Capital City Bank Group Inc: Form 10-K for the period ended Dec 31, 2024
Filed with the SEC on Mar 11, 2025 and accepted by EDGAR at Mar 11, 2025, 16:11 ET.
Business
As filed, 2,851 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
About Us
General
Capital City Bank Group, Inc. (“CCBG”) is a financial holding company headquartered in Tallahassee, Florida. CCBG was
incorporated under Florida law on December 13, 1982, to acquire five national banks and one state bank that all subsequently
became part of CCBG’s bank subsidiary, Capital City Bank (“CCB” or the “Bank”). The Bank commenced operations in 1895. In
this report, the terms “Company,” “we,” “us,” or “our” mean CCBG and all subsidiaries included in our consolidated financial
statements.
CCBG is one of the largest publicly traded financial holding companies headquartered in Florida and has approximately $4.3
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. The Bank has 62 banking offices and 104 ATMs/ITMs in
Florida, Georgia, and Alabama. Through Capital City Home Loans, LLC (“CCHL”), we have 27 additional offices in the
Southeast for our mortgage banking business. The majority of the revenue (excluding CCHL), approximately 85%, is derived
from our Florida market areas while approximately 14% and 1% of the revenue is derived from our Georgia and other market
areas, respectively. Approximately 55% of the revenue from CCHL is derived from our Georgia market areas while
approximately 33% and 12% is derived from our Florida and other market areas, respectively.
Below is a summary of our financial condition and results of operations for the past three fiscal years, which we believe is a
sufficient period for understanding our general business development. Our financial condition and results of operations are more
fully discussed in our Management’s Discussion and Analysis on page 43 and our consolidated financial statements on page 72.
Dollars in millions
Year Ended
December 31,
Assets
Deposits
Shareowners’
Equity
Revenue
(1)
Net Income
2024
$4,324.9
$3,672.0
$495.3
$270.6
$52.9
2023
$4,304.5
$3,701.8
$440.6
$252.7
$52.3
2022
$4,519.2
$3,939.3
$387.3
$207.1
$33.4
(1)
Revenue represents interest income plus noninterest income
Dividends and management fees received from the Bank are CCBG’s primary source of income. Dividend payments by the Bank
to CCBG depend on the capitalization, earnings and projected growth of the Bank, and are limited by various regulatory
restrictions, including compliance with a minimum Common Equity Tier 1 Capital conservation buffer. See the section entitled
“Regulatory Considerations” in this Item 1 and Note 17 in the Notes to Consolidated Financial Statements for a discussion of the
restrictions.
Risk factors
As filed, 99,877 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
or discussed in this Annual Report also could adversely affect
our results, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties. Any
forward-looking statements made by us or on our behalf speak only as of the date they are made. We do not undertake to update
any forward-looking statement, except as required by applicable law.
BUSINESS OVERVIEW
Our Business
We are a financial holding company headquartered in Tallahassee, Florida, and we are the parent of our wholly owned subsidiary,
Capital City Bank (the “Bank” or “CCB”).
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. The Bank has 62 banking
offices and 104 ATMs/ITMs in Florida, Georgia and Alabama. Through Capital City Home Loans, LLC (“CCHL”), we have 27
additional offices in the Southeast for our mortgage banking business. Please see the section captioned “About Us” beginning on
page 6 for more detailed information about our business.
Our profitability, like most financial institutions, is dependent, to a large extent upon net interest income, which is the difference
between the interest and fees received on interest earning assets, such as loans and securities, and the interest paid on interest-
bearing liabilities, principally deposits and borrowings. Results of operations are also affected by the provision for credit losses,
operating expenses such as salaries and employee benefits, occupancy , and other operating expenses including income taxes, and
noninterest income such as mortgage banking revenues, wealth management fees, deposit fees, and bank card fees.
Strategic Review
Operating Philosophy
. Our philosophy is to build long-term client relationships based on quality service, high ethical standards,
and safe and sound banking practices. We maintain a locally oriented, community-based focus, which is augmented by
experienced, centralized support in select specialized areas. Our local market orientation is reflected in our network of banking
office locations, experienced community executives with a dedicated President for each market, and community boards which
support our focus on responding to local banking needs. We strive to offer a broad array of sophisticated products and to provide
quality service by empowering associates to make decisions in their local markets.
Strategic Initiatives
. Our five-year strategic plan “2025 In Focus” guides us in the areas of client experience, channel
optimization, market expansion, and culture. As part of the strategic plan, we aim to take our brand of relationship banking to the
next level, further deepen relationships within our communities, expand into new higher growth markets, diversify our revenue
sources, invest in new technology that will support the expansion of client relationships, scale within our lines of business, and
drive higher profitability. We have implemented initiatives in support of the strategic plan, including the implementation of an
integrated marketing software aimed at deepening client relationships, the continuation of our comprehensive review of our
banking office network, and expansion into new markets and further diversification of revenues by expanding our residential
mortgage banking and wealth businesses.
Markets
. We maintain a blend of large and small markets in Florida and Georgia, all in close proximity to major interstate
thoroughfares such as Interstates 10 and 75. Our larger markets include Tallahassee (Leon County, Florida), Gainesville
(Alachua County, Florida), Macon (Bibb County, Georgia), and Suncoast (Hernando/Pasco/Citrus Counties, Florida). The larger
employers in these markets are state and local governments, healthcare providers, educational institutions, and small businesses,
providing stability and good growth dynamics that have historically grown in excess of the national average. We serve an
additional 15 smaller, less competitive, rural markets located on the outskirts of, and centered between, our larger markets where
we are positioned as a market leader. In 7 of 12 markets in Florida and one of three Georgia markets (excluding Northern Arc of
Atlanta markets entered into in 2022 and 2023), we frequently rank within the top three banks in terms of deposit market share.
Furthermore, in the counties in which we operate, we maintain an 8.3% deposit market share in the Florida counties and 5.2% in
the Georgia counties (excluding Northern Arc of Atlanta). Our markets provide for a strong core deposit funding base, a key
differentiator and driver of our profitability and franchise value.
Recent Acquisition/Expansion Activity
. We expanded into the Northern Arc of Atlanta, Georgia by opening full-service offices in
Marietta (Cobb County) in the fourth quarter of 2022 and Duluth (Gwinnett County) in the second quarter of 2023. Additionally,
we expanded our presence in the Florida Panhandle by opening a full-service office s in Watersound, Florida in the first quarter of
2023, Panama City, Florida (Lynn Haven) in the first quarter of 2024, and Panama City, Florida (West Bay) in the first quarter of
2025. To expand our presence and commitment to our Gainesville market, we opened a third full-service banking office in the
area in early 2023. During 2022 and 2023, we hired leadership and banking teams in the Northern Arc and Walton County office
markets, including commercial bankers, retail delivery support, private banking, wealth advisors, and treasury professionals.
Further, CCHL loan originators reside in the Northern Arc and Walton County offices.
On March 1, 2020, CCB acquired from BMGBMG, LLC (“BMG”) an initial 51% membership interest in CCHL (formerly
known as Brand Mortgage Group, LLC), which became a consolidated entity in the Company’s financial statements. As part of
the transaction, CCHL’s operating agreement included put and call options for CCB to purchase from BMG the remaining 49% of
CCHL’s membership interests (the “49% Interest”). On November 15, 2024, CCB entered into an agreement with BMG to
transfer the 49% Interest to CCB, effective January 1, 2025. BMG initiated the buyout by exercising its put option in CCHL’s
operating agreement.
EXECUTIVE OVERVIEW
For 2024, net income attributable to common shareowners totaled $52. 9 million, or $3.12 per diluted share, compared to net
income of $52.3 million, or $3.07 per diluted share, for 2023, and $33.4 million, or $1.97 per diluted share, for 2022.
For 2024, the increase in net income attributable to common shareowners reflected a $5.7 million decrease in provision for credit
losses and a $4.4 million increase in noninterest income, that were partially offset by a $8.3 million increase in noninterest
expense, a $0.9 million increase in income taxes, and a $0.1 million decrease in net interest income. Net income attributable to
common shareowners included a $0.2 million decrease in the deduction to record the non-controlling interest in the earnings of
CCHL.
For 2023, the increase in net income attributable to common shareowners reflected a $34 million increase in net interest income
that was partially offset by a $5.4 million increase in noninterest expense , a $5.2 million increase in income taxes, a $3.6 million
decrease in noninterest income of $3.6 million, and a $2.2 million increase in the provision for credit losses. Net income
attributable to common shareowners included a $1.3 million increase in the deduction to record the 49% non-controlling interest in
the earnings of CCHL.
Below are
Summary Highlights
of our 2024 financial performance:
Income Statement
Tax-equivalent net interest income totaled $159.2 million for 2024 compared to $159.4 million for 2023 driven by higher
yields across our earning assets, partially offset by higher deposit cost which was well controlled at 89 basis points for the
year – net interest margin was 4.08% for 2024 compared to 4.05% for 2023
Credit quality metrics remained strong throughout the year – allowance coverage ratio remained stable at 1.10% - net loan
charge-offs were 21 basis points of average loans for 2024 versus 18 basis points for 2023
Noninterest income increased $4.4 million, or 6.1%, driven by higher mortgage banking revenues and wealth management
fees
Noninterest expense increased $8.3 million, or 5.3%, primarily due to higher compensation expense reflective of higher
incentive compensation, merit raises, and higher health insurance costs
Balance Sheet
Loan balances increased $50.1 million, or 1.9% (average), and decreased $82.4 million, or 3.0% (end of period)
Deposit balances decreased $72.2 million, or 2.0% (average), and decreased $29.8 million, or 0.8% (end of period)
Tangible book value per share increased $3.20, or 15.6%, driven by strong earnings and favorable investment security and
pension plan accumulated other comprehensive loss adjustments
For more detailed information, refer to the following additional sections of the MD&A “Results of Operations” and “Financial
Condition”.
RESULTS OF OPERATIONS
A condensed earnings summary for the last three fiscal years is presented in Table 1 below:
Table 1
CONDENSED SUMMARY OF EARNINGS
(Dollars in Thousands, Except Per Share Data)
2024
2023
2022
Interest Income
194,657
181,068
131,910
Taxable Equivalent Adjustments
241
367
325
Total Interest Income (FTE)
194,898
181,435
132,235
Interest Expense
35,719
22,080
6,888
Net Interest Income (FTE)
159,179
159,355
125,347
Provision for Credit Losses
4,031
9,714
7,494
Taxable Equivalent Adjustments
241
367
325
Net Interest Income After Provision for Credit Losses
154,907
149,274
117,528
Noninterest Income
75,976
71,610
75,181
Noninterest Expense
165,315
157,023
151,634
Income Before Income Taxes
65,568
63,861
41,075
Income Tax Expense
13,924
13,040
7,798
Pre-Tax Loss Attributable to Noncontrolling Interests
1,271
1,437
135
Net Income Attributable to Common Shareowners
52,915
52,258
33,412
Basic Net Income Per Share
3.12
3.08
1.97
Diluted Net Income Per Share
3.12
3.07
1.97
Net Interest Income and Margin
Net interest income represents our single largest source of earnings and is equal to interest income and fees generated by earning
assets, less interest expense paid on interest bearing liabilities. We provide an analysis of our net interest income, including
average yields and rates in Tables 2 and 3 below. We provide this information on a “taxable equivalent” basis to reflect the tax-
exempt status of income earned on certain loans and investments.
