Capital City Bank Group(CCBG) - 2024 Q4 - Annual Report

Financial Performance - CCBG's consolidated assets and net income are primarily derived from its wholly owned banking subsidiary, CCB, which accounted for nearly 100% of consolidated assets and net income as of December 31, 2024[24]. - For the year ended 2024, revenues from Banking Services and Wealth Management Services were approximately 92.6% and 7.4% of total revenue, respectively, compared to 93.5% and 90.3% in 2023 and 2022[25]. - The company recorded 9,542 community service hours in 2024, compared to 10,526 hours in 2023 and 9,508 hours in 2022[64]. - The company declared four quarterly cash dividends in 2024, but future declarations depend on sufficient profits and capital requirements[173]. - In 2024, the company collected approximately $9.5 million in net consumer overdraft transaction fees, which constitutes a significant portion of its noninterest income[189]. Market Position and Share - CCBG's market share in Gadsden County was 81.8% as of June 30, 2024, while in Bradford County it was 34.3%[45]. - The bank's primary market area includes 21 counties in Florida, six counties in Georgia, and one county in Alabama, indicating a broad geographic footprint[42]. - As of December 31, 2024, commercial mortgage loans comprised approximately 29.4% of the total loan portfolio, while commercial loans made up about 7.1%[152]. - The concentration of loans in Florida and Georgia subjects the company to higher risks of loss during economic downturns or natural disasters, potentially leading to increased delinquencies and foreclosures[155]. Employee and Workplace Culture - The bank had approximately 940 full-time associates and 29 part-time associates as of December 31, 2024, with 68% of the workforce being female[51]. - CCBG has been recognized as one of the "Best Companies to Work for in Florida" for 13 consecutive years and a "Best Bank to Work For" for 12 consecutive years[52]. - The average tenure of associates at CCBG is approximately 9.4 years, indicating strong employee retention[53]. - The company offers a voluntary wellness program, StarFit, to promote associates' well-being[62]. - The company supports a culture of diversity and inclusion, with initiatives led by the Chief Inclusion Officer and the Inclusion Council[61]. Regulatory Environment - Capital City Bank is subject to supervision and regulation by the Florida OFR, which oversees all areas of operations including capital adequacy requirements and payment of dividends[87]. - The Federal Reserve requires a capital conservation buffer of at least 2.5% of risk-weighted assets to avoid restrictions on capital distributions[93]. - The CRA regulations encourage banks to meet the credit needs of low- and moderate-income neighborhoods, with a satisfactory rating impacting branch establishment and mergers[99]. - The compliance date for significant amendments to CRA regulations is January 1, 2026, with data reporting requirements applicable from January 1, 2027[100]. - The company is subject to extensive regulation, which could impose limitations on business activities, including dividends and mergers[178]. Risk Factors - Inflationary pressures remained elevated throughout 2023 and 2024, impacting the ability of business customers to repay loans, which could adversely affect the company's financial condition[141]. - The company may incur significant costs associated with the ownership of real property due to foreclosures, which could reduce net income[161]. - Cybersecurity incidents pose a significant risk, potentially leading to unauthorized access to sensitive information and operational disruptions, which could materially affect the company's business[196]. - The company faces operational risks from technological failures, human errors, and external events, which could adversely impact its financial condition and results of operations[192]. - The company is exposed to risks from severe weather, natural disasters, and global events that could disrupt operations and negatively impact financial performance[203]. Investment and Sustainability - The market value of trust assets under discretionary management exceeded$ 1.234 billion, with total assets under administration exceeding $1.244 billion as of December 31, 2024[26]. - The company has committed to a$ 7 million investment in SOLCAP 2022-1, LLC, a $7 million investment in SOLCAP 2023-1, LLC, and a$ 9.1 million investment in SOLCAP 2024-1, LLC for solar tax equity investments[69]. - The solar projects are expected to produce approximately 31,778,716 kWh of clean power annually, equivalent to removing approximately 21,350 metric tons of greenhouse gas emissions[69]. - The company has implemented company-wide recycling programs and converted exterior lighting to LED at 58 offices to reduce its carbon footprint[68]. Competition and Market Challenges - The company competes with larger financial institutions and non-bank providers, which may limit its market share and net income[209]. - Increased competition in the current higher interest-rate environment could adversely affect the company's liquidity due to public fund deposit volatility[167]. - The rapid evolution of technology in the financial services industry requires substantial investment to adapt products and services, posing risks to competitiveness[213]. - The company's ability to develop and introduce new products and services in a timely manner is critical for maintaining market acceptance and profitability[214]. Financial Health and Capital Management - The allowance for credit losses for loans held for investment was $29.3 million, representing approximately 1.10% of total loans held for investment[159]. - The company may need to raise additional capital in the future, which could be challenging due to market conditions and financial institution confidence[170]. - Increased regulatory capital requirements may lower the company's return on equity and could necessitate actions such as liquidating assets or increasing borrowings[184]. - The fair value of the investment securities portfolio, with 41.5% designated as available-for-sale, may decline, causing a reduction in shareholders' equity[144].