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Capital City Bank Group Inc.

10/21/2025 | Press release | Distributed by Public on 10/21/2025 12:39

Business/Financial Results (Form 8-K)

Capital City Bank Group, Inc.

Reports Third Quarter 2025 Results

TALLAHASSEE, Fla.(October 21, 2025) - Capital City Bank Group, Inc. (NASDAQ: CCBG) todayreported net income

attributable to common shareowners of $16.0 million, or $0.93 per dilutedshare, for the third quarter of 2025 compared to $15.0

million, or $0.88 per diluted share, for the second quarter of 2025, and $13.1 million,or $0.77 per diluted share, for the third quarter

of 2024.

QUARTER HIGHLIGHTS (3

Quarter 2025versus 2

Quarter 2025)

Income Statement

●

Tax-equivalentnet interest income totaled $43.6 million comparedto $43.2 million for the second quarter of 2025

Net interest margin increasedfour-basis points to 4.34% due to a four-basis pointdecline in cost of funds to 78 basis points

●

Provision for credit losses increasedby $1.3 million to $1.9 million for the third quarterof 2025 - net loan charge-offs were18-

basis points (annualized) of average loans - allowance coverage ratioincreased to 1.17% at September 30, 2025

●

Noninterest income increasedby $2.3 million, or 11.6%,due to a $1.2 million increase in other income which included a $0.7

million gain from the sale of our insurance subsidiary,and higher mortgage banking revenues of $0.6 millionand deposit fees of

$0.6million

●

Noninterest expense increasedby $0.4 million, or 0.9%, due to an increase in othermiscellaneous expenses

Balance Sheet

●

Loan balances decreased by $46.4 million, or1.7% (average), and decreased by $49.5 million, or 1.9%(end of period)

●

Deposit balances decreased by $68.4million, or 1.9% (average), and decreased by $89.9million, or 2.4% (end of period) due to

the seasonal decrease in our public fund balances

Noninterest bearing deposits averaged36.4% of total deposits for the third quarter of 2025and 36.3% for the year

●

Tangiblebook value per diluted share (non-GAAP financial measure)increased by $1.01, or 4.0%

"We are pleasedto share another strong report for the third quarter of 2025, highlightedby an above-peer ROA of 1.47% and ROE of

11.67%," said WilliamG. Smith, Jr., Capital City Bank GroupChairman and CEO. "Revenue growth driven by continued net interest

margin expansion and higher noninterestincome drove the improvement and resulted in a 4% increase in tangible book valueper

share. We arein a position of strength and look forward to finishing the year strong and continuedmomentum in 2026."

Discussion of Operating Results

Net Interest Income/Net InterestMargin

Tax-equivalent netinterest income for the third quarter of 2025 totaled $43.6 million comparedto $43.2 million for the second

quarter of 2025 and $40.3million for the third quarter of 2024.Compared to the second quarter of 2025, the increase was driven by

a $0.5million increase in investment securities income,a $0.4 million decrease in interest expense,and a $0.1 million increase in

overnight funds income, partially offset by a $0.6 million decreasein loan income.One additional calendar day in the third quarter

of 2025 contributed to the improvement.Compared to the third quarter of 2024, the increase was primarily due to a $3.0 million

increase in investment securities income,a $1.2 million decrease in interest expense,and a $0.5million increase in overnight funds

income, partially offset by a $1.4 million decrease inloan income.New investment purchases at higher yields drove the increase in

investment securities income for both prior period comparisons.Further, the decrease in deposit interest expensefrom both prior

periodsreflected the gradual decrease in our deposit rates.The decrease in loan income compared to both prior periods was due to

lower loan balances that was partially offset by favorablerate repricing.

For the first nine months of 2025, tax-equivalent net interest incometotaled $128.4 million compared to $118.0million for the same

period of 2024 with the increase primarily attributable to a $7.3million increase in investment securities income, a $2.3 million

increase in overnight funds income,and a $2.3 million decrease in deposit interest expense, partially offset bya $1.9 million

decrease in loan income.New investment purchases at higher yields drove the increase in investment securities income.Higher

average deposit balances contributed to the increase in overnight funds income.The decrease in deposit interest expense reflected

the aforementioned decrease in our deposit rates.The decrease in loan income was due to lower loan balances that was partially

offset by favorable rate repricing.