For 2024, our taxable equivalent net interest income totaled $159. 2 million compared to $159.4 million for 2023 and $125.3
million for 2022. The $0.2 million, or 0.1%, decrease in 2024 was primarily attributable to higher deposit interest expense, which
was substantially offset by higher loan interest income and to a lesser extent higher overnight funds interest income. The $34.1
million, or 27.2%, increase in 2023 reflected loan growth and higher interest rates across a majority of our earning assets, partially
offset by higher deposit interest expense.
For 2024, our taxable equivalent interest income totaled $194.9 million compared to $181.4 million in 2023 and $132.2 million in
2022. The $13.5 million, or 7.4%, increase in 2024 was primarily attributable to loan growth and favorable loan repricing. The
$49.2 million, or 37.2%, increase in 2023 reflected an overall improved earning asset mix driven by loan growth, and higher
interest rates on earning assets.
For 2024, interest expense totaled $35.7 million compared to $22.1 million for 2023 and $6.9 million for 2022. The $13.6
million, or 61.5% increase in 2024 was primarily attributable to increased deposit interest expense, including a $6.3 million
increase attributable to money market accounts, a $4.5 million increase attributable to NOW accounts, and a $3.7 million increase
attributable to certificates of deposit, all reflective of a shift in balances from noninterest bearing to interest bearing products
driven by the higher interest rate environment and clients seeking higher yield deposit products. The $15.2 million, or 220.3%,
increase in 2023 was also driven by increased deposit interest expense, primarily a $9.6 million increase attributable to NOW
accounts and a $3.5 million increase attributable to money market accounts. The increase in NOW account expense reflected
higher interest rates for our commercial accounts that have a managed rate that were increased during the year.
A
shift in
balances from the noninterest bearing to NOW product also contributed to the increase. The increase in the expense for money
market accounts reflected adjustments to our board and managed rates for this product also reflective of higher interest rates.
Our cost of interest bearing deposits was 142 basis points for 2024, 81 basis points for 2023, and 17 basis points for 2022. Our
total cost of deposits (including noninterest bearing accounts) was 89 basis points for 2024, 48 basis points for 2023, and 9 basis
points for 2022. Our total cost of funds (interest expense/average earning assets) was 92 basis points for 2024, 56 basis points for
2023, and 17 basis points for 2022.
Our net interest margin (defined as taxable-equivalent interest income less interest expense divided by average earning assets)
was 4.08% for 2024, 4.05% for 2023, and 3.14% for 2022. The increase in the net interest margin for 2024 and 2023 reflected a
combination of earning assets repricing at higher interest rates and an improved earning asset mix driven by loan growth, partially
offset by a higher, but well controlled cost of deposits.
The Federal Open Market Committee decreased the Federal Funds Rate during 2024. The Federal Funds Rate is currently in a
target range of 4.25% to 4.50%, with the Effective Federal Funds Rate at 4.33% at December 31, 2024, and 5.33% at
December 31, 2023. Management actively manages its balance sheet mix and volume and will make loan and deposit product
pricing changes to help mitigate interest rate risk. See section titled “Financial Condition - Market Risk and Interest Rate
Sensitivity” in Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional
information regarding this risk.
Table 2
AVERAGE BALANCES AND INTEREST RATES
2024
2023
2022
(Taxable Equivalent Basis - Dollars
in Thousands)
Average
Balance
Interest
Average
Rate
Average
Balance
Interest
Average
Rate
Average
Balance
Interest
Average
Rate
ASSETS
Loans Held for Sale
27,306
2,776
6.72
55,510
3,232
5.82
48,502
2,175
4.49
Loans Held for Investment
(1)(2)
2,706,461
162,385
6.03
2,656,394
149,366
5.62
2,189,440
104,578
4.78
Investment Securities
Taxable Investment Securities
923,253
17,073
1.85
1,016,550
18,652
1.83
1,098,876
15,917
1.45
Tax-Exempt Investment Securities
(2)
848
37
4.34
2,199
59
2.68
2,668
54
2.03
Total Investment Securities
924,101
17,110
1.85
1,018,749
18,711
1.83
1,101,544
15,971
1.45
Fed Funds Sold & Int Bearing Dep
239,712
12,627
5.27
203,147
10,126
4.98
649,762
9,511
1.46
Total Earning Assets
3,897,580
194,898
5.00
3,933,800
181,435
4.61
3,989,248
132,235
3.32
Cash & Due From Banks
73,881
75,786
76,929
Allowance for Credit Losses
(29,902)
(28,190)
(21,688)
Other Assets
293,044
297,290
287,813
TOTAL ASSETS
4,234,603
4,278,686
4,332,302
LIABILITIES
Noninterest Bearing Deposits
1,336,601
1,507,657
1,691,132
NOW Accounts
1,183,962
16,835
1.42
1,172,861
12,375
1.06
1,065,838
2,799
0.26
Money Market Accounts
400,664
9,957
2.49
299,581
3,670
1.22
283,407
203
0.07
Savings Accounts
518,869
723
0.14
592,033
598
0.10
628,313
309
0.05
Time Deposits
157,342
4,647
2.95
97,480
939
0.96
94,646
133
0.14
Total Interest Bearing Deposits
2,260,837
32,162
1.42
2,161,955
17,582
0.81
2,072,204
3,444
0.17
Total Deposits
3,597,438
32,162
0.89
3,669,612
17,582
0.48
3,763,336
3,444
0.09
Repurchase Agreements
26,970
838
3.11
19,917
513
2.57
8,095
14
0.17
Short-Term Borrowings
4,882
242
4.94
24,146
1,538
6.37
32,388
1,747
5.40
Subordinated Notes Payable
52,887
2,449
4.56
52,887
2,427
4.53
52,887
1,652
3.08
Other Long-Term Borrowings
534
28
5.31
408
20
4.77
665
31
4.62
Total Interest Bearing Liabilities
2,346,110
35,719
1.52
2,259,313
22,080
0.98
2,166,239
6,888
0.32
Other Liabilities
71,964
81,842
85,684
TOTAL LIABILITIES
3,754,675
3,848,812
3,943,055
Temporary Equity
6,712
8,392
9,957
TOTAL SHAREOWNERS’
EQUITY
473,216
421,482
379,290
TOTAL LIABILITIES,
TEMPORARY EQUITY AND
SHAREOWNERS’ EQUITY
4,234,603
4,278,686
4,332,302
Interest Rate Spread
3.47
3.63
3.00
Net Interest Income
159,179
159,355
125,347
Net Interest Margin
(3)
4.08
4.05
3.14
(1)
Average balances include net loan fees, discounts and premiums, and nonaccrual loans. Interest income includes net loan cost of $0.7 million for 2024,
and net loan fees of $0.05 million for 2023 and $0.5 million for 2022.
(2)
Interest income includes the effects of taxable equivalent adjustments using a 21% tax rate.
(3)
Taxable equivalent net interest income divided by average earning assets.
Table 3
RATE/VOLUME ANALYSIS
(1)
2024 vs. 2023
2023 vs. 2022
(Taxable Equivalent Basis -
Dollars in Thousands)
Increase (Decrease) Due to Change In
Increase (Decrease) Due to Change
In
Total
Calendar
(3)
Volume
Rate
Total
Volume
Rate
Earnings Assets:
Loans Held for Sale
(2)
(456)
9
(1,651)
1,186
1,057
315
742
Loans Held for Investment
(2)
13,019
409
2,406
10,204
44,788
22,304
22,484
Taxable Investment Securities
(1,579)
51
(1,763)
133
2,735
(1,192)
3,927
Tax-Exempt Investment Securities
(2)
(22)
(36)
14
5
(10)
15
Funds Sold
2,501
28
1,795
678
615
(6,537)
7,152
Total
13,463
497
751
12,215
49,200
14,880
34,320
Interest Bearing Liabilities:
NOW Accounts
4,460
34
83
4,343
9,576
281
9,295
Money Market Accounts
6,287
10
1,228
5,049
3,467
12
3,455
Savings Accounts
125
2.00
(76)
199
289
(18)
307
Time Deposits
3,708
3
574
3,131
806
4
802
Short-Term Borrowings
(971)
6
(574)
(403)
290
156
134
Subordinated Notes Payable
22
7
(7)
22
775
775
Other Long-Term Borrowings
8
6
2
(11)
(12)
1
Total
13,639
62
1,234
12,343
15,192
423
14,769
Changes in Net Interest Income
(176)
435
(483)
(128)
34,008
14,457
19,551
(1)
This table shows the change in taxable equivalent net interest income for comparative periods based on either changes in average
volume or changes in average rates for interest earning assets and interest bearing liabilities. Changes which are not solely
due to volume changes or solely due to rate changes have been attributed to rate changes.
(2)
Interest income includes the effects of taxable equivalent adjustments using a 21% tax rate to adjust on tax-exempt loans and securities
and securities to a taxable equivalent basis.
(3)
Reflects one extra calendar day in 2024.
Provision for Credit Losses
For 2024, we recorded a provision for credit loss expense of $4.0 million ($5.0 million expense for loans held for investment
(“HFI”) and $1.0 million benefit for unfunded loan commitments) compared to a provision expense of $9.7 million for 2023 ($9.5
million expense for loans HFI and $0.2 million expense for unfunded loan commitments), and a provision expense of $7.5 million
for 2022 ($7.4 million expense for loans HFI and $0.1 million expense for unfunded loan commitments). The decrease in the
provision for loans HFI in 2024 was primarily due to lower new loan volume and loan balances in 2024 and favorable loan grade
migration. The decrease in the provision for unfunded loan commitments reflected a lower level of loan commitments. The
increased provision in 2023 was driven by loan growth. We discuss the various factors that have impacted our provision expense
in more detail under the heading Allowance for Credit Losses.
Noninterest Income
For 2024, noninterest income totaled $76.0 million, a $4.4 million, or 6.1% , increase over 2023, primarily attributable to a $3.9
million increase in mortgage banking revenues and a $2.8 million increase in wealth management fees, partially offset by a $2.2
million decrease in other income. The increase in mortgage banking revenues was due to a higher gain on sale margin. The
increase in wealth management fees was primarily driven by higher retail brokerage fees and to a lesser extent trust fees,
primarily attributable to both new account growth and higher account values driven by higher market returns. The decrease in
other income was primarily attributable to a $1.4 million gain from the sale of mortgage servicing rights in 2023, and to a lesser
extent a decrease in vendor bonus income and miscellaneous income.
