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Capital City Bank Group, Inc. Reports Third Quarter 2023 Results
来源: Nasdaq GlobeNewswire / 24 10月 2023 06:00:01 America/Chicago
TALLAHASSEE, Fla., Oct. 24, 2023 (GLOBE NEWSWIRE) -- Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income attributable to common shareowners of $13.2 million, or $0.78 per diluted share, for the third quarter of 2023 compared to $14.6 million, or $0.85 per diluted share, for the second quarter of 2023, and $11.3 million, or $0.67 per diluted share, for the third quarter of 2022.
For the first nine months of 2023, net income attributable to common shareowners totaled $42.7 million, or $2.51 per diluted share, compared to net income of $28.5 million, or $1.68 per diluted share, for the same period of 2022.
QUARTER HIGHLIGHTS (3rd Quarter 2023 versus 2nd Quarter 2023)
Income Statement
- Tax-equivalent net interest income totaled $39.2 million compared to $40.1 million for the prior quarter and reflected higher deposit cost and lower overnight funds interest (seasonal low in public funds deposits) – total deposit cost increased 15 basis points to 58 basis points – net interest margin decreased three basis points to 4.02%
- Continued strong credit quality metrics – slightly higher loan loss provision expense of $0.2 million increased the allowance coverage ratio from 1.05% to 1.07% - net loan charge-offs were 17 basis points (annualized) of average loans
- Noninterest income decreased $2.7 million, or 11.8%, due to lower mortgage banking revenues of $1.0 million and a $1.4 million gain on the sale of mortgage servicing rights in second quarter of 2023
- Capital City Home Loans realized a net loss of $0.04 per share for the quarter compared to break even for the prior quarter reflective of challenging residential mortgage secondary market conditions
- Noninterest expense decreased $0.9 million, or 2.1%, primarily due to a non-recurring consulting payment of $0.8 million in the prior quarter related to the outsourcing of our core processing system
Balance Sheet
- Loan balances grew $15.0 million, or 0.6% (average), and $26.4 million, or 1.0% (end of period)
- Deposit balances (including repurchase agreements) declined by $115.3 million, or 3.1% (average), and $248.1 million, or 6.5% (end of period), primarily due to a seasonal low point for public fund balances
- Tangible book value per share increased $0.50, or 2.6%, in third quarter bringing the year-to-date increase to $2.09, or 11.8%
- Repurchased 36,411 shares of common stock in the third quarter of 2023 bringing the year-to-date total to 102,147 shares
“The solid results achieved this quarter continue what has been a year of strong financial performance by Capital City Bank Group,” said William G. Smith, Jr., Chairman, President and CEO of Capital City Bank Group. “The diversity of our revenues, strong core deposit franchise and stable credit have been key drivers. Our associates continue to embody our client-centric culture by consistently striving to exceed expectations for our clients and serve as their trusted financial partners. As we look toward 2024, we remain focused on client acquisition and exploring opportunities to foster stronger relationships and further enhance the overall client experience.”
Discussion of Operating Results
Net Interest Income/Net Interest Margin
Tax-equivalent net interest income for the third quarter of 2023 totaled $39.2 million, compared to $40.1 million for the second quarter of 2023, and $33.4 million for the third quarter of 2022. Compared to the second quarter of 2023, the decrease reflected higher deposit interest expense and a lower level of interest income from overnight funds, partially offset by higher loan interest due to loan growth and higher interest rates. For the first nine months of 2023, tax-equivalent net interest income totaled $119.8 million compared to $86.6 million for the same period of 2022. The increases over both prior year periods were driven by strong loan growth and higher interest rates across a majority of our earning assets.
Our net interest margin for the third quarter of 2023 was 4.02%, a decrease of three basis points from the second quarter of 2023 and an increase of 71 basis points over the third quarter of 2022. For the month of September 2023, our net interest margin was 4.10%. For the first nine months of 2023, our net interest margin was 4.03%, an increase of 112 basis points over the same period of 2022. The increase compared to all prior periods reflected a combination of higher interest rates and loan growth, partially offset by a higher cost of deposits. For the third quarter of 2023, our cost of funds was 66 basis points, an increase of 15 basis points over the second quarter of 2023 and an increase of 46 basis points over the third quarter of 2022. Our total cost of deposits (including noninterest bearing accounts) was 58 basis points, 43 basis points, and 11 basis points, respectively, for the same periods.
Provision for Credit Losses
We recorded a provision for credit losses of $2.4 million for the third quarter of 2023 compared to $2.2 million for the second quarter of 2023 and $2.1 million for the third quarter of 2022. The increase in the provision compared to the second quarter of 2023 was primarily attributable to loan growth and an increase in net loan charge-offs. For the first nine months of 2023, we recorded a provision for credit losses of $7.8 million compared to $3.6 million for the same period of 2022. The higher level of provision in 2023 was primarily driven by loan growth and also reflected the favorable impact in 2022 of the release of reserves held for pandemic related losses. We discuss the allowance for credit losses further below.
Noninterest Income and Noninterest Expense
Noninterest income for the third quarter of 2023 totaled $20.2 million compared to $22.9 million for the second quarter of 2023 and $22.9 million for the third quarter of 2022. The $2.7 million decrease from the second quarter of 2023 reflected a decrease in other income of $1.5 million, mortgage banking revenues of $1.0 million, wealth management fees of $0.2 million and bank card fees of $0.1 million, partially offset by an increase in deposit fees of $0.1 million. The decrease in other income was attributable to a $1.4 million gain from the sale of mortgage servicing rights realized in the second quarter of 2023. The decrease in mortgage banking revenues was attributable to market driven lower gain on sale margins and a lower volume of mandatory delivery loan sales which provide a higher gain on sale percentage.
