GlobeNewswire Inc | Jul 21, 2020 07:01AM EDT

July 21, 2020

TALLAHASSEE, Fla., July 21, 2020 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income of $9.1 million, or $0.55 per diluted share for the second quarter of 2020 compared to net income of $4.3 million, or $0.25 per diluted share for the first quarter of 2020, and $7.3 million, or $0.44 per diluted share for the second quarter of 2019. For the first six months of 2020, net income totaled $13.4 million, or $0.80 per diluted share, compared to net income of $13.8 million, or $0.82 per diluted share, for the same period of 2019.

QUARTER HIGHLIGHTS

-- Return on assets improved to 1.10% and efficiency ratio to 67% -- Diversified revenue and strong balance sheet continue to buffer impact of pandemic and lower interest rates -- Strong performance by Capital City Home Loans (CCHL) contributed significantly ($0.20/share) -- Pandemic related stimulus programs contributed $190 million in loan growth and deposit balances totaling $243 million

Though the second quarter presented a challenging environment, I am pleased with our financial performance and how we responded to the COVID-19 pandemic, said William G. Smith, Jr., Chairman, President and CEO. We issued $190 million in Paycheck Protection Program (PPP) loans to assist our small business clients and took critical precautions to protect the health and welfare of our associates and clients as we reopened our offices for routine lobby service. Despite a challenged economy, the mortgage market has been robust, and our recent alliance with CCHL contributed $0.20 per share during the second quarter. Earnings from CCHL and SBA/PPP fees helped mitigate the adverse impacts of a lower interest rate environment and reserve build attributable to the adoption of CECL and COVID-19. I anticipate the second half of 2020 will remain challenging but am hopeful it will bring improvement. We have taken a prudent and measured approach to managing through this ongoing crisis and continue to focus on our commitments to our associates, clients, communities, and shareowners. I remain optimistic about the long-term outlook for Capital City and appreciate your continued support.

COVID-19 Update

-- Lobby access has been re-opened for 56 of our 57 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 -- Continue to monitor COVID-19 case count trends in our markets and respond appropriately to help ensure client and associate safety -- Continued support of clients with the Small Business Administration Payment Protection Program (SBA PPP) - we will actively assist our clients with the forgiveness process in coming quarters -- We continued to assist our clients and communities in the second quarter by processing a total of 2,217 loan extensions ($330 million, or 16% of loan balances at June 30, 2020).

Discussion of Operating Results

Summary Overview

Compared to the first quarter of 2020, the $11.1 million increase in operating profit was attributable to a $14.7 million increase in noninterest income (primarily mortgage banking revenues) and a $3.0 million decrease in the provision for credit losses, partially offset by higher noninterest expense of $6.3 million and lower net interest income of $0.3 million.

Compared to the second quarter of 2019, the $6.6 million increase in operating profit was attributable to a $17.4 million increase in noninterest income, partially offset by a higher noninterest expense of $8.9 million, a $1.4 million increase in the provision for credit losses and lower net interest income of $0.5 million.

The $3.4 million increase in operating profit for the first six months of 2020 versus the comparable period of 2019 was attributable to higher noninterest income of $20.4 million and net interest income of $0.3 million, partially offset by a $5.6 million increase in the provision for credit losses and higher noninterest expense of $11.7 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 1.10% and our return on average equity (ROE) was 11.03% for the second quarter of 2020. These metrics were 0.57% and 5.20% for the first quarter of 2020, respectively, and 0.98% and 9.37% for the second quarter of 2019, respectively. For the first six months of 2020, our ROA was 0.85% and our ROE was 8.12% compared to 0.92% and 8.94%, respectively, for the same period of 2019.

Net Interest Income/Net Interest Margin

Tax-equivalent net interest income for the second quarter of 2020 was $25.6 million compared to $25.9 million for the first quarter of 2020 and $26.1 million for the second quarter of 2019. The decrease compared to both prior periods reflected lower rates earned on overnight funds, investment securities and variable rate loans, partially offset by lower cost for our negotiated rate deposits. For the first six months of 2020, tax-equivalent net interest income totaled $51.4 million compared to $51.2 million in 2019. The increase was primarily due to loan growth and a reduction in the cost of our negotiated rate deposits, partially offset by lower rates on our earning assets.