For 2023, noninterest income totaled $71.6 million, a $3.6 million, or 4.7%, decrease from 2022 and reflected decreases in wealth
management fees of $1.7 million, mortgage banking revenues of $1.5 million, deposit fees of $0.8 million, and bank card fees of
$0.5 million, partially offset by a $0.9 million increase in other income. The decrease in wealth management fees reflected lower
insurance commissions of $2.7 million due to the sale of large policies in 2022 and was partially offset by higher trust fees of $0.5
million and retail brokerage fees of $0.5 million. The decrease in mortgage banking revenues was primarily driven by lower
production volume in 2023, reflective of the rapid increase in interest rates and lower market driven gain on sale margins. Steady
best efforts adjustable-rate production by CCHL during 2023 contributed to the Bank’s loan growth and earnings. The decline in
deposit fees reflected lower commercial account analysis fees and account service charge fees, and the reduction in bank card fees
was generally due to lower card volume reflective of slower consumer spending. The increase in other income was primarily due
to a $1.4 million gain from the sale of mortgage servicing rights that was partially offset by lower loan servicing income.
Noninterest income as a percent of total operating revenues (net interest income plus noninterest income) was 32.34% in 2024,
31.05% in 2023, and 37.55% in 2022. The variance in 2024 was primarily attributable to higher mortgage banking revenues and
wealth management fees. The variances for both 2023 and 2022 reflected strong growth in net interest income and lower
mortgage banking revenues. The table below reflects the major components of noninterest income.
Table 4
NONINTEREST INCOME
(Dollars in Thousands)
2024
2023
2022
Deposit Fees
21,346
21,325
22,121
Bank Card Fees
14,707
14,918
15,401
Wealth Management Fees
19,113
16,337
18,059
Mortgage Banking Revenues
14,343
10,400
11,909
Other
6,467
8,630
7,691
Total Noninterest Income
75,976
71,610
75,181
Significant components of noninterest income are discussed in more detail below.
Deposit Fees
. For 2024, deposit fees (service charge fees, insufficient fund/overdraft fees, and business account analysis fees)
totaled $21.3 million compared to $21.3 million in 2023 and $22.1 million in 2022. Deposit fees for 2024 reflected a $0.2 million
increase in commercial account analysis fees that was offset by a $0.2 million decrease in overdraft fees. A lower earnings credit
rate and increased transaction volume drove the increase in commercial account analysis fees and the decrease in overdraft fees
generally reflected lower consumer spend. The $0.8 million, or 3.6%, decrease in 2023 was attributable to lower commercial
account analysis fees of $0.5 million and account service charge fees of $0.3 million. The reduction in commercial account
analysis fees reflected a higher earnings credit rate for commercial deposit accounts. The decrease in account service charge fees
was attributable to higher debit card utilization which allows the client to forego the service charge fee if a certain number of
debit card transactions is achieved.
Bank Card Fees
. Bank card fees totaled $14.7 million in 2024 compared to $14.9 million in 2023 and $15.4 million in 2022. The
decreases in 2024 and 2023 were generally due to lower card volume reflective of overall slower consumer spending.
Wealth Management Fees
. Wealth management fees including both trust fees (i.e., managed accounts and trusts/estates) and
retail brokerage fees (i.e., investment, insurance products, and retirement accounts) totaled $19.1 million in 2024 compared to
$16.3 million in 2023 and $18.1 million in 2022. The increase in 2024 was attributable to a $2.1 million increase in retail
brokerage fees and a $0.9 million increase in trust fees, that were partially offset by a $0.3 million decrease in insurance
commission revenue. The increase in retail brokerage fees was driven by increased fixed income and annuity product sales and
new account growth, and the increase in trust fees reflected new account growth , higher account values reflective of improved
market returns, and a mid-year fee increase. The decrease in 2023 reflected lower insurance revenues of $2.7 million that was
partially offset by a $0.5 million decrease in trust fees and $0.5 million decrease in retail brokerage fees. The sale of large
policies in 2022 drove the decline in insurance revenues. At December 31, 2024, total assets under management (“AUM”) were
approximately $3.049 billion compared to $2.588 billion at December 31, 2023 and $2.273 billion at December 31, 2022. The
increases in AUM in 2024 and 2023 reflected a combination of new account growth and higher account values due to improved
market returns.
Mortgage Banking Revenues
. Mortgage banking revenues totaled $14.3 million in 2024 compared to $10.4 million in 2023 and
$11.9 million in 2022. The increase in 2024 was attributable to a higher gain on sale margin which reflected a higher percentage
of secondary market/mandatory delivery loan sales. The decrease in 2023 was primarily driven by lower production volume
reflective of the rapid increase in interest rates and lower market driven gain on sale margins which were under pressure in 2023.
We provide a detailed overview of our mortgage banking operation, including a detailed break-down of mortgage banking
revenues, mortgage servicing activity, and warehouse funding within Note 4 - Mortgage Banking Activities in the Notes to
Consolidated Financial Statements.
Other
. Other noninterest income totaled $6.5 million in 2024 compared to $8.6 million in 2023 and $7.7 million in 2022. The
decrease in 2024 was primarily attributable to a $1.4 million gain from the sale of mortgage servicing rights realized in 2023, and
to a lesser extent a decrease in vendor bonus income and miscellaneous income. The $0.9 million increase in 2023 was due to a
$1.4 million gain from the sale of mortgage servicing rights that was partially offset by lower loan servicing income which
reflected the aforementioned sale.
Noninterest Expense
For 2024, noninterest expense totaled $165.3 million, a $8.3 million, or 5.3%, increase over 2023, primarily attributable to
increases in compensation expense of $6.9 million, occupancy expense of $0.3 million, and other expense of $1.1 million. The
increase in compensation reflected a $5.3 million increase in salary expense and a $1.6 million increase in other associate benefit
expense. The increase in salary expense was primarily due to a decrease of $3.1 million in realized loan cost (credit offset to
salary expense - lower new loan volume in 2024), a $2.2 million increase in base salary expense (primarily annual merit raises),
and a $1.2 million increase in cash incentive compensation that were partially offset by a decrease of $1.4 million in commission
expense (lower residential mortgage volume). The unfavorable variance in other associate benefit expense was due to a $0.9
million increase in associate insurance cost and a $0.6 million increase in stock compensation expense. The increase in
occupancy expense was attributable to increases in software license and maintenance agreement expenses. The increase in other
expense was driven by a $1.1 million increase in other real estate expense and a $1.4 million increase in processing expense that
were partially offset by a $1.4 million decrease in miscellaneous expense. The increase in other real estate expense reflected a
lower level of gains from the sale of banking offices in 2024. The increase in processing expense reflected both inflationary
increases on contract renewals and the outsourcing of our core processing system. The decrease in miscellaneous expense was
attributable to lower pension plan expense for the non-service related component of the plan.
For 2023, noninterest expense totaled $157.0 million, a $5.4 million, or 3.5%, increase over 2022 and reflected increases in
occupancy expense of $3.1 million and compensation expense of $2.3 million. The increase in occupancy expense was primarily
driven by the addition of four new banking offices in mid-to-late 2022 and early 2023, and, to a lesser extent, higher expense for
property insurance (increased premiums) and maintenance agreements (network and security upgrades). The increase in
compensation expense reflected a $4.7 million increase in salary expense that was partially offset by a $2.4 million decrease in
associate benefit expense. The increase in salary expense was primarily due to a $3.6 million increase in base salaries (primarily
the addition of staffing in new markets and annual merit), a $3.0 million decrease in realized cost (credit offset to salary expense -
lower new residential loan originations in 2023), and a $1.2 million increase in incentive expense that were partially offset by a
$3.3 million decrease in commission expense (lower residential loan originations and insurance policy sales in 2023). The
decrease in associate benefit expense reflected a $2.9 million decrease in pension plan service cost expense that was partially
offset by a $0.5 million increase in associate insurance expense (higher premiums). The net variance in other expense was
primarily due to a $1.6 million decrease in other real estate expense (gain from the sale of a banking office in 2023) and a $1.2
million decrease in miscellaneous expense (lower mortgage servicing asset amortization of $1.0 million due to mid-2023 sale of
servicing rights). Further, there was no pension settlement expense in 2023 whereas we realized $2.3 million in total pension
settlement expense in 2022. These favorable variances were partially offset by increases in pension – other expense (non-service
component) of $3.0 million, professional fees of $0.8 million (one -time consulting expense related to our core processor
outsourcing contract negotiation), insurance – other (FDIC insurance fees) of $0.7 million, processing fees of $0. 5 million, and
legal fees of $0.3 million. For comparison purposes, the service cost component of our pension plan expense is reflected in
associate benefit expense and the non-service component plus any settlement expenses are reflected in other expense. For 2023,
our total pension expense was $3.3 million compared to $5.7 million in 2022 which included $2.3 million in pension settlement
expense due to a higher level of retirements.
Our operating efficiency ratio (expressed as noninterest expense as a percent of taxable equivalent net interest income plus
noninterest income) was 70.30%, 67.99% and 75.62% in 2024, 2023 and 2022, respectively. The increase in this metric for 2024
was attributable to a higher level of noninterest expense and the decrease in this metric for 2023 was primarily driven by higher
taxable equivalent net interest income (refer to caption headed Net Interest Income and Margin). Expense management is an
important part of our culture and strategic focus. We will continue to review and evaluate opportunities to optimize our delivery
operations and invest in technology that provides favorable returns/scale and/or mitigates risk. The table below reflects the major
components of noninterest expense.
Table 5
NONINTEREST EXPENSE
(Dollars in Thousands)
2024
2023
2022
Salaries
84,639
79,278
74,590
Associate Benefits
16,082
14,509
16,929
Total Compensation
100,721
93,787
91,519
Premises
12,593
13,033
11,184
Equipment
15,389
14,627
13,390
Total Occupancy, net
27,982
27,660
24,574
Legal Fees
1,724
1,721
1,413
Professional Fees
6,311
6,245
5,437
Processing Services
8,411
6,984
6,534
Advertising
3,111
3,349
3,208
Travel and Entertainment
1,795
1,896
1,815
Telephone
2,857
2,729
2,851
Insurance – Other
3,137
3,120
2,409
Pension - Other
(1,675)
76
(3,043)
Pension Settlement (Gain) Charge
(291)
2,321
Other Real Estate, Net
(868)
(1,969)
(337)
Miscellaneous
11,809
11,716
12,933
Total Other Expense
36,612
35,576
35,541
Total Noninterest Expense
165,315
157,023
151,634
Significant components of noninterest expense are discussed in more detail below.
Compensation
. Compensation expense totaled $100.7 million in 2024 compared to $93.8 million in 2023, and $91.5 million in
2022. For 2024, the $6.9 million, or 7.4%, net increase reflected a $5.3 million increase in salary expense and a $1.6 million
increase in associate benefit expense. The increase in salary expense was primarily due to a $3.1 million decrease in realized loan
cost which is a credit offset to salary expense and reflected lower new loan volume and a $2.2 million increase in base salary
expense, primarily annual merit raises, which were partially offset by a $1.4 million decrease in commission expense driven by
lower residential mortgage volume. The unfavorable variance in other associate benefit expense was due to a $0.9 million
increase in associate insurance cost due to higher health insurance cost and a $0.6 million increase in stock compensation expense
attributable to a higher incentive pay-out.
