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Our net interest margin for the first quarter of 2025 was 4.22%, an increase of five basis points over the fourth quarter of 2024 and an increase of 21 basis points over the first quarter of 2024. For the month of March 2025, our net interest margin was 4.22%. The increase in net interest margin over the fourth quarter of 2024 reflected a higher yield in the investment portfolio driven by new purchases during the quarter and a lower cost of deposits, partially offset by a lower overnight funds rate. The increase over the first quarter of 2024 reflected favorable investment repricing, a lower cost of deposits, and a higher overnight funds rate, partially offset by lower average loan balances for both prior periods.   For the first quarter of 2025, our cost of funds was 84 basis points, a decrease of four basis points from the fourth quarter of 2024 and the first quarter of 2024. Our cost of deposits (including noninterest bearing accounts) was 82 basis points, 86 basis points, and 85 basis points, respectively, for the same periods.

Provision for Credit Losses

We recorded a provision expense for credit losses of $0.8 million for the first quarter of 2025 compared to $0.7 million for the fourth quarter of 2024 and $0.9 million for the first quarter of 2024. For the first quarter of 2025, we recorded a provision expense of $1.1 million for loans held for investment (“HFI”) and a provision benefit of $0.3 million for unfunded loan commitments, which was comparable to the fourth quarter of 2024. We discuss the various factors that impacted our provision expense in detail below under the heading Allowance for Credit Losses.

Noninterest Income and Noninterest Expense

Noninterest income for the first quarter of 2025 totaled $19.9 million compared to $18.8 million for the fourth quarter of 2024 and $18.1 million for the first quarter of 2024. The $1.1 million, or 6.1%, increase over the fourth quarter of 2024 was primarily due to a $0.7 million increase in mortgage banking revenues and a $0.5 million increase in wealth management fees, partially offset by a $0.1 million decrease in deposits fees.   The increase in mortgage revenues was driven by an increase in rate locks and a higher gain on sale margin. The increase in wealth management fees was attributable to a $0.5 million increase in insurance commission revenue.   Compared to the first quarter of 2024, the $1.8 million, or 10.0%, increase was driven by a $1.1 million increase in wealth management fees and a $0.9 million increase in mortgage banking revenues, partially offset by a $0.2 million decrease in deposit fees.   The increase in wealth management fees reflected higher retail brokerage fees of $0.6 million, insurance commission revenue of $0.3 million, and trust fees of $0.2 million. The increase in mortgage revenues was driven by an increase in loan fundings and a higher gain on sale margin.  

Noninterest expense for the first quarter of 2025 totaled $38.7 million compared to $41.8 million for the fourth quarter of 2024 and $40.2 million for the first quarter of 2024.   The $3.1 million, or 7.4%, decrease from the fourth quarter of 2024, reflected a $3.1 million decrease in other expense, a $0.1 million decrease in occupancy expense, and a $0.1 million increase in compensation expense. The decrease in other expense was driven by a $3.5 million decrease in other real estate expense which reflected higher gains from the sale of banking facilities, primarily the sale of our operations center building in the first quarter of 2025, partially offset by a $0.5 million increase in charitable contribution expense. The slight decrease in occupancy expense was due to lower maintenance/repairs for buildings and furniture/fixtures. The slight net decrease in compensation expense reflected a $0.2 million increase in salary expense offset by a $0.1 million decrease in associate benefit expense.

Income Taxes

We realized income tax expense of $5.1 million (effective rate of 23.3%) for the first quarter of 2025 compared to $4.2 million (effective rate of 24.3%) for the fourth quarter of 2024 and $3.5 million (effective rate of 23.0%) for the first quarter of 2024. Compared to the fourth quarter of 2024, the decrease in our effective tax rate was primarily due to a discrete item in the first quarter of 2025 related to an excess tax benefit for stock compensation.   Absent discrete items, we expect our annual effective tax rate to approximate 24% for 2025.

Discussion of Financial Condition

Earning Assets

Average earning assets totaled $3.994 billion for the first quarter of 2025, an increase of $72.0 million, or 1.8%, over the fourth quarter of 2024, and an increase of $144.3 million, or 3.7%, over the first quarter of 2024. The increase over both prior periods was driven by higher deposit balances (see below – Deposits).   Compared to the fourth quarter of 2024, the change in the earning asset mix reflected a $67.1 million increase in investment securities and a $22.7 million increase in overnight funds sold partially offset by a $11.5 million decrease in loans HFI and a $6.3 million decrease in loans held for sale (“HFS”).   Compared to the first quarter of 2024, the change in the earning asset mix reflected a $180.5 million increase in overnight funds and a $29.1 million increase in investment securities that was partially offset by a $62.7 million decrease in loans HFI and a $2.6 million decrease in HFS.

Average loans HFI decreased $11.5 million, or 0.4%, from the fourth quarter of 2024 and decreased $62.7 million, or 2.3%, from the first quarter of 2024. Compared to the fourth quarter of 2024, the decrease was primarily attributable to declines in construction loans of $8.6 million, commercial loans of $5.7 million, and consumer loans of $2.1 million, partially offset by a $6.6 million increase in home equity loans.   Compared to the first quarter of 2024, the decline was driven by decreases in consumer loans (primarily indirect auto) of $58.8 million, commercial loans of $32.9 million, and commercial real estate mortgage loans of $23.1 million, partially offset by increases in residential real estate loans of $28.9 million, construction loans of $11.5 million, and home equity loans of $10.4 million.