Compared to the third quarter of 2022, the $2.8 million decrease in noninterest income reflected decreases in mortgage banking revenues of $2.3 million, deposit fees of $0.5 million, and bank card fees of $0.2 million, partially offset by an increase in other income of $0.2 million. For the first nine months of 2023, noninterest income totaled $65.3 million compared to $73.7 million for the same period of 2022 with the $8.4 million decrease primarily attributable to lower mortgage banking revenues of $7.5 million, wealth management fees of $2.4 million, deposit fees of $0.6 million, and bank card fees of $0.4 million, partially offset by a $2.5 million increase in other income. Compared to both prior year periods, the decrease in mortgage banking revenues was driven by lower production volume in 2023 reflective of the rapid increase in interest rates, lower market driven gain on sale margins, and a lower level of mandatory delivery loan sales. The decrease in deposit fees from both prior year periods was primarily attributable to a higher earnings credit rate for commercial deposit accounts and lower service charge fees. For the nine-month period, the decrease in wealth management fees was attributable to lower insurance commissions which reflected the sale of large policies in 2022. Further, the increase in other income was primarily due to a $1.4 million gain from the sale of mortgage servicing rights and increases in miscellaneous income of $0.5 million, loan servicing fees of $0.2 million, and vendor volume rebates of $0.2 million.
Noninterest expense for the third quarter of 2023 totaled $41.6 million compared to $42.5 million for the second quarter of 2023 and $39.8 million for the third quarter of 2022. Compared to the second quarter of 2023, the $0.9 million decrease was primarily due to a $0.8 million non-recurring expense in the second quarter of 2023 related to a consulting engagement to assist in negotiating a multi-year contract for the outsourcing of our core processing system.
Compared to the third quarter of 2022, the $1.8 million increase in noninterest expense reflected increases in other expense of $1.1 million and occupancy expense of $0.8 million, partially offset by a decrease in compensation expense of $0.1 million. The increase in other expense was largely driven by a $0.7 million increase in pension plan expense (non-service-related component) and the increase in occupancy reflected the addition of four new banking offices in mid-to-late 2022 and higher property/equipment insurance premiums. For the first nine months of 2023, noninterest expense totaled $124.6 million compared to $119.5 million for the same period of 2022 with the $5.1 million increase attributable to increases in other expense of $2.7 million, occupancy expense of $2.2 million, and compensation expense of $0.2 million. The increase in other expense was primarily due to a $1.6 million increase in pension plan expense (non-service related component), the aforementioned consulting engagement expense of $0.8 million, and increases in loan servicing expense of $0.8 million, FDIC insurance expense of $0.6 million, and miscellaneous expense of $0.6 million, partially offset by lower OREO expense of $1.8 million related to a gain from the sale of a banking office. The increase in occupancy expense reflected the addition of banking offices in 2022 and higher insurance premiums. The slight unfavorable variance in compensation expense reflected a $1.7 million increase in salary expense (primarily, the addition of staffing in our new markets and annual merit) that was partially offset by a $1.5 million decrease in associate benefit expense. The variance in associate benefit expense was primarily due to a $2.2 million decrease in pension plan expense (service cost) that was partially offset by increases in associate insurance expense of $0.5 million and stock-based compensation of $0.1 million.
Income Taxes
We realized income tax expense of $3.2 million (effective rate of 20.9%) for the third quarter of 2023 compared to $3.5 million (effective rate of 19.6%) for the second quarter of 2023 and $3.1 million (effective rate of 21.4%) for the third quarter of 2022. For the first nine months of 2023, we realized income tax expense of $10.9 million (effective rate of 20.7%) compared to $7.5 million (effective rate of 20.3%) for the same period of 2022. The increase in our effective tax rate for the third quarter of 2023 was primarily due to a lower level of pre-tax income from CCHL in relation to our consolidated income as the non-controlling interest adjustment for CCHL is accounted for as a permanent tax adjustment. Further, the second quarter of 2023 effective rate reflected a higher level of tax benefit accrued from an investment in a solar tax credit equity fund. Absent discrete items or unexpected variance in the timing of the tax benefit accrued from our solar tax credit equity fund investment, we expect our annual effective tax rate to approximate 20-21% for 2023.
Discussion of Financial Condition
Earning Assets
Average earning assets totaled $3.877 billion for the third quarter of 2023, a decrease of $97.8 million, or 2.5%, from the second quarter of 2023, and a decrease of $155.8 million, or 3.9%, from the fourth quarter of 2022. The decrease from both prior periods was attributable to lower deposit balances (see below – Deposits). The mix of earning assets continues to improve as overnight funds are being utilized to fund loan growth.
Average loans held for investment (“HFI”) increased $15.0 million, or 0.6%, over the second quarter of 2023 and $233.3 million, or 9.6%, over the fourth quarter of 2022. Period end loans increased $26.4 million, or 1.0%, over the second quarter of 2023 and $168.2 million, or 6.7%, over the fourth quarter of 2022. Compared to both prior periods, the loan growth was primarily in the residential real estate category and was partially offset by lower indirect auto and construction loan balances.
