Core Insights - The primary focus for income investors is generating consistent cash flow from liquid investments, which can come from dividends, bond interest, and other investment interests [1][2] Company Overview - Capital City Bank (CCBG), headquartered in Tallahassee, has experienced a price change of 15.99% this year and currently pays a dividend of $0.26 per share, resulting in a dividend yield of 2.45% [3] - The company's dividend yield surpasses the Banks - Southeast industry's yield of 2.29% and the S&P 500's yield of 1.54% [3] Dividend Growth - CCBG's current annualized dividend of $1.04 reflects an 18.2% increase from the previous year [4] - Over the past five years, the company has raised its dividend five times, averaging an annual increase of 12.29% [4] - The future growth of dividends will depend on earnings growth and the payout ratio, which is currently at 28% [4] Earnings Expectations - The Zacks Consensus Estimate for CCBG's earnings in 2025 is projected at $3.43 per share, indicating a year-over-year growth rate of 9.94% [5] Investment Considerations - CCBG is viewed as an attractive dividend investment and a compelling opportunity, holding a Zacks Rank of 2 (Buy) [6]

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Core Viewpoint - Capital City Bank Group, Inc. (NASDAQ: CCBG) has experienced a significant stock price increase of 15% since a hold rating was adopted in June 2025 [1]. Group 1 - The stock price surge is primarily attributed to market factors and investor sentiment [1].

Company Overview - Capital City Bank (CCBG) is headquartered in Tallahassee and has experienced a price change of 17.08% this year [3] - The company currently pays a dividend of $0.24 per share, resulting in a dividend yield of 2.42%, which is higher than the Banks - Southeast industry's yield of 2.23% and the S&P 500's yield of 1.51% [3] Dividend Performance - The current annualized dividend of CCBG is $1.04, reflecting an 18.2% increase from the previous year [4] - Over the past 5 years, CCBG has increased its dividend 5 times, achieving an average annual increase of 12.29% [4] - The company's current payout ratio is 28%, indicating that it paid out 28% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - The Zacks Consensus Estimate for CCBG's earnings per share for 2025 is $3.43, representing a year-over-year growth rate of 9.94% [5] - The company is positioned as an attractive dividend play and a compelling investment opportunity, supported by a Zacks Rank of 2 (Buy) [6]

Core Insights - Capital City Bank has been recognized as one of the "Best Companies to Work For in Florida," ranking 11th in the "Large Companies" category for 2025, a significant improvement from 19th in 2024 and 24th in 2023, marking the 14th consecutive year of inclusion in this list [1][2] Company Performance - The CEO of Capital City Bank Group, Bill Smith, attributes the recognition to the dedication and passion of the associates, emphasizing the importance of creating a workplace where employees feel valued and inspired [2] - In addition to the Florida Trend recognition, Capital City Bank was ranked 13th out of 100 on Forbes' America's Best Banks list and included in Forbes' World's Best Banks list, showcasing its strong performance and workplace culture [2] Evaluation Process - The "Best Companies To Work For In Florida" program evaluates companies based on workplace policies, practices, and employee satisfaction through surveys, with a requirement of at least 15 employees and one year of operation in Florida [3][4]

PART I – Financial Information [Item 1. Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) CCBG's unaudited consolidated financial statements and detailed notes for the period ended June 30, 2025 [Consolidated Statements of Financial Condition](index=5&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) Total assets and shareowners' equity increased from December 2024 to June 2025, driven by cash, investments, and deposits Consolidated Statements of Financial Condition (Dollars in Thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :---------------- | | Total Cash and Cash Equivalents | $473,402 | $391,854 | | Total Investment Securities | $999,298 | $972,899 | | Loans Held for Investment, Net | $2,601,628 | $2,622,299 | | Total Assets | $4,391,753 | $4,324,932 | | Total Deposits | $3,704,853 | $3,671,977 | | Total Liabilities | $3,865,330 | $3,829,615 | | Total Shareowners' Equity | $526,423 | $495,317 | [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) Net income to common shareowners increased for Q2 and H1 2025, driven by higher net interest and noninterest income Consolidated Statements of Income (Dollars in Thousands, Except Per Share Data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Interest Income | $51,459 | $48,766 | $101,241 | $95,586 | | Total Interest Expense | $8,275 | $9,497 | $16,510 | $17,962 | | NET INTEREST INCOME | $43,184 | $39,269 | $84,731 | $77,624 | | Provision for Credit Losses | $620 | $1,204 | $1,388 | $2,124 | | Total Noninterest Income | $20,014 | $19,606 | $39,921 | $37,703 | | Total Noninterest Expense | $42,538 | $40,441 | $81,239 | $80,612 | | NET INCOME ATTRIBUTABLE TO COMMON SHAREOWNERS | $15,044 | $14,150 | $31,902 | $26,707 | | BASIC NET INCOME PER SHARE | $0.88 | $0.84 | $1.87 | $1.58 | | DILUTED NET INCOME PER SHARE | $0.88 | $0.83 | $1.87 | $1.57 | [Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Total comprehensive income significantly increased for both periods ended June 30, 2025, due to AFS unrealized loss changes Consolidated Statements of Comprehensive Income (Loss) (Dollars in Thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | NET INCOME ATTRIBUTABLE TO COMMON SHAREOWNERS | $15,044 | $14,150 | $31,902 | $26,707 | | Change in net unrealized loss on securities available for sale | $2,737 | $769 | $7,744 | $(406) | | Other comprehensive income, net of tax | $1,947 | $1,404 | $5,546 | $1,470 | | TOTAL COMPREHENSIVE INCOME | $16,991 | $15,554 | $37,448 | $28,177 | [Consolidated Statements of Changes in Shareowners' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareowners'%20Equity) Shareowners' equity increased from January 1 to June 30, 2025, driven by net income and positive AOCI, offset by dividends Consolidated Statements of Changes in Shareowners' Equity (Dollars in Thousands) | Metric | Balance, January 1, 2025 | Balance, June 30, 2025 | | :----------------------------------- | :----------------------- | :--------------------- | | Common Stock | $170 | $171 | | Additional Paid-In Capital | $37,684 | $39,527 | | Retained Earnings | $463,949 | $487,665 | | Accumulated Other Comprehensive (Loss) Income, Net of Taxes | $(6,486) | $(940) | | Total Shareowners' Equity | $495,317 | $526,423 | | Net Income Attributable to Common Shareowners | $31,902 | | | Other Comprehensive Income, net of tax | $5,546 | | | Cash Dividends ($0.4800 per share) | $(8,186) | | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash and cash equivalents significantly increased for H1 2025, driven by operating and financing activities Consolidated Statements of Cash Flows (Dollars in Thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net Cash Provided By Operating Activities | $54,491 | $39,584 | | Net Cash Provided by Investing Activities | $5,816 | $107,367 | | Net Cash Provided By (Used In) Financing Activities | $21,241 | $(111,039) | | NET INCREASE IN CASH AND CASH EQUIVALENTS | $81,548 | $35,912 | | Cash and Cash Equivalents at End of Period | $473,402 | $347,979 | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes provide crucial context on accounting policies, financial instruments, and operations [NOTE 1 – BUSINESS AND BASIS OF PRESENTATION](index=10&type=section&id=NOTE%201%20%E2%80%93%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) CCBG operates as a financial holding company providing