Loans HFI at March 31, 2025 increased $9.2 million, or 0.3%, over December 31, 2024 and decreased $70.4 million, or 2.6%, from March 31, 2024. Compared to December 31, 2024, the increase was primarily attributable to increases in commercial real estate mortgage loans of $27.8 million and residential real estate loans of $12.1 million, consumer loans (primarily indirect auto) of $6.7 million, and home equity loans of $5.9 million, partially offset by decreases in construction loans of $27.7 million, commercial loans of $4.8 million, and other loans of $10.8 million.   Compared to the first quarter of 2024, the decline was driven by decreases in consumer loans (primarily indirect auto) of $48.0 million, commercial loans of $33.9 million, commercial real estate mortgage loans of $16.7 million, and construction loans of $10.4 million, partially offset by increases in residential real estate loans of $27.8 million and home equity loans of $11.4 million.

Allowance for Credit Losses

At March 31, 2025, the allowance for credit losses for loans HFI totaled $29.7 million compared to $29.3 million at December 31, 2024 and $29.3 million at March 31, 2024. Activity within the allowance is provided on Page 9. The increase in the allowance over December 31, 2024 reflected higher loan balances and higher loan loss rates, partially offset by a lower level of net loan charge-offs.   The increase in the allowance over March 31, 2024 was primarily due to higher loss rates. Net loan charge-offs were nine basis points of average loans for the first quarter of 2025 versus 25 basis points for the fourth quarter of 2024 and 22 basis points for the first quarter of 2024. At March 31, 2025, the allowance represented 1.12% of loans HFI compared to 1.10% at December 31, 2024, and 1.07% at March 31, 2024.

Credit Quality

Nonperforming assets (nonaccrual loans and other real estate) totaled $4.4 million at March 31, 2025 compared to $6.7 million at December 31, 2024 and $6.8 million at March 31, 2024. At March 31, 2025, nonperforming assets as a percent of total assets was 0.10%, compared to 0.15% at December 31, 2024 and 0.16% at March 31, 2024. Nonaccrual loans totaled $4.3 million at March 31, 2025, a $2.0 million decrease from December 31, 2024 and a $2.5 million decrease from March 31, 2024. Further, classified loans totaled $19.2 million at March 31, 2025, a $0.7 million decrease from December 31, 2024 and a $3.1 million decrease from March 31, 2024.

Deposits

Average total deposits were $3.665 billion for the first quarter of 2025, an increase of $65.1 million, or 1.8%, over the fourth quarter of 2024 and an increase of $89.0 million, or 2.5%, over the first quarter of 2024.   Compared to the fourth quarter of 2024, the increase was primarily attributable to higher NOW account balances largely due to the seasonal increase in our public fund balances.   The increase over the first quarter of 2024 reflected growth in NOW, money market and certificate of deposit account balances which was mainly due to a combination of balances migrating from savings and noninterest bearing accounts, in addition to receiving new deposits from existing and new clients via various deposit strategies.  

At March 31, 2025, total deposits were $3.784 billion, an increase of $111.9 million, or 3.0%, over December 31, 2024, and an increase of $129.1 million, or 3.5%, over March 31, 2024.   The increase over December 31, 2024 was due to higher balances in all deposit categories. The increase over March 31, 2024 was primarily due to higher NOW account balances, largely due to the seasonal increase in public funds and increases in money market and certificates of deposit, partially offset by lower savings account balances. Total public funds balances were $648.0 million at March 31, 2025, $660.9 million at December 31, 2024, and $615.0 million at March 31, 2024.

Liquidity

The Bank maintained an average net overnight funds (i.e., deposits with banks plus FED funds sold less FED funds purchased) sold position of $320.9 million in the first quarter of 2025 compared to $298.3 million in the fourth quarter of 2024 and $140.5 million in the first quarter of 2024. Compared to both prior periods, the increase reflected higher average deposits (primarily seasonal public funds) and lower average loans.
    
At March 31, 2025, we had the ability to generate approximately $1.540 billion (excludes overnight funds position of $446 million) in additional liquidity through various sources including various federal funds purchased lines, Federal Home Loan Bank borrowings, the Federal Reserve Discount Window, and brokered deposits.

We also view our investment portfolio as a liquidity source as we have the option to pledge securities in our portfolio as collateral for borrowings or deposits, and/or to sell selected securities in our portfolio.  Our portfolio consists of debt issued by the U.S. Treasury, U.S. governmental agencies, municipal governments, and corporate entities.  At March 31, 2025, the weighted-average maturity and duration of our portfolio were 2.64 years and 2.10 years, respectively, and the available-for-sale portfolio had a net unrealized after-tax loss of $15.4 million.