Our net interest margin for the third quarter of 2025 was 4.34%, anincrease of four basis pointsover the second quarter of 2025 and

an increase of 22 basis points over the third quarter of 2024.For the month of September 2025,our net interest margin was 4.41%.

For the first nine months of 2025, our net interest marginof 4.28% reflected a 23 basis point increase over the same period of 2024.

The improvement in the net interest margin comparedto all prior periods reflected a higher yield in the investment portfolio driven

by new purchases at higher yields and lower deposit cost.For the third quarter of 2025, our cost of funds was 78 basis points, a

decrease of four basis points from the second quarter of 2025 anda 15-basis point decrease from the third quarter of 2024.Our cost

of deposits (including noninterest bearing accounts) was 80 basis points,81 basis points, and 92 basis points, respectively,for the

same periods.

Provision for Credit Losses

We recordeda provision expense for credit losses of $1.9 million for the third quarter of 2025compared to $0.6 million for the

second quarter of 2025 and $1.2 million for the third quarter of 2024.For the first nine months of 2025, we recorded a provision

expense for credit losses of $3.3 million which was comparable to the sameperiod of 2024.Activity within the components of the

provision (loans held for investment ("HFI") and unfunded loan commitments)for each reported period is provided in the table on

page 14.We discuss the various factorsthat impacted our provision expense for Loans HFI in further detailbelow under the

heading

Allowance for Credit Losses

Noninterest Income and NoninterestExpense

Noninterest income for the third quarter of 2025 totaled $22.3 million comparedto $20.0 million for the second quarter of 2025 and

$19.5 million for the third quarter of 2024.The $2.3 million, or 11.6%, increase over the secondquarter of 2025 was primarily due

to a $1.2 million increase in other income, a $0.6 million increase in mortgagebanking revenues,and a $0.6million increase in

deposit fees.The increase in other income was primarily due to a $0.7 million gain fromthe sale of our insurance subsidiary

(Capital City Strategic Wealth)in the third quarter of 2025, and to a lesser extent higher miscellaneous income.The increase in

mortgage revenues was driven by an increase in the gain on sale marginfor loan sales.Fee adjustments made late in the second

quarter of 2025 contributed to the increase in deposit fees and miscellaneousincome.

Compared to the third quarter of 2024, the $2.8 million, or 14.4%, increasewas primarily due to a $1.1 million increase in other

income, a $0.8 million increase in mortgage banking revenues, a $0.4million increase in wealth management fees, and a $0.4

million increase in deposit fees.The increase in other income reflected the aforementioned gain from the sale ofour insurance

subsidiary and higher miscellaneous income.Higher production volume and gain on sale margin drove the improvement in

mortgage banking revenues.The increase in wealth management fees was primarily due to higher retailbrokerage fees.The

aforementioned fee adjustments drove the improvement in deposit fees.

For the first nine months of 2025, noninterest income totaled $62.3million compared to $57.2 million for the same period of 2024,

primarily attributable to a $2.2 million increase in wealth managementfees, a $1.6 million increase in mortgage banking revenues,

and a $1.1 million increase in other income.The increase in wealth management fees reflected increases in trust fees of $1.1

million and retail brokerage fees of $1.0 million attributable to a combinationof new business and higher account valuations.A fee

increase implemented in early 2025 also contributed to the increase in trustfees.Higher production volume and gain on sale margin

drove the improvement in mortgage banking revenues.The increase in other income reflected the aforementioned gain from the

sale of our insurance subsidiary and higher miscellaneous income.

Noninterest expense for the third quarter of 2025 totaled $42.9 millioncompared to $42.5 million for the second quarter of 2025

and $42.9 million for the third quarter of 2024.The $0.4 million, or 0.9%, increase over the second quarter of 2025reflected a $0.8

million increase in other expense that was partially offset by a $0.4million decrease in compensation expense.The increase in

other expense was driven by higher miscellaneous expenses of $0.7million and professional fees of $0.1 million.The decrease in

compensation was primarily due to lower performance-based compensation(cash and stock incentives).Compared to the third

quarter of 2024, a $0.3 million increase in compensation expense was offsetby a $0.2 million decrease in other expense and a $0.1

million decline in occupancy expense.