For 2023, the $2.3 million, or 2.5%, net increase reflected an increase in salary expense of $4.7 million that was partially offset by
a decrease in associate benefit expense of $2.4 million. The increase in salary expense was primarily due to a $3.6 million
increase in base salaries, primarily the addition of staffing in new markets and annual merit, a $3.0 million decrease in realized
cost, and a $1.2 million increase in incentive expense, that were partially offset by a $3.3 million decrease in commission expense
which reflected lower residential loan originations and insurance policy sales in 2023. The decrease in associate benefit expense
reflected a $2.9 million decrease in pension plan service cost expense that was partially offset by a $0.5 million increase in
associate insurance expense attributable to higher premiums.
Occupancy
. Occupancy expense (including premises and equipment) totaled $28.0 million for 2024 compared to $27.7 million
for 2023, and $24.5 million for 2022. For 2024, the $0.3 million, or 1.2%, increase was attributable to an increase in maintenance
agreement expense, primarily for security upgrades and addition of interactive teller machines.
For 2023, the $3.1 million, or 12.6%, increase was primarily driven by the addition of four new banking offices in mid-to-late
2022 and early 2023, and, to a lesser extent higher expense for property insurance (increased premiums) and maintenance
agreements (network and security upgrades).
Other
. Other noninterest expense totaled $36.6 million in 2024 compared to $35.6 million in 2023 and $35.5 million in 2022.
For 2024, the $1.0 million variance in other expense was driven by a $1.1 million increase in other real estate expense and a $1.4
million increase in processing expense that were partially offset by a $1.4 million decrease in miscellaneous expense. The
increase in other real estate expense reflected a lower level of gains from the sale of banking offices in 2024. The increase in
processing expense reflected both inflationary increases on contract renewals and the outsourcing of our core processing system.
The decrease in miscellaneous expense was attributable to lower pension plan expense for the non-service related component of
the plan.
For 2023, the $0.1 million variance in other expense was primarily due to a $1.6 million decrease in other real estate expense
(gain from the sale of a banking office in 2023) and a $1.2 million decrease in miscellaneous expense (lower mortgage servicing
asset amortization of $1.0 million due to mid-2023 sale of servicing rights). Further, there was no pension settlement expense in
2023 whereas we realized $2.3 million in total pension settlement expense in 2022. These favorable variances were partially
offset by increases in pension – other expense (non-service component) of $2.8 million, professional fees of $0.8 million (one-
time consulting expense related to our core processor outsourcing contract negotiation), insurance – other (FDIC insurance fees)
of $0.7 million, processing fees of $0.5 million, and legal fees of $0.3 million.
Income Taxes
For 2024, we realized income tax expense of $13.9 million (effective rate of 21.2%) compared to $13.0 million (effective rate of
20.4%) for 2023 and $7.8 million (effective rate of 19.0%) for 2022. The increase in our effective tax rate in 2024 was primarily
attributable to a higher than projected Internal Revenue Code Section 162(m) limitation related to current and future
compensation and lower tax-exempt interest income. The increase in our effective tax rate in 2023 was attributable to a higher
level of consolidated income. The effective rate was further increased 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. However, these increases were offset by additional solar tax credits earned in 2023.
Absent discrete items or new tax credit investments, we expect our annual effective tax rate to approximate 24% for 2025.
FINANCIAL CONDITION
Average assets totaled approximately $4.235 billion for 2024, a decrease of $44.1 million, or 1.0%, from 2023. Average earning
assets were approximately $3.898 billion for 2024, a decrease of $36.2 million, or 0.9%, from 2023. Compared to 2023, the
change in earning assets was primarily attributable to a $94.6 million decrease in investment securities that was partially offset by
a $50.1 million increase in loans HFI. We discuss these variances in more detail below.
Table 2 provides information on average balances and rates, Table 3 provides an analysis of rate and volume variances and Table
6 highlights the changing mix of our interest earning assets over the last three fiscal years.
Loans
For 2024, average loans HFI increased $50.1 million, or 1.9%, compared to an increase of $467.0 million, or 21.3%, in 2023.
Compared to 2023, the growth in average loans was primarily driven by increases in residential real estate loans of $146.6 million
and to a lesser degree, commercial mortgage real estate loans of $7.2 million, and HELOCs of $7.7 million, partially offset by
declines in other loan categories, with the largest decline occurring in consumer, primarily indirect auto loans, with a decrease of
$63.4 million.
Total loans HFI at December 31, 2024 totaled $2.652 billion, an $82.4 million decrease from December 31, 2023 that was largely
attributable to decreases in consumer, primarily indirect auto loans of $72.8 million, commercial mortgage real estate loans of
$46.4 million, and commercial loans of $36.0 million, partially offset by increases in residential real estate loans of $38.3 million,
construction real estate loans of $23.9 million, and HELOCs of $9.1 million. During 2024, indirect auto balances declined
gradually as we focused on reducing exposure to this loan segment which totaled $175.1 million at December 31, 2024 and
$248.0 million at December 31, 2023.
As part of our overall strategy, we will originate 1-4 family real estate secured adjustable-rate loans through CCHL, which
provides us a larger pool of loan origination opportunities, and in large part drove the aforementioned growth in residential real
estate loans. This loan volume can vary according to the direction of residential mortgage interest rates, and we expect that this
volume will remain relatively stable compared to 2024.
Expansion into the Northern Arc of Atlanta, Georgia (Cobb and Gwinnett Counties) and Walton County, Florida drove
incremental loan growth of approximately $34 million in 2024.
In 2024, average loans held for sale (“HFS”) decreased $28.2 million, or 50.8%, from 2023. Loans HFI and HFS as a percentage
of average earning assets increased to 70.1% in 2024 compared to 68.9% in 2023, primarily attributable to growth in loans HFI.
Table 6
SOURCES OF EARNING ASSET GROWTH
2023 to
Percentage
Components of
2024
of Total
Average Earning Assets
(Average Balances – Dollars In Thousands)
Change
Change
2024
2023
2022
Loans:
Loans HFS
(28,204)
(77.9)
0.7
1.4
1.2
Loans HFI:
Commercial, Financial, and Agricultural
(25,337)
(70.0)
5.3
5.9
6.0
Real Estate – Construction
(21,849)
(60.3)
5.3
5.8
5.4
Real Estate – Commercial Mortgage
7,167
19.8
21.0
20.7
17.6
Real Estate – Residential
144,028
397.6
26.3
22.5
12.3
Real Estate – Home Equity
7,723
21.3
5.5
5.2
4.9
Consumer
(61,665)
(170.3)
6.0
7.6
8.7
Total HFI Loans
50,067
138.2
69.4
67.7
54.9
Total Loans HFS and HFI
21,863
60.3
70.1
69.1
56.1
Investment Securities:
Taxable
(93,297)
(257.6)
23.7
25.8
27.5
Tax-Exempt
(1,351)
(3.7)
0.1
0.1
Total Securities
(94,648)
(261.3)
23.7
25.9
27.6
Federal Funds Sold and Interest Bearing Deposits
36,565
101.0
6.2
5.0
16.3
Total Earning Assets
(36,220)
100
100
100
100
Our average total loans (HFS and HFI)-to-deposit ratio was 76.0% in 2024, 73.9% in 2023, and 59.5% in 2022.
The composition of our HFI loan portfolio at December 31 for each of the past three years is shown in Table 7. Table 8 arrays
our HFI loan portfolio at December 31, 2024, by maturity period. As a percentage of the HFI loan portfolio, loans with fixed
interest rates represented 25.3% at December 31, 2024 compared to 29.1% at December 31, 2023. Higher residential real estate
adjustable-rate loan balances and lower commercial real estate mortgage adjustable-rate loan balances at December 31, 2024
drove the decrease in the percentage.
Table 7
LOANS HFI BY CATEGORY
(Dollars in Thousands)
2024
2023
2022
Commercial, Financial and Agricultural
189,208
225,190
247,362
Real Estate – Construction
219,994
196,091
234,519
Real Estate – Commercial Mortgage
779,095
825,456
782,557
Real Estate – Residential
1,042,504
1,004,219
749,513
Real Estate – Home Equity
220,064
210,920
208,217
Consumer
200,685
272,042
325,517
Total Loans HFI, Net of Unearned Income
2,651,550
2,733,918
2,547,685
Table 8
LOANS HFI MATURITIES
Maturity Periods
(Dollars in Thousands)
One Year
or Less
Over One
Through
Five Years
Five
Through
Fifteen
Years
Over
Fifteen
Years
Total
Commercial, Financial and Agricultural
26,853
125,574
33,748
3,033
189,208
Real Estate – Construction
133,469
56,927
2,187
27,411
219,994
Real Estate – Commercial Mortgage
52,388
110,989
330,684
285,034
779,095
Real Estate – Residential
26,847
17,967
124,374
873,316
1,042,504
Real Estate – Home Equity
1,667
9,244
45,964
163,189
220,064
Consumer
(1)
5,796
154,291
40,316
282
200,685
Total
247,020
474,992
577,273
1,352,265
2,651,550
Total Loans HFI with Fixed Rates
96,292
354,785
177,610
43,366
672,053
Total Loans HFI with Floating or Adjustable-Rates
150,728
120,207
399,663
1,308,899
1,979,497
Total
247,020
474,992
577,273
1,352,265
2,651,550
(1)
Demand loans and overdrafts are reported in the category of one year or less.
Credit Quality
Table 9 provides the components of nonperforming assets and various other credit quality and risk metrics at December 31 for the
last three fiscal years. Information regarding our accounting policies related to nonaccruals, past due loans, and financial
difficulty modifications is provided in Note 3 – Loans Held for Investment and Allowance for Credit Losses.
Nonperforming assets (nonaccrual loans and other real estate) totaled $6.7 million at December 31, 2024 compared to $6.2
million at December 31, 2023. At December 31, 2024 and December 31, 2023, nonperforming assets as a percent of total assets
equaled 0.15%. Nonaccrual loans totaled $6.3 million at December 31, 2024, a $0.1 million increase over December 31, 2023.
Further, classified loans totaled $19.9 million at December 31, 2024, a $2.3 million decrease from December 31, 2023.