The federal funds target rate ended the second quarter of 2020 in a range of 0.00%-0.25%, unchanged from the end of the first quarter of 2020. However, since 150 basis points of rate cuts were made late in the first quarter of 2020, we experienced lower repricing of our variable/adjustable rate earning assets and investment securities during the second quarter 2020. We continue to prudently manage our deposit mix and overall cost of funds, which was 14 basis points for the second quarter of 2020 compared to 23 basis points for the first 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 second quarter of 2020 was 3.41%, a decrease of 37 basis points from the first quarter of 2020 and 44 basis points from the second quarter of 2019. For the first six months of 2020, the net interest margin decreased 21 basis points to 3.59%. The decrease compared to all prior periods was attributable to lower rates on our variable and adjustable rate earning assets, partially offset by a lower cost of funds. Our net interest margin for the second quarter of 2020 excluding the impact of SBA PPP loans was 3.46%. 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 second quarter of 2020 was $2.0 million compared to $5.0 million for the first quarter of 2020 and $0.6 million for the second quarter of 2019. For the first six months of 2020, the provision was $7.0 million compared to $1.4 million in 2019. The higher provision in 2020 reflected expected losses due to deterioration in economic conditions related to COVID-19. We discuss this exposure further below.

Noninterest Income and Noninterest Expense

CCHLs mortgage banking operations impacted our noninterest income and noninterest expense for the three and six month periods ended June 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 second quarter of 2020 totaled $30.2 million compared to $15.5 million for the first quarter of 2020 and $12.8 million for the second quarter of 2019. The increase over both periods was driven by higher mortgage banking fees and other income (loan origination fees) at CCHL, partially offset by lower deposit fees (overdraft fees). Deposit fees decreased $1.3 million, or 25.1% compared to the first quarter of 2020 and reflected slower consumer spending and the impact of stimulus payments in the second quarter related to the COVID-19 pandemic.

Noninterest expense for the second quarter of 2020 totaled $37.3 million compared to $31.0 million for the first quarter of 2020 and $28.4 million for the second quarter of 2019. The increase over the first quarter of 2020 was attributable to higher compensation expense of $4.2 million, occupancy expense of $0.8 million, and other real estate (ORE) expense of $1.1 million. The increase in compensation and occupancy expense was primarily due to the integration of CCHL late in the first quarter of 2020. We also realized approximately $0.8 million in expenses in the second quarter related to SBA PPP loan origination activities and pandemic related costs. Approximately $0.3 million were one-time SBA PPP expenses and the remainder are pandemic related and will phase out over time. The increase in ORE expense reflected a $1.0 million gain on the sale of a banking office in the first quarter of 2020. For the first six months of 2020, noninterest expense totaled $68.3 million compared to $56.6 million for the same period of 2019 with the increase driven primarily by the same aforementioned factors.

Overall, CCHL contributed significantly to the improvement in our efficiency ratio for the second quarter of 2020.

Three Months Ended Six Months Ended Jun 30, 2020 Mar 31, 2020 Jun 30, 2019 Jun 30, 2020 Jun 30, 2019(Dollars in Core CCHL Core CCHL Core CCHL Core CCHL Core CCHLthousands) CCBG CCBG CCBG CCBG CCBGDeposit Fees $ 3,756 - $ 5,015 $ - $ 4,756 $ - $ 8,771 $ - $ 9,531 $ -Bank Card 3,142 - 3,051 - 3,036 - 6,193 - 5,891 -FeesWealthManagement 2,554 - 2,604 - 2,404 - 5,158 - 4,727 -FeesMortgage 241 17,573 1,138 1,892 1,199 - 1,379 19,465 2,192 -Banking FeesOther 1,147 1,786 1,459 319 1,375 - 2,606 2,105 2,981 -TotalNoninterest $ 10,840 $ 19,359 $ 13,267 $ 2,211 $ 12,770 $ - $ 24,107 $ 21,570 $ 25,322 $ -Income Salaries $ 11,596 $ 8,381 $ 13,488 $ 2,242 $ 12,496 $ - $ 25,085 $ 10,623 $ 24,781 $ -OtherAssociate 3,477 204 3,957 49 3,941 - 7,433 253 8,005 -BenefitsTotal 15,073 8,585 17,445 2,291 16,437 - 32,518 10,876 32,786 -Compensation Occupancy, 5,030 768 4,748 231 4,537 - 9,778 999 9,046 -NetOther 6,599 1,248 5,797 457 7,422 - 12,396 1,705 14,762 -TotalNoninterest $ 26,702 $ 10,601 $ 27,990 $ 2,979 $ 28,396 $ - $ 54,692 $ 13,580 $ 56,594 $ -Expense

Income Taxes

We realized income tax expense of $2.9 million (effective rate of 18%) for the second quarter of 2020 compared to $1.3 million (effective rate of 24%) for the first quarter of 2020 and $2.4 million (effective rate of 25%) for the second quarter of 2019. For the first six months of 2020, we realized income tax expense of $4.2 million (effective rate of 20%) compared to $4.4 million (effective rate of 24%) for the same period of 2019. The decrease in our effective tax rate for the three and six month periods ended June 30, 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 19%-20%.