For the first nine months of 2025, noninterest expense totaled $124.2million compared to $123.5 million for the same period of

2024with the $0.6 million, or 0.5%, increase primarily due to a $4.2 million increase in compensationexpense that was partially

offset by a $3.4million decrease in other expense and a $0.2 million decrease in occupancy expense.The increase in compensation

was due to a $2.6 million increase in salary expense and a $1.6 millionincrease in associate benefit expense.The increase in salary

expense was primarily due to increases in incentive plan expense of $1.3million, base salaries of $0.6million (merit based), and

commissions of $0.7 million (retail brokerage and mortgage).The increase in associate benefit expense was attributable to a higher

cost for associate insurance.The decrease in other expense was primarily due to a $4.5 million decrease inother real estate expense

due to higher gains from the sale of banking facilities, and a $1.4million decrease in miscellaneous expense (non-service

component of pension expense), partially offset byincreases in processing expense of $1.4million (outsource of core processing

system), charitable contribution expense of $0.8 million, and professionalfees of $0.3 million.

Income Taxes

We realized incometax expense of $5.1million (effective rate of 24.4%) for the third quarter of 2025 comparedto $5.0 million

(effective rate of 24.9%) for the second quarter of 2025and $3.0 million (effective rate of 19.1%) for the third quarter of 2024.For

the first nine months of 2025, we realized income tax expense of$15.3 million (effective rate of 24.2%) compared to $9.7 million

(effective rate of 20.1%) for the same period of 2024.A lower level of tax benefit accrued from a solar tax credit equity fund drove

the increase in our effective tax rate compared to the prior year periods.Absent discrete items or new tax credit investments, we

expect our annual effective tax rate to approximate 24%for 2025.

Discussion of Financial Condition

Earning Assets

Average earningassets totaled $3.982 billion for the third quarter of 2025, a decrease of $50.5 million, or1.3%, fromthe second

quarter of 2025, and an increase of $59.6 million, or 1.5%, over thefourth quarter of 2024.Compared to the second quarter of

2025, the change in the earning asset mix reflected a $46.4 million decrease in loans HFIand a $14.1 million decrease in investment

securities, partially offset by a $7.4 million increase in overnightfunds sold and a $2.6 million increase in loans held for sale

("HFS").Compared to the fourth quarter of 2024, the change in earning asset mix reflecteda $78.7 million increase in investment

securities and a $57.9 million increase in overnight funds sold,partially offset by a $71.2 million decrease in loans HFI and a $5.8

million decrease in loans HFS.

Average loansHFI decreased by $46.4 million, or 1.8%, from the second quarter of 2025 anddecreased by $71.2 million, or 2.7%,

from the fourth quarter of 2024.Compared to the second quarter of 2025, the decline reflected decreasesin construction loans of

$22.4 million, consumer loans (primarily indirect auto) of $10.4million, commercial real estate loans of $8.7 million, residential

real estate loans of $2.9 million, and commercial loans of $2.7 million,partially offset by a $2.0 million increase in home equity

loans.Compared to the fourth quarter of 2024, the decline was primarily attributableto decreases in construction loans of $55.6

million, consumer loans (primarily auto indirect loans) of $14.4 million,commercial loans of $11.9 million and commercial real

estate loans of $6.8 million, partially offset by increases in homeequity loans of $12.8 million and residential real estate loans of

$7.0 million.

Loans HFI at September 30, 2025, decreased by $49.5 million,or 1.9%, from June 30, 2025, and decreased by $69.5 million, or

2.6%, from December 31, 2024.Compared to June 30, 2025, the decline was primarily due to decreases in construction loansof

$17.4 million, commercial real estate loans of $17.2 million, consumerloans (primarily indirect auto) of $11.6 million,and

residential real estate loans of $9.0 million, partially offset by a$5.9 million increase in home equity loans.Compared to December

31, 2024, the decrease was primarily attributable to decreases in constructionloans of $63.2 million, consumer loans (primarily

indirect auto) of $13.6 million, and commercial loans of $10.2 million, partiallyoffset by increases in home equity loans of $14.0

million, residential real estate loans of $8.8 million, and commercial real estateloans of $6.2 million.

Allowance for Credit Losses

At September 30, 2025, the allowance for credit losses for loans HFI totaled$30.2 million compared to $29.9 million at June 30,

2025 and $29.3 million at December 31, 2024.Activity within the allowance is provided on Page 14.The slight increase in the

allowance over June 30, 2025 and December 31, 2024 was primarilyattributable to qualitative factor adjustments that were partially

offset by lower loan balances.Net loan charge-offs were 18 basis points of averageloans for the third quarter of 2025 compared to

9 basis points for the second quarter of 2025.Net loan charge-offs for the nine-months ended September 30, 2025were 12 basis

points compared to 20 basis points for the same period of 2024.At September 30, 2025, the allowance represented 1.17% of loans

HFI compared to 1.13% at June 30, 2025, and 1.10% at December 31,2024.