Table 9
CREDIT QUALITY
(Dollars in Thousands)
2024
2023
2022
Nonaccruing Loans:
Commercial, Financial and Agricultural
37
311
41
Real Estate – Construction
322
17
Real Estate – Commercial Mortgage
566
909
645
Real Estate – Residential
3,127
2,990
239
Real Estate – Home Equity
1,782
999
771
Consumer
790
711
584
Total Nonaccruing Loans
6,302
6,242
2,297
Other Real Estate Owned
367
1
431
Total Nonperforming Assets
6,669
6,243
2,728
Past Due Loans 30 – 89 Days
4,311
6,855
7,829
Classified Loans
19,896
22,203
19,342
Nonaccruing Loans/Loans
0.24
0.23
0.09
Nonperforming Assets/Total Assets
0.15
0.15
0.06
Nonperforming Assets/Loans Plus OREO
0.25
0.23
0.11
Allowance/Nonaccruing Loans
464.14
479.70
1091.33
Nonaccrual Loans
. Nonaccrual loans totaled $6.3 million at December 31, 2024, a $0.1 million increase over December 31,
2023. Generally, loans are placed on nonaccrual status if principal or interest payments become 90 days past due or management
deems the collectability of the principal and interest to be doubtful. Once a loan is placed in nonaccrual status, all previously
accrued and uncollected interest is reversed against interest income. Interest income on nonaccrual loans is recognized when the
ultimate collectability is no longer considered doubtful. Loans are returned to accrual status when the principal and interest
amounts contractually due are brought current or when future payments are reasonably assured. If interest on our loans classified
as nonaccrual during 2024 had been recognized on a fully accruing basis, we would have recorded an additional $0.3 million of
interest income for the year ended December 31, 2024.
Other Real Estate Owned
. OREO represents property acquired as the result of borrower defaults on loans or by receiving a deed
in lieu of foreclosure. OREO is recorded at the lower of cost or estimated fair value, less estimated selling costs, at the time of
foreclosure. Write-downs occurring at foreclosure are charged against the allowance for credit losses. On an ongoing basis,
properties are either revalued internally or by a third-party appraiser as required by applicable regulations. Subsequent declines in
value are reflected as other noninterest expense. Carrying costs related to maintaining the OREO properties are expensed as
incurred and are also reflected as other noninterest expense.
OREO totaled $0.4 million at December 31, 2024 versus $1,000 at December 31, 2023. During 2024, we added properties
totaling $1.0 million and sold properties totaling $0.6 million. For 2023, we added properties totaling $1.5 million and sold
properties totaling $1.9 million.
Modifications to Borrowers Experiencing Financial Difficulty
. Occasionally, we will modify loans to borrowers who are
experiencing financial difficulty. Loan modifications to borrowers in financial difficulty are loans in which we will grant an
economic concession to the borrower that we would not otherwise consider. In these instances, as part of a work-out alternative,
we will make concessions including the extension of the loan term, a principal moratorium, a reduction in the interest rate, or a
combination thereof. A modified loan classification can be removed if the borrower’s financial condition improves such that the
borrower is no longer in financial difficulty, the loan has not had any forgiveness of principal or interest, and the loan is
subsequently refinanced or restructured at market terms and qualifies as a new loan. At December 31, 2024, we maintained one
loan for $0.3 million that we modified due to the borrower experiencing financial difficulty.
Past Due Loans
. A loan is defined as a past due loan when one full payment is past due or a contractual maturity is over 30 days
past due. Past due loans at December 31, 2024 totaled $4.3 million compared to $6.9 million at December 31, 2023. Indirect
auto loans represented a large portion of the past due balances representing 56% and 76%, respectively, of the total dollars past
due at December 31, 2024 and December 31, 2023, respectively.
Potential Problem Loans
. Potential problem loans are defined as those loans which are now current but where management has
doubt as to the borrower’s ability to comply with present loan repayment terms. At December 31, 2024, we had $2.8 million in
loans of this type which were not included in either of the nonaccrual or 90 days past due loan categories compared to $3.4
million at December 31, 2023. Management monitors these loans closely and reviews their performance on a regular basis.
Loan Concentrations
. Loan concentrations exist when there are amounts loaned to multiple borrowers engaged in similar
activities which cause them to be similarly impacted by economic or other conditions and such amount exceeds 10% of our total
loans. Due to the lack of diversified industry within our markets and the relatively close proximity of the markets, we have both
geographic concentrations as well as concentrations in the types of loans funded. Specifically, due to the nature of our markets, a
significant portion of our HFI loan portfolio has historically been secured with real estate, approximately 85% at December 31,
2024 and 82% at December 31, 2023, with the increase driven by lower loan volume in 2024 for commercial and consumer
(indirect auto) loans and a higher volume of 1-4 family residential real estate loans originated in 2023 in comparison to other loan
types. The primary types of real estate collateral are commercial properties and 1-4 family residential properties.
We review our loan portfolio segments and concentration limits on an ongoing basis and will make adjustments as needed to
mitigate/reduce risk to segments that reflect decline or stress.
We
have established an internal lending limit of $10 million for the total aggregate amount of credit that will be extended to a
client and any related entities within our Board approved policies. This compares to our legal lending limit of approximately
$101 million.
The following table summarizes our real estate loan category as segregated by the type of property. Property type concentrations
are stated as a percentage of total real estate loans at December 31.
Table 10
REAL ESTATE LOANS BY PROPERTY TYPE
2024
2023
(Dollars in Thousands)
Investor Real
Estate
Owner
Occupied
Real Estate
Investor Real
Estate
Owner
Occupied
Real Estate
Vacant Land, Construction, and Land
Development
317,881
14.1
294,751
13.3
Improved Property
542,858
24.2
1,386,912
61.7
604,993
27.2
1,333,981
59.5
860,739
38.3
61.7
899,744
40.5
59.5
A major portion of our real estate loan segment is centered in the owner occupied category which carries a lower risk of non-
collection than certain segments of the investor category. The owner occupied category was approximately 62% of total real
estate loans at December 31, 2024 and 60% of total real estate loans at December 31, 2023. Further, investor real estate totaled
38% and 41% of total real estate loans at December 31, 2024 and December 31, 2023, respectively.
The table below further segments the investor real estate category for improved property.
Table 11
REAL ESTATE LOANS IMPROVED PROPERTY
DISTRIBUTION
(Dollars in Thousands)
2024
2023
Hotel/Motel
74,400
13.7
83,108
13.7
Gas Station/C-Store
7,628
1.4
9,640
1.6
Industrial/Warehouse
30,427
5.6
31,710
5.3
Multi-Family
49,295
9.1
72,677
12.0
Office
45,541
8.4
49,245
8.1
Retail & Shopping Centers
116,402
21.4
119,873
19.8
Commercial Condos
867
0.2
2,204
0.4
Other
32,022
5.9
35,766
5.9
Total Improved Property
356,582
65.7
404,223
66.8
Non-Owner Occupied 1-4 Residential
186,276
34.3
200,770
33.2
Total Investor Real Estate Improved Property
542,858
100
604,993
100
Allowance for Credit Losses
The allowance for credit losses is a valuation account that is deducted from the loans’ amortized cost basis to present the net
amount expected to be collected on the loans. The allowance for credit losses is adjusted by a credit loss provision which is
reported in earnings and reduced by the charge-off of loan amounts, net of recoveries. Loans are charged off against the
allowance when management believes the uncollectability of a loan balance is confirmed. Expected recoveries do not exceed the
aggregate of amounts previously charged-off and expected to be charged-off. Expected credit loss inherent in non-cancellable
off-balance sheet credit exposures is provided through the credit loss provision, but recorded separately in other liabilities.
Management estimates the allowance balance using relevant available information, from internal and external sources, relating to
past events, current conditions, and reasonable and supportable forecasts. Historical loan default and loss experience provides the
basis for the estimation of expected credit losses. Adjustments to historical loss information incorporate management’s view of
current conditions and forecasts.
Detailed information regarding the methodology for estimating the amount reported in the allowance for credit losses is provided
in Note 1 – Significant Accounting Policies/Allowance for Credit Losses in the Consolidated Financial Statements.
Note 3 – Loans Held for Investment and Allowance for Credit Losses in the Consolidated Financial Statements provides the
activity in the allowance and the allocation by loan type for each of the past three fiscal years.
At December 31, 2024, the allowance for credit losses for HFI loans totaled $29.2 million compared to $29.9 million at December
31, 2023 and $25.1 million at December 31, 2022. The $0.7 million decrease in the allowance in 2024 reflected a credit loss
provision of $5.0 million and net loan charge-offs of $5.7 million. The $4.8 million increase in the allowance in 2023 reflected a
credit loss provision of $9.6 million and net loan charge -offs of $4.7 million. The decrease in the allowance in 2024 was
primarily attributable to lower new loan volume and loan balances and favorable loan migration. The increase in the allowance in
2023 was primarily attributable to incremental allowance related to loan growth, primarily residential real estate, and slower
prepayment speeds (due to higher interest rates).
For 2024, we realized net loan charge-offs of $5.7 million, or 0.21%, of average HFI loans, compared to net loan charge -offs of
$4.7 million, or 0.18%, for 2023, and net loan recoveries of $3.9 million, or 0.18%, for 2022. Consumer (indirect auto) net loan
charge-offs represented 62%, 76%, and 43% of total net loan charge-offs for the same respective years. Further, indirect auto net
loan charge-offs represented approximately 1.68% of average indirect auto loans in 2024, 1.31% in 2023, and 0.53% in 2022 .
Beginning in 2022 we began reducing our exposure to this loan segment.
At December 31, 2024, the allowance for credit losses represented 1.10% of HFI loans and provided coverage of 464% of
nonperforming loans compared to 1.10% and 480%, respectively, at December 31, 2023 and 0.98% and 1,091%, respectively, at
December 31, 2022.
Table 11 further segments the allocation of allowance for credit losses at December 31 for each of the last three fiscal years.
Table 11
ALLOCATION OF ALLOWANCE FOR CREDIT LOSSES
2024
2023
2022
(Dollars in Thousands)
ACL
Amount
Percent of
Loans to
Total Loans
ACL
Amount
Percent of
Loans to
Total Loans
ACL
Amount
Percent of
Loans to
Total Loans
Commercial, Financial and Agricultural
1,514
7.1
1,482
8.2
1,506
9.7
Real Estate:
Construction
2,384
8.3
2,502
7.2
2,654
9.2
Commercial
5,867
29.4
5,782
30.2
4,815
30.7
Residential
14,568
39.3
15,056
36.7
10,741
29.4
Home Equity
1,952
8.3
1,818
7.7
1,864
8.2
Consumer
2,966
7.6
3,301
10.0
3,488
12.8
Total
29,251
100
29,941
100
25,068
100
Investment Securities
Our average investment portfolio balance was $924 million in 2024, $1.019 billion in 2023, and $1.102 billion in 2022. As a
percentage of average earning assets, our investment portfolio represented 23.7% in 2024, compared to 25.9% in 2023, and 27.6%
in 2022. For both year-over-year comparisons, the decline in the investment portfolio was attributable to a portion of our
investment cash flow not being reinvested to support loan growth. In, 2025, we plan to reinvest cash flow from the investment
portfolio as appropriate given loan demand and other liquidity management strategies.
For 2024, average taxable investments decreased $93.3 million, or 9.2%, while tax-exempt investments decreased $1.4 million, or
61.4%. Both taxable and non-taxable bonds decreased as part of our overall investment strategy to allow a majority of our
investments to run off in order to fund loan growth. At December 31, 2024, municipal securities (taxable and non-taxable)
comprised 4.0% of the portfolio.
