Well, good morning. Welcome to the 2021 Capital City Bank Group, Inc. Shareowners Meeting. I'm glad we can be together by audio and video today and look forward to being in person again next year after a 2 year hiatus. The polls open and will remain open until all matters set forth in the proxy statement are concluded.
Tim Davis, Capital City's Corporate Secretary, will provide the notice of the annual meeting.
I have a notice of annual meeting and an affidavit attesting that the notice on March 11, 2021 to all shareowners of record as of February 25, 2021. I also have available as of record date a list of share owners, including number of shares owned.
The notice of the meeting and affidavit will be annexed to the corporate minutes. Tim has taken an oath meeting. Tim, please advise the shareholders that we have a quorum present
and a way to conduct business. We have an excess of a majority of the outstanding shares represented at today's meeting either in person or by proxy.
Since a quorum is present, I will now introduce the formal proposals as set forth in the proxy statement, which was previously made available to you. Proposal number 1 is for the approval of amended and restated articles of incorporation to declassify the Board and provide for annual election of directors. Do I hear a motion to approve the amended and restated articles of incorporation to declassify the Board and provide for annual election of directors. So moved.
2nd.
Based on the vote, we are now filing amended and restated articles of incorporation with the Secretary of State. We will now vote on all of the directors for a 1 year term. Proposal number 2 is for the election of directors. Do I hear a motion to approve the election of the 11 directors and that the nominations for elections be closed?
So moved.
2nd.
Proposal number 3 is to vote on the adoption of the 2021 Director Stock Purchase Plan. Do I hear a motion to approve the adoption of the 2021 Director Stock Purchase Plan?
So moved. 2nd. Proposal number 4
is to vote on the adoption of the 2021 associate stock purchase plan. Do I hear a motion to approve the adoption of the 2021 associate stock purchase
plan? So moved.
Second.
Proposal number 5 is to vote on the adoption of the 2021 associate incentive plan. Do I hear a motion to approve the adoption of the 2021 associate incentive plan? So moved. 2nd. Proposal number 6 is for the ratification of the expected appointment of Ernst and Young LLP as the independent registered public accounting firm for the company for the fiscal year ending December 31, 2021.
Do I hear a motion for the ratification of Ernst and Young?
So move.
2nd.
Is there any discussion on the proposals as presented? Jacob Cooper with Ernst and Young LLP and the partner in charge of the Capital City relationship is listening today. Jacob and I had a discussion prior to today's meeting, and he did not have any comments. As all discussions on the matter set forth in the proxy is complete, I declare the polls closed. Will the inspector give the last preliminary vote we are in receipt of at this time with the final vote to be tabulated and reported publicly within the required time frame.
As of the record date, we had 16, 850, 644 shares outstanding and eligible to vote. As of midnight last night, we had 14, 000, 077, 441 shares or 83.54 percent of the total shares outstanding voted, thereby constituting a quorum. Based on the preliminary vote, I'm pleased to announce the approval of all matters presented.
Thank you, Kim. I have some personal remarks I'd like to make. But before doing so, I'd like to conclude the formal portion of the annual meeting. As there is no other business to come before this meeting, I'd entertain a motion to adjourn the meeting.
So moved.
Second. Meeting is adjourned. We'll now move on to the presentation portion of our meeting. Again, welcome to the 2021 Capital City Bank Group, Inc. Shareowners Meeting.
During my presentation today, I may make some forward looking statements, and the notice of that is posted on your screen. I'd like to recognize the Capital City Bank Group Board members. Lead Director, Everett Drew, President, SouthGroup Equities, Inc. Robert Antoine, former partner in the banking and securities practice of Deloitte and Touche Tom Barron, President, Capital City Bank Doctor. Alan Binns, President and CEO, Binns Enterprises Inc.
Stan Conley, Jr, Executive Vice President, Operations, Southern Company Services, Inc, who chairs the Corporate Governance and Nominating Committee. Marshall Kreiser, III, Chancellor of the State University System of Florida Cater Cox, III, Chairman and Secretary, Riverview Plantation, Inc, who chairs the Compensation Committee Eric Grant, President, Municipal Code Corporation Laura Johnson, Chief Executive Officer, Cotton Colors John Sample, former Senior Vice President and Chief Financial Officer at American Corporation, who chairs the Audit Committee and William G. Smith, Jr, Chairman, President and CEO, Capital City Bank Group, Inc. I would note, 6 of the 11 members of the Capital City Board have been nominated and elected in the last 5 years. Thank you to all of you for your service.