Discussion of Financial Condition

Earning Assets

Average earning assets were $3.017 billion for the second quarter of 2020, an increase of $264.9 million, or 9.6% over the first quarter of 2020, and an increase of $322.1 million, or 12.0% 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. The impact of pandemic related stimulus programs on our balance sheet in the second quarter of 2020 is discussed in further detail below.

We maintained an average net overnight funds (deposits with banks plus FED funds sold less FED funds purchased) sold position of $351.5 million during the second quarter of 2020 compared to an average net overnight funds sold position of $234.4 million in the first quarter of 2020 and $228.1 million in the fourth quarter of 2019. The increase compared to both prior periods was primarily driven by pandemic related stimulus programs (see below Funding).

Average loans held for investment (HFI) increased $135.2 million, or 7.3%, over the first quarter of 2020 and $148.9 million, or 8.1%, over the fourth quarter of 2019. Period-end HFI loans increased $159.8, or 8.6%, over the first quarter of 2020 and $186.2 million, or 10.1%, over the fourth quarter of 2019. Demand from the SBA PPP was strong with SBA PPP loans (reflected in commercial loans) averaging $133.8 million in the second quarter of 2020 and totaling $190 million at June 30, 2020. In total, we funded 2,208 loans for $193 million under the SBA PPP, all from current balance sheet liquidity. To date, our borrowers have submitted a nominal level of forgiveness applications, but these applications are expected to accelerate in the second half of the year. We received 100% of our SBA PPP loan fees totaling approximately $6.3 million (net) late in the second quarter. Amortized SBA PPP loan fees totaled approximately $0.4 million for the second quarter of 2020.

Allowance for Credit Losses

At June 30, 2020, the allowance for credit losses totaled $22.5 million compared to $21.1 million at March 31, 2020 and $13.9 million at December 31, 2019. At June 30, 2020, the allowance represented 1.11% of outstanding loans held for investment (HFI) and provided coverage of 322% of nonperforming loans compared to 1.13% and 433%, respectively, at March 31, 2020 and 0.75% and 311%, respectively, at December 31, 2019. At June 30, 2020, excluding SBA PPP loans (100% government guaranteed), the allowance represented 1.23% 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 $5.7 million build (provision of $7.0 million less net charge-offs of $1.3 million) in the allowance for credit losses for the first six months of 2020 reflected a higher forecasted rate of unemployment due to stressed economic conditions related the COVID-19 pandemic.

Credit Quality/COVID-19 Exposure

Nonperforming assets (nonaccrual loans and OREO) totaled $8.0 million at June 30, 2020, a $1.7 million increase over March 31, 2020, and a $2.6 million increase over December 31, 2019. Nonaccrual loans totaled $7.0 million at June 30, 2020, a $2.1 million increase over March 31, 2020 and a $2.5 million increase over December 31, 2019. The balance of OREO totaled $1.1 million at June 30, 2020, a decrease of $0.4 million from March 31, 2020 and a $0.1 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 June 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 these loans were for commercial borrowers and 17% for consumer borrowers.

% Loans ExtendedAt July 9, 2020 (Dollars in # Loans Loan Amount # $thousands) Loans LoansLoans Extended 2,217 $ 330,406 Loans Resuming Payments (1,708 ) (234,610 ) 77 % 71 %Loans Still on Extension 509 $ 95,796 23 % 29 % Still on Extension: From First 382 $ 60,237 17 % 18 %ExtensionStill on Extension: From 127 $ 35,559 6 % 11 %Second Extension

Funding (Deposits/Debt)

Average total deposits were $2.783 billion for the second quarter of 2020, an increase of $230.8 million, or 9.0% over the first quarter of 2020, and an increase of $258.5 million, or 10.2% over the fourth quarter of 2019. The estimated deposit inflows, related to the two pandemic related stimulus programs, were $179 million (SBA PPP) and $64 million (Economic Impact Payment stimulus checks). Period end deposit balances grew $409 million and $310 million over the first quarter of 2020 and fourth quarter of 2019, respectively, indicating strong growth in core deposit balances. 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, in addition to cash flow generated from the investment portfolio. 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 $39.9 million over the first quarter of 2020 and $65.0 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 $335.1 million at June 30, 2020 compared to $328.5 million at March 31, 2020 and $327.0 million at December 31, 2019. For the first six months of 2020, shareowners equity was positively impacted by net income of $13.4 million, a $3.0 million increase in the unrealized gain on investment securities, net adjustments totaling $0.7 million related to transactions under our stock compensation plans, and stock compensation accretion of $0.4 million. Shareowners equity was reduced by common stock dividends of $4.7 million ($0.28 per share), a $3.1 million (net of tax) adjustment to retained earnings for the adoption of ASC 326 (CECL), and share repurchases of $1.6 million (76,952 shares).