Allowance for Credit Losses
At September 30, 2023, the allowance for credit losses for HFI loans totaled $28.9 million compared to $28.0 million at June 30, 2023 and $24.7 million at December 31, 2022. Activity within the allowance is provided on Page 9. The increase in the allowance over both prior periods was driven primarily by loan growth. Further, the increase from December 31, 2022 reflected a higher loss rate for the residential real estate portfolio due to slower prepayment speeds. At September 30, 2023, the allowance represented 1.07% of HFI loans compared to 1.05% at June 30, 2023, and 0.98% at December 31, 2022.
Credit Quality
Credit quality metrics remained strong for the quarter. Nonperforming assets (nonaccrual loans and other real estate) totaled $4.7 million at September 30, 2023 compared to $6.6 million at June 30, 2023 and $2.7 million at December 31, 2022. At September 30, 2023, nonperforming assets as a percent of total assets equaled 0.11%, compared to 0.15% at June 30, 2023 and 0.06% at December 31, 2022. Nonaccrual loans totaled $4.7 million at September 30, 2023, a $1.9 million decrease from June 30, 2023 and a $2.4 million increase over December 31, 2022. Further, classified loans totaled $21.8 million at September 30, 2023, a $6.8 million increase over June 30, 2023 and a $2.5 million increase over December 31, 2022. The increase in the current period was primarily attributable to the downgrade of one hotel loan that is performing as agreed on scheduled payments.
Deposits
Average total deposits were $3.597 billion for the third quarter of 2023, a decrease of $122.7 million, or 3.3%, from the second quarter of 2023 and a decrease of $206.2 million, or 5.4%, from the fourth quarter of 2022. Compared to both prior periods, the decreases were primarily attributable to lower noninterest bearing, savings, and NOW balances, partially offset by higher money market balances. Compared to the second quarter of 2023, the decrease in NOW account balances was primarily due to the seasonal reduction in public fund balances held by our institutional and municipal clients.
At September 30, 2023, total deposits were $3.540 billion, a decrease of $248.4 million, or 6.6%, from June 30, 2023 and a decline of $398.9 million, or 10.1%, from December 31, 2022. Our public fund deposit balances declined $205 million and $245 million from June 30, 2023 and December 31, 2022, respectively, and reflected the seasonal decline in those balances which will begin to increase in the fourth quarter as municipal tax receipts are received. In addition, the decrease from June 30, 2023 reflected a short-term deposit of $103 million (in the NOW category) made late in June by a municipal client that was subsequently moved in mid-July. The remaining portion of the decrease reflected continued client spend of stimulus savings and clients seeking higher yielding investment products outside the Bank, a portion of which have moved to our wealth division. Additionally, compared to both prior periods, we realized a remix of deposit balances of $32 million and $99 million, respectively, as noninterest bearing accounts migrated into interest bearing accounts (primarily NOW and money market accounts).
Business deposit transaction accounts classified as repurchase agreements averaged $25.4 million for the third quarter of 2023, an increase of $7.5 million over the second quarter of 2023 and $16.9 million over the fourth quarter of 2022. At September 30, 2023, repurchase agreement balances were $22.9 million compared to $22.6 million at June 30, 2023 and $6.6 million at December 31, 2022.
Liquidity
The Bank maintained an average net overnight funds (deposits with banks plus FED funds sold less FED funds purchased) sold position of $136.6 million in the third quarter of 2023 compared to $218.9 million in the second quarter of 2023 and $469.4 million in the fourth quarter of 2022. The declining overnight funds position reflected growth in average loans and lower average deposit balances.
At September 30, 2023, we had the ability to generate approximately $1.587 billion (excludes overnight funds position of $95 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 and have the option to pledge securities in our portfolio as collateral for borrowings or deposits, and/or to sell selected securities. Our portfolio consists of debt issued by the U.S. Treasury, U.S. governmental agencies, municipal governments, and corporate entities. At September 30, 2023, the weighted-average maturity and duration of our portfolio were 2.90 years and 2.61 years, respectively, and the available-for-sale portfolio had a net unrealized tax-effected loss of $31.0 million.
Capital
Shareowners’ equity was $428.6 million at September 30, 2023 compared to $420.8 million at June 30, 2023 and $394.0 million at December 31, 2022. For the first nine months of 2023, shareowners’ equity was positively impacted by net income attributable to common shareowners of $42.7 million, a $2.4 million decrease in the unrealized loss on investment securities, the issuance of stock of $2.2 million, stock compensation accretion of $1.0 million, and a $0.4 million increase in the fair value of the interest rate swap related to subordinated debt. Shareowners’ equity was reduced by common stock dividends of $9.5 million ($0.56 per share), the repurchase of stock of $3.1 million (102,147 shares), and net adjustments totaling $1.5 million related to transactions under our stock compensation plans.
At September 30, 2023, our total risk-based capital ratio was 16.58% compared to 15.95% at June 30, 2023 and 15.52% at December 31, 2022. Our common equity tier 1 capital ratio was 13.56%, 13.02%, and 12.64%, respectively, on these dates. Our leverage ratio was 10.19%, 9.74%, and 9.06%, respectively, on these dates. At September 30, 2023, all our regulatory capital ratios exceeded the threshold to be designated as “well-capitalized” under the Basel III capital standards. Further, our tangible common equity ratio was 8.28% at September 30, 2023 compared to 7.61% and 6.79% at June 30, 2023 and December 31, 2022, respectively. If our unrealized held-to-maturity securities losses of $33.1 million (after-tax) were recognized in accumulated other comprehensive loss, our adjusted tangible capital ratio would be 7.46%.