Please join me in recognizing Rick Carroll, tax professional at Carroll and Company, who is retiring from the Board after 18 years of service. Rick was a phenomenal Director, chaired the audit committee for 12 years. On a personal note, Rick and I enjoy a long history together. Our parents were friends, and we grew up together at St. Theresa Beach at the summers as children.
Rick was a wonderful asset for Capital City and we thank him for his service. I'd also like to acknowledge the members of the Capital City Bank Board and our community boards. These incredibly important contributors provide invaluable insight, direction and leadership. Capital City has an impressive group of leaders we refer to as the Management Council. I thank them for their service and commitment with a special thank you to our senior partners, Tom Barron, Kim Davis, Beth Coram, Ed Canop and Dale Thompson.
I want to give special recognition to my 2 senior partners, Tom Barron and Kim Davis, who lead the bank day to day. Their tireless efforts on behalf of the company are appreciated by me. I would ask you to join me in thanking them. For the last several years, Capital City has recognized the very best from our company in both sales and service at our annual Star Summit gathering. We hated to postpone the event scheduled for earlier this year, but these associates will be honored in September by the company at a wonderful celebration.
Congratulations to all of you. Please join me in a moment of silence. The associates and directors we have to meet folks both active and retired made a difference in establishing who we are today. Thank you. Let me take a few moments to provide some 2020 highlights, which I'll discuss in more detail later before first talking about the Q1 of 2021 and my thoughts for the rest of the year.
Capital City celebrated its 125th anniversary in 2020, quite a milestone. While COVID from a public celebration, unwavering of capital city stories from 125 years was very well received. Talented local author, Julie Strauss Bettinger, did a job of capturing our past, present and future with her storytelling abilities. The strong culture is evident on every page, and the notes and calls I have received are very rewarding. Julie, we thank you.
We have a few copies of the book left and if any shareowner would like 1, just contact our marketing department. 2020 was a remarkable year given all that occurred. Some of the financial highlights are included on the next few slides. Earnings of $31, 600, 000 or $1.88 a share, from the prior year. Average loan growth of $146, 000, 000
up over 8%. Average deposits increased $307, 000, 000
up 12.1 percent and nonperforming assets were $6, 700, 000 at year end. This is in context to a high watermark of over $137, 000, 000 during the Great Recession. Charge offs were only 0.12 percent of total loans. The company produced a return on assets of 0.93 and a return on equity of 9.36 percent for the year. Capital City Home Loans closed almost 6, 000 home loans, totaling over $1, 600, 000, 000 since we partnered together in March of 2020.
Capital City Wealth managed about 2, 000, 000, 000 dollars in client assets. Capital City transitioned to a more technology based delivery with almost 58% of our traditional client transactions being handled electronically. During Phase 1 of PPP, Capital City closed over 2, 200 loans for over $190, 000, 000 with an average loan size of only $85, 000 well below state and national averages. Our largest PPP loan was $7, 800, 000 and our smallest was $154 with almost all of the work around this endeavor being handled remotely. Kyle Phelps and Jim Scarborough did a great job leading this effort for the bank.
Over 100 associates participated all across the footprint with PPP efforts. Capital City Foundation contributed almost $250, 000 in support of our communities. And Capital City closed over 4, 300 automobile loans, totaling $136, 000, 000 Our investment in Capital City Home Loans was more than an investment. It was Capital City's initial foray into an extension of an existing product offering. While not a whole bank or an office acquisition, the framework we established will continue to guide Capital City in future years as we evaluate other opportunities to diversify both our revenue stream and demographics with an investment rather than a purchase.
As mentioned earlier, volumes since our agreement was finalized in March were way ahead of our initial projections, and profitability was strong with Capital City Home Loans contributing $0.52 have done a fantastic job managing the business. CCHL has 80 licensed mortgage loan officers and does business in 9 states, with the Northern Arc of Atlanta representing about 50% of the total volume. During 2020, we experienced a different economic year being adversely impacted by COVID during the last 9 months of the year. Who would have thought this is where we would be today? In Capital City Markets, COVID clearly affected hospitality venues, restaurants, bars and small businesses, just to name a few.
