Capital City Bank Group, Inc. Reports Second Quarter 2022 Results

Capital City Bank Group

TALLAHASSEE, Fla., July 26, 2022 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income attributable to common shareowners of $8.7 million, or $0.51 per diluted share, for the second quarter of 2022 compared to net income of $8.5 million, or $0.50 per diluted share, for the first quarter of 2022, and $7.4 million, or $0.44 per diluted share, for the second quarter of 2021.

For the first six months of 2022, net income attributable to common shareowners totaled $17.2 million, or $1.01 per diluted share, compared to net income of $16.9 million, or $1.00 per diluted share, for the same period of 2021.

QUARTER HIGHLIGHTS (2^nd Quarter 2022 versus 1^st Quarter 2022)

• Net interest income grew 14.7% driven by strong loan growth and higher interest rates

• Period end loan balances grew $228.1 million, or 11.5%, with residential loan purchases from Capital City Home Loans (CCHL) contributing $132 million and solid growth from residential construction and commercial mortgage

• Provision for credit losses increased $1.5 million driven by strong loan growth – overall credit quality remained strong

• Average deposit balances grew $51.3 million, or 1.4%, driven by higher noninterest bearing and savings balances

• Noninterest income decreased $0.9 million, or 3.5%, due to lower insurance commission revenues at Capital City Strategic Wealth (CCSW), which had a very strong first quarter – deposit, bank card, and retail brokerage fees all realized solid improvement

• Noninterest expense increased $1.3 million, or 3.2%, primarily due to higher performance-based compensation and to a lesser extent annual merit raises and staffing additions in new markets

• Tangible book value per share declined $0.04, or 0.2%, buoyed by strong earnings that significantly mitigated the impact of rapidly increasing interest rates and the related impact on our unrealized loss on investment securities
  

“Strong loan growth and higher rates produced another quarter of solid financial performance,” said William G. Smith, Jr., Chairman, President and CEO of Capital City Bank Group. “The quality of our core deposit base, deployment of liquidity into the loan portfolio and higher interest rates all contributed to an increase in our net interest margin percentage of 32 basis points during the second quarter. The $1.5 million loan loss provision recorded in this quarter was primarily driven by loan growth as our credit quality metrics remain very favorable. From a macro-economic perspective, we continue to face a high level of uncertainty. While much of this is out of our control, we believe we are well positioned to navigate through this year and beyond. Although higher rates will generate unrealized losses in our available-for-sale investment portfolio, our asset-sensitive balance sheet and pension liability should respond well to rising rates. Additionally, our expansion efforts in west Florida and the northern arc of Atlanta are producing favorable results. While challenges remain, we continue to focus on identifying opportunities and executing strategies we believe are sustainable and add long-term value for our shareowners.”

Discussion of Operating Results

Net Interest Income/Net Interest Margin

Tax-equivalent net interest income for the second quarter of 2022 totaled $28.4 million, compared to $24.8 million for the first quarter of 2022, and $26.1 million for the second quarter of 2021. For the first six months of 2022, tax-equivalent net interest income totaled $53.2 million compared to $50.7 million for the same period of 2021. Compared to the referenced prior periods, the increase reflected higher interest rates, strong loan growth, and higher investment balances.

Our net interest margin for the second quarter of 2022 was 2.87%, an increase of 32 basis points over the first quarter of 2022 primarily attributable to higher interest rates and an overall improved earning asset mix. For the month of June 2022, our net interest margin was 3.05%. Excluding the impact of overnight funds in excess of $200 million, our net interest margin for the second quarter of 2022 was 3.24%. Compared to the three and six month periods of 2021, the net interest margin decreased two and 16 basis points, respectively, primarily due to growth in earning assets (driven by higher deposit balances), which drove net interest income dollars higher, but negatively impacted the margin percentage.

Provision for Credit Losses

We recorded a provision for credit losses of $1.5 million for the second quarter of 2022 compared to no provision in the first quarter of 2022 and a provision benefit of $0.6 million for the second quarter of 2021. Compared to the first quarter of 2022, the higher level of provision was primarily attributable to strong loan growth. For the first six months of 2022, the provision was $1.5 million compared to a benefit of $1.6 million for the same period of 2021. Improvement in credit quality and the release of reserves held for pandemic related losses favorably impacted our provision for credit losses in 2022. We discuss the allowance for credit losses further below.