banking services across three states, with interim financials prepared under GAAP - CCBG provides a full range of banking and banking-related services through its wholly owned subsidiary, Capital City Bank, with offices in Florida, Georgia, and Alabama[27](index=27&type=chunk) - The company is currently evaluating the impact of ASU 2023-06 (Disclosure Improvements), ASU 2023-09 (Income Tax Disclosures effective Jan 1, 2025), and ASU 2023-03 (Expense Disaggregation Disclosures effective Jan 1, 2026) on its future consolidated statements[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) [NOTE 2 – INVESTMENT SECURITIES](index=11&type=section&id=NOTE%202%20%E2%80%93%20INVESTMENT%20SECURITIES) Investment portfolio shows increased AFS fair value and decreased HTM, with significant unrealized losses in government-backed securities Investment Portfolio Composition (Dollars in Thousands) | Category | June 30, 2025 (Fair Value) | December 31, 2024 (Fair Value) | | :--------------------------------- | :------------------------- | :----------------------------- | | Available for Sale (AFS) | $533,457 | $403,345 | | Held to Maturity (HTM) | $448,911 | $544,460 | | Total Investment Securities | $999,298 | $972,899 | Unrealized Losses on Investment Securities (Dollars in Thousands) | Category | June 30, 2025 (Total Unrealized Losses) | December 31, 2024 (Total Unrealized Losses) | | :--------------------------------- | :-------------------------------------- | :------------------------------------------ | | Available for Sale (AFS) | $19,094 | $25,685 | | Held to Maturity (HTM) | $13,924 | $22,711 | | Total Unrealized Losses | $33,018 | $48,396 | - At June 30, 2025, **788 positions** (combined AFS and HTM) had unrealized pre-tax losses totaling **$33.0 million**, with the majority being U.S. Treasury and government agency securities, for which the company believes the expectation of nonpayment is effectively zero[45](index=45&type=chunk) [NOTE 3 – LOANS HELD FOR INVESTMENT AND ALLOWANCE FOR CREDIT LOSSES](index=14&type=section&id=NOTE%203%20%E2%80%93%20LOANS%20HELD%20FOR%20INVESTMENT%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) Loan portfolio composition shifted, ACL increased due to qualitative factors, and nonaccrual/classified loans rose, especially in real estate Loan Portfolio Composition (Dollars in Thousands) | Loan Type | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :---------------- | | Commercial, Financial and Agricultural | $180,008 | $189,208 | | Real Estate – Construction | $174,115 | $219,994 | | Real Estate – Commercial Mortgage | $802,504 | $779,095 | | Real Estate – Residential | $1,047,920 | $1,042,504 | | Real Estate – Home Equity | $228,201 | $220,064 | | Consumer | $198,742 | $200,685 | | Loans Held For Investment, Net of Unearned Income | $2,631,490 | $2,651,550 | Allowance for Credit Losses (ACL) Activity (Dollars in Thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Beginning Balance | $29,251 | $29,941 | | Provision for Credit Losses | $1,801 | $2,011 | | Net (Charge-Offs) Recoveries | $(1,190) | $(2,733) | | Ending Balance | $29,862 | $29,219 | Nonaccrual Loans (Dollars in Thousands) | Loan Type | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :---------------- | | Commercial, Financial and Agricultural | $319 | $37 | | Real Estate – Commercial Mortgage | $1,404 | $566 | | Real Estate – Residential | $1,545 | $3,127 | | Real Estate – Home Equity | $2,591 | $1,782 | | Consumer | $590 | $790 | | Total Nonaccrual Loans | $6,449 | $6,302 | - The increase in the allowance for loans HFI over December 31, 2024, was primarily attributable to qualitative factor adjustments, partially offset by lower loan balances[54](index=54&type=chunk) [NOTE 4 – MORTGAGE BANKING ACTIVITIES](index=21&type=section&id=NOTE%204%20%E2%80%93%20MORTGAGE%20BANKING%20ACTIVITIES) Mortgage banking revenues increased for H1 2025 due to higher gain on sale margins, despite fewer loans held for sale, with debt covenants met Mortgage Banking Revenues (Dollars in Thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net realized gains on sales of mortgage loans | $3,605 | $3,159 | $6,485 | $4,835 | | Net origination fees | $807 | $807 | $1,359 | $1,372 | | Total mortgage banking revenues | $4,190 | $4,381 | $8,010 | $7,259 | Residential Mortgage Loans Held for Sale (Dollars in Thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :---------------- | | Unpaid Principal Balance | $18,391 | $28,117 | | Fair Value | $19,181 | $28,672 | - The company's warehouse line borrowings totaled **$12.7 million** at June 30, 2025, an increase from **$1.9 million** at December 31, 2024, and the company was in compliance with all significant debt covenants[100](index=100&type=chunk) [NOTE 5 – DERIVATIVES](index=23&type=section&id=NOTE%205%20%E2%80%93%20DERIVATIVES) The company uses **$30 million** notional interest rate swaps as cash flow hedges, with fair value decreasing and a net loss in AOCI for H1 2025 - Interest rate swaps with a notional amount of **$30 million** were designated as a cash flow hedge for subordinated debt, with the company paying a fixed rate of **2.50%** and receiving a variable rate based on three-month CME Term SOFR[102](index=102&type=chunk) Cash Flow Hedges (Interest Rate Swaps) (Dollars in Thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :---------------- | | Notional Amount | $30,000 | $30,000 | | Fair Value | $4,130 | $5,319 | Change in Net Gains (Losses) on Cash Flow Derivatives (Dollars in Thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Change in Gain (Loss) Recognized in AOCI | $(888) | $289 | | Amount of Gain (Loss) Reclassified from AOCI to Income | $596 | $751 | [NOTE 6 – LEASES](index=24&type=section&id=NOTE%206%20%E2%80%93%20LEASES) Operating lease ROU assets and liabilities increased from December 2024 to June 2025, with total lease expense rising and a **15.8-year** average term Operating Lease ROU Assets and Liabilities (Dollars in Thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :---------------- | | Operating lease ROU assets | $27,600 | $24,900 | | Operating lease liabilities | $28,200 | $25,500 | Total Lease Expense (Dollars in Thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Operating lease expense | $1,761 | $1,668 | | Short-term lease expense | $551 | $389 | | Total lease expense | $2,312 | $2,057 | - At June 30, 2025, the weighted average remaining lease term for operating leases was **15.8 years**, with a weighted average discount rate of **3.7%** and the present value of lease liabilities totaling **$28.187 million**[112](index=112&type=chunk)[113](index=113&type=chunk) [NOTE 7 - EMPLOYEE BENEFIT PLANS](index=25&type=section&id=NOTE%207%20-%20EMPLOYEE%20BENEFIT%20PLANS) The qualified pension plan reported a net periodic benefit cost of **$(283) thousand** for H1 2025, while SERP plans showed an increased cost Net Periodic Benefit Cost - Qualified Pension Plan (Dollars in Thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Service Cost | $1,720 | $1,857 | | Interest Cost | $3,353 | $3,048 | | Expected Return on Plan Assets | $(4,529) | $(4,058) | | Net Loss Amortization | $(827) | $82 | | Net Periodic Benefit Cost | $(283) | $929 | Net Periodic Benefit Cost - SERP and SERP II (Dollars in Thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Service Cost | $23 | $18 | | Interest Cost | $264 | $227 | | Prior Service Cost Amortization | $51 | $- | | Net Loss Amortization | $(58) | $(140) | | Net Periodic Benefit Cost | $280 | $105 | [NOTE 8 - COMMITMENTS AND CONTINGENCIES](index=26&type=section&id=NOTE%208%20-%20COMMITMENTS%20AND%20CONTINGENCIES) Off-balance sheet lending commitments increased slightly, while the ACL for these commitments decreased, alongside a venture capital fund commitment Off-Balance Sheet Obligations (Dollars in Thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :---------------- | | Commitments