Home values held up quite well, and a strong stock market increased the value of 401s and retirement plans at year end. These increases did give the consumer some confidence throughout the year as consumer spending rebounded late in the year and is now approaching pre pandemic levels. Stimulus dollars and PPP loans provided an early bridge to better economic times. While inflation has yet to show up in the numbers, I feel and see the rise in commodity prices and lumber, in particular. With residential so strong, this increase will eventually show up in inflation.
Before talking about the future, let me elaborate on some of my previous high level points from 2020. COVID, it changed the world and how we operate and interact. I was I am quite pleased with Capital City's response. We took appropriate safety precautions to protect our clients and associates with offices open by appointment only and between 20% 40% of our associates working remotely. Some of those associates will more than likely continue to work remotely, but I do think it is important for us to have the face to face interaction.
It does and will enable the all important culture component of our business to grow and continue to be a part of our DNA. Capital City provided extra pay to frontline workers, brought lunch to offices, increased paid time off. I'd like to pay special recognition to Leanne Stalenberg and Pam Gay, who led Capital City's efforts surrounding COVID. Leanne and Pam managed our safety protocols as we closed and opened offices across the footprint and dealt with 100 COVID cases within the company over the last year. Capital City's PPP efforts were incredible.
The team pulled together and worked virtually around the clock, assisting our clients with credits to bridge them to a more robust economy. While I personally deplore deficits, this expenditure was appropriate given the virtual shutdown of the economy. Capital City was again recognized by Florida Trend and the American Banker as a great place to work, ranking number 6 out of over 5, 000 banks, a recognition we are all proud of. The Capital City Home Loans transaction gave Capital City a glimpse into the dynamic growth we refer to as the North and move that geography and demographics to the top of list as places to grow. Our more traditional smaller markets are great, and we believe the more dynamic growth in the Northern Arc will only complement them.
Capital Cities deposit growth of $572, 000, 000 at year end was phenomenal and came from all across our footprint. When I joined the company, we were $75, 000, 000 in total deposits. So $572, 000, 000 in growth is a 7x plus times in a single year from our total size then. Maybe what it says, I'm getting older or I've just been with Capital City a long time. Our wealth initiative through Capital City Trust and Capital City Investments is another all important noninterest income revenue stream.
With almost $2, 000, 000, 000 in assets under management, we provide a full range of products to help our clients manage and grow their wealth. Wealth is a $10, 500, 000 revenue business for Capital City.
Credit quality ended the year with a couple of metrics. Stimulus dollars and people loans are helping bridge
the future. And as COVID begins to
recede somewhat, our
markets are beginning to rise to more normalized economies. A former Capital City associate described the folks who work behind the scenes in our operations area as the pit crew for a championship NASCAR team, which was true again in 2020. Those behind the scenes folks made us all look good. So thank you to Beth Coram, Susie Andrews, Randy Laschua, Cheryl Thompson, Alicia Ronan and many, many more for all you do. And finally, thanks to Randall Sharpton and Marcia Kroll for helping the bank manage through the ever evolving regulatory landscape and ensuring we are in good standing with our regulators.
State budgets are clearly challenged with lower sales tax revenues and the increase and increase the need to make some cuts. Clearly, government spending is important to the well-being of many of our markets, particularly those with institutions of higher learning. We continue to see excess in student housing and some early real estate speculation, but closed the year feeling pretty good with spectacular credit quality. Residential construction led the economy in many of our markets with developments like Canopy in Tallahassee, Hales Homestead in Gainesville. Archer Road in Gainesville saw phenomenal growth, and Capital City will have dividend to $0.15 per share a quarter in the Q4 of 'twenty, a 7% increase.
This reflected our confidence in the future and stated goal of returning 25% to 35% of our earnings to shareowners in the form of dividends. During 2020, Capital City returned $11, 600, 000 to our shareowners in the form of dividends and open market share repurchases. Capital City announced Q1 2021 results this morning, and boy, am I excited. Financial highlights for the Q1 include earnings of 9, 500, 000 dollars or $0.56 per share, the 2nd best quarter in the history of Capital City Average loan growth of $51, 000, 000 or 2.6 percent over year end. Average deposits up 173, 000, 000 or 5.6 over year end and Phase II PPP production of over 1100 loans for $72, 000, 000 And also during the quarter, over 1300 loans for almost $97, 000, 000 were forgiven under Phase 1 of the PPP program.