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 $4.1 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 63 banking offices and 100 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: our ability to successfully manage credit risk, interest rate risk, liquidity risk, and other risks inherent to our industry; legislative or regulatory changes; adverse developments in the financial services industry generally, such as the recent bank failures and any related impacts on depositor behavior; the effects of changes in the level of checking or savings account deposits and the competition for deposits on our funding costs, net interest margin and ability to replace maturing deposits and advances, as necessary; the effects of actions taken by governmental agencies to stabilize the financial system and the effectiveness of such actions; changes in monetary and fiscal policies of the U.S. Government; inflation, interest rate, market and monetary fluctuations; the effects of security breaches and computer viruses that may affect our computer systems or fraud related to debit card products; the accuracy of our financial statement estimates and assumptions, including the estimates used for our allowance for credit losses, deferred tax asset valuation and pension plan; changes in our liquidity position; changes in accounting principles, policies, practices or guidelines; the frequency and magnitude of foreclosure of our loans; the effects of our lack of a diversified loan portfolio, including the risks of loan segments, geographic and industry concentrations; the strength of the United States economy in general and the strength of the local economies in which we conduct operations; our ability to declare and pay dividends, the payment of which is subject to our capital requirements; changes in the securities and real estate markets; structural changes in the markets for origination, sale and servicing of residential mortgages; uncertainty in the pricing of residential mortgage loans that we sell, as well as competition for the mortgage servicing rights related to these loans and related interest rate risk or price risk resulting from retaining mortgage servicing rights and the potential effects of higher interest rates on our loan origination volumes; the effect of corporate restructuring, acquisitions or dispositions, including the actual restructuring and other related charges and the failure to achieve the expected gains, revenue growth or expense savings from such corporate restructuring, acquisitions or dispositions; the effects of natural disasters, harsh weather conditions (including hurricanes), widespread health emergencies (including pandemics, such as the COVID-19 pandemic), military conflict, terrorism, civil unrest or other geopolitical events; our ability to comply with the extensive laws and regulations to which we are subject, including the laws for each jurisdiction where we operate; the willingness of clients to accept third-party products and services rather than our products and services and vice versa; increased competition and its effect on pricing; technological changes; the outcomes of litigation or regulatory proceedings; negative publicity and the impact on our reputation; changes in consumer spending and saving habits; growth and profitability of our noninterest income; the limited trading activity of our common stock; the concentration of ownership of our common stock; anti-takeover provisions under federal and state law as well as our Articles of Incorporation and our Bylaws; other risks described from time to time in our filings with the Securities and Exchange Commission; and our ability to manage the risks involved in the foregoing. Additional factors can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, 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.
USE OF NON-GAAP FINANCIAL MEASURES
UnauditedWe 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.