At June 30, 2020, our total risk-based capital ratio was 17.81% compared to 17.19% at March 31, 2020 and 17.90% at December 31, 2019. Our common equity tier 1 capital ratio was 14.21%, 13.55%, and 14.47%, respectively, on these dates. Our leverage ratio was 10.24%, 10.81%, 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 7.21% at June 30, 2020 compared to 7.98% and 8.06% at March 31, 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 $3.5 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, Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019except pershare data)Shareowners'Equity $ 335,057 $ 328,507 $ 327,016 $ 321,562 $ 314,595 (GAAP)Less:Goodwill 89,095 89,275 84,811 84,811 84,811 (GAAP)TangibleShareowners' A 245,962 239,232 242,205 236,751 229,784 Equity(non-GAAP)Total Assets 3,499,524 3,086,523 3,088,953 2,934,513 3,017,654 (GAAP)Less:Goodwill 89,095 89,275 84,811 84,811 84,811 (GAAP)TangibleAssets B $ 3,410,429 $ 2,997,248 $ 3,004,142 $ 2,849,702 $ 2,932,843 (non-GAAP)TangibleCommon A/ 7.21 % 7.98 % 8.06 % 8.31 % 7.83 %Equity Ratio B(non-GAAP)ActualDilutedShares C 16,821,743 16,845,462 16,855,161 16,797,241 16,773,449 Outstanding(GAAP)TangibleBook Value A/per Diluted C $ 14.62 $ 14.20 $ 14.37 $ 14.09 $ 13.70 Share(non-GAAP)

CAPITAL CITY BANK GROUP, INC.EARNINGS HIGHLIGHTSUnaudited Three Months Ended Six Months Ended(Dollars inthousands, Jun 30, Mar 31, Jun 30, Jun 30, Jun 30,except per 2020 2020 2019 2020 2019share data)EARNINGS Net IncomeAttributable $ 9,146 $ 4,287 $ 7,325 $ 13,433 $ 13,761 to CommonShareownersDiluted NetIncome Per $ 0.55 $ 0.25 $ 0.44 $ 0.80 $ 0.82 SharePERFORMANCE Return on 1.10 % 0.57 % 0.98 % 0.85 % 0.92 %Average AssetsReturn on 11.03 % 5.20 % 9.37 % 8.12 % 8.94 %Average EquityNet Interest 3.41 % 3.78 % 3.85 % 3.59 % 3.80 %MarginNoninterestIncome as % of 54.26 % 37.52 % 32.95 % 47.13 % 33.23 %OperatingRevenueEfficiency 66.90 % 74.89 % 73.02 % 70.30 % 74.00 %RatioCAPITAL ADEQUACYTier 1 Capital 16.79 % 16.12 % 16.36 % 16.79 % 16.36 %Total Capital 17.81 % 17.19 % 17.13 % 17.81 % 17.13 %Leverage 10.24 % 10.81 % 10.64 % 10.24 % 10.64 %Common Equity 14.21 % 13.55 % 13.67 % 14.21 % 13.67 %Tier 1TangibleCommon Equity 7.21 % 7.98 % 7.83 % 7.21 % 7.83 %^(1)Equity to 9.57 % 10.64 % 10.43 % 9.57 % 10.43 %AssetsASSET QUALITY Allowance as %of 322.37 % 432.61 % 259.55 % 322.37 % 259.55 %Non-PerformingLoansAllowance as a 1.11 % 1.13 % 0.79 % 1.11 % 0.79 %% of LoansNetCharge-Offs as 0.05 % 0.23 % 0.04 % 0.14 % 0.12 %% of AverageLoansNonperformingAssets as % of 0.40 % 0.34 % 0.36 % 0.40 % 0.36 %Loans and OREONonperformingAssets as % of 0.23 % 0.21 % 0.22 % 0.23 % 0.22 %Total AssetsSTOCK PERFORMANCEHigh $ 23.99 $ 30.62 $ 25.00 $ 30.62 $ 25.87 Low 16.16 15.61 21.57 15.61 21.04 Close $ 20.95 $ 20.12 $ 24.85 $ 20.95 $ 24.85 Average Daily 49,569 40,536 24,258 45,089 21,380 Trading Volume ^(1) Tangible common equity ratio is a non-GAAP financial measure. Foradditional information, including a reconciliation to GAAP, refer to page 5.

