Capital City Bank Group Inc.
07/22/2025 | Press release | Distributed by Public on 07/22/2025 12:04
Business/Financial Results (Form 8-K)
Capital City Bank Group, Inc.
Reports Second Quarter 2025 Results
TALLAHASSEE, Fla.(July 22, 2025) - Capital City Bank Group, Inc. (NASDAQ: CCBG)today reported net income attributable to
common shareowners of $15.0 million, or $0.88 per diluted share, forthe second quarter of 2025compared to $16.9 million, or
$0.99 per diluted share, for the first quarter of 2025, and $14.2 million, or $0.83 per diluted share, for the second quarter of 2024.
QUARTER HIGHLIGHTS (2
nd
Quarter 2025versus 1
st
Quarter 2025)
Income Statement
●
Tax-equivalentnet interest income totaled $43.2 million comparedto $41.6million for the first quarter of 2025
-
Net interest margin increasedeight basis points to 4.30% (earning asset yield increasedby six basis pointsand cost of funds
decreased two basis points to 82 basis points)
●
Provision for credit losses decreasedby $0.1 million to $0.6 million for the second quarter - net loancharge-offs were
comparable to the first quarter of 2025 at nine basis points (annualized) ofaverage loans - allowance coverage ratio increased
to 1.13% at June 30, 2025
●
Noninterest income increasedby $0.1 million, or 0.5%, reflecting higherdeposit and bankcard fees as well as mortgage fees
partially offset by lower wealth management fees
●
Noninterest expense increasedby $3.8 million, or 9.9%, primarily due to a $3.9 million net gain fromthe sale of our operations
center building (reflected in other expense)in the first quarter of 2025
Balance Sheet
●
Loan balances decreased by $13.3 million, or0.5% (average), and decreased by $29.3 million, or1.1% (end of period)
●
Deposit balances increased by $15.2 million,or 0.4% (average), and decreased by $79.0 million, or2.1% (end of period) due to
the seasonal decrease in our public fund balances
-
Noninterest bearing deposits averaged36.5% of total deposits for the second quarter and 36.2% for the year
●
Tangiblebook value per diluted share (non-GAAP financial measure)increased by $0.78, or 3.2%
"Capital City delivered another strong quarter,highlighted by sustained revenue growth and continued credit strength,"said William
G. Smith, Jr, Capital City Bank Group Chairmanand CEO. "Our second quarter results reflect a 3.9% increase in net interest
income and an 8 basis point expansion in the net interest marginto 4.30%.Tangible book value pershare increased by 3.2%, and
we further strengthened our capital position, with our tangible capital ratioincreasing to 10.1%. Weremain focused on executing
strategies that drive consistent, profitable growth,supported by a fortress balance sheet that provides resilience and strategic
flexibility."
2
Discussion of Operating Results
Net Interest Income/Net InterestMargin
Tax-equivalent netinterest income for the second quarter of 2025 totaled $43.2 million comparedto $41.6 million for the first
quarter of 2025 and $39.3 million for the second quarter of 2024.Compared to the first quarter of 2025, the increase was driven by a
$0.9 million increase in investment securities income and a $0.4million increase in overnight funds income.One additional
calendar day in the second quarter of 2025 contributed to the increase.Compared to the second quarter of 2024, the increase was
primarily due to a $2.7 million increase in investment securities income anda $1.2million decrease in deposit interest expense.
New investment purchases at higher yields drove the increase in investmentsecurities income for both prior period comparisons.
Further, the decrease in deposit interest expensefrom the prior year period reflected the gradual decrease in our deposit rates, as
short term rates began declining in the second half of 2024.
For the first six months of 2025, tax-equivalent net interest income totaled$84.8 million compared to $77.8 million for the same
period of 2024 with the increase primarily attributable to a $4.2 millionincrease in investment securities income, a $1.9 million
increase in overnight funds income, and a $1.4 million decrease in depositinterest expense.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 depositrates.