(Dollars in Thousands, except per share data) Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Shareowners' Equity (GAAP) $ 428,610 $ 420,779 $ 411,240 $ 394,016 $ 373,165 Less: Goodwill and Other Intangibles (GAAP) 92,973 93,013 93,053 93,093 93,133 Tangible Shareowners' Equity (non-GAAP) A 335,637 327,766 318,187 300,923 280,032 Total Assets (GAAP) 4,147,191 4,399,563 4,409,742 4,525,958 4,332,671 Less: Goodwill and Other Intangibles (GAAP) 92,973 93,013 93,053 93,093 93,133 Tangible Assets (non-GAAP) B $ 4,054,218 $ 4,306,550 $ 4,316,689 $ 4,432,865 $ 4,239,538 Tangible Common Equity Ratio (non-GAAP) A/B 8.28 % 7.61 % 7.37 % 6.79 % 6.61 % Actual Diluted Shares Outstanding (GAAP) C 16,997,886 17,025,023 17,049,913 17,039,401 16,998,177 Tangible Book Value per Diluted Share (non-GAAP) A/C $ 19.75 $ 19.25 $ 18.66 $ 17.66 $ 16.47 CAPITAL CITY BANK GROUP, INC. EARNINGS HIGHLIGHTS Unaudited Three Months Ended Nine Months Ended (Dollars in thousands, except per share data) Sep 30, 2023 Jun 30, 2023 Sep 30, 2022 Sep 30, 2023 Sep 30, 2022 EARNINGS Net Income Attributable to Common Shareowners $ 13,202 $ 14,551 $ 11,315 42,707 $ 28,483 Diluted Net Income Per Share $ 0.78 $ 0.85 $ 0.67 2.51 $ 1.68 PERFORMANCE Return on Average Assets (annualized) 1.24 % 1.35 % 1.03 % 1.32 % 0.88 % Return on Average Equity (annualized) 12.25 13.94 11.83 13.70 10.05 Net Interest Margin 4.02 4.05 3.31 4.03 2.91 Noninterest Income as % of Operating Revenue 34.01 36.38 40.76 35.33 46.03 Efficiency Ratio 70.09 % 67.55 % 70.66 % 67.32 % 74.60 % CAPITAL ADEQUACY Tier 1 Capital 15.41 % 14.84 % 14.80 % 15.41 % 14.80 % Total Capital 16.58 15.95 15.75 16.58 15.75 Leverage 10.19 9.74 8.91 10.19 8.91 Common Equity Tier 1 13.56 13.02 12.83 13.56 12.83 Tangible Common Equity (1) 8.28 7.61 6.61 8.28 6.61 Equity to Assets 10.33 % 9.56 % 8.61 % 10.33 % 8.61 % ASSET QUALITY Allowance as % of Non-Performing Loans 614.71 % 422.23 % 934.53 % 614.71 % 934.53 % Allowance as a % of Loans HFI 1.07 1.05 0.96 1.07 0.96 Net Charge-Offs as % of Average Loans HFI 0.17 0.07 0.12 0.16 0.17 Nonperforming Assets as % of Loans HFI and OREO 0.17 0.25 0.10 0.17 0.10 Nonperforming Assets as % of Total Assets 0.11 % 0.15 % 0.06 % 0.11 % 0.06 % STOCK PERFORMANCE High $ 33.44 $ 34.16 $ 33.93 36.86 $ 33.93 Low 28.64 28.03 27.41 28.03 24.43 Close $ 29.83 $ 30.64 $ 31.11 29.83 $ 31.11 Average Daily Trading Volume 26,774 33,412 30,546 33,936 26,677 (1) Tangible common equity ratio is a non-GAAP financial measure. For additional information, including a reconciliation to GAAP, refer to Page 6. CAPITAL CITY BANK GROUP, INC. CONSOLIDATED STATEMENT OF FINANCIAL CONDITION Unaudited 2023 2022 (Dollars in thousands) Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter ASSETS Cash and Due From Banks $ 72,379 $ 83,679 $ 84,549 $ 72,114 $ 72,686 Funds Sold and Interest Bearing Deposits 95,119 285,129 303,403 528,536 497,679 Total Cash and Cash Equivalents 167,498 368,808 387,952 600,650 570,365 Investment Securities Available for Sale 334,052 386,220 402,943 413,294 416,745 Investment Securities Held to Maturity 632,076 641,398 651,755 660,744 676,178 Other Equity Securities 3,585 1,703 1,883 10 1,349 Total Investment Securities 969,713 1,029,321 1,056,581 1,074,048 1,094,272 Loans Held for Sale 53,093 67,908 55,118 54,635 50,304 Loans Held for Investment ("HFI"): Commercial, Financial, & Agricultural 221,704 227,219 236,263 247,362 246,304 Real Estate - Construction 197,526 226,404 253,903 234,519 237,718 Real Estate - Commercial 828,234 831,285 798,438 782,557 715,870 Real Estate - Residential 954,447 876,867 827,124 721,759 573,963 Real Estate - Home Equity 203,902 203,150 207,241 208,120 202,512 Consumer 285,122 295,646 305,324 324,450 347,949 Other Loans 1,401 5,425 7,660 5,346 20,822 Overdrafts 1,076 1,007 931 1,067 1,047 Total Loans Held for Investment 2,693,412 2,667,003 2,636,884 2,525,180 2,346,185 Allowance for Credit Losses (28,854 ) (27,964 ) (26,507 ) (24,736 ) (22,510 ) Loans Held for Investment, Net 2,664,558 2,639,039 2,610,377 2,500,444 2,323,675 Premises and Equipment, Net 81,677 82,062 82,055 82,138 81,736 Goodwill and Other Intangibles 92,973 93,013 93,053 93,093 93,133 