Capital

Shareowners’ equity was $512.6 million at March 31, 2025 compared to $495.3 million at December 31, 2024 and $448.3 million at March 31, 2024. For the first three months of 2025, shareowners’ equity was positively impacted by net income attributable to shareowners of $16.9 million, a net $3.6 million decrease in the accumulated other comprehensive loss, the issuance of stock of $2.4 million, and stock compensation accretion of $0.4 million. The net favorable change in accumulated other comprehensive loss reflected a $4.1 million decrease in the investment securities loss that was partially offset by a $0.5 million decrease in the fair value of the interest rate swap related to subordinated debt. Shareowners’ equity was reduced by a common stock dividend of $4.1 million ($0.24 per share) and net adjustments totaling $1.9 million related to transactions under our stock compensation plans.

At March 31, 2025, our total risk-based capital ratio was 19.20% compared to 18.64% at December 31, 2024 and 16.84% at March 31, 2024. Our common equity tier 1 capital ratio was 16.08%, 15.54%, and 13.82%, respectively, on these dates. Our leverage ratio was 11.17%, 11.05%, and 10.45%, respectively, on these dates. At March 31, 2025, all our regulatory capital ratios exceeded the thresholds to be designated as “well-capitalized” under the Basel III capital standards. Further, our tangible common equity ratio (non-GAAP financial measure) was 9.61% at March 31, 2025 compared to 9.51% and 8.53% at December 31, 2024 and March 31, 2024, respectively. If our unrealized held-to-maturity securities losses of $12.1 million (after-tax) were recognized in accumulated other comprehensive loss, our adjusted tangible capital ratio would be 9.33%.

About Capital City Bank Group, Inc.

Capital City Bank Group, Inc. (NASDAQ: CCBG) is one of the largest publicly traded financial holding companies headquartered in Florida and has approximately $4.5 billion in assets. We provide a full range of banking services, including traditional deposit and credit services, mortgage banking, asset management, trust, merchant services, bankcards, securities brokerage services and financial advisory services, including the sale of life insurance, risk management and asset protection services. Our bank subsidiary, Capital City Bank, was founded in 1895 and now has 62 banking offices and 105 ATMs/ITMs in Florida, Georgia and Alabama. For more information about Capital City Bank Group, Inc., visit www.ccbg.com.

FORWARD-LOOKING STATEMENTS

Forward-looking statements in this Press Release are based on current plans and expectations that are subject to uncertainties and risks, which could cause our future results to differ materially. The words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “target,” “vision,” “goal,” and similar expressions are intended to identify forward-looking statements. The following factors, among others, could cause our actual results to differ: the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board; inflation, interest rate, market and monetary fluctuations; local, regional, national, and international economic conditions and the impact they may have on us and our clients and our assessment of that impact; the costs and effects of legal and regulatory developments, the outcomes of legal proceedings or regulatory or other governmental inquiries, the results of regulatory examinations or reviews and the ability to obtain required regulatory approvals; the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) and their application with which we and our subsidiaries must comply; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as other accounting standard setters; the accuracy of our financial statement estimates and assumptions; changes in the financial performance and/or condition of our borrowers; changes in the mix of loan geographies, sectors and types or the level of non-performing assets and charge-offs; changes in estimates of future credit loss reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements; changes in our liquidity position; the timely development and acceptance of new products and services and perceived overall value of these products and services by users; changes in consumer spending, borrowing, and saving habits; greater than expected costs or difficulties related to the integration of new products and lines of business; technological changes; the cost and effects of cyber incidents or other failures, interruptions, or security breaches of our systems or those of our customers or third-party providers; acquisitions and integration of acquired businesses; impairment of our goodwill or other intangible assets; changes in the reliability of our vendors, internal control systems, or information systems; our ability to increase market share and control expenses; our ability to attract and retain qualified employees; changes in our organization, compensation, and benefit plans; the soundness of other financial institutions; volatility and disruption in national and international financial and commodity markets; changes in the competitive environment in our markets and among banking organizations and other financial service providers; government intervention in the U.S. financial system; the effects of natural disasters (including hurricanes), widespread health emergencies (including pandemics), military conflict, terrorism, civil unrest, climate change or other geopolitical events; our ability to declare and pay dividends; structural changes in the markets for origination, sale and servicing of residential mortgages; any inability to implement and maintain effective internal control over financial reporting and/or disclosure control; negative publicity and the impact on our reputation; and the limited trading activity and concentration of ownership of our common stock. Additional factors can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and our other filings with the SEC, which are available at the SEC’s internet site (http://www.sec.gov). Forward-looking statements in this Press Release speak only as of the date of the Press Release, and we assume no obligation to update forward-looking statements or the reasons why actual results could differ, except as may be required by law.

For Information Contact:

Jep Larkin
Executive Vice President and Chief Financial Officer
850.402. 8450

USE OF NON-GAAP FINANCIAL MEASURES
Unaudited

We present a tangible common equity ratio and a tangible book value per diluted share that removes the effect of goodwill and other intangibles resulting from merger and acquisition activity. We believe these measures are useful to investors because it allows investors to more easily compare our capital adequacy to other companies in the industry.

The GAAP to non-GAAP reconciliations are provided below.