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On Nov 6, Zacks Investment Research upgraded Capital City Bank Group Inc. (CCBG - Snapshot Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Capital City Bank has been witnessing rising earnings estimates on the back of strong third-quarter 2013 results. The long-term expected earnings growth rate for this stock is 6%.

Capital City Bank reported its third-quarter results on Oct 29 with earnings per share of 9 cents, beating the Zacks Consensus Estimate of 8 cents by 12.5% and the year-ago earnings of 7 cents by 28.6%.

Robust results for the reported quarter were primarily aided by substantial reduction in provision for loan losses. Moreover, Capital City Bank recorded a strong capital position and a marked improvement in its credit quality.

As of Sep 30, 2013, the ratio of nonperforming assets to total assets reduced to 3.77% from 5.10% in the prior-year quarter. The ratio of allowance to total loans decreased 22 basis points year over year to 1.75%.

Reduced net interest income, which declined 8.6% year over year to $19.2 million and rise in non-interest expenses (up 0.7% year over year) were the headwinds.

For Capital City Bank, the Zacks Consensus Estimate for 2013 jumped 3.3% to 31 cents per share over the last 30 days. For 2014, the Zacks Consensus Estimate surged 2.4% to 43 cents per share over the same time frame.

Other Stocks to Consider

Besides Capital City Bank, other Southeast banks that are worth considering include Simmons First National Corp. (SFNC - Snapshot Report), American National Bankshares Inc. (AMNB - Snapshot Report) and SY Bancorp Inc. (SYBT - Snapshot Report). All the 3 companies carry a Zacks Rank #1.

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