Our investment portfolio is a significant component of our operations and, as such, it functions as a key element of liquidity and
asset/liability management. Two types of classifications are approved for investment securities which are Available -for-Sale
(“AFS”) and Held-to-Maturity (“HTM”). For 2024 and 2023, we maintained securities under both the AFS and HTM
designations. At December 31, 2024, $403.3 million, or 41.5%, of our investment portfolio was classified as AFS, with $567.2
million, or 58.3%, classified as HTM, and $2.4 million, or 0.2%, classified as equity securities. At December 31, 2023, $337.9
million, or 35.1%, of our investment portfolio was classified as AFS, with $625.0 million, or 64.7%, classified as HTM and $3.5
million, or 0.2%, classified as equity securities. In the third quarter of 2022, U.S. Treasury obligations totaling $168.4 million
with unrealized losses of $9.4 million were transferred from AFS to HTM. At December 31, 2024, $1.3 million was remaining in
unrealized losses for these securities.
Table 12 provides the composition of our investment securities portfolio at December 31 for each of the last three fiscal years.
Table 12
INVESTMENT SECURITIES COMPOSITION
2024
2023
2022
(Dollars in Thousands)
Carrying
Amount
Percent
Carrying
Amount
Percent
Carrying
Amount
Percent
Available for Sale
U.S. Government Treasury
105,801
10.9
24,679
2.6
22,050
2.1
U.S. Government Agency
143,127
14.8
145,034
15.0
186,052
17.3
States and Political Subdivisions
39,382
4.0
39,083
4.0
40,329
3.8
Mortgage-Backed Securities
55,477
5.7
63,303
6.6
69,405
6.5
Corporate Debt Securities
51,462
5.3
57,552
6.0
88,236
8.2
Other Securities
8,096
0.8
8,251
0.9
7,222
0.6
Total
403,345
41.5
337,902
35.1
413,294
38.5
Held to Maturity
U.S. Government Treasury
368,005
37.8
457,681
47.4
457,374
42.6
Mortgage-Backed Securities
199,150
20.5
167,341
17.3
203,370
18.9
Total
567,155
58.3
625,022
64.7
660,744
61.5
Other Equity Securities
2,399
0.2
3,450
0.2
10
Total Investment Securities
972,899
100
966,374
100
1,074,048
100
The classification of a security is determined upon acquisition based on how the purchase will affect our asset/liability strategy
and future business plans and opportunities. Classification determinations will also factor in regulatory capital requirements,
volatility in earnings or other comprehensive income, and liquidity needs. Securities in the AFS portfolio are recorded at fair
value with unrealized gains and losses associated with these securities recorded net of tax, in the accumulated other
comprehensive loss component of shareowners’ equity. Securities designated as HTM are those acquired or owned with the
intent of holding them to maturity (final payment date). HTM investments are measured at amortized cost. It is neither
management’s current intent nor practice to participate in the trading of investment securities for the purpose of recognizing gains
and therefore we do not maintain a trading portfolio.
At December 31, 2024, there were 856 positions (combined AFS and HTM) with pre-tax unrealized losses totaling $48.4 million.
The Government National Mortgage Association mortgage-backed securities, U.S. Treasuries, and SBA securities held carry the
full faith and credit guarantee of the U.S. Government and are deemed to be 0% risk-weighted assets. Other mortgage-backed
securities held (Federal National Mortgage Association and Federal Home Loan Mortgage Corporation) are issued by U.S.
Government sponsored entities. Direct obligations of U.S. Government agencies (Federal Farm Credit Bank and Federal Home
Loan Bank of Atlanta) are also owned. We believe the long history of no credit losses on government securities indicates that the
expectation of nonpayment of the amortized cost basis is zero. A large portion of the SBA securities float monthly or quarterly
with the prime rate and are uncapped. The remaining positions owned are municipal and corporate bonds. At December 31,
2024, 48 corporate bond positions had a total allowance for credit loss of $64,000 and 31 municipal bond positions had a total
allowance for credit loss of $3,000. All of these positions maintain an overall rating of at least “BBB+”, and all are expected to
mature at par.
The average maturity of our investment portfolio at December 31, 2024 was 2.54 years, with a duration of 2.19 compared to 2.91
years and 2.53, respectively, at December 31, 2023. The average life of our investment portfolio decreased primarily due to the
natural aging of the portfolio in conjunction with a portion of the cash flow from the investment portfolio not being reinvested in
order to fund loan growth.
The weighted average taxable equivalent yield of our investment portfolio at December 31, 2024 was 2.41% versus 2.02% in
2023. This increase in yield reflected a favorable reinvestment rate on securities purchased in 2024. Our bond portfolio contained
no investments in obligations, other than U.S. Governments, of any state, municipality, political subdivision, or any other issuer
that exceeded 10% of our shareowners’ equity at December 31, 2024.
Table 13 and Note 2 in the Notes to Consolidated Financial Statements present a detailed analysis of our investment securities as
to type, maturity, unrealized losses, and yield at December 31.
Table 13
MATURITY DISTRIBUTION OF INVESTMENT SECURITIES
Within 1 year
1 - 5 years
5 - 10 years
After 10 years
Total
(Dollars in
Thousands)
Amount
WAY
(3)
Amount
WAY
(3)
Amount
WAY
(3)
Amount
WAY
(3)
Amount
WAY
(3)
Available for Sale
U.S. Government
Treasury
11,776
1.73
94,025
3.80
105,801
3.65
U.S. Government
Agency
15,894
0.98
114,961
3.06
12,272
5.41
143,127
3.03
States and Political
Subdivisions
6,463
0.92
23,248
1.51
9,671
1.97
39,382
1.54
Mortgage-Backed
Securities
(1)
1
3.83
10,735
1.49
44,741
2.43
55,477
2.26
Corporate Debt
Securities
3,645
1.49
35,370
1.76
12,447
2.01
51,462
1.81
Other Securities
(2)
8,096
6.51
8,096
6.51
Total
37,779
1.48
278,339
2.98
79,131
2.77
8,096
6.51
403,345
2.83
Held to Maturity
U.S. Government
Treasury
238,506
1.68
129,499
1.79
368,005
1.72
Mortgage-Backed
Securities
(1)
3,574
2.54
171,426
2.68
24,150
3.97
199,150
2.84
Total
242,080
1.69
300,925
2.30
24,150
3.97
567,155
2.11
Equity Securities
2,399
0.35
2,399
0.35
Total Investment
Securities
279,859
1.66
579,264
2.63
103,281
3.05
10,495
6.51
972,899
2.41
(1)
Based on weighted-average maturity.
(2)
Federal Home Loan Bank Stock and Federal Reserve Bank Stock are included in this category for weighted average yield, but do not have stated maturities.
(3)
Weighted average yield ("WAY") calculated based on current amortized cost balances – not presented on a tax equivalent basis.
Deposits
Average total deposits for 2024 were $3.597 billion, a decrease of $72.2 million, or 2.0%, from 2023. Average deposits
decreased $93.7 million, or 2.5%, in 2023.
For both year-over-year periods, the decline was experienced in noninterest bearing
deposits and savings accounts, partially offset by increases in balances of NOW accounts, money market accounts and certificates
of deposit. Our public funds balances have historically realized
growth in the fourth quarter of the year when municipalities
collect tax receipts and will be at a seasonal low in the third quarter. At December 31, 2024, public funds balances totaled $660.9
million and at December 31, 2023, totaled $709.8 million.
At December 31, 2024, total deposits were $3.672 billion, a decrease of $29.8 million, or 0.8%, from December 31, 2023. The
decrease from December 31, 2023 was driven by lower noninterest bearing, NOW, and savings account balances that were
partially offset by higher money market accounts and certificate of deposit balances which reflected the re-mix in balances during
2024. Core deposit balances (total deposits less public funds) increased $21.9 million over December 31, 2023.
Although the overnight funds rate was lowered in the second half of 2024 by 100 basis points to a target range of 4.25%-4.50%,
the overall rate environment remains higher than early 2022 when the overnight funds rate was 0.00%-0.25%. As a result in
2024, we continued to see a shift in mix out of noninterest bearing accounts into interest bearing accounts, primarily money
market accounts and certificates of deposit. We have several strategies in place to protect core deposits and mitigate deposit run-
off, and we will continue to closely monitor several metrics such as the sensitivity of our clients to our deposit rates, our overall
liquidity position, and competitor rates when pricing deposits. This strategy is consistent with previous rate cycles and allows us
to manage the mix of our deposits as well as the overall client relationship rather than competing solely on rate.
Table 2 provides an analysis of our average deposits, by category, and average rates paid thereon for each of the last three fiscal
years. Table 14 reflects the shift in our deposit mix over the last year and Table 15 provides a maturity distribution of time
deposits in denominations of $250,000 and over at December 31, 2024. For 2024, noninterest bearing deposits represented 37.2%
of total average deposits. This compares to 41.1% in 2023 and 44.9% in 2022.
Table 14
SOURCES OF DEPOSIT GROWTH
2023 to
Percentage
Components of
2024
of Total
Total Deposits
(Average Balances - Dollars in Thousands)
Change
Change
2024
2023
2022
Noninterest Bearing Deposits
(171,056)
(237.0)
37.2
41.1
44.9
NOW Accounts
11,101
15.4
32.9
32.0
28.3
Money Market Accounts
101,083
140.1
11.1
8.2
7.5
Savings Accounts
(73,164)
(101.4)
14.4
16.1
16.7
Time Deposits
59,862
82.9
4.4
2.6
2.6
Total Deposits
(72,174)
100
100
100
100
Table 15
MATURITY DISTRIBUTION OF CERTIFICATES OF DEPOSITS GREATER THAN $250,000
2024
(Dollars in Thousands)
Certificates
of Deposit
Percent
Three months or less
26,846
51.3
Over three through six months
15,141
28.9
Over six through 12 months
2,658
5.1
Over 12 months
7,677
14.7
Total
52,322
100
Market Risk and Interest Rate Sensitivity
Overview.
Market risk arises from changes in interest rates, exchange rates, commodity prices, and equity prices. We have risk
management policies designed to monitor and limit exposure to market risk and we do not participate in activities that give rise to
significant market risk involving exchange rates, commodity prices, or equity prices. In asset and liability management activities,
our policies are designed to minimize structural interest rate risk.
Interest Rate Risk Management.
Our net income is largely dependent on net interest income. Net interest income is susceptible to
interest rate risk to the degree that interest-bearing liabilities mature or reprice on a different basis than interest-earning
assets. When interest-bearing liabilities mature or reprice more quickly than interest-earning assets in a given period, a significant
increase in market rates of interest could adversely affect net interest income. Similarly, when interest-earning assets mature or
reprice more quickly than interest-bearing liabilities, falling market interest rates could result in a decrease in net interest
income. Net interest income is also affected by changes in the portion of interest-earning assets that are funded by interest-
bearing liabilities rather than by other sources of funds, such as noninterest -bearing deposits and shareowners’ equity.
