Capital City Bank Group(CCBG) - 2025 Q2 - Quarterly Results

Executive Summary Second Quarter 2025 Financial Highlights 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] - Tangible book value per share increased by 3.2% (QoQ), and the tangible capital ratio rose to 10.1% (QoQ)[2] CEO Commentary 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] - The company remains focused on executing strategies for consistent, profitable growth, supported by a 'fortress balance sheet' for resilience and strategic flexibility[2] Discussion of Operating Results Net Interest Income/Net Interest Margin 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] Provision for Credit Losses 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 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] - 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] Noninterest Expense 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] - 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] Income Taxes 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] - The company expects its annual effective tax rate to approximate 24% for 2025, absent discrete items or new tax credit investments[13] Discussion of Financial Condition Earning Assets 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] Loans Held for Investment (HFI) 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] - 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] Allowance for Credit Losses 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] Credit Quality 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] - 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] 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] - Noninterest bearing deposits averaged 36.5% of total deposits for Q2 2025 and 36.2% for the year[3] 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] - 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] 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] - All regulatory capital ratios exceeded the thresholds to be designated as 'well-capitalized' under Basel III capital standards at June 30, 2025[26] Company Information About Capital City Bank Group, Inc. 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] - 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] - Its subsidiary, Capital City Bank, operates 62 banking offices and 107 ATMs/ITMs in Florida, Georgia, and Alabama[28] Forward-Looking Statements 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] - 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] - The company assumes no obligation to update forward-looking statements unless required by law[29] Use of Non-GAAP Financial Measures 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] - These non-GAAP measures remove the effect of goodwill and other intangibles resulting from merger and acquisition activity[31] 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 Earnings Highlights 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 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 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 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] - Total recoveries for Q2 2025 were $0.908 million, with consumer loans contributing $0.456 million[40] Average Balance and Interest Rates 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% |