Capital City Bank Group (CCBG, Financial) filed Quarterly Report for the period ended 2011-09-30.
Capital City Bank Group has a market cap of $182.7 million; its shares were traded at around $10.65 with a P/E ratio of 24.2 and P/S ratio of 1.1. The dividend yield of Capital City Bank Group stocks is 3.8%.
Compared to the second quarter of 2011, third quarter 2011 earnings reflect lower operating revenues of $0.6 million and a $0.2 million increase in the loan loss provision, which is partially offset by a $0.5 million decline in noninterest expense and lower income tax expense of $0.1 million. A $1.9 million decline in the loan loss provision and a $1.7 million reduction in noninterest expense, which is partially offset by lower operating revenues of $0.9 million and higher income taxes of $1.1 million, drove the improvement in earnings compared to the third quarter of 2010.
The increase in earnings for the nine month period ended September 30, 2011 is attributable to an $8.6 million reduction in the loan loss provision and lower noninterest expense of $5.2 million, which is partially offset by a $0.8 million decline in operating revenues and higher income taxes of $5.2 million. 2011 performance also reflects the sale of our Visa Class B shares of stock during the first quarter which resulted in a net pre-tax gain of $2.6 million (i.e., $3.2 million pre-tax included in noninterest income and a swap liability of $0.6 million included in noninterest expense).
Other. Other income decreased by $537,000, or 24.1%, from the second quarter of 2011 and increased by $367,000, or 27.7%, over the third quarter of 2010. For the first nine months of 2011, other income decreased by $74,000, or 1.4%, from the comparable period of 2010. The unfavorable variance compared to the second quarter of 2011 reflects a decrease in gains from the sale of OREO properties. The increase over the third quarter of 2010 reflects a higher level of gains from the sale of OREO properties. For the first nine months of 2011, the slight unfavorable variance reflects lower merchant fees that were partially offset by higher gains from ORE sales. The decline in our merchant fees is substantially offset by a reduction in processing costs, which are reflected as interchange fees in noninterest expense.
In the third quarter of 2011, our average investment portfolio of $303.5 million decreased $2.0 million, or 0.6%, from the second quarter of 2011 and increased $41.1 million, or 13.5%, from the fourth quarter of 2010. The average balance of the investment portfolio compared to the second quarter of 2011 decreased as maturing municipal bonds exceeded purchases. Declines were also experienced in U.S. Treasury securities and mortgage-backed securities, which were only partially offset with purchases of floating rate SBA securities. The increase in the investment portfolio compared to the fourth quarter of 2010 was a result of an investment strategy which utilized a portion of our excess liquidity to attain a higher yield than overnight funds. A majority of these investments were U.S. Treasury securities which were also largely used for pledging purposes, and were partially offset by a decline in municipal bond balances. As a percentage of average earning assets, the investment portfolio represented 13.8% in the third quarter of 2011, compared to 13.5% in the second quarter of 2011 and 11.8% in the fourth quarter of 2010. If appropriate, we will continue to look to deploy a portion of the overnight funds position in the investment portfolio during the fourth quarter.
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Capital City Bank Group has a market cap of $182.7 million; its shares were traded at around $10.65 with a P/E ratio of 24.2 and P/S ratio of 1.1. The dividend yield of Capital City Bank Group stocks is 3.8%.