to Extend Credit | $672,254 | $663,414 | | Standby Letters of Credit | $7,402 | $7,287 | | Total | $679,656 | $670,701 | Allowance for Credit Losses for Off-Balance Sheet Commitments (Dollars in Thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Beginning Balance | $2,155 | $3,191 | | Provision for Credit Losses | $(417) | $(52) | | Ending Balance | $1,738 | $3,139 | - The company has an outstanding commitment of up to **$1.0 million** in a bank tech venture capital fund, with **$0.3 million** remaining to be funded at June 30, 2025[124](index=124&type=chunk) [NOTE 9 – FAIR VALUE MEASUREMENTS](index=27&type=section&id=NOTE%209%20%E2%80%93%20FAIR%20VALUE%20MEASUREMENTS) Fair value measurements are categorized into Level 1, 2, and 3, with most recurring assets in Level 2 and non-recurring assets primarily in Level 3 - Fair value hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1 quoted prices), Level 3 (unobservable inputs reflecting entity's own assumptions)[134](index=134&type=chunk) Assets Measured at Fair Value on a Recurring Basis (Dollars in Thousands) | Asset Type | Level 1 (June 30, 2025) | Level 2 (June 30, 2025) | Level 3 (June 30, 2025) | Total Fair Value (June 30, 2025) | | :--------------------------------- | :---------------------- | :---------------------- | :---------------------- | :------------------------------- | | U.S. Government Treasury (AFS) | $222,321 | $- | $- | $222,321 | | U.S. Government Agency (AFS) | $- | $163,068 | $- | $163,068 | | Loans Held for Sale | $- | $19,181 | $- | $19,181 | | Interest Rate Swap Derivative | $- | $4,130 | $- | $4,130 | | Residential Mortgage Loan Commitments ("IRLCs") | $- | $- | $652 | $652 | - Collateral-dependent loans, other real estate owned, and mortgage servicing rights are measured at fair value on a non-recurring basis, primarily using Level 3 inputs due to the judgment and estimation involved in their valuation[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) [NOTE 10 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)](index=31&type=section&id=NOTE%2010%20%E2%80%93%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME%20(LOSS)) Accumulated other comprehensive loss significantly improved from January 1 to June 30, 2025, driven by AFS securities and partially offset by interest rate swaps Accumulated Other Comprehensive Income (Loss) (Dollars in Thousands) | Component | Balance as of January 1, 2025 | Other comprehensive income (loss) during the period | Balance as of June 30, 2025 | | :--------------------------------- | :---------------------------- | :------------------------------------------------ | :-------------------------- | | Securities Available for Sale | $(20,179) | $6,434 | $(13,745) | | Interest Rate Swap | $3,971 | $(888) | $3,083 | | Retirement Plans | $9,722 | $- | $9,722 | | Accumulated Other Comprehensive (Loss) Income | $(6,486) | $5,546 | $(940) | [NOTE 11 - SEGMENT REPORTING](index=31&type=section&id=NOTE%2011%20-%20SEGMENT%20REPORTING) The company operates as a single commercial banking segment across three states, with CODM evaluating performance based on consolidated financial metrics - The company operates a single reportable business segment, commercial banking, within Florida, Georgia, and Alabama[152](index=152&type=chunk) - The Chief Operating Decision Maker (CODM) evaluates consolidated net income, revenue streams, significant expenses, and budget-to-actual results to assess performance and allocate resources[152](index=152&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses CCBG's financial condition, operating results, market risk, liquidity, and critical accounting policies for Q2 2025 [BUSINESS OVERVIEW](index=32&type=section&id=BUSINESS%20OVERVIEW) CCBG is a financial holding company providing banking and financial services across the Southeast, with profitability driven by net interest income - CCBG is a financial holding company headquartered in Tallahassee, Florida, operating through its wholly owned subsidiary, Capital City Bank, with **62 full-service offices** and **107 ATMs/ITMs** in Florida, Georgia, and Alabama[158](index=158&type=chunk) - The company offers a broad array of products and services including traditional deposit and credit services, mortgage banking, asset management, trust, merchant services, bankcards, securities brokerage, and financial advisory services[158](index=158&type=chunk) - Profitability is largely dependent on net interest income (interest and fees on earning assets minus interest paid on liabilities), provision for credit losses, operating expenses, and noninterest income[159](index=159&type=chunk) [NON-GAAP FINANCIAL MEASURES (UNAUDITED)](index=33&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES%20(UNAUDITED)) The company presents non-GAAP measures like tangible common equity ratio to provide clearer capital adequacy comparisons by excluding intangibles - The company uses non-GAAP financial measures, including tangible common equity ratio and tangible book value per diluted share, to remove the effect of goodwill and other intangibles from merger and acquisition activity[162](index=162&type=chunk) Non-GAAP Financial Measures (Dollars in Thousands, except per share data) | Metric | June 30, 2025 | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :------------- | :---------------- | | Shareowners' Equity (GAAP) | $526,423 | $512,575 | $495,317 | | Less: Goodwill and Other Intangibles (GAAP) | $92,693 | $92,733 | $92,773 | | Tangible Shareowners' Equity (non-GAAP) | $433,730 | $419,842 | $402,544 | | Total Assets (GAAP) | $4,391,753 | $4,461,233 | $4,324,932 | | Less: Goodwill and Other Intangibles (GAAP) | $92,693 | $92,733 | $92,773 | | Tangible Assets (non-GAAP) | $4,299,060 | $4,368,500 | $4,232,159 | | Tangible Common Equity Ratio (non-GAAP) | 10.09% | 9.61% | 9.51% | | Tangible Book Value per Diluted Share (non-GAAP) | $25.37 | $24.59 | $23.65 | [SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)](index=34&type=section&id=SELECTED%20QUARTERLY%20FINANCIAL%20DATA%20(UNAUDITED)) Quarterly data shows increased net income and net interest income for Q2 2025, with improved net interest margin and stable asset quality Summary of Operations (Dollars in Thousands, Except Per Share Data) | Metric | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | | :--------------------------------- | :------ | :------ | :------ | :------ | :------ | | Net Interest Income | $43,184 | $41,547 | $41,103 | $40,211 | $39,269 | | Net Income Attributable to CCBG | $15,044 | $16,858 | $13,090 | $13,118 | $14,150 | | Diluted Net Income Per Share | $0.88 | $0.99 | $0.77 | $0.77 | $0.83 | | Net Interest Margin (FTE) | 4.30% | 4.22% | 4.17% | 4.12% | 4.02% | | Return on Average Assets (annualized) | 1.38% | 1.58% | 1.22% | 1.24% | 1.33% | | Tangible Common Equity (non-GAAP) | 10.09% | 9.61% | 9.51% | 9.28% | 8.91% | | Nonperforming Assets ("NPAs") | $6,581 | $4,428 | $6,669 | $7,242 | $6,165 | | NPAs to Total Assets | 0.15% | 0.10% | 0.15% | 0.17% | 0.15% | [FINANCIAL OVERVIEW](index=35&type=section&id=FINANCIAL%20OVERVIEW) The financial overview details increased net income for H1 2025, growth in earning assets, and shifts in loan portfolio and asset quality [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Net income increased for H1 2025 due to higher net interest and noninterest income, despite a modest rise in noninterest expense Net Income Attributable to Common Shareowners (Dollars in Millions, Except Per Share Data) | Period | Net Income | Diluted EPS | | :--------------------------------- | :--------- | :---------- | | Q2 2025 | $15.0 | $0.88 | | Q1 2025 | $16.9 | $0.99 | | Q2 2024 | $14.2 | $0.83 | | First Six Months 2025 | $31.9 | $1.87 | | First Six Months 2024 | $26.7 | $1.57 | - Tax-equivalent net interest income for the first six months of 2025 totaled **$84.8 million**, up from **$77.8 million** in 2024, driven by a **$4.2 million** increase in investment securities income, a **$1.9 million** increase in overnight funds income, and a **$1.4 million** decrease in deposit interest expense[168](index=168&type=chunk)[183](index=183&type=chunk) - Noninterest income for the first six months of 2025 totaled **$39.9 million**, up from **$37.7 million** in 2024, primarily due to a **$1.8 million** increase in wealth management fees and a **$0.7 million** increase in mortgage banking revenues[170](index=170&type=chunk)[187](index=187&type=chunk) - Noninterest expense for the first six months of 2025 totaled **$81.2 million**, a **$0.6 million** increase from **$80.6 million** in 2024, mainly due to a **$3.9 million** increase in compensation expense, partially offset by a **$3.2 million** decrease in other expense[171](index=171&type=chunk)[198](index=198&type=chunk) [Financial Condition](index=35&type=section&id=Financial%20Condition) Financial condition at June 30, 2025, shows increased earning assets, decreased loans HFI, higher nonperforming assets, increased deposits, and strong capital ratios - Average earning assets totaled **$4.032 billion** for Q2 2025, a **1.0%** increase over Q1 2025 and a **2.8%** increase over Q4 2024, driven by higher average deposit balances[172](index=172&type=chunk)[206](index=206&type=chunk) - Average loans held for investment (HFI) decreased by **0.5%** from Q1 2025 and **0.9%** from Q4 2024, with construction and consumer loans seeing the largest declines[173](index=173&type=chunk)[211](index=211&type=chunk) - Nonperforming assets totaled **$6.6 million** at June 30, 2025 (**0.15%** of total assets), up from **$4.4 million** at March 31, 2025, and classified loans increased by **$9.4 million** over Q1 2025, primarily due to downgrades in residential and commercial real estate loans[175](index=175&type=chunk)[214](index=214&type=chunk) - Average total deposits increased by **0.4%** over Q1 2025 and **2.2%** over Q4 2024, reaching **$3.681 billion** for Q2 2025, with total deposits at June 30, 2025, at **$3.705 billion**, a **0.9%** increase over December 31, 2024[176](index=176&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk) - At June 30, 2025, the company was 'well-capitalized' with a total risk-based capital ratio of **19.60%** and a tangible common equity ratio of **10.09%**, both exceeding prior periods[177](index=177&type=chunk)[247](index=247&type=chunk) [MARKET RISK AND INTEREST RATE SENSITIVITY](index=43&type=section&id=MARKET%20RISK%20AND%20INTEREST%20RATE%20SENSITIVITY) The company manages interest rate risk via ALCO, with rising rates positively impacting NII, but falling rates potentially exceeding policy limits - The company's interest rate risk management policy aims to minimize structural interest rate risk, with ALCO administering limits on net interest income (NII) at risk and economic value of equity (EVE) at risk[225](index=225&type=chunk)[226](index=226&type=chunk) Estimated Changes in Net Interest Income (12-month shock) | Percentage Change (12-month shock) | +400 bp | +300 bp | +200 bp | +100 bp | -100 bp | -200 bp | -300 bp | -400 bp | | :--------------------------------- | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Policy Limit | -15.0% | -12.5% | -10.0% | -7.5% | -7.5% | -10.0% | -12.5% | -15.0% | | June 30, 2025 | 19.2% | 14.4% | 9.6% | 5.0% | -5.3% | -11.1% | -17.5% | -23.3% | - NII at Risk analysis indicates that rising rate environments will positively impact net interest margin, while declining rates will have a negative impact, with instantaneous parallel rate shock results for 12-month and 24-month periods outside of policy in the rates down **200 bps**, **300 bps**, and **400 bps** scenarios[231](index=231&type=chunk) Estimated Changes in Economic Value of Equity (EVE) | Changes in Interest Rates | +400 bp | +300 bp | +200 bp | +100 bp | -100 bp | -200 bp | -300 bp | -400 bp | | :------------------------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Policy Limit | -30.0% | -25.0% | -20.0% | -15.0% | -15.0% | -20.0% | -25.0% | -30.0% | | June 30, 2025 | 29.4% | 23.9% | 17.1% | 9.2% | -11.5% | -23.9% | -34.8% | -40.8% | | EVE Ratio (policy minimum 5.0%) | 31.6% | 29.7% | 27.6% | 25.4% | 19.9% | 16.8% | 14.2% | 12.8% | [LIQUIDITY AND CAPITAL RESOURCES](index=45&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company maintains strong liquidity and robust capital ratios, exceeding 'well-capitalized' thresholds, with shareowners' equity increasing - At June 30, 2025, the company had the ability to generate approximately **$1.603 billion** in additional liquidity through various sources, excluding overnight funds[237](index=237&type=chunk) - Shareowners' equity was **$526.4 million** at June 30, 2025, positively impacted by **$31.9 million** in net income and a **$5.5 million** decrease in accumulated other comprehensive loss[246](index=246&type=chunk) Regulatory Capital Ratios | Capital Ratio | June 30, 2025 | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :-------------- | :------------- | :---------------- | | Total Risk-Based Capital Ratio | 19.60% | 19.20% | 18.64% | | Common Equity Tier 1 Capital Ratio | 16.81% | 16.08% | 15.54% | | Leverage Ratio | 11.14% | 11.17% | 11.05% | | Tangible Common Equity (non-GAAP) | 10.09% | 9.61% | 9.51% | - All regulatory capital ratios exceeded the thresholds to be designated as 'well-capitalized' under Basel III capital standards at June 30, 2025[245](index=245&type=chunk)[247](index=247&type=chunk) [OFF-BALANCE SHEET ARRANGEMENTS](index=46&type=section&id=OFF-BALANCE%20SHEET%20ARRANGEMENTS) Off-balance sheet arrangements include **$672.3 million** in credit commitments and **$7.4 million** in standby letters of credit, with a **$1.7 million** ACL - At June 30, 2025, the company had **$672.3 million** in commitments to extend credit and **$7.4 million** in standby letters of credit[250](index=250&type=chunk) - An allowance for credit losses of **$1.7 million** was recorded for non-cancellable off-balance sheet credit commitments at June 30, 2025[252](index=252&type=chunk) [CRITICAL ACCOUNTING POLICIES](index=46&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) Critical accounting policies include allowance for credit losses, goodwill, pension assumptions, and income taxes, requiring significant judgment - The most critical accounting policies and estimates are the allowance for credit losses, goodwill, pension assumptions, and income taxes, which require subjective and complex judgment[255](index=255&type=chunk) [TABLE I AVERAGE BALANCES & INTEREST RATES (UNAUDITED)](index=48&type=section&id=TABLE%20I%20AVERAGE%20BALANCES%20%26%20INTEREST%20RATES%20(UNAUDITED)) This table details average balances and interest rates, showing an improved net interest margin of **4.26%** for H1 2025 Average Balances & Interest Rates (Six Months Ended June 30, Dollars in Thousands) | Metric | 2025 Average Balances | 2025 Interest | 2025 Average Rate | 2024 Average Balances | 2024 Interest | 2024 Average Rate | | :--------------------------------- | :-------------------- | :------------ | :---------------- | :-------------------- | :------------ | :---------------- | | Total Earning Assets | $4,013,066 | $101,329 | 5.09% | $3,892,447 | $95,731 | 4.94% | | Total Interest Bearing Liabilities | $2,431,575 | $16,510 | 1.37% | $2,348,098 | $17,962 | 1.54% | | Net Interest Income | | $84,819 | | | $77,769 | | | Net Interest Margin | | | 4.26% | | | 4.01% | [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) This section refers to the MD&A's market risk discussion, confirming no new material changes since December 31, 2024 - The company incorporates the 'Market Risk and Interest Rate Sensitivity' section from the MD&A by reference, stating no additional disclosures are needed to assess changes in market risk since December 31, 