Capital City Bank Group(CCBG) - 2019 Q1 - Quarterly Report

PART I Consolidated Financial Statements (Unaudited) This section presents Capital City Bank Group's unaudited consolidated financial statements, including balance sheets, income statements, and cash flow statements, for the period ended March 31, 2019 Consolidated Statements of Financial Condition Total assets increased to $3.05 billion as of March 31, 2019, driven by cash and net loan growth, with total liabilities and shareowners' equity also rising Consolidated Balance Sheet Highlights (Unaudited, In Thousands) | (In Thousands) | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Assets | $3,052,051 | $2,959,183 | | Total Cash and Cash Equivalents | $353,714 | $276,000 | | Loans, Net | $1,782,985 | $1,760,015 | | Total Investment Securities | $655,195 | $663,477 | | Total Liabilities | $2,743,065 | $2,656,596 | | Total Deposits | $2,617,294 | $2,531,856 | | Total Shareowners' Equity | $308,986 | $302,587 | Consolidated Statements of Income Net income for Q1 2019 increased to $6.4 million, driven by a 14.4% rise in net interest income, with diluted EPS reaching $0.38 Consolidated Income Statement Highlights (Unaudited, In Thousands, Except Per Share Data) | (In Thousands, Except Per Share Data) | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net Interest Income | $24,908 | $21,763 | | Provision for Loan Losses | $767 | $745 | | Noninterest Income | $12,552 | $12,477 | | Noninterest Expense | $28,198 | $27,906 | | Net Income | $6,436 | $5,773 | | Diluted Net Income Per Share | $0.38 | $0.34 | Consolidated Statements of Cash Flows Net cash provided by operating activities significantly increased to $15.2 million in Q1 2019, contributing to a $77.7 million net increase in cash and cash equivalents Cash Flow Summary (Unaudited, In Thousands) | (In Thousands) | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net Cash Provided By Operating Activities | $15,240 | $2,190 | | Net Cash Used In Investing Activities | ($15,806) | ($13,747) | | Net Cash Provided By Financing Activities | $78,280 | $24,740 | | Net Increase in Cash and Cash Equivalents | $77,714 | $13,183 | Notes to Consolidated Financial Statements This section details accounting policies, investment securities, loan portfolio analysis, fair value measurements, and upcoming accounting changes like CECL - The company adopted ASU 2016-02 for leases on January 1, 2019, recognizing operating lease right-of-use (ROU) assets of $2.0 million and liabilities of $2.8 million, with no significant impact on the income statement or cash flows[28][29] - The company is preparing for the adoption of ASU 2016-13 (CECL) on January 1, 2020, engaging a vendor for model development and expecting an increase in the allowance for credit losses, though the quantitative impact is not yet estimable[122] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2019 financial performance, highlighting improved net income from loan growth, reduced nonperforming assets, strong capital, and asset-sensitive interest rate positioning Q1 2019 Financial Highlights (Amounts in Millions, Except Per Share Data) | Metric | Q1 2019 | Q4 2018 | Q1 2018 | | :--- | :--- | :--- | :--- | | Net Income (in millions) | $6.4 | $8.5 | $5.8 | | Diluted EPS | $0.38 | $0.50 | $0.34 | | Taxable Equivalent NII (in millions) | $25.0 | $24.5 | $21.9 | | Nonperforming Assets (in millions) | $6.9 | $9.1 | $10.6 | - The company is a financial holding company headquartered in Tallahassee, Florida, operating through its subsidiary, Capital City Bank, with 59 full-service offices in Florida, Georgia, and Alabama[128] Results of Operations Q1 2019 net income reached $6.4 million, driven by increased net interest income, with stable noninterest income and a slight rise in noninterest expense - Net interest margin for Q1 2019 was 3.75%, a decrease of 6 basis points from Q4 2018 due to a seasonal influx of public fund deposits, but an increase of 32 basis points from Q1 2018 due to loan growth and higher yields on variable-rate assets[147] - Net loan charge-offs for Q1 2019 were $0.9 million, or 0.20% of average loans, compared to $0.5 million (0.10%) in Q4 2018 and $0.8 million (0.20%) in Q1 2018[148] - Noninterest expense increased by $1.7 million from Q4 2018, primarily due to a $2.0 million gain on the sale of a banking office in Q4 2018 being recorded as a reduction of OREO expense, making the Q1 2019 expense appear higher in comparison[157] Financial Condition As of March 31, 2019, the company maintained a strong financial condition with $1.8 billion in loans, significantly improved asset quality, and $2.565 billion in average total deposits - Nonperforming assets (nonaccrual loans and OREO) fell to $6.9 million at March 31, 2019, a 23.6% decrease from December 31, 2018, and a 34.7% decrease from March 31, 2018[177] - The allowance for loan losses was $14.1 million, or 0.78% of outstanding loans, and provided coverage of 280% of nonperforming loans, a significant increase from 181% coverage a year prior[184] - Average total deposits grew by $108.6 million (4.4%) over Q1 2018, driven by increases in all deposit types except money market accounts and CDs, including a seasonal influx of public NOW accounts[186] Market Risk and Interest Rate Sensitivity The company's asset-sensitive balance sheet is positioned to benefit from rising interest rates, with NII and EVE sensitivity analyzed through simulation Estimated Change in Net Interest Income (12-month shock, Percentage) | Rate Shock | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | +200 bp | +6.2% | +4.3% | | +100 bp | +3.3% | +2.3% | | -100 bp | -5.8% | -5.0% | Estimated Change in Economic Value of Equity (Percentage) | Rate Shock | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | +200 bp | +18.9% | +13.9% | | +100 bp | +10.6% | +8.0% | | -100 bp | -17.7% | -13.8% | Liquidity and Capital Resources The company maintained strong liquidity with $1.27 billion in available resources and capital ratios well above regulatory requirements, including a 17.09% Total Capital ratio, supported by a new share repurchase program - At March 31, 2019, the company had the ability to generate $1.270 billion in additional liquidity through available resources, excluding $304 million in overnight funds sold[204] Regulatory Capital Ratios (Percentage) | Ratio | March 31, 2019 | December 31, 2018 | March 31, 2018 | | :--- | :--- | :--- | :--- | | Common Equity Tier 1 | 13.62% | 13.58% | 13.44% | | Total Capital | 17.09% | 17.13% | 17.05% | | Leverage | 10.53% | 10.89% | 10.36% | - In January 2019, the Board of Directors authorized a new share repurchase program for up to 750,000 shares of common stock, valid through February 2024, with no shares repurchased under this new program as of March 31, 2019[214] Quantitative and Qualitative Disclosure About Market Risk This section incorporates the MD&A's market risk discussion by reference, confirming no material changes in market risk information since year-end 2018 - The company refers to the 'Market Risk and Interest Rate Sensitivity' section in the MD&A for its disclosures on market risk[222] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2019, with no significant changes in internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2019, the company maintained effective disclosure controls and procedures[223] - No significant changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[224] PART II – Other Information Legal Proceedings The company is involved in various lawsuits, but management believes no pending litigation will materially affect its financial position or results - In management's opinion, there is no pending litigation that would have a material effect on the company's financial condition or results[225] Risk Factors This section refers to the detailed risk factors in the 2018 Form 10-K, advising investors to consider these and other potential risks - Investors are advised to carefully consider the risk factors discussed in Part I, Item 1A of the 2018 Form 10-K[226][227] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and XBRL instance and taxonomy documents[228]