Before I make some 2021 predictions I did last year. Howe is correct on FSU didn't lose to UF in football, he didn't play. Interest rates were flat. President Biden won. Lorraine Aussie was elected to the Florida Senate.
The jury is probably out on a 2020 recession. Maybe we just had a 2020 COVID year. A predicted civil discourse, unfortunately, would occur, but I didn't think it would be this bad. All in all, 2020, more than 4 years. Let us some 2021 predictions.
Capital City will reach its challenging 2021 budget goals. Rates will remain lower for longer. UF will beat FSU in football. COVID will see significant progress in the latter half of 'twenty 1. Acquisitions will heat up in both whole banks
and to existing business lines, although we need to remember we
basically acquired a $600, 000, 000 to $700, 000, 000 bank last year through organic growth alone. Capital City will again be named a great place to work. Georgia will lose to Alabama in the SEC championship. There is a real prospect for higher taxes in 'twenty 2. The 10 year treasurer will end the year at 1.9%.
FSU will hire a new 1. Capital City Home Loans will close $1, 800, 000, 000 in loans. U. S. 27 will not be named renamed for President Trump to make it to the Sweet 16.
I did write that before the tournament actually started. Working remotely became somewhat of a norm in 2020 with the virus as we put safety protocols in place. I expect a small portion of the workforce will find this to be a reality, but I'm cognizant of the strong capital city culture that is developed with the personal interactions our associates develop with their teammates in the workplace. This element is critical to our success and cannot be overlooked. I believe Capital City has and will continue to have the proper balance with respect to COVID and our interactions with both clients and each other.
The building of offices will continue, albeit at a slower pace as client needs continue to evolve. Generally, we'll open an office or 2 in a new market like Breakfast Point, Panama City Beach, Doones Lake in Walton County and the Origins office underway also in Walton. We'll enter new market and then grow both organically and via acquisition to establish our presence. Being located close to the St. Joe Company in Bay Walton Counties and their incredible growth is a real plus.
Panama City Beach was just named the 2 Emerging Market. Emerging world destination only 1 of our markets in the United States. While historically, our acquisition strategy has been to acquire a whole bank, I believe that will change as we continue to add to our franchise with emphasis on opportunities in noninterest income areas like residential lending and wealth. We see signs of economic activity across the footprint with enrollment numbers our major universities and aeronautics growth via the U. S.
Navy and MHD Rockland and Keystone Heights. Our agricultural markets generally enjoyed another good year with tomatoes in Quincy, potatoes in Palatka and dairy in Trenton, all doing fairly well. Our hospitals in Macon, Tennessee and Nashville, assisted with the vaccinations, continue to be major economic drivers in their respective markets. The investment from North American properties with the Cascades project in Tallahassee is going to be a game changer. And the recent news that Tallahassee Memorial, FSU Medical School and the St.
Joe Company will be establishing a medical campus partnership in Panama City Beach is really exciting. Over the last few years, ESG, environmental, social and governance, has become more prevalent in the corporate world. With respect to this important initiative, Capital City has programmed all of our HVA systems to operate during business hours only and converted 1 third of our buildings to LED exterior lighting with the goal of 100% of exterior lighting by 2025. Our efforts to encourage our clients to opt for electronic notices and statements is paying dividends. We plan to purchase an electric vehicle for courier use in 2021 and purchase renewable energy credits to help offset our electricity usage and meet our sustainability goals.
Our wealth area offers ESG investing opportunities with sustainable investment opportunities in a broad array of approaches. On the S front, Capital City asked each associate to volunteer for 10 hours of community service each year, and we achieved 109% of that goal even with limited opportunities last year given COVID. Our foundation made contributions of $240, 000 last year, including 118, 000 to eligible CRA organizations. Working with Capital City Home Loans, we continued our long time partnership with Habitat and participated in the Warrick Dunn Charity for a home in early 2021. Capital City provided a dollar extra pay for all noninterest associates, meals twice a week for 12 weeks and extra PTO during the height of COVID.