Our net interest margin for the second quarter of 2025 was 4.30%,an increase of eight basis pointsover the first quarter of 2025and
an increase of 28 basis points over the second quarter of 2024.For the month of June 2025, our net interest margin was 4.36%.For
the first six months of 2025, our net interest margin increasedby 25 basis points to 4.26% compared to the same period of 2024.
The increase in net interest margin over all prior periods reflecteda higher yield in the investment portfolio driven by new purchases
at higher yields.Lower deposit cost also contributed to the improvement over both prior year periods.For the second quarter of
2025, our cost of funds was 82 basis points, a decrease of two basis points fromthe first quarter of 2025 and a 15-basis point
decrease from the second quarter of 2024.Our cost of deposits (including noninterest bearing accounts) was 81 basis points, 82
basis points, and 95 basis points, respectively,for the same periods.
Provision for Credit Losses
We recordeda provision expense for credit losses of $0.6million for the second quarter of 2025compared to $0.8 million for the
first quarter of 2025 and $1.2 million for the second quarter of 2024.For the first six months of 2025, we recorded a provision
expense for credit losses of $1.4 million compared to $2.1 million forthe first six months of 2024.Activity within the components
of the provision (loans held for investment ("HFI") and unfundedloan commitments) for each reported period is provided in the
table on page 14.We discuss the variousfactors that impacted our provision expense for Loans HFI in further detail belowunder
the heading
Allowance for Credit Losses
.
3
Noninterest Income and NoninterestExpense
Noninterest income for the second quarter of 2025 totaled $20.0 millioncompared to $19.9 million for the first quarter of 2025and
$19.6 million for the second quarter of 2024.The $0.1 million, or 0.5%, increase over the first quarter of 2025 was primarilydue to
a $0.4million increase in mortgage banking revenues and a $0.3million increase in deposit fees, partially offset by a $0.6 million
decrease in wealth management fees.The increase in mortgage revenues was driven by an increase in productionvolume.Fee
adjustments made late in the second quarter of 2025 led to the increasein deposit fees.The decrease in wealth management fees
was attributable to a decrease in insurance commission revenue.Compared to the second quarter of 2024, the $0.4 million, or 2.1%,
increase was primarily due to a $0.8 million increase in wealth managementfees, partially offset by a $0.2 million decrease in
mortgage banking revenues and a $0.1 million decrease in otherincome.The increase in wealth management fees reflected a $0.5
million increase in trust fees and a $0.4 million increase in retail brokeragefees, partially offset by a $0.1 million decrease in
insurance commission revenue.A combination of new business, higher account valuations, and fee increasesimplemented in early
2025 drove the improvement in trust and retail brokerage fees.
For the first six months of 2025, noninterest income totaled $39.9 million comparedto $37.7 million for the same period of 2024,
primarily attributable to a $1.8 million increase in wealth managementfees and a $0.7 million increase in mortgage banking
revenues that was partially offset by a $0.2 million decrease in depositfees.The increase in wealth management fees reflected
increases in retail brokerage fees of $1.0 million, trust fees of $0.7 million,and insurance commission revenue of $0.1 million.The
increases in retail brokerage and trust fees were attributable to a combinationof new business, higher account valuations, and fee
increases implemented in early 2025.The increase in mortgage banking revenues was due to a higher gain on sale margin.
