Capital City Bank leader expects rocky recovery

The economy’s recovery appears to be under way, but it will take time and the road won’t be smooth, said the head of Tallahassee, Fla.-based Capital City Bank.

What’s happening in the banking industry is reflective of the economy, said Bill Smith, president and CEO of the bank, who was in Macon on Wednesday on a periodic visit to the bank’s offices in Middle Georgia.

“We didn’t get in this thing overnight, and we won’t get out of it overnight,” Smith said. “But I do believe we are headed for what I call ‘recovery’ but not sustained recovery yet. I think the road to recovery is going to be rocky.”

Wednesday, Smith took a tour of the Macon bank’s new headquarters under construction at the corner of Fifth Street and Martin Luther King Jr. Boulevard and met with bank executives and branch officers. The group discussed a variety of topics during the casual, boxed-lunch gathering.

The bank is seeing some improvement in residential loans, he said. About two months ago, the majority of loans were for refinancing instead of new home loans. But now that has reversed.

“It does send a pretty positive signal,” Smith said.

He talked to the group about ways to reach younger customers — such as using Facebook and other social networking tools — who may not need or want the hands-on attention older customers demand.

In July, the bank reported net income of $800,000 for the second quarter this year compared to $4.8 million for the second quarter of 2008. Earnings for the first six months of 2009 totaled $1.4 million, or 8 cents per diluted share, compared to $12.1 million, or 70 cents per diluted share, in 2008.

Also, earnings for the three- and six-month periods reflect loan loss provisions of $8.4 million and $16.8 million, respectively. This reflects funds set aside to cover actual or potential loss from problem loans.

Most of the problem loans come from residential development, Smith said.

“We saw an endless supply of homes being bought and sold,” he said. “I think everybody got ahead of themselves, including Capital City Bank.”

But the bank is not only considered well-capitalized by banking regulation standards, but it also is “40 percent over well-capitalized,” Smith said.

While many banks have suspended issuing dividends, last week Capital City declared the company’s quarterly cash dividend of 19 cents per share of common stock, which is unchanged from the first quarter, according to a news release. It will be paid Sept. 22 to shareholders of record as of next Tuesday.

Capital City Bank Group (Nasdaq: CCBG) is one of the largest publicly traded financial services companies based in Florida and has about $2.5 billion in assets, according to the release. The bank was founded in 1895 and has 70 offices in Florida, Georgia and Alabama.

To contact writer Linda S. Morris, call 744-4223.