2024[259](index=259&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirmed effective disclosure controls and no material changes to internal controls over financial reporting as of June 30, 2025 - As of June 30, 2025, the company's disclosure controls and procedures were evaluated and deemed effective by management, including the CEO and CFO[260](index=260&type=chunk) - No significant changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that materially affected or are reasonably likely to materially affect these controls[261](index=261&type=chunk) PART II – Other Information [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) Management believes ongoing legal proceedings will not materially impact the company's financial results or position - The company is a party to lawsuits and claims in the normal course of business, but management does not expect any known pending litigation to have a material effect on consolidated results, financial position, or cash flows[262](index=262&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the comprehensive risk factors in the 2024 Form 10-K, noting the list is not exhaustive - Readers should carefully consider the risk factors discussed in Part I, Item 1A of the 2024 Form 10-K, as updated in subsequent quarterly reports, noting that the list of factors is not exhaustive[263](index=263&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported during the period - There were no unregistered sales of equity securities and no use of proceeds to report[264](index=264&type=chunk) [Item 3. Defaults Upon Senior Securities](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - There were no defaults upon senior securities[267](index=267&type=chunk) [Item 4. Mine Safety Disclosure](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This disclosure item is not applicable to the company's operations - Mine Safety Disclosure is not applicable to the company[267](index=267&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated Rule 10b5-1 trading plans during Q2 2025 - During the three months ended June 30, 2025, no directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements[265](index=265&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance and certifications - The exhibits include Amended and Restated Articles of Incorporation and Bylaws, certifications from the CEO and CFO (pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350), and XBRL taxonomy extension documents[268](index=268&type=chunk) [Signatures](index=51&type=section&id=Signatures) The report is duly signed by Jeptha E. Larkin, EVP and CFO, on behalf of Capital City Bank Group, Inc - The report is signed by Jeptha E. Larkin, Executive Vice President and Chief Financial Officer, on behalf of Capital City Bank Group, Inc., as duly authorized[270](index=270&type=chunk)

[Executive Summary](index=1&type=section&id=Executive%20Summary) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Capital City Bank Group reported net income attributable to common shareowners of $15.0 million, or $0.88 per diluted share, for Q2 2025, showing a decrease from Q1 2025 but an increase compared to Q2 2024, with key improvements in net interest income and margin expansion Net Income and EPS (QoQ & YoY) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------------- | :------ | :------ | :------ | | Net Income Attributable to Common Shareowners | $15.0 million | $16.9 million | $14.2 million | | Diluted Net Income Per Share | $0.88 | $0.99 | $0.83 | - Net interest income increased by **3.9%** (QoQ) and net interest margin expanded by **8 basis points** to **4.30%** (QoQ)[2](index=2&type=chunk) - Tangible book value per share increased by **3.2%** (QoQ), and the tangible capital ratio rose to **10.1%** (QoQ)[2](index=2&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) William G. Smith, Jr., Chairman and CEO, highlighted the bank's strong quarter, emphasizing sustained revenue growth, continued credit strength, and strategic execution, focusing on profitable growth supported by a resilient balance sheet - Capital City delivered a strong quarter with sustained revenue growth and continued credit strength[2](index=2&type=chunk) - The company remains focused on executing strategies for consistent, profitable growth, supported by a 'fortress balance sheet' for resilience and strategic flexibility[2](index=2&type=chunk) [Discussion of Operating Results](index=2&type=section&id=Discussion%20of%20Operating%20Results) [Net Interest Income/Net Interest Margin](index=2&type=section&id=Net%20Interest%20Income%2FNet%20Interest%20Margin) Tax-equivalent net interest income increased across all comparative periods, driven by higher investment securities income from new purchases at higher yields and a decrease in deposit interest expense due to declining short-term rates, leading to significant net interest margin expansion Tax-Equivalent Net Interest Income | Period | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------- | :------ | :------ | :------ | :------ | :------ | | Tax-Equivalent Net Interest Income | $43.2 million | $41.6 million | $39.3 million | $84.8 million | $77.8 million | Net Interest Margin and Cost of Funds | Metric | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :------------------ | :------ | :------ | :------ | :------ | :------ | | Net Interest Margin | 4.30% | 4.22% | 4.02% | 4.26% | 4.01% | | Cost of Funds (basis points) | 82 | 84 | 97 | N/A | N/A | | Cost of Deposits (basis points) | 81 | 82 | 95 | N/A | N/A | - The increase in net interest income was primarily due to a **$0.9 million** increase in investment securities income and a **$0.4 million** increase in overnight funds income (QoQ), and a **$2.7 million** increase in investment securities income and a **$1.2 million** decrease in deposit interest expense (YoY)[4](index=4&type=chunk) [Provision for Credit Losses](index=2&type=section&id=Provision%20for%20Credit%20Losses) The provision expense for credit losses decreased across all comparative periods, reflecting improved credit conditions Provision for Credit Losses | Period | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------- | :------ | :------ | :------ | :------ | :------ | | Provision for Credit Losses | $0.6 million | $0.8 million | $1.2 million | $1.4 million | $2.1 million | [Noninterest Income](index=3&type=section&id=Noninterest%20Income) Noninterest income saw a slight increase quarter-over-quarter, driven by higher mortgage banking revenues and deposit fees, partially offset by a decrease in wealth management fees, with the year-over-year increase primarily due to wealth management fees Noninterest Income (QoQ & YoY) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------- | :------ | :------ | :------ | :------ | :------ | | Total Noninterest Income | $20.0 million | $19.9 million | $19.6 million | $39.9 million | $37.7 million | | Mortgage Banking Revenues | $4.19 million | $3.82 million | $4.38 million | $8.01 million | $7.26 million | | Deposit Fees | $5.32 million | $5.06 million | $5.38 million | $10.38 million | $10.63 million | | Wealth Management Fees | $5.21 million | $5.76 million | $4.44 million | $10.97 million | $9.12 million | - QoQ increase in noninterest income was primarily due to a **$0.4 million** increase in mortgage banking revenues and a **$0.3 million** increase in deposit fees, partially offset by a **$0.6 million** decrease in wealth management fees[9](index=9&type=chunk) - YTD increase in noninterest income was primarily attributable to a **$1.8 million** increase in wealth management fees and a **$0.7 million** increase in mortgage banking revenues[10](index=10&type=chunk) [Noninterest Expense](index=3&type=section&id=Noninterest%20Expense) Noninterest expense increased significantly quarter-over-quarter, mainly due to a decrease in gains from the sale of banking facilities (specifically