Noninterest expense for the second quarter of 2025 totaled $42.5million compared to $38.7 million for the first quarter of 2025and
$40.4million for the second quarter of 2024.The $3.8 million, or 9.9%, increase over the first quarter of 2025, reflected a$3.3
million increase in other expense, a $0.3million increase in occupancy expense, and a $0.2 million increase in compensation
expense.The increase in other expense was driven by a $4.5 million increase in other real estate expensewhich reflected lower
gains from the sale of banking facilities, primarily the sale of our operations centerbuilding in the first quarter of 2025, partially
offset by a $0.5million decrease in charitable contribution expense and a $0.6 million decrease in miscellaneousexpense.The
slight increase in occupancy expense was due to higher software maintenanceagreement expense and maintenance/repairs for
buildings and furniture/fixtures.The slight increase in compensation expense reflected a $0.1 millionincrease in salary expense and
a $0.1 million increase in associate benefit expense.Compared to the second quarter of 2024, the $2.1 million, or 5.2%, increase
was primarily due to a $2.1 million increase in compensation expense whichreflected a $1.3 million increase in salary expense and
a $0.8 million increase in associate benefit expense.The increase in salary expense was primarily due to increases in incentive plan
expense of $0.9 million and base salaries of $0.4million (merit based).The increase in associate benefit expense was attributable to
a $0.6 million increase in associate insurance expense and a $0.2million increase in stock compensation expense.
For the first six months of 2025, noninterest expense totaled $81.2 millioncompared to $80.6 million for the same period of 2024
with the $0.6 million, or 0.8%, increase due to a $3.9 million increase incompensation expense that was partially offset by a $3.2
million decrease in other expense and a $0.1 million decrease in occupancyexpense.The increase in compensation was due to a
$2.5 million increase in salary expense and a $1.4 million increase in associate benefitexpense.The increase in salary expense was
primarily due to increases in incentive plan expense of $1.2 million, basesalaries of $0.9 million (merit based), and commissions of
$0.7 million (retail brokerage and mortgage).The increase in associate benefit expense was attributable to a highercost for
associate insurance.The decrease in other expense was primarily due to a $4.5 million decrease in other realestate expense due to
lower gains from the sale of banking facilities, and a $1.0 million decrease inmiscellaneous expense (non-service component of
pension expense), partially offset by increases in processingexpense of $1.1 million (outsource of core processing system),
charitable contribution expense of $0.7 million, and professional feesof $0.5 million.
Income Taxes
We realized incometax expense of $5.0million (effective rate of 24.9%) for the second quarter of 2025 comparedto $5.1 million
(effective rate of 23.3%) for the first quarter of 2025 and$3.2 million (effective rate of 18.5%) for the second quarter of 2024.For
the first six months of 2025, we realized income tax expense of $10.1 million(effective rate of 24.1%) compared to $6.7 million
(effective rate of 20.6%) 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 for all prior period comparisons.Absent discrete items or new tax credit investments, we
expect our annual effective tax rate to approximate 24%for 2025.
4
Discussion of Financial Condition
Earning Assets
Average earningassets totaled $4.032 billion for the second quarter of 2025, an increase of $38.1 million,or 1.0%, over the first
quarter of 2025, and an increase of $110.1million, or 2.8%, over the fourth quarter of 2024.The increase over both prior periods
was driven by higher average deposit balances (see below -
Deposits
).Compared to the first quarter of 2025, the change in the
earning asset mix reflected a $27.8 million increase in overnight fundsand a $25.7 million increase in investment securities that was
partially offset by a $13.3 million decrease in loans HFI anda $2.1million decrease in loans held for sale ("HFS").Compared to
the fourth quarter of 2024, the change in the earning asset mix reflected a $92.8million increase in investment securities and a
$50.5 million increase in overnight funds sold partially offsetby a $24.8 million decrease in loans HFI and a $8.4 million decrease
in loans HFS.
Average loansHFI decreased by $13.3 million, or 0.5%, from the first quarter of 2025 and decreasedby $24.8 million, or 0.9%,
from the fourth quarter of 2024.Compared to the first quarter of 2025, the decrease was due to decreases inconstruction loans of
$24.6 million, consumer loans (primarily indirect auto) of $1.9 million,and commercial loans of $3.4 million, partially offset by
increases to residential real estate loans of $10.2 million, commercial real estate loansof $2.1 million, and home equity loans of
$4.1 million.Compared to the fourth quarter of 2024, the decline was primarily attributable to decreasesin construction loans of
$33.2 million, commercial loans of $9.2 million, and consumer loans(primarily indirect auto) of $4.0 million, partially offset by
increases in home equity loans of $10.8 million, residential real estate loans of$9.9 million, and commercial real estate loans of
$1.9 million.