Other Real Estate Owned 1 1 13 431 13 Other Assets 117,678 119,411 124,593 120,519 119,173 Total Other Assets 292,329 294,487 299,714 296,181 294,055 Total Assets $ 4,147,191 $ 4,399,563 $ 4,409,742 $ 4,525,958 $ 4,332,671 LIABILITIES Deposits: Noninterest Bearing Deposits $ 1,472,165 $ 1,520,134 $ 1,601,388 $ 1,653,620 $ 1,737,046 NOW Accounts 1,092,996 1,269,839 1,242,721 1,290,494 990,021 Money Market Accounts 304,323 321,743 271,880 267,383 292,932 Savings Accounts 571,003 590,245 617,310 637,374 646,526 Certificates of Deposit 99,958 86,905 90,621 90,446 92,853 Total Deposits 3,540,445 3,788,866 3,823,920 3,939,317 3,759,378 Repurchase Agreements 22,910 22,619 4,429 6,583 6,943 Other Short-Term Borrowings 18,786 28,054 22,203 50,210 45,328 Subordinated Notes Payable 52,887 52,887 52,887 52,887 52,887 Other Long-Term Borrowings 364 414 463 513 562 Other Liabilities 75,585 77,192 85,878 73,675 84,657 Total Liabilities 3,710,977 3,970,032 3,989,780 4,123,185 3,949,755 Temporary Equity 7,604 8,752 8,722 8,757 9,751 SHAREOWNERS' EQUITY Common Stock 170 170 170 170 170 Additional Paid-In Capital 36,182 36,853 37,512 37,331 36,234 Retained Earnings 426,934 417,128 405,634 393,744 384,964 Accumulated Other Comprehensive Loss, Net of Tax (34,676 ) (33,372 ) (32,076 ) (37,229 ) (48,203 ) Total Shareowners' Equity 428,610 420,779 411,240 394,016 373,165 Total Liabilities, Temporary Equity and Shareowners' Equity $ 4,147,191 $ 4,399,563 $ 4,409,742 $ 4,525,958 $ 4,332,671 OTHER BALANCE SHEET DATA Earning Assets $ 3,811,337 $ 4,049,361 $ 4,051,987 $ 4,182,399 $ 3,988,440 Interest Bearing Liabilities 2,163,227 2,372,706 2,302,514 2,395,890 2,128,052 Book Value Per Diluted Share $ 25.22 $ 24.72 $ 24.12 $ 23.12 $ 21.95 Tangible Book Value Per Diluted Share(1) 19.75 19.25 18.66 17.66 16.47 Actual Basic Shares Outstanding 16,958 16,992 17,022 16,987 16,962 Actual Diluted Shares Outstanding 16,998 17,025 17,050 17,039 16,998 (1) Tangible book value per diluted share is a non-GAAP financial measure. For additional information, including a reconciliation to GAAP, refer to Page 6. CAPITAL CITY BANK GROUP, INC. CONSOLIDATED STATEMENT OF OPERATIONS Unaudited 2023 2022 Nine Months Ended September 30, (Dollars in thousands, except per share data) Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter 2023 2022 INTEREST INCOME Loans, including Fees $ 39,212 $ 37,477 $ 34,880 $ 31,916 $ 27,761 $ 111,569 $ 73,966 Investment Securities 4,561 4,815 4,924 4,847 4,372 14,300 11,108 Federal Funds Sold and Interest Bearing Deposits 1,848 2,782 4,111 4,463 3,231 8,741 5,048 Total Interest Income 45,621 45,074 43,915 41,226 35,364 134,610 90,122 INTEREST EXPENSE Deposits 5,214 4,008 2,488 1,902 1,052 11,710 1,542 Repurchase Agreements 190 115 9 7 5 314 6 Other Short-Term Borrowings 440 336 452 683 531 1,228 1,065 Subordinated Notes Payable 625 604 571 522 443 1,800 1,130 Other Long-Term Borrowings 4 5 6 8 6 15 23 Total Interest Expense 6,473 5,068 3,526 3,122 2,037 15,067 3,766 Net Interest Income 39,148 40,006 40,389 38,104 33,327 119,543 86,356 Provision for Credit Losses 2,443 2,219 3,130 3,521 2,099 7,792 3,641 Net Interest Income after Provision for Credit Losses 36,705 37,787 37,259 34,583 31,228 111,751 82,715 NONINTEREST INCOME Deposit Fees 5,456 5,326 5,239 5,536 5,947 16,021 16,585 Bank Card Fees 3,684 3,795 3,726 3,744 3,860 11,205 11,657 Wealth Management Fees 3,984 4,149 3,928 3,649 3,937 12,061 14,410 Mortgage Banking Revenues 4,819 5,837 6,995 5,497 7,116 17,651 25,127 Other 2,237 3,766 2,360 2,546 2,074 8,363 5,876 Total Noninterest Income 20,180 22,873 22,248 20,972 22,934 65,301 73,655 NONINTEREST EXPENSE Compensation 24,648 24,884 25,636 25,565 24,738 75,168 74,977 Occupancy, Net 6,980 6,820 6,762 6,253 6,153 20,562 18,321 Other 10,014 10,830 8,057 10,469 8,919 28,901 26,243 Total Noninterest Expense 41,642 42,534 40,455 42,287 39,810 124,631 119,541 OPERATING PROFIT 15,243 18,126 19,052 13,268 14,352 52,421 36,829 Income Tax Expense 3,190 3,544 4,133 2,599 3,074 10,867 7,486 Net Income 12,053 14,582 14,919 10,669 11,278 41,554 29,343 Pre-Tax Loss (Income) Attributable to Noncontrolling Interest 1,149 (31 ) 35 995 37 1,153 (860 ) NET INCOME ATTRIBUTABLE TO