the operations center building in Q1 2025), while the year-over-year increase was driven by higher compensation expenses Noninterest Expense (QoQ & YoY) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------- | :------ | :------ | :------ | :------ | :------ | | Total Noninterest Expense | $42.5 million | $38.7 million | $40.4 million | $81.2 million | $80.6 million | | Compensation | $26.49 million | $26.25 million | $24.41 million | $52.74 million | $48.81 million | | Occupancy, Net | $7.07 million | $6.79 million | $6.99 million | $13.86 million | $13.99 million | | Other Expense | $8.98 million | $5.66 million | $9.04 million | $14.64 million | $17.81 million | - The **$3.8 million (9.9%)** QoQ increase in noninterest expense was primarily due to a **$3.3 million** increase in other expense, reflecting lower gains from the sale of banking facilities (e.g., operations center building in Q1 2025)[11](index=11&type=chunk) - The **$2.1 million (5.2%)** YoY increase was primarily due to a **$2.1 million** increase in compensation expense, driven by higher incentive plan expense and base salaries[11](index=11&type=chunk) [Income Taxes](index=3&type=section&id=Income%20Taxes) Income tax expense remained relatively stable quarter-over-quarter but increased year-over-year, leading to a higher effective tax rate attributed to a lower tax benefit from a solar tax credit equity fund, with an expected annual effective tax rate of approximately 24% for 2025 Income Tax Expense and Effective Rate | Metric | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------- | :------ | :------ | :------ | :------ | :------ | | Income Tax Expense | $5.0 million | $5.1 million | $3.2 million | $10.1 million | $6.7 million | | Effective Tax Rate | 24.9% | 23.3% | 18.5% | 24.1% | 20.6% | - A lower level of tax benefit from a solar tax credit equity fund drove the increase in the effective tax rate for all prior period comparisons[13](index=13&type=chunk) - The company expects its annual effective tax rate to approximate **24%** for 2025, absent discrete items or new tax credit investments[13](index=13&type=chunk) [Discussion of Financial Condition](index=4&type=section&id=Discussion%20of%20Financial%20Condition) [Earning Assets](index=4&type=section&id=Earning%20Assets) Average earning assets increased over prior periods, primarily driven by higher average deposit balances, with the mix shifting towards increases in overnight funds and investment securities, partially offset by decreases in loans held for investment (HFI) and loans held for sale (HFS) Average Earning Assets | Period | Q2 2025 | Q1 2025 | Q4 2024 | | :------------------ | :------ | :------ | :------ | | Average Earning Assets | $4.032 billion | $3.994 billion | $3.922 billion | | Change QoQ | +$38.1 million (+1.0%) | N/A | N/A | | Change vs Q4 2024 | +$110.1 million (+2.8%) | N/A | N/A | - The earning asset mix reflected a **$27.8 million** increase in overnight funds and a **$25.7 million** increase in investment securities (QoQ), partially offset by a **$13.3 million** decrease in loans HFI and a **$2.1 million** decrease in loans HFS[14](index=14&type=chunk) [Loans Held for Investment (HFI)](index=4&type=section&id=Loans%20Held%20for%20Investment%20%28HFI%29) Both average and end-of-period loans HFI decreased across comparative periods, primarily driven by declines in construction, consumer (indirect auto), and commercial loans, partially offset by increases in residential real estate, commercial real estate, and home equity loans Loans Held for Investment (HFI) Changes | Metric | Q2 2025 (Avg) | Q1 2025 (Avg) | Q4 2024 (Avg) | Q2 2025 (EOP) | Q1 2025 (EOP) | Q4 2024 (EOP) | | :-------------------- | :------------ | :------------ | :------------ | :------------ | :------------ | :------------ | | Total Loans HFI | $2.653 billion | $2.666 billion | $2.677 billion | $2.631 billion | $2.661 billion | $2.652 billion | | Change QoQ (Avg) | -$13.3 million (-0.5%) | N/A | N/A | N/A | N/A | N/A | | Change QoQ (EOP) | N/A | N/A | N/A | -$29.3 million (-1.1%) | N/A | N/A | - QoQ decrease in average loans HFI was due to decreases in construction loans (**$24.6 million**), consumer loans (**$1.9 million**), and commercial loans (**$3.4 million**), partially offset by increases in residential real estate (**$10.2 million**), commercial real estate (**$2.1 million**), and home equity loans (**$4.1 million**)[15](index=15&type=chunk) - EOP loans HFI decreased by **$29.3 million (1.1%)** from March 31, 2025, primarily due to decreases in construction loans (**$18.2 million**), consumer loans (**$8.7 million**), commercial loans (**$4.4 million**), and commercial real estate loans (**$4.4 million**)[16](index=16&type=chunk) [Allowance for Credit Losses](index=4&type=section&id=Allowance%20for%20Credit%20Losses) The allowance for credit losses (ACL) for loans HFI slightly increased, primarily due to qualitative factor adjustments despite lower loan balances, leading to an improved allowance coverage ratio while net loan charge-offs remained comparable to the prior quarter Allowance for Credit Losses (ACL) for Loans HFI | Metric | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | | :-------------------------------- | :----------- | :----------- | :----------- | | ACL for Loans HFI | $29.9 million | $29.7 million | $29.3 million | | Allowance as % of Loans HFI | 1.13% | 1.12% | 1.10% | | Net Loan Charge-Offs (annualized, basis points) | 9 | 9 | N/A | - The slight increase in ACL was primarily attributable to qualitative factor adjustments, partially offset by lower loan balances[17](index=17&type=chunk) [Credit Quality](index=4&type=section&id=Credit%20Quality) Nonperforming assets (NPAs) increased quarter-over-quarter but remained stable year-over-year, with the increase mainly driven by a rise in nonaccrual loans and classified loans, particularly in residential and commercial real estate Nonperforming Assets (NPAs) and Credit Quality | Metric | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | | :-------------------------------- | :----------- | :----------- | :----------- | | Total Nonperforming Assets (NPAs) | $6.6 million | $4.4 million | $6.7 million | | NPAs as % of Total Assets | 0.15% | 0.10% | 0.15% | | Nonaccrual Loans | $6.4 million | $4.3 million | $6.3 million | | Classified Loans | $28.6 million | $19.2 million | $19.9 million | - The **$2.2 million** increase in nonaccrual loans (QoQ) was primarily attributable to two home equity loans totaling **$1.8 million**[18](index=18&type=chunk) - Classified loans increased by **$9.4 million** (QoQ) due to the downgrade of four residential real estate loans (**$4.2 million**) and two commercial real estate loans (**$4.3 million**)[18](index=18&type=chunk) [Deposits](index=4&type=section&id=Deposits) Average total deposits increased quarter-over-quarter and year-over-year, driven by higher core deposit balances, though end-of-period deposits decreased quarter-over-quarter due to a seasonal decline in public funds while increasing year-over-year Total Deposits (Average & EOP) | Metric | Q2 2025 (Avg) | Q1 2025 (Avg) | Q4 2024 (Avg) | Jun 30, 2025 (EOP) | Mar 31, 2025 (EOP) | Dec 31, 2024 (EOP) | | :-------------------------- | :------------ | :------------ | :------------ | :----------------- | :----------------- | :----------------- | | Total Deposits | $3.681 billion | $3.665 billion | $3.600 billion | $3.705 billion | $3.784 billion | $3.672 billion | | Change QoQ (Avg) | +$15.2 million (+0.4%) | N/A | N/A | N/A | N/A | N/A | | Change QoQ (EOP) | N/A | N/A | N/A | -$79.0 million (-2.1%) | N/A | N/A | - Average total deposits increased QoQ due to higher core deposit balances (primarily noninterest bearing checking and money market), partially offset by a seasonal decline in public funds[19](index=19&type=chunk) - Noninterest bearing deposits averaged **36.5%** of total