Noninterest Income and Noninterest Expense

Noninterest income for the second quarter of 2022 totaled $24.9 million compared to $25.8 million for the first quarter of 2022 and $26.5 million for the second quarter of 2021. The $0.9 million decrease from the first quarter of 2022 was primarily attributable to lower wealth management fees of $1.7 million, which reflected lower insurance revenues at CCSW of $1.9 million that were partially offset by higher retail brokerage fees of $0.3 million. Combined deposit and bank card fees increased $0.5 million and mortgage banking fees increased $0.1 million. Compared to the second quarter of 2021, the $1.6 million decrease was primarily attributable to lower mortgage banking revenues of $4.2 million that were partially offset by higher deposit fees of $1.2 million and wealth management fees of $1.1 million (insurance revenues of $0.7 million and retail brokerage fees of $0.4 million). For the first six months of 2022, noninterest income totaled $50.7 million compared to $56.3 million for the same period of 2021 with the $5.6 million decrease largely driven by lower mortgage banking fees of $12.3 million partially offset by higher deposit fees of $2.1 million and wealth management fees of $4.1 million (insurance revenues of $3.4 million and retail brokerage fees of $0.7 million). Lower mortgage banking revenues for 2022 reflected a reduction in refinancing activity, and to a lesser degree lower purchase mortgage originations, primarily driven by higher interest rates. In addition, gain on sale margins have been pressured due to a lower level of both governmental loan product originations and mandatory delivery loan sales (both of which provide a higher gain percentage). Strong best efforts (portfolio product) origination volume and continued stability in our construction/permanent loan program have partially offset the slowdown in secondary market originations. For 2022, CCHL contributed $0.6 million ($0.03 per diluted share) to earnings versus $2.5 million ($0.14 per diluted share) in 2021, which has largely been offset by a $1.2 million ($0.07 per diluted share) contribution to earnings by CCSW and improvement in both retail brokerage fees and deposit fees which reflects our continued focus on and commitment to revenue diversification.

Noninterest expense for the second quarter of 2022 totaled $40.5 million compared to $39.2 million for the first quarter of 2022 and $42.1 million for the second quarter of 2021. The $1.3 million increase over the first quarter of 2022 was driven by a $0.9 million increase in other expense and higher compensation of $0.5 million. Higher expense for advertising ($0.2 million), processing ($0.1 million), and travel/entertainment ($0.1 million) drove the increase in other expense. Other expense also reflects a $0.2 million expense for our VISA share swap agreement, which is triggered when VISA funds their merchant litigation reserve which happens infrequently. The $0.5 million increase in compensation was driven by higher salary expense of $0.8 million (CCHL commissions, annual merit, and staffing additions in new markets) that was partially offset by lower associate benefit expense of $0.3 million. Compared to the second quarter of 2021, the $1.6 million decrease was primarily attributable to lower pension settlement expense of $1.8 million. Other expense decreased $0.1 million and reflected lower base pension plan expense of $0.8 million partially offset by higher expense for advertising and miscellaneous (includes $0.2 million VISA share swap expense). For the first six months of 2022, noninterest expense totaled $79.7 million compared to $82.6 million for the same period of 2021 with the $2.9 million decrease primarily attributable to lower pension settlement expense of $1.6 million and lower compensation expense of $1.2 million. The decrease in compensation expense reflected lower salary expense of $1.4 million partially offset by higher associate benefit expense of $0.2 million. Lower performance-based compensation (commissions/incentives) at CCHL partially offset by higher performance based compensation at CCSW and lower realized loan cost (credit offset by salary expense) at the Bank drove the variance in salary expense. To date, the impact of inflation and higher prices on our cost structure has not been significant. While operating in a very tight labor market, we have mitigated the impact of salary pressures by not replacing certain positions that became vacant. Further, we have realized higher than historical increases in certain premises and processing contracts reflective of inflationary pressures and will continue to focus on opportunities to re-negotiate or replace vendors at periodic renewals.