During 2020, we increased our time
to diversify, equity and fund groups of associates to
diversity. 4 of our last 6 board appointments to Capital City Bank and Capital City Bank Group have been minority or females. I'm excited about 2021 slight uptick in rates for the balance sheet to be achieved. As reported earlier, we stand back in the Q1 of that being fun and enjoyable
after nearly a decade of dealing with
the economy and problem credits. Thank you. The Julian V. Smith Community Service Award was established in 1989 and named for Julian, who spent his entire career with Capital City and was original member of the Capital City Bank Group Board. Every year, Capital City recognizes 1 of our own legacy of his or her community, volunteering and leadership and is not afraid to sacrifice personal time for the benefit of others.
Laurel Perito joined Capital
City Trust in 2000 and
1 and currently serves as Trust Operations Manager with Capital City Trust Company in Tallahassee. She is possibly 1 of the most active community volunteers among all bankers and is the 2020 Julien B. Smith Award recipient. Since 2017, including almost a full year when a global pandemic limited in person volunteer service, Laurel has recorded more than 1200 volunteer hours with 13 different organizations or programs. Her dedication to community aligns closely with her faith, leading Laurel to support nonprofit services ranging from children's literacy and youth addiction rehabilitation to crisis pregnancy counseling and equine assisted psychotherapy.
She has served everyone from the youngest citizens through the way of the Leading Powell initiative to our most senior citizens through elder care services, Meals on Wheels, yet Laurel's largest single volunteer role, accounting for 700 service hours in just the past 4 years, has been the area coordinator for Operation Christmas Child, an outreach program of the Samaritan's Purse that provides shoe boxes filled with gifts and toys, school supplies and hygiene items to children in 160 countries around the world. She coordinates Operation Christmas Child annually for the 6 counties in the Big Bend region of North Florida by leading a team of volunteers to promote the program in local churches, assist in shoebox collections and process and ship thousands of shoeboxes donated locally. I'm pleased to present Laurel with 25 shares of Capital City Bank stock and a check for $1, 000 for a contribution over the half of the organization she chose. Laurel selected a women's pregnancy center, a crisis pregnancy center where she plans to devote more of her time in retirement. Laura will retire September 30 and looks forward to continued volunteer service and travel along with her husband, particularly to Hawaii as it's the only state he has never visited.
Please join me in recognizing Laurel, a great example of community service Capital City Bankers provide to the places we call home. At Capital City, we work hard to promote a team environment in our approach. But each year, we recognize a single associate who truly embodies the spirit of Capital City Bank. The Godfrey Smith Award is the highest single honor an associate can receive. It's named for longtime banker Godfrey Smith, who devoted nearly 63 years to Capital City and established the banking foundation we're doing today.
This year's Godfrey Smith Award winner has a long legacy and history with Capital City. His And 61 years ago, when his father joined the bank as a teller and his mother was working at the bank as a proof operator and she was a senior at Leon High School. They met and were later married. Mark Strickland's father retired from Capital City in 2000 after 40 years of service. Mark Strickland joined Capital City in 1989 as an internal auditor and is currently Senior Vice President in Credit Administration.
Mark is the go to guy for those seeking lending assistance with complex credits and his sharp mind and incredible skills enable Capital City to enjoy spectacular credit quality today. Mark's been honored twice at Star Summit, including receiving the Mountain Mover Award in 2018 for consistently going above and beyond expectations for our clients. He received an incredible 31 nominations from across the bank for that award from his peers. His fellow associates have made the following comments. Mark is 1 of our most valuable associates.
He puts others before himself. He is consistent and timely. I always appreciate his guidance. It gives me great pleasure to recognize Mark Strickland as this year's Godfrey Smith Award winner. All of the accolades given Mark mirror those Godfrey Smith embodied.
Mark is a pleasure to work with, approves credit for our clients like he is lending his own money personally and is the consummate profession. Mark, thank you for exemplifying everything that a capital city banker aspires to be. Before we close, I'd be happy to entertain any questions you may have at this time. Given the format, it may be difficult to ask a question. If you have a control number, you can ask a question now.
If you're logged on as a guest but have questions, just feel free to reach out for me after the meeting. They tell me we have no questions. So as always, thank you for joining us today for your ownership of CCBG and for your business.