deposits for Q2 2025 and **36.2%** for the year[3](index=3&type=chunk) [Liquidity](index=5&type=section&id=Liquidity) The company maintained a strong liquidity position, with an increased average net overnight funds sold position, significant additional liquidity capacity available through various sources, and views its investment portfolio as a key liquidity source Average Net Overnight Funds Sold Position | Period | Q2 2025 | Q1 2025 | Q4 2024 | | :-------------------------- | :------ | :------ | :------ | | Average Net Overnight Funds Sold | $348.8 million | $320.9 million | $298.3 million | - The company had the ability to generate approximately **$1.603 billion** in additional liquidity at June 30, 2025, through various sources including federal funds purchased lines, FHLB borrowings, Federal Reserve Discount Window, and brokered deposits[23](index=23&type=chunk) - The investment portfolio, consisting of U.S. Treasury, agency, municipal, and corporate debt, serves as a liquidity source, with a weighted-average maturity of **2.66 years** and duration of **2.14 years** at June 30, 2025[24](index=24&type=chunk) [Capital](index=5&type=section&id=Capital) Shareowners' equity increased across all comparative periods, positively impacted by net income and a decrease in accumulated other comprehensive loss, with all regulatory capital ratios exceeding 'well-capitalized' thresholds and an improved tangible common equity ratio Shareowners' Equity and Capital Ratios | Metric | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | | :-------------------------- | :----------- | :----------- | :----------- | | Shareowners' Equity | $526.4 million | $512.6 million | $495.3 million | | Total Risk-Based Capital Ratio | 19.60% | 19.20% | 18.64% | | Common Equity Tier 1 Capital Ratio | 16.81% | 16.08% | 15.54% | | Leverage Ratio | 11.14% | 11.17% | 11.05% | | Tangible Common Equity Ratio (non-GAAP) | 10.09% | 9.61% | 9.51% | - Shareowners' equity was positively impacted by net income attributable to shareowners of **$31.9 million** and a **$5.5 million** decrease in accumulated other comprehensive loss for the first six months of 2025[25](index=25&type=chunk) - All regulatory capital ratios exceeded the thresholds to be designated as 'well-capitalized' under Basel III capital standards at June 30, 2025[26](index=26&type=chunk) [Company Information](index=6&type=section&id=Company%20Information) [About Capital City Bank Group, Inc.](index=6&type=section&id=About%20Capital%20City%20Bank%20Group%2C%20Inc.) Capital City Bank Group, Inc. is a publicly traded financial holding company headquartered in Florida, with approximately $4.4 billion in assets, offering a comprehensive range of banking and financial services through 62 banking offices and 107 ATMs/ITMs across Florida, Georgia, and Alabama - Capital City Bank Group, Inc. has approximately **$4.4 billion** in assets[28](index=28&type=chunk) - The company provides a full range of banking services, including traditional deposit and credit services, mortgage banking, asset management, trust, merchant services, bankcards, securities brokerage, and financial advisory services[28](index=28&type=chunk) - Its subsidiary, Capital City Bank, operates **62** banking offices and **107** ATMs/ITMs in Florida, Georgia, and Alabama[28](index=28&type=chunk) [Forward-Looking Statements](index=6&type=section&id=Forward-Looking%20Statements) This section serves as a disclaimer, stating that forward-looking statements are based on current plans and expectations subject to uncertainties and risks, listing various factors that could cause actual results to differ materially from projections, including economic conditions, regulatory changes, market fluctuations, and operational risks - Forward-looking statements are based on current plans and expectations and are subject to uncertainties and risks that could cause future results to differ materially[29](index=29&type=chunk) - Key risk factors include changes in trade, monetary, and fiscal policies, inflation, interest rate fluctuations, economic conditions, legal and regulatory developments, and technological changes[29](index=29&type=chunk) - The company assumes no obligation to update forward-looking statements unless required by law[29](index=29&type=chunk) [Use of Non-GAAP Financial Measures](index=7&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) The company presents non-GAAP financial measures, specifically the tangible common equity ratio and tangible book value per diluted share, to provide investors with a clearer comparison of capital adequacy within the industry, with a reconciliation to GAAP measures provided - Non-GAAP financial measures, such as tangible common equity ratio and tangible book value per diluted share, are used to allow investors to more easily compare capital adequacy to other companies[31](index=31&type=chunk) - These non-GAAP measures remove the effect of goodwill and other intangibles resulting from merger and acquisition activity[31](index=31&type=chunk) GAAP to Non-GAAP Reconciliation (Tangible Common Equity) | Metric | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | | :-------------------------------- | :----------- | :----------- | :----------- | | Shareowners' Equity (GAAP, millions) | $526.423 | $512.575 | $495.317 | | Less: Goodwill and Other Intangibles (GAAP, millions) | $92.693 | $92.733 | $92.773 | | Tangible Shareowners' Equity (non-GAAP, millions) | $433.730 | $419.842 | $402.544 | | Total Assets (GAAP, billions) | $4.391 | $4.461 | $4.324 | | Less: Goodwill and Other Intangibles (GAAP, millions) | $92.693 | $92.733 | $92.773 | | Tangible Assets (non-GAAP, billions) | $4.299 | $4.368 | $4.232 | | Tangible Common Equity Ratio (non-GAAP) | 10.09% | 9.61% | 9.51% | | Tangible Book Value per Diluted Share (non-GAAP) | $25.37 | $24.59 | $23.65 | [Financial Tables and Supplementary Data](index=8&type=section&id=Financial%20Tables%20and%20Supplementary%20Data) [Earnings Highlights](index=8&type=section&id=Earnings%20Highlights) This section provides a summary table of key financial and performance indicators, including earnings, profitability ratios, capital adequacy metrics, asset quality, and stock performance for various quarterly and year-to-date periods Key Performance Indicators | Metric | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | Jun 30, 2025 (6M) | Jun 30, 2024 (6M) | | :-------------------------------- | :----------- | :----------- | :----------- | :---------------- | :---------------- | | Net Income Attributable to Common Shareowners (millions) | $15.044 | $16.858 | $14.150 | $31.902 | $26.707 | | Diluted Net Income Per Share | $0.88 | $0.99 | $0.83 | $1.87 | $1.57 | | Return on Average Assets (annualized) | 1.38% | 1.58% | 1.33% | 1.48% | 1.27% | | Net Interest Margin | 4.30% | 4.22% | 4.02% | 4.26% | 4.01% | | Total Capital | 19.60% | 19.20% | 17.50% | 19.60% | 17.50% | | Allowance as % of Loans HFI | 1.13% | 1.12% | 1.09% | 1.13% | 1.09% | | Nonperforming Assets as % of Total Assets | 0.15% | 0.10% | 0.15% | 0.15% | 0.15% | [Consolidated Statement of Financial Condition](index=9&type=section&id=Consolidated%20Statement%20of%20Financial%20Condition) This table presents the consolidated balance sheet, detailing assets, liabilities, and shareowners' equity at the end of various quarters, providing a snapshot of the company's financial position Consolidated Statement of Financial Condition (Selected Items) | Metric | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | | :-------------------------------- | :----------- | :----------- | :----------- | | Total Assets (billions) | $4.391 | $4.461 | $4.324 | | Total Loans Held for Investment (billions) | $2.631 | $2.660 | $2.651 | | Total Deposits (billions) | $3.704 | $3.783 | $3.671 | | Total Liabilities (billions) | $3.865 | $3.948 | $3.829 | | Total Shareowners' Equity (millions) | $526.423 | $512.575 | $495.317 | | Earning Assets (billions) | $4.044 | $4.108 | $3.974 | [Consolidated Statement of Operations](index=10&type=section&id=Consolidated%20Statement%20of%20Operations) This table provides the consolidated income statement, outlining interest income, interest expense, net interest income, provision for credit losses, noninterest income, noninterest expense, and net income for various quarterly and year-to-date periods Consolidated Statement of Operations (Selected Items) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | :------ | | Total Interest Income (millions) | $51.459 | $49.782 | $48.766 | $101.241 | $95.586 | | Total Interest Expense (millions) | $8.275 | $8.235 | $9.497 | $16.510 | $17.962 | | Net Interest Income (millions) | $43.184 | $41.547 | $39.269 | $84.731 | $77.624 | | Provision for Credit Losses (millions) | $0.620 | $0.768 | $1.204 | $1.388 | $2.124 | | Total Noninterest Income (millions) | $20.014 | $19.907 | $19.606 | $39.921 | $37.703 | | Total Noninterest Expense (millions) | $42.538 | $38.701 | $40.441 | $81.239 | $80.612 | | Net Income Attributable to Common Shareowners (millions) | $15.044 | $16.858 | $14.150 | $31.902 | $26.707 | [Allowance for Credit Losses and Credit Quality Details](index=11&type=section&id=Allowance%20for%20Credit%20Losses%20and%20Credit%20Quality%20Details) This detailed table provides a breakdown of the Allowance for Credit Losses (ACL) activity for held-for-investment loans, unfunded commitments, and debt securities, along with comprehensive data on charge-offs, recoveries by loan type, and various credit quality indicators like nonaccruing loans and nonperforming assets Allowance for Credit Losses (ACL) and Credit Quality | Metric | Q2 2025 | Q1 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------------- | :------ | :------ | :------ | :------ | :------ | | ACL - HFI Loans (End of Period, millions) | $29.862 | $29.734 | $29.219 | $29.862 | $29.219 | | ACL as a % of Loans HFI | 1.13% | 1.12% | 1.09% | 1.13% | 1.09% | | Net Charge-Offs (Recoveries, millions) | $0.590 | $0.600 | $1.239 | $1.190 | $2.733 | | Nonaccruing Loans (millions) | $6.449 | $4.296 | $5.515 | N/A | N/A | | Total Nonperforming Assets ("NPAs", millions) | $6.581 | $4.428 | $6.165 | N/A | N/A | | NPAs as a % of Total Assets | 0.15% | 0.10% | 0.15% | N/A | N/A | - Total charge-offs for Q2 2025 were **$1.498 million**, with consumer loans contributing the largest portion at **$0.914 million**[40](index=40&type=chunk) - Total recoveries for Q2 2025 were **$0.908 million**, with consumer loans contributing **$0.456 million**[40](index=40&type=chunk) [Average Balance and Interest Rates](index=12&type=section&id=Average%20Balance%20and%20Interest%20Rates) This table provides a comprehensive breakdown of average balances for earning assets and interest-bearing liabilities, along with their corresponding interest income/expense and average interest rates, also presenting the interest rate spread and net interest margin Average Balances and Interest Rates (Selected Items) | Metric | Q2 2025 Avg Balance | Q2 2025 Avg Rate | Q1 2025 Avg Balance | Q1 2025 Avg Rate | Q2 2024 Avg Balance | Q2 2024 Avg Rate | | :-------------------------------- | :------------------ | :--------------- | :------------------ | :--------------- | :------------------ | :--------------- | | Total Earning Assets (billions) | $4.032 | 5.12% | $3.993 | 5.06% | $3.935 | 4.99% | | Loans Held for Investment (billions) | $2.652 | 6.11% | $2.665 | 6.09% | $2.726 | 6.03% | | Total Interest Bearing Deposits (billions) | $2.338 | 1.27% | $2.348 | 1.28% | $2.294 | 1.50% | | Total Interest Bearing Liabilities (billions) | $2.424 | 1.37% | $2.438 | 1.37% | $2.381 | 1.60% | | Interest Rate Spread | N/A | 3.75% | N/A | 3.69% | N/A | 3.38% | | Net Interest Margin | N/A | 4.30% | N/A | 4.22% | N/A | 4.02% |

Group 1: Earnings Performance - Capital City Bank reported quarterly earnings of $0.88 per share, exceeding the Zacks Consensus Estimate of $0.83 per share, and up from $0.83 per share a year ago, representing an earnings surprise of +6.02% [1] - The company posted revenues of $63.2 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.77%, compared to year-ago revenues of $58.88 million [2] - Over the last four quarters, Capital City Bank has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Group 2: Stock Performance and Outlook - Capital City Bank shares have increased approximately 14.5% since the beginning of the year, outperforming the S&P 500's gain of 7.2% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $0.84 on revenues of $63.2 million, and for the current fiscal year, it is $3.43 on revenues of $248.6 million [7] Group 3: Industry Context - The Zacks Industry Rank indicates that the Banks - Southeast industry is currently in the top 16% of over 250 Zacks industries, suggesting a favorable environment for Capital City Bank [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors or through tools like the Zacks Rank [5][6]

Core Insights - Capital City Bank Group, Inc. reported a net income of $15.0 million for Q2 2025, a decrease from $16.9 million in Q1 2025 but an increase from $14.2 million in Q2 2024 [1][32] - The company experienced a 3.9% increase in net interest income and an 8 basis point expansion in net interest margin to 4.30% [2][5] - Tangible book value per share increased by 3.2% to $25.37 [10][32] Income Statement - Tax-equivalent net interest income for Q2 2025 was $43.2 million, up from $41.6 million in Q1 2025 and $39.3 million in Q2 2024 [3][10] - Noninterest income for Q2 2025 totaled $20.0 million, a slight increase from $19.9 million in Q1 2025 and $19.6 million in Q2 2024 [7][10] - Noninterest expense increased to $42.5 million in Q2 2025 from $38.7 million in Q1 2025 and $40.4 million in Q2 2024 [9][10] Balance Sheet - Average earning assets rose to $4.032 billion in Q2 2025, an increase of $38.1 million from Q1 2025 [14] - Total deposits were $3.705 billion at June 30, 2025, a decrease of $79.0 million from March 31, 2025, but an increase of $32.9 million from December 31, 2024 [20] - The allowance for credit losses for loans held for investment (HFI) was $29.9 million at June 30, 2025, slightly up from $29.7 million at March 31, 2025 [17] Credit Quality - Nonperforming assets totaled $6.6 million at June 30, 2025, compared to $4.4 million at March 31, 2025 [18] - The allowance represented 1.13% of loans HFI at June 30, 2025, compared to 1.12% at March 31, 2025 [17][32] Capital Adequacy - The total risk-based capital ratio was 19.60% at June 30, 2025, up from 19.20% at March 31, 2025 [25] - The tangible common equity ratio was 10.09% at June 30, 2025, compared to 9.61% at March 31, 2025 [25][32] Liquidity - The average net overnight funds sold position was $348.8 million in Q2 2025, an increase from $320.9 million in Q1 2025 [21] - The company had the ability to generate approximately $1.603 billion in additional liquidity through various sources as of June 30, 2025 [22]

Company Overview - Capital City Bank Group, Inc. is one of the largest publicly traded financial holding companies based in Florida with approximately $4.4 billion in assets [2] - The company offers a comprehensive range of banking services, including traditional deposit and credit services, mortgage banking, asset management, trust services, merchant services, bankcards, securities brokerage, and financial advisory services [2] - Capital City Bank, the bank subsidiary, was established in 1895 and operates 62 banking offices and 107 ATMs/ITMs across Florida, Georgia, and Alabama [2] Upcoming Financial Results - Capital City Bank Group, Inc. will release its second quarter 2025 results on Tuesday, July 22, 2025, before the market opens [1] - Investors can access the earnings results on the company's Investor Relations website after the release [1]