Income Taxes

We realized income tax expense of $2.2 million (effective rate of 19.4%) for the second quarter of 2022 comparable to the first quarter of 2022 and $2.1 million (effective rate of 18.9%) for the second quarter of 2021. For the first six months of 2022, we realized income tax expense of $4.4 million (effective rate of 19.6%) compared to $4.8 million (effective rate of 18.8%) for the same period of 2021. For the second quarter of 2022, we realized a favorable discrete tax item for $0.3 million related to state of Florida tax refunds. Absent discrete items, we expect our annual effective tax rate to approximate 20-21% in 2022.

Discussion of Financial Condition

Earning Assets

Average earning assets totaled $3.974 billion for the second quarter of 2022, an increase of $35.4 million, or 0.9%, over the first quarter of 2022, and an increase of $182.9 million, or 4.8%, over the fourth quarter of 2021. The increase over both prior periods was primarily driven by higher deposit balances (see below – Funding). The mix of earning assets continues to improve driven by strong loan growth and further deployment of liquidity into the investment portfolio, which has increased $135 million in 2022.

We maintained an average net overnight funds (deposits with banks plus FED funds sold less FED funds purchased) sold position of $691.9 million in the second quarter of 2022 compared to $873.1 million in the first quarter of 2022 and $789.1 million in the fourth quarter of 2021.

Average loans held for investment (“HFI”) increased $121.1 million, or 6.2%, over the first quarter of 2022 and increased $136.4 million, or 7.0%, over the fourth quarter of 2021. Period end loans increased $228.1 million, or 11.5%, over the first quarter of 2022 and $282.2 million, or 14.6%, over the fourth quarter of 2022. The growth in 2022 has been broad based with increases realized in all loan categories, more significantly, residential mortgage, residential construction, and consumer (indirect auto) with strong growth in commercial mortgage in the second quarter. The increase in residential mortgage reflected a higher level of loan purchases (second quarter - $132 million, first quarter - $26 million) from CCHL driven by higher demand for portfolio/adjustable rate product. In addition, the increase in commercial mortgage reflected a loan pool purchase (7 loans for $15 million).

Allowance for Credit Losses

At June 30, 2022, the allowance for credit losses for HFI loans totaled $21.3 million compared to $20.8 million at March 31, 2022 and $21.6 million at December 31, 2021. Activity within the allowance is provided on Page 9. The $0.5 million increase in the allowance for the second quarter was driven by growth in reserves for strong new loan origination volume that was partially offset by the release of reserves held for pandemic related losses that have not materialized to the extent projected. Further, net charge-offs increased $0.4 million to $1.1 million for the second quarter and reflected one large commercial charge-off for $0.8 million related to a work-out resolved during the quarter. At June 30, 2022, the allowance represented 0.96% of HFI loans and provided coverage of 678% of nonperforming loans compared to 1.05% and 761%, respectively, at March 31, 2022, and 1.12% and 500%, respectively, at December 31, 2021.

Credit Quality

Overall credit quality remains strong. Nonperforming assets (nonaccrual loans and other real estate) totaled $3.2 million at June 30, 2022 compared to $2.8 million at March 31, 2022 and $4.3 million at December 31, 2021. At June 30, 2022, nonperforming assets as a percentage of total assets totaled 0.07% compared to 0.06% at March 31, 2022 and 0.10% at December 31, 2021. Nonaccrual loans totaled $3.1 million at June 30, 2022, a $0.4 million increase over March 31, 2022 and a $1.2 million decrease from December 31, 2021. Further, classified loans decreased $2.7 million from the first quarter of 2022 to $19.6 million.

Funding (Deposits/Debt)

Average total deposits were $3.765 billion for the second quarter of 2022, an increase of $51.3 million, or 1.4%, over the first quarter of 2022 and $216.2 million, or 6.1%, over the fourth quarter of 2021. Compared to the first quarter of 2022, the increase reflected higher noninterest bearing and savings balances, partially offset by a decline in seasonal public fund balances. Compared to the fourth quarter of 2021, strong growth occurred in our noninterest bearing deposits, NOW accounts, and savings account balances. Over the past few years, we have experienced strong core deposit growth, in addition to growth related to multiple government stimulus programs in response to the Covid-19 pandemic, such as those under the CARES Act and the American Rescue Plan Act. Given these increases, the potential exists for our deposit levels to be volatile for the remainder of 2022 due to the uncertain timing of the outflows of the stimulus related balances, in addition to the frequency and degree to which the Federal Open Market Committee (FOMC) raises the overnight funds rate. It is anticipated that liquidity levels will remain strong given our current level of overnight funds.

