,087 14,492Bank Card 3,389 3,142 3,051 3,131 2,972 9,582 8,863FeesWealthManagement 2,808 2,554 2,604 2,761 2,992 7,966 7,719FeesMortgage 22,983 19,397 3,253 1,542 1,587 45,633 3,779Banking FeesOther 1,469 1,350 1,555 1,414 1,391 4,374 4,372TotalNoninterest 34,965 30,199 15,478 13,828 13,903 80,642 39,225Income NONINTEREST EXPENSECompensation 26,164 23,658 19,736 17,363 16,203 69,558 48,989Occupancy, 5,906 5,798 4,979 4,680 4,710 16,683 13,756NetOther Real 219 116 (798 ) 102 6 (463 ) 444Estate, NetOther 8,053 7,731 7,052 6,997 6,954 22,836 21,278TotalNoninterest 40,342 37,303 30,969 29,142 27,873 108,614 84,467Expense OPERATING 18,437 16,349 5,292 11,102 11,451 40,078 29,658PROFITIncome Tax 3,165 2,950 1,282 2,537 2,970 7,397 7,416ExpenseNet Income 15,272 13,399 4,010 8,565 8,481 32,681 22,242Pre-Tax IncomeAttributable to (4,875 ) (4,253 ) 277 - - (8,851 ) -NoncontrollingInterestNET INCOMEATTRIBUTABLETO $ 10,397 $ 9,146 $ 4,287 $ 8,565 $ 8,481 $ 23,830 $ 22,242COMMONSHAREOWNERS PER COMMON SHAREBasic Net $ 0.62 $ 0.55 $ 0.25 $ 0.51 $ 0.51 $ 1.42 $ 1.33IncomeDiluted Net 0.62 0.55 0.25 0.51 0.50 1.42 1.32IncomeCash $ 0.14 $ 0.14 $ 0.14 $ 0.13 $ 0.13 $ 0.42 $ 0.35DividendAVERAGE SHARESBasic 16,771 16,797 16,808 16,750 16,747 16,792 16,776Diluted 16,810 16,839 16,842 16,834 16,795 16,823 16,810

CAPITAL CITYBANK GROUP, INC.ALLOWANCE FOR CREDIT LOSSESAND RISK ELEMENT ASSETSUnaudited Nine Months Ended 2020 2019 September 30,(Dollars inthousands, Third Second First Fourth Third 2020 2019 except per Quarter Quarter Quarter Quarter Quartershare data) ALLOWANCE FOR CREDIT LOSSESBalance atBeginning of $ 22,457 $ 21,083 $ 13,905 $ 14,319 $ 14,593 $ 13,905 $ 14,210 PeriodImpact ofAdopting ASC - - 3,269 - - 3,269 - 326 (CECL)Provision forCredit Losses - 1,265 1,615 4,990 (162 ) 776 7,870 2,189 HFINet Charge-Offs 585 241 1,081 252 1,050 1,907 2,080 Balance at End $ 23,137 $ 22,457 $ 21,083 $ 13,905 $ 14,319 $ 23,137 $ 14,319 of Period^(2)As a % of Loans 1.16 % 1.11 % 1.13 % 0.75 % 0.78 % 1.16 % 0.78 %HFIAs a % ofNonperforming 420.30 % 322.37 % 432.61 % 310.99 % 290.55 % 420.30 % 290.55 %Loans CHARGE-OFFS Commercial,Financial and $ 137 $ 186 $ 362 $ 149 $ 289 $ 685 $ 619 AgriculturalReal Estate - - - 0 58 223 - 223 ConstructionReal Estate - 17 - 11 33 26 28 181 CommercialReal Estate - 1 1 110 27 44 112 373 ResidentialReal Estate - 58 52 31 0 333 141 430 Home EquityConsumer 619 634 864 819 744 2,117 2,059 Overdrafts^(3) 450 541 702 - - 1,693 - Total $ 1,282 $ 1,414 $ 2,080 $ 1,086 $ 1,659 $ 4,776 $ 3,885 Charge-Offs RECOVERIES Commercial,Financial and $ 74 $ 74 $ 40 $ 127 $ 86 $ 188 $ 218 AgriculturalReal Estate - - - - - - - - ConstructionReal Estate - 30 70 191 266 142 291 312 CommercialReal Estate - 35 51 40 116 46 126 313 ResidentialReal Estate - 41 64 33 25 58 138 