CAPITAL CITY BANK GROUP, INC.CONSOLIDATED STATEMENT OF FINANCIAL CONDITIONUnaudited 2020 2019(Dollars in Second Quarter First Fourth Third Secondthousands) Quarter Quarter Quarter QuarterASSETS Cash and Due $ 75,155 $ 72,676 $ 60,087 $ 61,151 $ 53,731 From BanksFunds Soldand Interest 513,273 196,936 318,336 177,389 234,097 BearingDepositsTotal Cashand Cash 588,428 269,612 378,423 238,540 287,828 Equivalents InvestmentSecurities 341,180 382,514 403,601 376,981 410,851 Available forSaleInvestmentSecurities 232,178 251,792 239,539 240,303 229,516 Held toMaturityTotalInvestment 573,358 634,306 643,140 617,284 640,367 Securities Loans Heldfor Sale 76,610 82,598 9,509 13,075 9,885 ("HFS") Loans Heldfor Investment("HFI")Commercial,Financial, & 421,270 249,020 255,365 259,870 265,001 AgriculturalReal Estate - 117,794 122,595 115,018 111,358 101,372 ConstructionReal Estate - 662,434 656,084 625,556 610,726 614,618 CommercialReal Estate - 353,831 354,150 353,642 354,545 349,843 ResidentialReal Estate - 194,479 196,443 197,360 197,326 201,579 Home EquityConsumer 266,417 275,982 279,565 277,970 288,196 Other Loans 4,883 6,580 7,808 14,248 13,131 Overdrafts 1,069 1,533 1,615 1,710 1,442 Total LoansHeld for 2,022,177 1,862,387 1,835,929 1,827,753 1,835,182 InvestmentAllowance for (22,457 ) (21,083 ) (13,905 ) (14,319 ) (14,593 )Loan LossesLoans Heldfor 1,999,720 1,841,304 1,822,024 1,813,434 1,820,589 Investment,Net Premises andEquipment, 87,972 87,684 84,543 85,810 86,005 NetGoodwill 89,095 89,275 84,811 84,811 84,811 Other Real 1,059 1,463 953 526 1,010 Estate OwnedOther Assets 83,282 80,281 65,550 81,033 87,159 Total Other 261,408 258,703 235,857 252,180 258,985 AssetsTotal Assets $ 3,499,524 $ 3,086,523 $ 3,088,953 $ 2,934,513 $ 3,017,654 LIABILITIES Deposits: NoninterestBearing $ 1,377,033 $ 1,066,607 $ 1,044,699 $ 1,022,774 $ 1,024,898 DepositsNOW Accounts 808,244 779,467 902,499 728,395 810,568 Money Market 240,754 210,124 217,839 239,410 240,181 AccountsRegularSavings 423,924 384,480 374,396 372,601 371,773 AccountsCertificates 105,041 104,907 106,021 109,827 113,684 of DepositTotal 2,954,996 2,545,585 2,645,454 2,473,007 2,561,104 Deposits Short-Term 63,958 76,516 6,404 10,622 9,753 BorrowingsSubordinated 52,887 52,887 52,887 52,887 52,887 Notes PayableOtherLong-Term 5,583 5,896 6,514 6,963 7,313 BorrowingsOther 75,702 70,044 50,678 69,472 72,002 LiabilitiesTotal 3,153,126 2,750,928 2,761,937 2,612,951 2,703,059 Liabilities Temporary 11,341 7,088 - - - Equity SHAREOWNERS' EQUITYCommon Stock 168 168 168 167 167 AdditionalPaid-In 31,575 32,100 32,092 31,075 30,751 CapitalRetained 328,570 321,772 322,937 316,551 310,247 EarningsAccumulatedOtherComprehensive (25,256 ) (25,533 ) (28,181 ) (26,231 ) (26,570 )Loss, Net ofTaxTotalShareowners' 335,057 328,507 327,016 321,562 314,595 EquityTotalLiabilities,Temporary $ 3,499,524 $ 3,086,523 $ 3,088,953 $ 2,934,513 $ 3,017,654 Equity andShareowners'Equity OTHER BALANCE SHEET DATAEarning $ 3,185,418 $ 2,776,228 $ 2,806,913 $ 2,635,501 $ 2,719,530 AssetsInterestBearing 1,700,391 1,614,277 1,666,560 1,520,705 1,606,159 LiabilitiesBook ValuePer Diluted $ 19.92 $ 19.50 $ 19.40 $ 19.14 $ 18.76 ShareTangible BookValue Per 14.62 14.20 14.37 14.09 13.70 Diluted Share^(1)Actual BasicShares 16,780 16,812 16,772 16,749 16,746 OutstandingActualDiluted 16,822 16,845 16,855 16,797 16,773 SharesOutstanding