COMMON SHAREOWNERS$ 13,202 $ 14,551 $ 14,954 $ 11,664 $ 11,315 $ 42,707 $ 28,483 PER COMMON SHARE Basic Net Income $ 0.78 $ 0.86 $ 0.88 $ 0.69 $ 0.67 $ 2.52 $ 1.68 Diluted Net Income 0.78 0.85 0.88 0.68 0.67 2.51 1.68 Cash Dividend $ 0.20 $ 0.18 $ 0.18 $ 0.17 $ 0.17 $ 0.56 $ 0.49 AVERAGE SHARES Basic 16,985 17,002 17,016 16,963 16,960 17,001 16,947 Diluted 17,025 17,035 17,045 17,016 16,996 17,031 16,973 CAPITAL CITY BANK GROUP, INC. ALLOWANCE FOR CREDIT LOSSES ("ACL") AND CREDIT QUALITY Unaudited 2023 2022 Nine Months Ended
September 30,(Dollars in thousands, except per share data) Third
QuarterSecond
QuarterFirst
QuarterFourth
QuarterThird
Quarter2023 2022 ACL - HELD FOR INVESTMENT LOANS Balance at Beginning of Period $ 27,964 $ 26,507 $ 24,736 $ 22,510 $ 21,281 $ 24,736 $ 21,606 Provision for Credit Losses 2,043 1,944 3,291 3,543 1,931 7,278 3,522 Net Charge-Offs (Recoveries) 1,153 487 1,520 1,317 702 3,160 2,618 Balance at End of Period $ 28,854 $ 27,964 $ 26,507 $ 24,736 $ 22,510 $ 28,854 $ 22,510 As a % of Loans HFI 1.07 % 1.05 % 1.01 % 0.98 % 0.96 % 1.07 % 0.96 % As a % of Nonperforming Loans 614.71 % 422.23 % 577.63 % 1,076.89 % 934.53 % 614.71 % 934.53 % ACL - UNFUNDED COMMITMENTS Balance at Beginning of Period 3,120 $ 2,833 $ 2,989 $ 3,012 $ 2,853 $ 2,989 $ 2,897 Provision for Credit Losses 382 287 (156 ) (23 ) 159 513 115 Balance at End of Period(1) 3,502 3,120 2,833 2,989 3,012 3,502 3,012 ACL - DEBT SECURITIES Provision for Credit Losses $ 18 $ (12 ) $ (5 ) $ 1 $ 9 $ 1 $ 4 CHARGE-OFFS Commercial, Financial and Agricultural $ 76 $ 54 $ 164 $ 129 $ 2 $ 294 $ 1,179 Real Estate - Construction - - - - - - - Real Estate - Commercial - - 120 88 1 120 267 Real Estate - Home Equity - 39 - 160 - 39 33 Consumer 1,340 993 1,732 976 770 4,065 1,925 Overdrafts 659 894 634 720 989 2,187 2,429 Total Charge-Offs $ 2,075 $ 1,980 $ 2,650 $ 2,073 $ 1,762 $ 6,705 $ 5,833 RECOVERIES Commercial, Financial and Agricultural $ 28 $ 71 $ 95 $ 25 $ 58 $ 194 $ 282 Real Estate - Construction - 1 1 - 2 2 10 Real Estate - Commercial 17 11 8 13 8 36 93 Real Estate - Residential 30 132 57 98 44 219 186 Real Estate - Home Equity 53 131 25 36 22 209 147 Consumer 418 514 571 175 260 1,503 896 Overdrafts 376 633 373 409 666 1,382 1,601 Total Recoveries $ 922 $ 1,493 $ 1,130 $ 756 $ 1,060 $ 3,545 $ 3,215 NET CHARGE-OFFS (RECOVERIES) $ 1,153 $ 487 $ 1,520 $ 1,317 $ 702 $ 3,160 $ 2,618 Net Charge-Offs as a % of Average Loans HFI(2) 0.17 % 0.07 % 0.24 % 0.21 % 0.12 % 0.16 % 0.17 % CREDIT QUALITY Nonaccruing Loans $ 4,694 $ 6,623 $ 4,589 $ 2,297 $ 2,409 Other Real Estate Owned 1 1 13 431 13 Total Nonperforming Assets ("NPAs") $ 4,695 $ 6,624 $ 4,602 $ 2,728 $ 2,422 Past Due Loans 30-89 Days $ 5,577 $ 4,207 $ 5,061 $ 7,829 $ 6,263 Past Due Loans 90 Days or More - - - - - Classified Loans 21,812 14,973 12,179 19,342 20,988 Nonperforming Loans as a % of Loans HFI 0.17 % 0.25 % 0.17 % 0.09 % 0.10 % NPAs as a % of Loans HFI and Other Real Estate 0.17 % 0.25 % 0.17 % 0.11 % 0.10 % NPAs as a % of Total Assets 0.11 % 0.15 % 0.10 % 0.06 % 0.06 % (1) Recorded in other liabilities (2) Annualized CAPITAL CITY BANK GROUP, INC. AVERAGE BALANCE AND INTEREST RATES Unaudited Third Quarter 2023 Second Quarter 2023 First Quarter 2023 Fourth Quarter 2022 Third Quarter 2022 Sep 2023 YTD Sep 2022 YTD (Dollars in thousands) Average
BalanceInterest Average
RateAverage