Credit Quality

Nonperforming assets (nonaccrual loans and other real estate) totaled$10.0 million at September 30, 2025, compared to $6.6

million at June 30, 2025, and $6.7 million at December 31, 2024.At September 30, 2025, nonperforming assets as a percentage of

total assets was 0.23%, compared to 0.15% at June 30, 2025and 0.15% at December 31, 2024.Nonaccrual loans totaled $8.2

million at September 30, 2025, a $1.7 million increase overJune 30, 2025 and a $1.9 million increase over December 31, 2024 with

the increase over both periods primarily attributable to two home equityloans totaling $1.8 million.Classified loans totaled $26.5

million at September 30, 2025, a $2.1 million decrease from June 30,2025, and a $6.6 million increase over December 31, 2024.

Deposits

Average totaldeposits were $3.612 billion for the third quarter of 2025, a decrease of $68.4 million,or 1.86%, from the second

quarter of 2025 and an increase of $11.9 million,or 0.33%, over the fourth quarter of 2024.Compared to the second quarter of

2025, the decrease was attributable to lower public funds balances (primarilyNOW accounts) due to the seasonal reduction in those

balances, partially offset by higher core deposit balances(primarily noninterest bearing checking,money market accounts, and

certificates of deposit).The increase over the fourth quarter of 2024 reflected strong growth in core deposit balances,partially

offset by the seasonal decline in public fund balances.

At September 30, 2025, total deposits were $3.615 billion, a decrease of $89.9million, or 2.4%, from June 30 2025, and a decrease

of $57.1 million, or 1.6%, from December 31, 2024.The decrease compared to both prior periods was due to a decline in public

fund deposits, partially offset by growth in our coredeposits.Public funds totaled $497.9 million at September 30, 2025, $596.6

million at June 30, 2025, and $660.9 million at December 31, 2024.

Liquidity

We maintainedan average net overnight funds (i.e., deposits with banks plus FED funds sold less FED fundspurchased) sold

position of $356.2 million in the third quarter of 2025compared to $348.8 million in the second quarter of 2025 and $298.3 million

in the fourth quarter of 2024.Compared to the second quarter of 2025, the slight increase reflected loweraverage loan and

investment security balances partially offset by lower average depositbalances.The increase over the fourth quarter of 2024 was

primarily due to lower average loan balances.

At September 30, 2025, we had the ability to generate approximately $1.625billion (excludes overnight funds position of $398

million) in additional liquidity through various sources includingvarious federal funds purchased lines, Federal Home Loan Bank

borrowings, the Federal Reserve Discount Window,and brokered deposits.

We also view ourinvestment portfolio as a liquidity source, as we have the option to pledge securitiesin our portfolio as collateral

for borrowings or deposits and/or to sell selected securities in our portfolio.Our portfolio consists of debt issued by the U.S.

Treasury,U.S. governmental agencies, municipal governments, and corporateentities.At September 30, 2025, the weighted-

average maturity and duration of our portfolio were 2.66 years and 2.15years, respectively, and the available-for-sale portfolio had

a net unrealized after-tax loss of $11.2million.

Capital

Shareowners' equity was $540.6 million at September 30, 2025,compared to $526.4 million at June 30, 2025, and $495.3 million at

December 31, 2024.For the first nine months of 2025, shareowners' equity was positively impacted bynet income attributable to

shareowners of $47.9 million, a net $7.7 million decrease in the accumulatedother comprehensive loss, the issuance of common

stock of $2.9 million, and stock compensation accretion of $1.4 million.The net favorable change in accumulated other

comprehensive loss reflected a $8.8 million decrease in the investmentsecurities loss that was partially offset by a $1.1 million

decrease in the fair value of the interest rate swap related to subordinated debt.Shareowners' equity was reduced by common stock

dividendsof $12.6 million ($0.74 per share) and net adjustments totaling $2.0 million related to transactionsunder our stock

compensation plans.