^(1) Tangible book value per diluted share is a non-GAAP financial measure.For additional information, including a reconciliation to GAAP, refer to page5.

CAPITAL CITY BANK GROUP, INC.CONSOLIDATED STATEMENT OF OPERATIONSUnaudited Six Months Ended 2020 2019 Jun 30,(Dollars inthousands, Second First Fourth Third Second 2020 2019except per Quarter Quarter Quarter Quarter Quartershare data) INTEREST INCOMEInterest and $ 23,687 $ 23,593 $ 23,842 $ 23,992 $ 23,765 $ 47,280 $ 46,381Fees on LoansInvestment 2,737 3,015 3,221 3,307 3,393 5,752 6,906SecuritiesFunds Sold 88 757 945 1,142 1,507 845 3,100Total Interest 26,512 27,365 28,008 28,441 28,665 53,877 56,387Income INTEREST EXPENSEDeposits 218 939 1,157 1,596 1,988 1,157 4,087Short-Term 421 132 16 27 31 553 66BorrowingsSubordinated 374 471 525 558 596 845 1,204Notes PayableOtherLong-Term 41 50 56 63 66 91 138BorrowingsTotal Interest 1,054 1,592 1,754 2,244 2,681 2,646 5,495ExpenseNet Interest 25,458 25,773 26,254 26,197 25,984 51,231 50,892IncomeProvision for 2,005 4,990 (162 ) 776 646 6,995 1,413Credit LossesNet InterestIncome after 23,453 20,783 26,416 25,421 25,338 44,236 49,479Provision for Loan Losses NONINTEREST INCOMEDeposit Fees 3,756 5,015 4,980 4,961 4,756 8,771 9,531Bank Card Fees 3,142 3,051 3,131 2,972 3,036 6,193 5,891WealthManagement 2,554 2,604 2,761 2,992 2,404 5,158 4,727FeesMortgage 17,814 3,030 1,542 1,587 1,199 20,844 2,192Banking FeesOther 2,933 1,778 1,414 1,391 1,375 4,711 2,981TotalNoninterest 30,199 15,478 13,828 13,903 12,770 45,677 25,322Income NONINTEREST EXPENSECompensation 23,658 19,736 17,363 16,203 16,437 43,394 32,786Occupancy, Net 5,798 4,979 4,680 4,710 4,537 10,777 9,046Other Real 116 (798 ) 102 6 75 (682 ) 438Estate, NetOther 7,731 7,052 6,997 6,954 7,347 14,783 14,324TotalNoninterest 37,303 30,969 29,142 27,873 28,396 68,272 56,594Expense OPERATING 16,349 5,292 11,102 11,451 9,712 21,641 18,207PROFITIncome Tax 2,950 1,282 2,537 2,970 2,387 4,232 4,446ExpenseNet Income 13,399 4,010 8,565 8,481 7,325 17,409 13,761(Gain) LossAttributableto (4,253 ) 277 - - - (3,976 ) -NoncontrollingInterestNET INCOMEATTRIBUTABLETO $ 9,146 $ 4,287 $ 8,565 $ 8,481 $ 7,325 $ 13,433 $ 13,761COMMONSHAREOWNERS PER COMMON SHAREBasic Net $ 0.55 $ 0.25 $ 0.51 $ 0.51 $ 0.44 $ 0.80 $ 0.82IncomeDiluted Net 0.55 0.25 0.51 0.50 0.44 0.80 0.82IncomeCash Dividend $ 0.14 $ 0.14 $ 0.13 $ 0.13 $ 0.11 $ 0.28 $ 0.22AVERAGE SHARES Basic 16,797 16,808 16,750 16,747 16,791 16,803 16,791Diluted 16,839 16,842 16,834 16,795 16,818 16,844 16,820