Average borrowings decreased $0.7 million from the first quarter of 2022 primarily due to a decrease in short-term repurchase agreements and declined $15.3 million from the fourth quarter of 2021, reflecting lower warehouse line borrowing needs to support CCHL’s loans held for sale.

Capital

Shareowners’ equity was $371.7 million at June 30, 2022 compared to $372.1 million at March 31, 2022 and $383.2 million at December 31, 2021. For the first six months of 2022, shareowners’ equity was positively impacted by net income attributable to common shareowners of $17.2 million, a $2.2 million increase in the fair value of the interest rate swap related to subordinated debt, net adjustments totaling $0.8 million related to transactions under our stock compensation plans, stock compensation accretion of $0.5 million, and a $0.3 million decrease in the accumulated other comprehensive loss for our pension plan. Shareowners’ equity was reduced by common stock dividends of $5.4 million ($0.32 per share) and a $27.1 million increase in the unrealized loss on investment securities.

At June 30, 2022, our total risk-based capital ratio was 16.07% compared to 16.98% at March 31, 2022 and 17.15% at December 31, 2021. Our common equity tier 1 capital ratio was 13.07%, 13.77%, and 13.86%, respectively, on these dates. Our leverage ratio was 8.77%, 8.78%, and 8.95%, 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 6.54% at June 30, 2022 compared to 6.61% and 6.95% at March 31, 2022 and December 31, 2021, respectively. The decline in our regulatory capital ratios was attributable to strong loan growth and higher asset levels. The decline in our tangible capital ratio from the first quarter of 2022 was driven by an $8.0 million increase in the unrealized loss on investment securities which totaled $31.7 million, or 5.3% of available for sale securities at June 30, 2022.

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 $4.4 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, securities brokerage services and financial advisory services, including the sale of life insurance, risk management and asset protection services. Our bank subsidiary, Capital City Bank, was founded in 1895 and now has 57 banking offices and 88 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: fluctuations in inflation, interest rates, or monetary policies; the accuracy of the our financial statement estimates and assumptions; legislative or regulatory changes; 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; the magnitude and duration of the ongoing COVID-19 pandemic and its impact on the global economy and financial market conditions and our business; 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, 2021, and our other filings with the SEC, which are available at the SEC’s internet site (http://www.sec.gov). Forward-looking statements in this Press Release speak only as of the date of the Press Release, and we assume no obligation to update forward-looking statements or the reasons why actual results could differ.

USE OF NON-GAAP FINANCIAL MEASURES

We present a tangible common equity ratio and a tangible book value per diluted share that removes the effect of goodwill and other intangibles 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 in Thousands, except per share data)		Jun 30, 2022			Mar 31, 2022			Dec 31, 2021			Sep 30, 2021			Jun 30, 2021
Shareowners' Equity (GAAP)		$	371,675		$	372,145		$	383,166		$	348,868		$	335,880
Less: Goodwill and Other Intangibles (GAAP)			93,173			93,213			93,253			93,293			93,333
Tangible Shareowners' Equity (non-GAAP)	A		278,502			278,932			289,913			255,575			242,547
Total Assets (GAAP)			4,354,297			4,310,045			4,263,849			4,048,733			4,011,459
Less: Goodwill and Other Intangibles (GAAP)			93,173			93,213			93,253			93,293			93,333
Tangible Assets (non-GAAP)	B	$	4,261,124		$	4,216,832		$	4,170,596		$	3,955,440		$	3,918,126
Tangible Common Equity Ratio (non-GAAP)	A/B		6.54	%		6.61	%		6.95	%		6.46	%		6.19	%
Actual Diluted Shares Outstanding (GAAP)	C		16,981,614			16,962,362			16,935,389			16,911,715			16,901,375
Tangible Book Value per Diluted Share (non-GAAP)	A/C	$	16.40		$	16.44		$	17.12		$	15.11		$	14.35