Highlight of Business Operations:
Our Business We are a bank holding company headquartered in Tallahassee, Florida, and we are the parent of our wholly-owned subsidiary, Capital City Bank (the "Bank" or "CCB"). The Bank offers a broad array of products and services through a total of 70 full-service offices located in Florida, Georgia, and Alabama. The Bank offers commercial and retail banking services, as well as trust and asset management, retail securities brokerage and data processing services. Our profitability, like most financial institutions, is dependent to a large extent upon net interest income, which is the difference between the interest received on earning assets, such as loans and securities, and the interest paid on interest-bearing liabilities, principally deposits and borrowings. Results of operations are also affected by the provision for loan losses, operating expenses such as salaries and employee benefits, occupancy and other operating expenses including income taxes, and noninterest income such as service charges on deposit accounts, asset management and trust fees, retail securities brokerage fees, mortgage banking fees, bank card fees, and data processing fees. Our noninterest income from these fees, including a description of the effects of recent enacted regulations on our fee income, is further described in our 2010 Form 10-K, Part I, Item 1, Business. As a result of recent consumer protection related initiatives, we anticipate that there is a high likelihood that additional laws, rules, and regulations may be enacted or adopted by certain governmental regulatory agencies, such as the Consumer Financial Protection Bureau, which could adversely affect our ability to generate fee-based income in future periods. We will continue to monitor the regulatory environment for changes that could affect our future business operations. Much of our lending operations, approximately 78%, are within the State of Florida, which had been particularly hard hit in the recent economic recession. Evidence of the economic downturn in Florida is particularly reflected in current unemployment statistics and real estate property devaluation. According to the U.S. Department of Labor, the Florida unemployment rate (seasonally adjusted) at September 30, 2011 was 10.6% compared to 12.0% at the end of 2010, 11.8% at the end of 2009, and 7.6% at the end of 2008. While our larger Florida markets have generally realized an unemployment rate below the Florida rate, they have been adversely impacted as evidenced by layoffs and business closings, as well as wealth reduction due to depressed markets. We have also realized an increasing trend in the number of bankruptcy filings in Florida and Georgia. Generally, bankruptcy filings in those states have increased approximately 9% in the aggregate from 2009 to 2010 with the most significant increases resulting from non-business bankruptcy filings. Based on data from the U.S. Census Bureau, since 2006, median household income has decreased by 3.1% and 10.6% in Florida and Georgia, respectively. Additionally, real estate property valuations continue to be depressed during the economic downturn as evidenced by our higher level of problem assets and credit related costs. Higher unemployment, increased non-business bankruptcy filings, decreased median household income, and depressed real estate values all affect the value of our loan portfolios and the associated risks. An extended continuation of the recession in Florida would likely exacerbate the adverse effects of these difficult market conditions on our clients, which would likely have a negative impact on our financial results.Compared to the second quarter of 2011, third quarter 2011 earnings reflect lower operating revenues of $0.6 million and a $0.2 million increase in the loan loss provision, which is partially offset by a $0.5 million decline in noninterest expense and lower income tax expense of $0.1 million. A $1.9 million decline in the loan loss provision and a $1.7 million reduction in noninterest expense, which is partially offset by lower operating revenues of $0.9 million and higher income taxes of $1.1 million, drove the improvement in earnings compared to the third quarter of 2010.
The increase in earnings for the nine month period ended September 30, 2011 is attributable to an $8.6 million reduction in the loan loss provision and lower noninterest expense of $5.2 million, which is partially offset by a $0.8 million decline in operating revenues and higher income taxes of $5.2 million. 2011 performance also reflects the sale of our Visa Class B shares of stock during the first quarter which resulted in a net pre-tax gain of $2.6 million (i.e., $3.2 million pre-tax included in noninterest income and a swap liability of $0.6 million included in noninterest expense).
Other. Other income decreased by $537,000, or 24.1%, from the second quarter of 2011 and increased by $367,000, or 27.7%, over the third quarter of 2010. For the first nine months of 2011, other income decreased by $74,000, or 1.4%, from the comparable period of 2010. The unfavorable variance compared to the second quarter of 2011 reflects a decrease in gains from the sale of OREO properties. The increase over the third quarter of 2010 reflects a higher level of gains from the sale of OREO properties. For the first nine months of 2011, the slight unfavorable variance reflects lower merchant fees that were partially offset by higher gains from ORE sales. The decline in our merchant fees is substantially offset by a reduction in processing costs, which are reflected as interchange fees in noninterest expense.
In the third quarter of 2011, our average investment portfolio of $303.5 million decreased $2.0 million, or 0.6%, from the second quarter of 2011 and increased $41.1 million, or 13.5%, from the fourth quarter of 2010. The average balance of the investment portfolio compared to the second quarter of 2011 decreased as maturing municipal bonds exceeded purchases. Declines were also experienced in U.S. Treasury securities and mortgage-backed securities, which were only partially offset with purchases of floating rate SBA securities. The increase in the investment portfolio compared to the fourth quarter of 2010 was a result of an investment strategy which utilized a portion of our excess liquidity to attain a higher yield than overnight funds. A majority of these investments were U.S. Treasury securities which were also largely used for pledging purposes, and were partially offset by a decline in municipal bond balances. As a percentage of average earning assets, the investment portfolio represented 13.8% in the third quarter of 2011, compared to 13.5% in the second quarter of 2011 and 11.8% in the fourth quarter of 2010. If appropriate, we will continue to look to deploy a portion of the overnight funds position in the investment portfolio during the fourth quarter.
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