Loans HFI at June 30, 2025 decreased by $29.3 million, or 1.1%, fromMarch 31, 2025 and decreased by $20.1 million, or 0.8%,
from December 31, 2024.Compared to the first quarter of 2025, the decline was primarily due to decreasesin construction loans of
$18.2 million, consumer loans (primarily indirect auto) of $8.7 million,commercial loans of $4.4 million, and commercial real
estate loans of $4.4 million, partially offset by increases in residential realestate loans of $5.8 million and home equity loans of $2.2
million.Compared to December 31, 2024, the decrease was primarily attributable to decreases inconstruction loans of $45.9
million, commercial loans of $9.2 million, and consumer loans (primarilyindirect auto) of $2.0 million, partially offset by increases
in commercial real estate loans of $23.4 million, residential real estate loans of$17.9 million, and home equity loans of $8.1
million.
Allowance for Credit Losses
At June 30, 2025, the allowance for credit losses for loans HFI totaled$29.9 million compared to $29.7 million at March 31, 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 March 31, 2025 and December 31, 2024 was primarilyattributable to qualitative factor adjustments that were
partially offset by lower loan balances.Net loan charge-offs for both the second quarter of 2025and the first quarter of 2025 were
comparable at nine basis points of average loans.At June 30, 2025, the allowance represented 1.13% of loans HFI comparedto
1.12% at March 31, 2025, and 1.10% at December 31, 2024.
Credit Quality
Nonperforming assets (nonaccrual loans and other real estate) totaled$6.6 million at June 30, 2025 compared to $4.4 million at
March 31, 2025 and $6.7 million at December 31, 2024.At June 30, 2025, nonperforming assets as a percentage of total assets was
0.15%, compared to 0.10% at March 31, 2025 and 0.15% at December 31,2024.Nonaccrual loans totaled $6.4 million at June 30,
2025, a $2.2 million increase over March 31, 2025 and a $0.1 million increaseover December 31, 2024 with the increase over the
first quarter of 2025 primarily attributable to two home equity loanstotaling $1.8 million.Classified loans totaled $28.6 million at
June 30, 2025, a $9.4 million increase over March 31, 2025 and a $8.7 million increaseover December 31, 2024.The increase over
the prior periods was primarily due to the downgrade of four residential realestate loans totaling $4.2 million and two commercial
real estate loans totaling $4.3 million.
Deposits
Average totaldeposits were $3.681 billion for the second quarter of 2025, an increase of $15.2million, or 0.4%, over the first
quarter of 2025 and an increase of $80.3 million, or 2.2%, over the fourth quarterof 2024.Compared to the first quarter of 2025,
the increase was attributable to higher core deposit balances (primarily noninterestbearing checking and money market), partially
offset by a decline in public funds balances (primarily NOW accounts)due to the seasonal reduction in those balances.The
increase over the fourth quarter of 2024 reflected strong growth in core depositbalances and a seasonal increase in public funds
balances (primarily NOW) which are received/deposited by those clientsstarting in December and peak on average in the first
quarter.
5
At June 30, 2025, total deposits were $3.705 billion, a decrease of $79.0million, or 2.1%, from March 31, 2025, and an increase of
$32.9 million, or 0.9%, over December 31, 2024.The decrease from March 31, 2025 was primarily due to a seasonal decline in
public funds balances,(primarily money market and noninterest bearing).The increase over December 31, 2024 reflected higher
core deposit balances, primarily noninterest bearing accounts. Publicfunds totaled $596.6 million at June 30, 2025, $648.0 million
at March 31, 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 $348.8 million in the second quarter of 2025compared to $320.9 million in the first quarter of 2025 and $298.3 million
in the fourth quarter of 2024.Compared to both prior periods, the increase reflected higher average depositsand lower average
loans.