150 Home EquityConsumer 280 365 268 300 277 913 812 Overdrafts^(3) 237 549 427 - - 1,213 - Total $ 697 $ 1,173 $ 999 $ 834 $ 609 $ 2,869 $ 1,805 Recoveries NET CHARGE-OFFS $ 585 $ 241 $ 1,081 $ 252 $ 1,050 $ 1,907 $ 2,080 Net Charge-Offsas a % of 0.11 % 0.05 % 0.23 % 0.05 % 0.23 % 0.13 % 0.15 %Average LoansHFI^(1) RISK ELEMENT ASSETSNonaccruing $ 5,505 $ 6,966 $ 4,874 $ 4,472 $ 4,928 LoansOther Real 1,227 1,059 1,463 953 526 Estate OwnedTotalNonperforming $ 6,732 $ 8,025 $ 6,337 $ 5,425 $ 5,454 Assets ("NPAs") Past Due Loans $ 3,191 $ 2,948 $ 5,077 $ 4,871 $ 5,120 30-89 DaysPast Due Loans - - - - - 90 Days or MoreClassified 16,772 17,091 16,548 20,847 21,323 LoansPerformingTroubled Debt $ 14,693 $ 15,133 $ 15,934 $ 16,888 $ 18,284 Restructuring's NonperformingLoans as a % of 0.28 % 0.34 % 0.26 % 0.24 % 0.27 % Loans HFINPAs as a % ofLoans HFI and 0.34 % 0.40 % 0.34 % 0.29 % 0.30 % Other Real EstateNPAs as a % of 0.19 % 0.23 % 0.21 % 0.18 % 0.19 % Total Assets ^(1) Annualized ^(2) Does not include $1.5 million for unfunded commitments recorded in other liabilities at 9/30/2020.^(3) Prior to the first quarter 2020, overdraft losses were reflected in noninterest income (deposit fees).

CAPITAL CITY BANK GROUP, INC. AVERAGE BALANCE AND INTEREST RATES^(1) Unaudited Third Quarter 2020 Second Quarter 2020 First Quarter 2020 Fourth Quarter 2019 Third Quarter 2019 Sep 2020 YTD Sep 2019 YTD(Dollars in Average Average Average Average Average Average Average Average Average Average Average Average Averagethousands) Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate Balance Interest Rate BalanceInterestAverage RateASSETS: Loans HFI $ 2,097,700 $ 23,698 4.50 % $ 2,057,925 $ 23,785 4.65 % $ 1,882,703 $ 23,692 5.06 % $ 1,846,190 23,958 5.15 % $ 1,837,548 $ 24,113 5.21 % $ 2,013,243 $ 71,175 4.73 % $1,813,964$70,7055.21%and HFS Investment SecuritiesTaxableInvestment 553,395 2,401 1.73 601,509 2,708 1.80 629,512 2,995 1.91 610,046 3,186 2.08 607,363 3,249 2.13 594,654 8,104 1.82 613,3829,9362.16SecuritiesTax-ExemptInvestment 4,860 32 2.66 5,865 37 2.51 5,293 25 1.86 10,327 43 1.67 18,041 73 1.63 5,338 94 2.34 29,2373471.59Securities TotalInvestment 558,255 2,433 1.74 607,374 2,745 1.81 634,805 3,020 1.91 620,373 3,229 2.08 625,404 3,322 2.12 599,992 8,198 1.82 642,61910,2832.13Securities Funds Sold 567,883 146 0.10 351,473 88 0.10 234,372 757 1.30 228,137 945 1.64 207,129 1,142 2.19 385,245 991 0.34 241,3234,2422.35 TotalEarning 3,223,838 $ 26,277 3.25 % 3,016,772 $ 26,618 3.55 % 2,751,880 $ 27,469 4.01 % 2,694,700 $ 28,132 4.14 % 2,670,081 $ 28,577 4.25 % 2,998,480 $ 80,364 3.58 % 2,697,906$85,2304.22%Assets Cash and Due 69,893 72,647 56,958 53,174 50,981 66,512 52,210From BanksAllowancefor Loan (22,948 ) (21,642 ) (14,389 ) (14,759 ) (14,863 ) (19,672 ) (14,576)LossesOther Assets 268,549 261,449 244,339 249,089 253,111 257,993 253,152 Total Assets $ 3,539,332 $ 3,329,226 $ 3,038,788 $ 2,982,204 $ 2,959,310 $ 3,303,313 $2,988,692 LIABILITIES: InterestBearing DepositsNOW Accounts $ 826,776 $ 61 0.03 % $ 789,378 $ 78 0.04 % $ 808,811 $ 725 0.36 % $ 755,625 $ 889 0.47 % $ 749,678 $ 1,235 0.65 % $ 808,389 $ 864 0.14 % $821,819$4,6130.75%Money Market 247,185 32 0.05 222,377 40 0.07 212,211 117 0.22 227,479 170 0.30 238,565 264 0.44 227,331 189 0.11 238,6647750.43AccountsSavings 438,762 54 0.05 409,366 50 0.05 379,237 46 0.05 372,518 46 0.05 372,593 46 0.05 409,230 150 0.05 369,7261360.05AccountsTime 104,522 43 0.16 104,718 50 0.19 105,542 51 0.19 108,407 52 0.19 111,447 51 0.18 104,925 144 0.18 115,2151590.18DepositsTotalInterest 1,617,245 190 0.05 % 1,525,839 218 0.06 % 1,505,801 939 0.25 % 1,464,029 1,157 0.31 % 1,472,283 1,596 0.43 % 1,549,875 1,347 0.12 % 1,545,4245,6830.49%BearingDeposits Short-Term 74,557 498 2.66 % 73,377 421 2.31 % 32,915 132 1.61 % 7,448 16 0.87 % 8,697 27 1.24 % 60,335 1,051 2.33 % 9,890931.27%BorrowingsSubordinatedNotes 52,887 316 2.34 52,887 374 2.80 52,887 471 3.52 52,887 525 3.88 52,887 558 4.13 52,887 1,161 2.89 52,8871,7624.39PayableOtherLong-Term 5,453 40 2.91 5,766 41 2.84 6,312 50 3.21 6,723 56 3.33 7,158 63 3.47 5,842 131 3.00 7,6192013.52Borrowings TotalInterest 1,750,142 $ 1,044 0.24 % 1,657,869 $ 1,054 0.26 % 1,597,915 $ 1,592 0.40 % 1,531,087 $ 1,754 0.45 % 1,541,025 $ 2,244 0.58 % 1,668,939 $ 3,690 0.30 % 1,615,820$7,7390.64%BearingLiabilities NoninterestBearing 1,354,032 1,257,614 1,046,889 1,060,922 1,023,472 1,220,002 996,290DepositsOther 83,192 72,073 59,587 63,291 74,540 71,661 62,823Liabilities Total 3,187,366 2,987,556 2,704,391 2,655,300 2,639,037 2,960,602 2,674,933LiabilitiesTemporary 11,893 8,155 2,506 - - 7,534 -Equity SHAREOWNERS' 340,073 333,515 331,891 326,904 320,273 335,177 313,759EQUITY: TotalLiabilities,Temporary $ 3,539,332 $ 3,329,226 $ 3,038,788 $ 2,982,204 $ 2,959,310 $ 3,303,313 $2,988,692Equity andShareowners'Equity Interest $ 25,233 3.01 % $ 25,564 3.30 % $ 25,877 3.61 % $ 26,378 3.69 % $ 26,333 3.67 % $ 76,674 3.29 % $77,4913.58%Rate Spread InterestIncome and 26,277 3.25 26,618 3.55 27,469 4.01 28,132 4.14 28,577 4.25 80,364 3.58 85,2304.22Rate Earned^(1)InterestExpense and 1,044 0.13 1,054 0.14 1,592 0.23 1,754 0.26 2,244 0.33 3,690 0.16 7,7390.38Rate Paid^(2) Net Interest $ 25,233 3.12 % $ 25,564 3.41 % $ 25,877 3.78 % $ 26,378 3.89 % $ 26,333 3.92 % $ 76,674 3.42 % $77,4913.84%Margin ^(1) Interest and average rates are calculated on a tax-equivalent basis using a 21% Federal tax rate.^(2) Rate calculated based on average earning assets.

For Information Contact:J. Kimbrough DavisExecutive Vice President and Chief Financial Officer850.402.7820