We have established what we believe to be a comprehensive interest rate risk management policy, which is administered by
management’s Asset Liability Management Committee (“ALCO”). The policy establishes limits of risk, which are quantitative
measures of the percentage change in net interest income (a measure of net interest income at risk) and the fair value of equity
capital (a measure of economic value of equity (“EVE”) at risk) resulting from a hypothetical change in interest rates for
maturities from one day to 30 years. We measure the potential adverse impacts that changing interest rates may have on our
short-term earnings, long-term value, and liquidity by employing simulation analysis through the use of computer modeling. The
simulation model captures optionality factors such as call features and interest rate caps and floors imbedded in investment and
loan portfolio contracts. As with any method of gauging interest rate risk, there are certain shortcomings inherent in the interest
rate modeling methodology used by us. When interest rates change, actual movements in different categories of interest-earning
assets and interest-bearing liabilities, loan prepayments, and withdrawals of time and other deposits, may deviate significantly
from assumptions used in the model. Finally, the methodology does not measure or reflect the impact that higher rates may have
on adjustable-rate loan clients’ ability to service their debts, or the impact of rate changes on demand for loan and deposit
products.
The statement of financial condition is subject to testing for interest rate shock possibilities to indicate the inherent interest rate
risk. We prepare a current base case and several alternative interest rate simulations (+/- 100, 200, 300, and 400 basis points
(bp)), at least once per quarter, and report the analysis to ALCO, our Market Risk Oversight Committee (“MROC”), our Risk
Oversight Committee (“ROC”) and the Board of Directors. We augment our interest rate shock analysis with alternative interest
rate scenarios on a quarterly basis that may include ramps, parallel shifts, and a flattening or steepening of the yield curve (non-
parallel shift). In addition, more frequent forecasts may be produced when interest rates are particularly uncertain or when other
business conditions so dictate.
Our goal is to structure the statement of financial condition so that net interest earnings at risk over 12-month and 24-month
periods and the economic value of equity at risk do not exceed policy guidelines at the various interest rate shock levels. We
attempt to achieve this goal by balancing, within policy limits, the volume of floating-rate liabilities with a similar volume of
floating-rate assets, by keeping the average maturity of fixed-rate asset and liability contracts reasonably matched, by managing
the mix of our core deposits, and by adjusting our rates to market conditions on a continuing basis.
Analysis.
Measures of net interest income at risk produced by simulation analysis are indicators of an institution’s short-term
performance in alternative rate environments. These measures are typically based upon a relatively brief period, and do not
necessarily indicate the long-term prospects or economic value of the institution.
Table 16
ESTIMATED CHANGES IN NET INTEREST INCOME
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
December 31, 2024
15.4
11.5
7.6
3.9
-4.3
-9.0
-14.3
-19.9
December 31, 2023
3.0
2.1
1.3
0.7
-1.2
-3.6
-7.5
-12.8
Percentage Change (24-month shock)
+400 bp
+300 bp
+200 bp
+100 bp
-100 bp
-200 bp
-300 bp
-400 bp
Policy Limit
-17.5
-15.0
-12.5
-10.0
-10.0
-12.5
-15.0
-17.5
December 31, 2024
40.8
32.9
24.8
17.1
0.1
-9.8
-20.9
-31.6
December 31, 2023
29.5
24.4
19.3
14.8
4.1
-3.5
-12.9
-23.6
The Net Interest Income at risk position was more favorable at December 31, 2024 compared to December 31, 2023 for the 12-
month and 24-month shocks for the rising rate scenarios and less favorable in the falling rate scenarios. Further, we are slightly
more asset sensitive at December 31, 2024 as compared to December 31, 2023 due to a higher level of variable rate overnight
funds and slightly lower loan balances.
Net Interest Income at risk is within our prescribed policy limits over both the 12-month and 24-month periods for all rate
scenarios with the exception of the down 300 bps and down 400 bps scenario primarily due to our limited ability to lower our
deposit rates relative to the decline in market rate for those scenarios. Given that our average nonmaturity deposit rate is less than
1.00%, a shock down 300 bps or down 400 bps scenario is more impactful to asset yields than deposit rates.
The measures of equity value at risk indicate our ongoing economic value by considering the effects of changes in interest rates
on all of our cash flows by discounting the cash flows to estimate the present value of assets and liabilities. The difference
between these discounted values of the assets and liabilities is the economic value of equity, which in theory approximates the fair
value of our net assets.
Table 17
ESTIMATED CHANGES IN ECONOMIC VALUE OF EQUITY
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
December 31, 2024
30.7
24.4
17.0
9.0
-17.2
-23.7
-35.1
-42.2
December 31, 2023
12.9
10.7
7.8
4.4
-6.4
-14.0
-23.6
-27.8
EVE Ratio (policy minimum 5.0%)
30.6
28.6
26.5
24.3
17.8
16.2
13.5
11.9
At December 31, 2024, the economic value of equity was favorable in all rising rate scenarios and unfavorable in the falling rate
scenarios. EVE was within prescribed tolerance levels as the EVE ratio (EVE/EVA) in all rate scenarios is greater than 5.0%.
Factors that can impact EVE values include the absolute level of rates, the overall structure of the balance sheet (including
liquidity levels), pre-payment speeds, loan floors, and the change of model assumptions.
As the interest rate environment and the dynamics of the economy continue to change, additional simulations will be analyzed to
address not only the changing rate environment, but also the changing statement of financial condition mix, measured over
multiple years, to help assess the risk to the Company.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
In general terms, liquidity is a measurement of our ability to meet our cash needs. Our objective in managing our liquidity is to
maintain our ability to fund loan commitments, purchase securities, accommodate deposit withdrawals or repay other liabilities in
accordance with their terms, without an adverse impact on our current or future earnings. Our liquidity strategy is guided by
policies that are formulated and monitored by our ALCO and senior management, and which take into account the marketability
of assets, the sources and stability of funding and the level of unfunded commitments. We regularly evaluate all of our various
funding sources with an emphasis on accessibility, stability, reliability, and cost-effectiveness. For 2024 and 2023, our principal
source of funding was client deposits, supplemented by our short-term and long-term borrowings, primarily from our trust-
preferred securities, securities sold under repurchase agreements, federal funds purchased, and FHLB borrowings. We believe
that the cash generated from operations, our borrowing capacity and our access to capital resources are sufficient to meet our
future operating capital and funding requirements.
At December 31, 2024, we had the ability to generate approximately $1.535 billion (excludes overnight funds position of $321
million) in additional liquidity through various sources, including various Federal Home Loan Bank borrowings, the Federal
Reserve Discount Window, federal funds purchased lines, and brokered deposits. We recognize the importance of maintaining
liquidity and have developed a Contingent Liquidity Plan, which addresses various liquidity stress levels and our response and
action based on the level of severity. We periodically test our credit facilities for access to the funds, but also understand that as
the severity of the liquidity level increases certain credit facilities may no longer be available. We conduct quarterly liquidity
stress tests and the results are reported to ALCO, MROC, ROC and the Board of Directors. We believe the liquidity available to
us is sufficient to meet our ongoing needs.
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 December 31, 2024, the weighted-average maturity
and duration of our portfolio were 2.54 years and 2.19, respectively, and the AFS portfolio had a net unrealized tax-effected loss
of $19.2 million.
Our average net overnight funds sold position (defined as funds sold plus interes t-bearing deposits with other banks less funds
purchased) was $239.7 million in 2024 compared to an average net overnight funds sold position of $203.1 million in 2023. The
increase was primarily attributable to a decline in investment security balance .
We expect capital expenditures over the next 12 months to be approximately $10.0 million, which will consist primarily of
technology purchases for banking offices, office leasehold improvements, business applications, and information technology
security needs as well as furniture and fixtures and banking office remodels. We expect that these capital expenditures will be
funded with existing resources without impairing our ability to meet our ongoing obligations.
Borrowings
Average short -term borrowings decreased $12.2 million compared to 2023 primarily attributable to a $19.2 million decrease in
warehouse line of credit borrowings, which reflected lower utilization of our line to support loans held for sale which was
partially offset by a $7.1 million increase in repurchase agreement balances (business deposit accounts classified as repurchase
agreements). Additional detail on these warehouse borrowings is provided in Note 4 – Mortgage Banking Activities in the
Consolidated Financial Statements.
At December 31, 2024, advances from the FHLB totaled $0.1 million comprised of one note. FHLB advances are collateralized
by a floating lien on certain 1-4 family residential mortgage loans, commercial real estate mortgage loans, and home equity
mortgage loans.
We have issued two junior subordinated deferrable interest notes to wholly owned Delaware statutory trusts. The first note for
$30.9 million was issued to CCBG Capital Trust I in November 2004, of which $10 million was retired in April 2016. The
second note for $32.0 million was issued to CCBG Capital Trust II in May 2005. The interest payment for the CCBG Capital
Trust I borrowing is due quarterly and adjusts quarterly to a variable rate of three-month CME Term SOFR (secured overnight
financing rate) plus a margin of 1.90%. This note matures on December 31, 2034. The interest payment for the CCBG Capital
Trust II borrowing is due quarterly and adjusts quarterly to a variable interest rate based on three-month CME Term SOFR plus a
margin of 1.80%. This note matures on June 15, 2035. The proceeds from these borrowings were used to partially fund
acquisitions. Under the terms of each junior subordinated deferrable interest note, in the event of default or if we elect to defer
interest on the note, we may not, with certain exceptions, declare or pay dividends or make distributions on our capital stock or
purchase or acquire any of our capital stock. In the second quarter of 2020, we entered into a derivative cash flow hedge of our
interest rate risk related to our subordinated debt. The notional amount of the derivative is $30 million ($10 million of the CCBG
Capital Trust I borrowing and $20 million of the CCBG Capital Trust II borrowing). Under the swap arrangement, CCBG will
pay a fixed interest rate of 2.50% and receive a variable interest rate based on three-month CME Term SOFR. Additional detail
on the interest rate swap agreement is provided in Note 5 – Derivatives in the Consolidated Financial Statements.
See Note 11 – Short Term Borrowings and Note 12 – Long Term Borrowings in the Notes to Consolidated Financial Statements
for additional information on borrowings.
In the ordinary course of business, we have entered into contractual obligations and have made other commitments to make future
payments. Refer to the accompanying notes to consolidated financial statements elsewhere in this report for the expected timing
of such payments as of December 31, 2024. These include payments related to (i) long-term borrowings (Note 12 – Long-Term
Borrowings), (ii) short-term borrowings (Note 11 – Short-Term Borrowings), (iii) operating leases (Note 7 – Leases), (iv) time
deposits with stated maturities (Note 10 – Deposits), and (v) commitments to extend credit and standby letters of credit (Note 21 –
Commitments and Contingencies).
