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

PART I – Financial Information Item 1. Consolidated Financial Statements (Unaudited) CCBG's unaudited consolidated financial statements and detailed notes for the period ended June 30, 2025 Consolidated Statements of Financial Condition 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 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) 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 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 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 Detailed notes provide crucial context on accounting policies, financial instruments, and operations NOTE 1 – BUSINESS AND BASIS OF PRESENTATION 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] - 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][32][33] NOTE 2 – INVESTMENT SECURITIES 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] NOTE 3 – LOANS HELD FOR INVESTMENT AND ALLOWANCE FOR CREDIT LOSSES 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] NOTE 4 – MORTGAGE BANKING ACTIVITIES 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] NOTE 5 – DERIVATIVES 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] 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 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][113] NOTE 7 - EMPLOYEE BENEFIT PLANS 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 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] NOTE 9 – FAIR VALUE MEASUREMENTS 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] 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][140][141] NOTE 10 – ACCUMULATED OTHER COMPREHENSIVE INCOME (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 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] - 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses CCBG's financial condition, operating results, market risk, liquidity, and critical accounting policies for Q2 2025 BUSINESS OVERVIEW 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] - 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] - 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] NON-GAAP FINANCIAL MEASURES (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] 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) 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 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 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][183] - 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][187] - 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][198] Financial Condition 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][206] - 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][211] - 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][214] - 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][220][221] - 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][247] MARKET RISK AND INTEREST RATE SENSITIVITY 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][226] 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] 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 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] - 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] 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][247] OFF-BALANCE SHEET ARRANGEMENTS 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] - An allowance for credit losses of $1.7 million was recorded for non-cancellable off-balance sheet credit commitments at June 30, 2025[252] CRITICAL ACCOUNTING POLICIES 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] TABLE I AVERAGE BALANCES & INTEREST RATES (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 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] Item 4. Controls and Procedures 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] - 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] PART II – Other Information Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - There were no defaults upon senior securities[267] Item 4. Mine Safety Disclosure This disclosure item is not applicable to the company's operations - Mine Safety Disclosure is not applicable to the company[267] Item 5. Other Information 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] Item 6. Exhibits 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] 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]