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RateASSETS: Loans Held for Sale $ 62,768 $ 971 6.14 % $ 54,350 $ 801 5.90 % $ 55,110 $ 644 4.74 % $ 42,910 581 5.38 % $ 55,164 $ 486 4.82 % $ 57,438 $ 2,416 5.62 % $ 50,387 $ 1,594 4.23 % Loans Held for Investment(1) 2,672,653 38,323 5.69 2,657,693 36,758 5.55 2,582,395 34,331 5.39 2,439,379 31,418 5.11 2,264,075 27,354 4.76 2,637,911 109,412 5.55 2,105,211 72,598 4.61 Investment Securities Taxable Investment Securities 1,002,547 4,549 1.80 1,041,202 4,804 1.84 1,061,372 4,912 1.86 1,078,265 4,835 1.78 1,117,789 4,359 1.55 1,034,825 14,265 1.84 1,105,822 11,082 1.34 Tax-Exempt Investment Securities(1) 2,456 17 2.66 2,656 16 2.47 2,840 17 2.36 2,827 17 2.36 2,939 17 2.30 2,649 50 2.49 2,614 37 1.90 Total Investment Securities 1,005,003 4,566 1.81 1,043,858 4,820 1.84 1,064,212 4,929 1.86 1,081,092 4,852 1.78 1,120,728 4,376 1.55 1,037,474 14,315 1.84 1,108,436 11,119 1.34 Federal Funds Sold and Interest Bearing Deposits 136,556 1,848 5.37 218,902 2,782 5.10 360,971 4,111 4.62 469,352 4,463 3.77 569,984 3,231 2.25 237,987 8,741 4.91 710,559 5,048 0.95 Total Earning Assets 3,876,980 $ 45,708 4.68 % 3,974,803 $ 45,161 4.56 % 4,062,688 $ 44,015 4.39 % 4,032,733 $ 41,314 4.07 % 4,009,951 $ 35,447 3.51 % 3,970,810 $ 134,884 4.54 % 3,974,593 $ 90,359 3.04 % Cash and Due From Banks 75,941 75,854 74,639 74,178 79,527 75,483 77,856 Allowance for Credit Losses (29,172 ) (27,893 ) (25,637 ) (22,596 ) (21,509 ) (27,581 ) (21,382 ) Other Assets 295,106 297,837 300,175 297,510 289,709 297,688 284,546 Total Assets $ 4,218,855 $ 4,320,601 $ 4,411,865 $ 4,381,825 $ 4,357,678 $ 4,316,400 $ 4,315,613 LIABILITIES: Noninterest Bearing Deposits $ 1,474,574 $ 1,539,877 $ 1,601,750 $ 1,662,443 $ 1,726,918 $ 1,538,268 $ 1,700,800 NOW Accounts 1,125,171 $ 3,489 1.23 % 1,200,400 $ 3,038 1.01 % 1,228,928 $ 2,152 0.71 % 1,133,733 $ 1,725 0.60 % 1,016,475 $ 868 0.34 % 1,184,453 $ 8,679 0.98 % 1,042,958 $ 1,074 0.14 % Money Market Accounts 322,623 1,294 1.59 288,466 747 1.04 267,573 208 0.31 273,328 63 0.09 288,758 71 0.10 293,089 2,249 1.03 286,804 140 0.07 Savings Accounts 579,245 200 0.14 602,848 120 0.08 629,388 76 0.05 641,153 80 0.05 643,640 80 0.05 603,643 396 0.09 623,986 229 0.05 Time Deposits 95,203 231 0.96 87,973 103 0.47 89,675 52 0.24 92,385 34 0.15 94,073 33 0.14 90,970 386 0.57 95,408 99 0.14 Total Interest Bearing Deposits 2,122,242 5,214 0.97 2,179,687 4,008 0.74 2,215,564 2,488 0.46 2,140,599 1,902 0.35 2,042,946 1,052 0.20 2,172,155 11,710 0.72 2,049,156 1,542 0.10 Total Deposits 3,596,816 5,214 0.58 3,719,564 4,008 0.43 3,817,314 2,488 0.26 3,803,041 1,902 0.20 3,769,864 1,052 0.11 3,710,423 11,710 0.42 3,749,956 1,542 0.05 Repurchase Agreements 25,356 190 2.98 17,888 115 2.58 9,343 9 0.37 8,464 7 0.34 11,665 5 0.18 17,588 314 2.39 7,971 6 0.11 Other Short-Term Borrowings 24,306 440 7.17 17,834 336 7.54 37,766 452 4.86 42,380 683 6.39 35,014 531 6.01 26,586 1,228 6.17 29,020 1,065 4.90 Subordinated Notes Payable 52,887 625 4.62 52,887 604 4.52 52,887 571 4.32 52,887 522 3.86 52,887 443 3.28 52,887 1,800 4.49 52,887 1,130 2.82 Other Long-Term Borrowings 387 4 4.73 431 5 4.80 480 6 4.80 530 8 4.80 580 6 4.74 433 15 4.78 710 23 4.58 Total Interest Bearing Liabilities 2,225,178 $ 6,473 1.15 % 2,268,727 $ 5,068 0.90 % 2,316,040 $ 3,526 0.62 % 2,244,860 $ 3,122 0.55 % 2,143,092 $ 2,037 0.38 % 2,269,649 $ 15,067 0.89 % 2,139,744 $ 3,766 0.24 % Other Liabilities 83,099 84,305 81,206 84,585 98,501 82,877 86,055 Total Liabilities 3,782,851 3,892,909 3,998,996 3,991,888 3,968,511 3,890,794 3,926,599 Temporary Equity 8,424 8,935 8,802 9,367 9,862 8,719 10,156 SHAREOWNERS' EQUITY: 427,580 418,757 404,067 380,570 379,305 416,887 378,858 Total Liabilities, Temporary Equity and Shareowners' Equity $ 4,218,855 $ 4,320,601 $ 4,411,865 $ 4,381,825 $ 4,357,678 $ 4,316,400 $ 4,315,613 Interest Rate Spread $ 39,235 3.52 % $ 40,093 3.66 % $ 40,489 3.77 % $ 38,192 3.52 % $ 33,410 3.13 % $ 119,817 3.65 % $ 86,593 2.80 % Interest Income and Rate Earned(1) 45,708 4.68 45,161 4.56 44,015 4.39 41,314 4.07 35,447 3.51 134,884 4.54 90,359 3.04 Interest Expense and Rate Paid(2) 6,473 0.66 5,068 0.51 3,526 0.35 3,122 0.31 2,037 0.20 15,067 0.51 3,766 0.13 Net Interest Margin $ 39,235 4.02 % $ 40,093 4.05 % $ 40,489 4.04 % $ 38,192 3.76 % $ 33,410 3.31 % $ 119,817 4.03 % $ 86,593 2.91 % (1) Interest and average rates are calculated on a tax-equivalent basis using a 21% Federal tax rate. (2) Rate calculated based on average earning assets. For Information Contact:
Jep Larkin
Executive Vice President and Chief Financial Officer
850.402. 8450