CAPITAL CITY BANK GROUP, INC.
EARNINGS HIGHLIGHTS
Unaudited
		Three Months Ended							Six Months Ended
(Dollars in thousands, except per share data)		Jun 30, 2022		Mar 31, 2022		Jun 30, 2021			Jun 30, 2022		Jun 30, 2021
EARNINGS
Net Income Attributable to Common Shareowners	$	8,713	$	8,455	$	7,427		$	17,168	$	16,933
Diluted Net Income Per Share	$	0.51	$	0.50	$	0.44		$	1.01	$	1.00
PERFORMANCE
Return on Average Assets		0.81	%	0.80	%	0.75		%	0.81	%	0.88		%
Return on Average Equity		9.36		8.93		9.05			9.14		10.42
Net Interest Margin		2.87		2.55		2.89			2.71		2.87
Noninterest Income as % of Operating Revenue		46.78		51.11		50.47			48.89		52.73
Efficiency Ratio		75.96	%	77.55	%	80.18		%	76.73	%	77.22		%
CAPITAL ADEQUACY
Tier 1 Capital		15.13	%	15.98	%	15.44		%	15.13	%	15.44		%
Total Capital		16.07		16.98		16.48			16.07		16.48
Leverage		8.77		8.78		8.84			8.77		8.84
Common Equity Tier 1		13.07		13.77		13.14			13.07		13.14
Tangible Common Equity (1)		6.54		6.61		6.19			6.54		6.19
Equity to Assets		8.54	%	8.63	%	8.37		%	8.54	%	8.37		%
ASSET QUALITY
Allowance as % of Non-Performing Loans		677.57	%	760.83	%	433.93		%	677.57	%	433.93		%
Allowance as a % of Loans HFI		0.96		1.05		1.10			0.96		1.10
Net Charge-Offs as % of Average Loans HFI		0.22		0.16		(0.07	)		0.19		(0.08	)
Nonperforming Assets as % of Loans HFI and OREO		0.15		0.14		0.31			0.15		0.31
Nonperforming Assets as % of Total Assets		0.07	%	0.06	%	0.16		%	0.07	%	0.16		%
STOCK PERFORMANCE
High	$	28.55	$	28.88	$	27.39		$	28.88	$	28.98
Low		24.43		25.96		24.55			24.43		21.42
Close	$	27.89	$	26.36	$	25.79		$	27.89	$	25.79
Average Daily Trading Volume		25,342		24,019		28,958			24,681		29,620
(1) Tangible common equity ratio is a non-GAAP financial measure. For additional information, including a reconciliation to GAAP, refer to Page 4.