At June 30, 2025, we had the ability to generate approximately $1.603billion (excludes overnight funds position of $395 million) in
additional liquidity through various sources including various federal fundspurchased 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 June 30, 2025, the weighted-average
maturity and duration of our portfolio were 2.66 years and 2.14 years,respectively, and the available-for-sale portfolio had a net
unrealized after-tax loss of $13.4 million.
Capital
Shareowners' equity was $526.4 million at June 30, 2025 comparedto $512.6 million at March 31, 2025 and $495.3 million at
December 31, 2024.For the first six months of 2025, shareowners' equity was positively impacted by netincome attributable to
shareowners of $31.9 million, a net $5.5 million decrease in the accumulatedother comprehensive loss, the issuance of common
stock of $2.8 million, and stock compensation accretion of $0.9 million.The net favorable change in accumulated other
comprehensive loss reflected a $6.4 million decrease in the investment securitiesloss that was partially offset by a $0.9 million
decrease in the fair value of the interest rate swap related to subordinated debt.Shareowners' equity was reduced by common stock
dividendsof $8.2 million ($0.48 per share) and net adjustments totaling $1.8 million related totransactions under our stock
compensation plans.
At June 30, 2025, our total risk-based capital ratio was 19.60% compared to19.20% at March 31, 2025 and 18.64% at December
31, 2024.Our common equity tier 1 capital ratio was 16.81%, 16.08%, and 15.54%, respectively,on these dates.Our leverage ratio
was 11.14%, 11.17%,and 11.05%, respectively,on these dates.At June 30, 2025, all our regulatory capital ratios exceeded the
thresholds to be designated as "well-capitalized" under the Basel IIIcapital standards.Further, our tangible common equity ratio
(non-GAAP financial measure) was 10.09%at June 30, 2025 compared to 9.61% and 9.51% at March 31, 2025and December 31,
2024, respectively.If the unrealized loss for held-to-maturity securities of $9.9 million (after-tax)was recognized in accumulated
other comprehensive loss, our adjusted tangible capital ratio would be9.86%.
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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 $4.4billion in assets.We providea full range of banking services, including traditional deposit
and credit services, mortgage banking, asset management, trust, merchantservices, bankcards,securities brokerage services, and
financial advisory services, including the sale of life insurance, risk managementand asset protection services.Our bank
subsidiary, Capital City Bank,was founded in 1895 and now has 62 banking offices and 107 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 cyber incidents orother failures, interruptions, or security breaches of our systems or
those of our customers or third-party providers; acquisitions and integrationof acquired businesses; impairment of our goodwill or
other intangible assets; changes in the reliability of our vendors, internalcontrol systems, or information systems; our ability to
increase market share and control expenses; our ability to attract and retain qualifiedemployees; changes in our organization,
compensation, and benefit plans; the soundness of other financial institutions;volatility and disruption in national and international
financial and commodity markets; changes in the competitive environmentin our markets and among banking organizations and
other financial service providers; government intervention in the U.S. financialsystem; the effects of natural disasters (including
hurricanes), widespread health emergencies (including pandemics),military conflict, terrorism, civil unrest, climate change or other
geopolitical events; our ability to declare and pay dividends; structural changesin the markets for origination, sale and servicing of
residential mortgages; any inability to implement and maintain effectiveinternal control over financial reporting and/or disclosure
control; negative publicity and the impact on our reputation; and the limitedtrading activity and concentration of ownership of our
common stock. Additional factors can be found in our Annual Report onForm 10-K for the fiscal year ended December 31, 2024
and our other filings with the SEC, which are available at the SEC'sinternet site (
https://www.sec.gov
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