CAPITAL CITY BANK GROUP, INC.ALLOWANCE FOR CREDIT LOSSESAND RISK ELEMENT ASSETSUnaudited Six Months Ended 2020 2019 Jun 30,(Dollars inthousands, Second First Fourth Third Second 2020 2019 except per Quarter Quarter Quarter Quarter Quartershare data) ALLOWANCE FOR CREDIT LOSSESBalance atBeginning of $ 21,083 $ 13,905 $ 14,319 $ 14,593 $ 14,120 $ 13,905 $ 14,210 PeriodImpact ofAdopting ASC - 3,269 - - - 3,269 - 326 (CECL)Provision forCredit Losses - 1,615 4,990 (162 ) 776 646 6,605 1,413 HFINet Charge-Offs 241 1,081 252 1,050 173 1,322 1,030 Balance at End $ 22,457 $ 21,083 $ 13,905 $ 14,319 $ 14,593 $ 22,457 $ 15,623 of Period^(2)As a % of Loans 1.11 % 1.13 % 0.75 % 0.78 % 0.79 % 1.11 % 0.79 %As a % ofNonperforming 322.37 % 432.61 % 310.99 % 290.55 % 259.55 % 322.37 % 259.55 %Loans CHARGE-OFFS Commercial,Financial and $ 186 $ 362 $ 149 $ 289 $ 235 $ 548 $ 330 AgriculturalReal Estate - - - 58 223 - - - ConstructionReal Estate - - 11 33 26 - 11 155 CommercialReal Estate - 1 110 27 44 65 111 329 ResidentialReal Estate - 52 31 0 333 45 83 97 Home EquityConsumer 634 864 819 744 520 1,498 1,315 Overdrafts^(3) 541 702 - - - 1,243 - Total $ 1,414 $ 2,080 $ 1,086 $ 1,659 $ 865 $ 3,494 $ 2,226 Charge-Offs RECOVERIES Commercial,Financial and $ 74 $ 40 $ 127 $ 86 $ 58 $ 114 $ 132 AgriculturalReal Estate - - - - - - - - ConstructionReal Estate - 70 191 266 142 100 261 170 CommercialReal Estate - 51 40 116 46 223 91 267 ResidentialReal Estate - 64 33 25 58 60 97 92 Home EquityConsumer 365 268 300 277 251 633 535 Overdrafts^(3) 549 427 - - - 976 - Total $ 1,173 $ 999 $ 834 $ 609 $ 692 $ 2,172 $ 1,196 Recoveries NET CHARGE-OFFS $ 241 $ 1,081 $ 252 $ 1,050 $ 173 $ 1,322 $ 1,030 Net Charge-Offsas a % of 0.05 % 0.23 % 0.05 % 0.23 % 0.04 % 0.14 % 0.12 %Average Loans^(1) RISK ELEMENT ASSETSNonaccruing $ 6,966 $ 4,874 $ 4,472 $ 4,928 $ 5,622 LoansOther Real 1,059 1,463 953 526 1,010 Estate OwnedTotalNonperforming $ 8,025 $ 6,337 $ 5,425 $ 5,454 $ 6,632 Assets ("NPAs") Past Due Loans $ 2,948 $ 5,077 $ 4,871 $ 5,120 $ 5,443 30-89 DaysPast Due Loans - - - - - 90 Days or MoreClassified 17,091 16,548 20,847 21,323 26,406 LoansPerformingTroubled Debt $ 15,133 $ 15,934 $ 16,888 $ 18,284 $ 18,737 Restructuring's NonperformingLoans as a % of 0.34 % 0.26 % 0.24 % 0.27 % 0.30 % LoansNPAs as a % ofLoans and Other 0.40 % 0.34 % 0.29 % 0.30 % 0.36 % Real EstateNPAs as a %of Total 0.23 % 0.21 % 0.18 % 0.19 % 0.22 % Assets ^(1) Annualized ^(2) Does not include $1.4 million for unfunded commitments recorded in other liabilities^(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