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
Unaudited
	2022							2021
(Dollars in thousands)	Second Quarter				First Quarter			Fourth Quarter			Third Quarter			Second Quarter
ASSETS
Cash and Due From Banks	$	91,209		$	77,963		$	65,313		$	73,132		$	78,894
Funds Sold and Interest Bearing Deposits		603,315			790,465			970,041			708,988			766,920
Total Cash and Cash Equivalents		694,524			868,428			1,035,354			782,120			845,814
Investment Securities Available for Sale		601,405			624,361			654,611			645,844			480,890
Investment Securities Held to Maturity		528,258			518,678			339,601			341,228			325,559
Other Equity Securities		900			855			861			-			-
Total Investment Securities		1,130,563			1,143,894			995,073			987,072			806,449
Loans Held for Sale		48,708			50,815			52,532			77,036			80,821
Loans Held for Investment ("HFI"):
Commercial, Financial, & Agricultural		247,902			230,213			223,086			218,929			292,953
Real Estate - Construction		225,664			174,293			174,394			177,443			149,884
Real Estate - Commercial		699,093			669,110			663,550			683,379			707,599
Real Estate - Residential		478,121			368,020			346,756			355,958			362,018
Real Estate - Home Equity		194,658			188,174			187,821			187,642			190,078
Consumer		359,906			347,785			321,511			309,983			298,464
Other Loans		6,854			6,692			13,265			6,792			6,439
Overdrafts		1,455			1,222			1,082			1,299			1,227
Total Loans Held for Investment		2,213,653			1,985,509			1,931,465			1,941,425			2,008,662
Allowance for Credit Losses		(21,281	)		(20,756	)		(21,606	)		(21,500	)		(22,175	)
Loans Held for Investment, Net		2,192,372			1,964,753			1,909,859			1,919,925			1,986,487
Premises and Equipment, Net		82,932			82,518			83,412			84,750			85,745
Goodwill and Other Intangibles		93,173			93,213			93,253			93,293			93,333
Other Real Estate Owned		90			17			17			192			1,192
Other Assets		111,935			106,407			94,349			104,345			111,618
Total Other Assets		288,130			282,155			271,031			282,580			291,888
Total Assets	$	4,354,297		$	4,310,045		$	4,263,849		$	4,048,733		$	4,011,459
LIABILITIES
Deposits:
Noninterest Bearing Deposits	$	1,724,671		$	1,704,329		$	1,668,912		$	1,592,345		$	1,552,864
NOW Accounts		1,036,757			1,062,498			1,070,154			926,201			970,705
Money Market Accounts		289,337			288,877			274,611			286,065			280,805
Regular Savings Accounts		639,594			614,599			599,811			559,714			539,477
Certificates of Deposit		95,899			95,204			99,374			101,637			103,070
Total Deposits		3,786,258			3,765,507			3,712,862			3,465,962			3,446,921
Short-Term Borrowings		39,463			30,865			34,557			51,410			47,200
Subordinated Notes Payable		52,887			52,887			52,887			52,887			52,887
Other Long-Term Borrowings		612			806			884			1,610			1,720
Other Liabilities		93,319			77,323			67,735			113,720			105,534
Total Liabilities		3,972,539			3,927,388			3,868,925			3,685,589			3,654,262
Temporary Equity		10,083			10,512			11,758			14,276			21,317
SHAREOWNERS' EQUITY
Common Stock		170			169			169			169			169
Additional Paid-In Capital		35,738			35,188			34,423			33,876			33,560
Retained Earnings		376,532			370,531			364,788			359,550			345,574
Accumulated Other Comprehensive Loss, Net of Tax		(40,765	)		(33,743	)		(16,214	)		(44,727	)		(43,423	)
Total Shareowners' Equity		371,675			372,145			383,166			348,868			335,880
Total Liabilities, Temporary Equity and Shareowners' Equity	$	4,354,297		$	4,310,045		$	4,263,849		$	4,048,733		$	4,011,459
OTHER BALANCE SHEET DATA
Earning Assets	$	3,996,238		$	3,970,684		$	3,949,111		$	3,714,521		$	3,662,852
Interest Bearing Liabilities		2,154,549			2,145,736			2,132,278			1,979,524			1,995,864
Book Value Per Diluted Share	$	21.89		$	21.94		$	22.63		$	20.63		$	19.87
Tangible Book Value Per Diluted Share(1)		16.40			16.44			17.12			15.11			14.35
Actual Basic Shares Outstanding		16,959			16,948			16,892			16,878			16,874
Actual Diluted Shares Outstanding		16,982			16,962			16,935			16,912			16,901
(1) Tangible book value per diluted share is a non-GAAP financial measure. For additional information, including a reconciliation to GAAP, refer to Page 4.