At September 30, 2025, our total risk-based capital ratio was 20.59%compared to 19.60% at June 30, 2025, and 18.64% at

December 31, 2024.Our common equity tier 1 capital ratio was 17.73%, 16.81%, and 15.54%, respectively,on these dates.Our

leverage ratio was 11.64%, 11.14%, and 11.05%, respectively,on these dates.At September 30, 2025, all our regulatory capital

ratios exceeded the thresholds to be designated as "well-capitalized"under the Basel III capital standards.Further, our tangible

common equity ratio (non-GAAP financial measure) was 10.66% at September 30, 2025, compared to 10.09% and 9.51% at June

30, 2025, and December 31, 2024, respectively.

About Capital City Bank Group, Inc.

Capital City Bank Group, Inc. (NASDAQ: CCBG) is one of the largestpublicly traded financial holding companies headquartered

in Florida and has approximately $4.3billion in assets.We providea full range of banking services, including traditional deposit

and credit services, mortgage banking, asset management, trust, merchantservices, bankcards,and securities brokerage services.

Our bank subsidiary,Capital City Bank, was founded in 1895 and has 62 banking offices and108 ATMs/ITMs in Florida, Georgia

and Alabama.For more information about Capital City Bank Group, Inc., visit

https://www.ccbg.com/

FORWARD-LOOKING STATEMENTS

Forward-looking statements in this Press Release are based on current plansand expectations that are subject to uncertainties and

risks, which could cause our future results to differ materially.The words "may," "could," "should,""would," "believe,"

"anticipate," "estimate," "expect," "intend," "plan," "target," "vision,""goal," and similar expressions are intended to identify

forward-looking statements. The following factors, among others, could cause our actualresults to differ: the effects of and changes

in trade and monetary and fiscal policies and laws, including the interest rate policies ofthe Federal Reserve Board; inflation,

interest rate, market and monetary fluctuations; local, regional, national, and internationaleconomic conditions and the impact they

may have on us and our clients and our assessment of that impact; the costs andeffects of legal and regulatory developments, the

outcomes of legal proceedings or regulatory or other governmental inquiries,the results of regulatory examinations or reviews and

the ability to obtain required regulatory approvals; the effect ofchanges in laws and regulations (including laws and regulations

concerning taxes, banking, securities, and insurance) and their applicationwith which we and our subsidiaries must comply; the

effect of changes in accounting policies and practices, as maybe adopted by the regulatory agencies, as well as other accounting

standard setters; the accuracy of our financial statement estimates and assumptions;changes in the financial performance and/or

condition of our borrowers; changes in the mix of loan geographies, sectors andtypes or the level of non-performing assets and

charge-offs; changes in estimates of future creditloss reserve requirements based upon the periodic review thereof under relevant

regulatory and accounting requirements; changes in our liquidity position;the timely development and acceptance of new products

and services and perceived overall value of these products and services by users;changes in consumer spending, borrowing, and

saving habits; greater than expected costs or difficulties related to theintegration of new products and lines of business;

technological changes; the costs and effects of cyberincidents or other failures, interruptions, or security breaches of our systems or

those of our customers or third-party providers; dispositions (includingthe impact from the sale of our insurance subsidiary)

acquisitions and integration of acquired businesses; impairment of ourgoodwill or other intangible assets; changes in the reliability

of our vendors, internal control systems, or information systems; our abilityto increase market share and control expenses; our

ability to attract and retain qualified employees; changes in our organization,compensation, and benefit plans; the soundness of

other financial institutions; volatility and disruption in national and internationalfinancial and commodity markets; changes in the

competitive environment in our markets and among banking organizationsand other financial service providers; action or inaction

by the federal government, including as a result of any prolonged governmentshutdown or government intervention in the U.S.

financial system; the effects of natural disasters (includinghurricanes), widespread health emergencies (including pandemics),

military conflict, terrorism, civil unrest, climate change or other geopolitical events;our ability to declare and pay dividends;

structural changes in the markets for origination, sale and servicing of residentialmortgages; any inability to implement and maintain

effective internal control over financial reporting and/or disclosurecontrol; negative publicity and the impact on our reputation; and

the limited trading activity and concentration of ownership of our commonstock. Additional factors can be found in our Annual

Report on Form 10-K for the fiscal year ended December 31, 2024and our other filings with the SEC, which are available at the

SEC's internet site (

https://www.sec.gov

Capital City Bank Group Inc. published this content on October 21, 2025, and is solely responsible for the information contained herein. Distributed via EDGAR on October 21, 2025 at 18:39 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]