Second Quarter 2020 First Quarter 2020 Fourth Quarter 2019 Third Quarter 2019 Second Quarter 2019 Jun 2020 YTD Jun 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 $ 2,057,925 $ 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% $ 1,823,311 $ 23,873 5.25% $ 1,970,551 $ 47,477 4.85% $ 1,801,977$46,5915.21%and HFS Investment SecuritiesTaxableInvestment 601,509 2,708 1.80 629,512 2,995 1.91 610,046 3,186 2.08 607,363 3,249 2.13 614,775 3,301 2.15 615,511 5,703 1.86 616,4426,6882.18SecuritiesTax-ExemptInvestment 5,865 37 2.51 5,293 25 1.86 10,327 43 1.67 18,041 73 1.63 29,342 116 1.58 5,579 62 2.20 34,9282741.57Securities TotalInvestment 607,374 2,745 1.81 634,805 3,020 1.91 620,373 3,229 2.08 625,404 3,322 2.12 644,117 3,417 2.12 621,090 5,765 1.86 651,3706,9622.14Securities Funds Sold 351,473 88 0.10 234,372 757 1.30 228,137 945 1.64 207,129 1,142 2.19 251,789 1,507 2.40 292,922 845 0.58 258,7033,1002.42 TotalEarning 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% 2,719,217 $ 28,797 4.25% 2,884,563 $ 54,087 3.77% 2,712,050$56,6534.21%Assets Cash and Due 72,647 56,958 53,174 50,981 51,832 64,802 52,834From BanksAllowancefor Loan (21,642) (14,389) (14,759) (14,863) (14,513) (18,015) (14,431)LossesOther Assets 261,449 244,339 249,089 253,111 254,126 252,657 253,173 Total Assets $ 3,329,226 $ 3,038,788 $ 2,982,204 $ 2,959,310 $ 3,010,662 $ 3,184,007 $ 3,003,626 LIABILITIES: InterestBearing DepositsNOW Accounts $ 789,378 $ 78 0.04% $ 808,811 $ 725 0.36% $ 755,625 $ 889 0.47% $ 749,678 $ 1,235 0.65% $ 832,982 $ 1,623 0.78% $ 799,094 $ 803 0.20% $ 858,488$3,3780.79%Money Market 222,377 40 0.07 212,211 117 0.22 227,479 170 0.30 238,565 264 0.44 237,921 265 0.45 217,295 157 0.15 238,7145120.43AccountsSavings 409,366 50 0.05 379,237 46 0.05 372,518 46 0.05 372,593 46 0.05 371,716 46 0.05 394,301 96 0.05 368,268900.05AccountsTime 104,718 50 0.19 105,542 51 0.19 108,407 52 0.19 111,447 51 0.18 115,442 54 0.19 105,130 101 0.19 117,1311070.18DepositsTotalInterest 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% 1,558,061 1,988 0.51% 1,515,820 1,157 0.15% 1,582,6014,0870.52%BearingDeposits Short-Term 73,377 421 2.31% 32,915 132 1.61% 7,448 16 0.87% 8,697 27 1.24% 9,625 31 1.30% 53,146 553 2.09% 10,497661.28%BorrowingsSubordinatedNotes 52,887 374 2.80 52,887 471 3.52 52,887 525 3.88 52,887 558 4.13 52,887 596 4.46 52,887 845 3.16 52,8871,2044.53PayableOtherLong-Term 5,766 41 2.84 6,312 50 3.21 6,723 56 3.33 7,158 63 3.47 7,509 66 3.53 6,039 91 3.03 7,8531383.54Borrowings TotalInterest 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% 1,628,082 $ 2,681 0.66% 1,627,892 $ 2,646 0.33% 1,653,838$5,4950.67%BearingLiabilities NoninterestBearing 1,257,614 1,046,889 1,060,922 1,023,472 1,007,370 1,152,251 982,473DepositsOther 72,073 59,587 63,291 74,540 61,611 65,830 56,867Liabilities Total 2,987,556 2,704,391 2,655,300 2,639,037 2,697,063 2,845,973 2,693,178LiabilitiesTemporary 8,155 2,506.00 - - - 5,331 -Equity SHAREOWNERS' 333,515 331,891 326,904 320,273 313,599 332,703 310,448EQUITY: TotalLiabilities,Temporary $ 3,329,226 $ 3,038,788 $ 2,982,204 $ 2,959,310 $ 3,010,662 $ 3,184,007 $ 3,003,626Equity andShareowners'Equity Interest $ 25,564 3.30% $ 25,877 3.61% $ 26,378 3.69% $ 26,333 3.67% $ 26,116 3.59% $ 51,441 3.44% $51,1583.54%Rate Spread InterestIncome and 26,618 3.55 27,469 4.01 28,132 4.14 28,577 4.25 28,797 4.25 54,087 3.77 56,6534.21Rate Earned^(1)InterestExpense and 1,054 0.14 1,592 0.23 1,754 0.26 2,244 0.33 2,681 0.40 2,646 0.18 5,4950.41Rate Paid^(2) Net Interest $ 25,564 3.41% $ 25,877 3.78% $ 26,378 3.89% $ 26,333 3.92% $ 26,116 3.85% $ 51,441 3.59% $51,1583.80%Margin ^(1) Interest and average rates are calculated on a tax-equivalent basisusing 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