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited
		2022						2021									June 30,
(Dollars in thousands, except per share data)		Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			2022			2021
INTEREST INCOME
Loans, including Fees	$	24,072		$	22,133		$	22,744		$	25,885		$	24,582		$	46,205		$	47,932
Investment Securities		3,840			2,896			2,505			2,350			2,054			6,736			3,937
Federal Funds Sold and Interest Bearing Deposits		1,408			409			300			285			200			1,817			413
Total Interest Income		29,320			25,438			25,549			28,520			26,836			54,758			52,282
INTEREST EXPENSE
Deposits		266			224			213			210			208			490			416
Short-Term Borrowings		343			192			307			317			324			535			736
Subordinated Notes Payable		370			317			306			307			308			687			615
Other Long-Term Borrowings		8			9			12			14			16			17			37
Total Interest Expense		987			742			838			848			856			1,729			1,804
Net Interest Income		28,333			24,696			24,711			27,672			25,980			53,029			50,478
Provision for Credit Losses		1,542			-			-			-			(571	)		1,542			(1,553	)
Net Interest Income after Provision for Credit Losses		26,791			24,696			24,711			27,672			26,551			51,487			52,031
NONINTEREST INCOME
Deposit Fees		5,447			5,191			5,300			5,075			4,236			10,638			8,507
Bank Card Fees		4,034			3,763			3,872			3,786			3,998			7,797			7,616
Wealth Management Fees		4,403			6,070			3,706			3,623			3,274			10,473			6,364
Mortgage Banking Revenues		9,065			8,946			9,800			12,283			13,217			18,011			30,342
Other		1,954			1,848			1,994			1,807			1,748			3,802			3,470
Total Noninterest Income		24,903			25,818			24,672			26,574			26,473			50,721			56,299
NONINTEREST EXPENSE
Compensation		25,383			24,856			24,783			25,245			25,378			50,239			51,442
Occupancy, Net		6,075			6,093			5,960			6,032			5,973			12,168			11,940
Other Real Estate, Net		(29	)		25			26			(1,126	)		(270	)		(4	)		(388	)
Pension Settlement		169			209			572			500			2,000			378			2,000
Other		8,900			8,050			8,866			9,051			9,042			16,950			17,605
Total Noninterest Expense		40,498			39,233			40,207			39,702			42,123			79,731			82,599
OPERATING PROFIT		11,196			11,281			9,176			14,544			10,901			22,477			25,731
Income Tax Expense		2,177			2,235			2,040			2,949			2,059			4,412			4,846
Net Income		9,019			9,046			7,136			11,595			8,842			18,065			20,885
Pre-Tax Income Attributable to Noncontrolling Interest		(306	)		(591	)		(764	)		(1,504	)		(1,415	)		(897	)		(3,952	)
NET INCOME ATTRIBUTABLE TO COMMON SHAREOWNERS	$	8,713		$	8,455		$	6,372		$	10,091		$	7,427		$	17,168		$	16,933
PER COMMON SHARE
Basic Net Income	$	0.51		$	0.50		$	0.38		$	0.60		$	0.44		$	1.01		$	1.00
Diluted Net Income		0.51			0.50			0.38			0.60			0.44			1.01			1.00
Cash Dividend	$	0.16		$	0.16		$	0.16		$	0.16		$	0.15		$	0.32		$	0.30
AVERAGE SHARES
Basic		16,949			16,931			16,880			16,875			16,858			16,940			16,848
Diluted		16,971			16,946			16,923			16,909			16,885			16,958			16,874

CAPITAL CITY BANK GROUP, INC.
ALLOWANCE FOR CREDIT LOSSES ("ACL")
AND CREDIT QUALITY
Unaudited
		2022						2021									June 30,
(Dollars in thousands, except per share data)		Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			2022			2021
ACL - HELD FOR INVESTMENT LOANS
Balance at Beginning of Period	$	20,756		$	21,606		$	21,500		$	22,175		$	22,026		$	21,606		$	23,816
Provision for Credit Losses		1,670			(79	)		200			(546	)		(184	)		1,591			(2,496	)
Net Charge-Offs (Recoveries)		1,145			771			94			129			(333	)		1,916			(855	)
Balance at End of Period	$	21,281		$	20,756		$	21,606		$	21,500		$	22,175		$	21,281		$	22,175
As a % of Loans HFI		0.96	%		1.05	%		1.12	%		1.11	%		1.10	%		0.96	%		1.10	%
As a % of Nonperforming Loans		677.57	%		760.83	%		499.93	%		710.39	%		433.93	%		677.57	%		433.93	%
ACL - UNFUNDED COMMITMENTS
Balance at Beginning of Period		2,976		$	2,897		$	3,117		$	2,587		$	2,974		$	2,897		$	1,644
Provision for Credit Losses		(123	)		79			(220	)		530			(387	)		(44	)		943
Balance at End of Period(1)		2,853			2,976			2,897			3,117			2,587			2,853			2,587
ACL - DEBT SECURITIES
Provision for Credit Losses	$	(5