Capital Resources
Shareowners’ equity was $495.3 million at December 31, 2024 compared to $440.6 million at December 31, 2023. For 2024,
shareowners’ equity was positively impacted by net income attributable to common shareowners of $52.9 million, a net $15.7
million decrease in the accumulated other comprehensive loss, the issuance of stock of $3.1 million, and stock compensation
accretion of $1.9 million. The net favorable change in accumulated other comprehensive loss reflected a $10.1 million decrease
in the pension plan loss from the year-end re-measurement of the plan and a $5.6 million decrease in the investment securities
loss. Shareowners’ equity was reduced by common stock dividends of $14.9 million ($0.88 per share), the repurchase of stock of
$2.3 million (82,540 shares), net adjustments totaling $1.4 million related to transactions under our stock compensation plans, and
a $0.3 million reclassification from temporary equity.
Additional historical information on capital changes is provided in the Consolidated Statements of Changes in Shareowners’
Equity in the Consolidated Financial Statements.
We continue to maintain a strong capital position. The ratio of shareowners' equity to total assets at December 31, 2024 was
11.45% compared to 10.24% at December 31, 2023. Further, our tangible common equity ratio was 9.51% (non-GAAP financial
measure) at December 31, 2024 compared to 8.26% at December 31, 2023. If our unrealized HTM securities losses of $16.0
million (after-tax) were recognized in accumulated other comprehensive loss, our adjusted tangible capital ratio would be 9.14%.
The improvement in the ratios in 2024 was primarily attributable to strong earnings and decreases in the unrealized loss on AFS
securities and the unfunded pension liability, both of which are recognized in accumulated other comprehensive loss.
We are subject to regulatory risk-based capital requirements that measure capital relative to risk-weighted assets and off-balance
sheet financial instruments. At December 31, 2024, our total risk-based capital ratio was 18.64% compared to 16.57% at
December 31, 2023. Our common equity tier 1 capital ratio was 15.54% and 13.52%, respectively, on these dates. Our leverage
ratio was 11.05% and 10.30%, respectively, on these dates. For a detailed discussion of our regulatory capital requirements, refer
to the “Regulatory Considerations – Capital Regulations” section on page 17. See Note 17 in the Notes to Consolidated Financial
Statements for additional information as to our capital adequacy.
At December 31, 2024, our common stock had a book value of $29.11 per diluted share compared to $25.92 at December 31,
2023. Book value is impacted by the net unrealized gains and losses on investment securities. At December 31, 2024, the net
unrealized loss was $20.2 million compared to an unrealized loss of $25.7 million at December 31, 2023. Book value is also
impacted by the recording of our unfunded pension liability through other comprehensive income in accordance with Accounting
Standards Codification Topic 715. At December 31, 2024, the net pension asset reflected in accumulated other comprehensive
loss was $9.7 million compared to a net pension liability of $0.4 million at December 31, 2023. The favorable adjustment for the
pension plan was primarily attributable to a higher than estimated return on plan assets in 2024 and a higher discount rate used to
determine the plan liability at December 31, 2024.
In January 2024, our Board of Directors authorized the Capital City Bank Group, Inc. Share Repurchase Program (“the
Program”), effective February 1, 2024, which authorizes the repurchase of up to 750,000 shares of our outstanding common stock
over a five-year period. Under the Program, shares may be repurchased by the Company from time to time in the open market or
in privately negotiated transactions, as market conditions warrant; however, the Program does not obligate the Company to
repurchase any specified number of shares. We purchased (i) 73,349 shares under the Program in 2024 at an average price of
$28.03 per share and (ii) 9,101 shares in January 2024 at an average price of $29.47 per share under a substantially similar
repurchase plan that was authorized in 2019 and expired in 2024. There are 676,561 shares remaining for purchase under the
Program.
Dividends
Adequate capital and financial strength are paramount to our stability and the stability of CCB. Cash dividends declared and paid
should not place unnecessary strain on our capital levels. When determining the level of dividends, the following factors are
considered:
Compliance with state and federal laws and regulations;
Our capital position and our ability to meet our financial obligations;
Projected earnings and asset levels; and
The ability of the Bank and us to fund dividends.
OFF-BALANCE SHEET ARRANGEMENTS
We are a party to financial instruments with off-balance sheet risks in the normal course of business to meet the financing needs
of our clients. See Note 21 in the Notes to Consolidated Financial Statements.
If commitments arising from these financial instruments continue to require funding at historical levels, management does not
anticipate that such funding will adversely impact our ability to meet on-going obligations. In the event these commitments
require funding in excess of historical levels, management believes current liquidity, investment security maturities, available
advances from the FHLB and Federal Reserve Bank, and warehouse lines of credit provide a sufficient source of funds to meet
these commitments.
In conjunction with the sale and securitization of loans held for sale and their related servicing rights, we may be exposed to
liability resulting from recourse, repurchase, and make-whole agreements. If it is determined subsequent to our sale of a loan or
its related servicing rights that a breach of the representations or warranties made in the applicable sale agreement has occurred,
which may include guarantees that prepayments will not occur within a specified and customary time frame, we may have an
obligation to either (a) repurchase the loan for the unpaid principal balance, accrued interest, and related advances; (b) indemnify
the purchaser against any loss it suffers; or (c) make the purchaser whole for the economic benefits of the loan and its related
servicing rights.
Our repurchase, indemnification and make-whole obligations vary based upon the terms of the applicable agreements, the nature
of the asserted breach, and the status of the mortgage loan at the time a claim is made. We establish reserves for estimated losses
of this nature inherent in the origination of mortgage loans by estimating the losses inherent in the population of all loans sold
based on trends in claims and actual loss severities experienced. The reserve will include accruals for probable contingent losses
in addition to those identified in the pipeline of claims received. The estimation process is designed to include amounts based on
actual losses experienced from actual activity.
ACCOUNTING POLICIES
Critical Accounting Policies and Estimates
The consolidated financial statements and accompanying Notes to Consolidated Financial Statements are prepared in accordance
with accounting principles generally accepted in the United States of America, which require us to make various estimates and
assumptions (see Note 1 in the Notes to Consolidated Financial Statements). We believe that, of our significant accounting
policies, the following may involve a higher degree of judgment and complexity.
Allowance for Credit Losses
. The amount of the allowance for credit losses represents managemen t’s best estimate of current
expected credit losses considering available information, from internal and external sources, relevant to assessing exposure to
credit loss over the contractual term of the instrument. Relevant available information includes historical credit loss experience,
current conditions, and reasonable and supportable forecasts. While historical credit loss experience provides the basis for the
estimation of expected credit losses, adjustments to historical loss information may be made for changes in loan risk grades, loss
experience trends, loan prepayment trends, differences in current portfolio-specific risk characteristics, environmental conditions,
future expectations, or other relevant factors. While management utilizes its best judgment and information available, the
ultimate adequacy of our allowance accounts is dependent upon a variety of factors beyond our control, including the
performance of our portfolios, the economy, changes in interest rates, and the view of the regulatory authorities toward
classification of assets. Detailed information on the Allowance for Credit Losses valuation, and the assumptions used are provided
in Note 1 – Significant Accounting Policies of the Notes to Consolidated Financial Statements.
Goodwill
. Goodwill represents the excess of the cost of acquired businesses over the fair value of their identifiable net
assets. We perform an impairment review on an annual basis or more frequently if events or changes in circumstances indicate
that the carrying value may not be recoverable. Adverse changes in the economic environment, declining operations, or other
factors could result in a decline in the estimated implied fair value of goodwill. If the estimated implied fair value of goodwill is
less than the carrying amount, a loss would be recognized to reduce the carrying amount to the estimated implied fair value.
We evaluate goodwill for impairment on an annual basis. Accounting Standards Update 2017-04, Intangibles – Goodwill and
Other (Topic 350): Simplifying Accounting for Goodwill Impairment allows for a qualitative assessment of goodwill impairment
indicators. If the assessment indicates that impairment has more than likely occurred, the Company must compare the estimated
fair value of the reporting unit to its carrying amount. If the carrying amount of the reporting unit exceeds its estimated fair value,
an impairment charge is recorded equal to the excess.
During the fourth quarter of 2024, we performed our annual impairment testing. We proceeded with qualitative assessment by
evaluating impairment indicators and concluded there were none that indicated that goodwill impairment had occurred.
Pension Assumptions
We have a defined benefit pension plan for the benefit of a portion of our associates. On December 30,
2019, the plan was amended to remove plan eligibility for new associates hired after December 31, 2019. Our funding policy
with respect to the pension plan is to contribute, at a minimum, amounts sufficient to meet minimum funding requirements as set
by law. Pension expense is determined by an external actuarial valuation based on assumptions that are evaluated annually as of
December 31, the measurement date for the pension obligation. The service cost component of pension expense is reflected as
“Compensation Expense” in the Consolidated Statements of Income. All other components of pension expense are reflected as
“Other Expense”.
The Consolidated Statements of Financial Condition reflect an accrued pension benefit cost due to funding levels and
unrecognized actuarial amounts. The most significant assumptions used in calculating the pension obligation are the weighted-
average discount rate used to determine the present value of the pension obligation, the weighted-average expected long-term rate
of return on plan assets, and the assumed rate of annual compensation increases. These assumptions are re-evaluated annually
with the external actuaries, taking into consideration both current market conditions and anticipated long-term market conditions.
The discount rate is determined by matching the anticipated defined pension plan cash flows to the spot rates of a corporate AA-
rated bond index/yield curve and solving for the single equivalent discount rate which would produce the same present value.
This methodology is applied consistently from year to year. The discount rate utilized in 2024 was 5.29%. The estimated impact
to 2024 pension expense of a 25 basis point increase or decrease in the discount rate would have been an approximate $0.6
million decrease or increase, respectively. We anticipate using a 5.82% discount rate in 2025.
Based on the balances at the December 31, 2024 measurement date, the estimated impact on accumulated other comprehensive
loss of a 25 basis point increase or decrease in the discount rate would have been a decrease or increase of approximately $3.1
million (after-tax). The estimated impact on accumulated other comprehensive loss of a 1% favorable/unfavorable variance in the
actual rate of return on plan assets versus the assumed rate of return on plan assets of 6.75% would have been an approximate
$0.9 million (after-tax) decrease/increase, respectively.
The weighted-average expected long-term rate of return on plan assets is determined based on the current and anticipated future
mix of assets in the plan. The assets currently consist of equity securities, U.S. Government and Government agency debt
securities, and other securities (typically temporary liquid funds awaiting investment). The weighted-average expected long-term
rate of return on plan assets utilized for 2024 was 6.75%. The estimated impact to 2024 pension expense of a 25 basis point
increase or decrease in the rate of return would have been an approximate $0.3 million decrease or increase, respectively. We
anticipate using a rate of return on plan assets of 6.75% for 2025.
The assumed rate of annual compensation increases of 4.75% for 2024 was based on an experience study performed for the plan
in 2022. It is anticipated that this compensation increase assumption may change based on updates to the actual plan participants
remaining in the plan at the end of each plan year.
Detailed information on the pension plan, the actuarially determined disclosures, and the assumptions used are provided in Note
15 of the Notes to Consolidated Financial Statements.
Income Taxes
Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax
assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between
carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed,
reduces deferred tax assets to the amount expected to be realized.
A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax
examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is
greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax
benefit is recorded.
We
recognize interest and/or penalties related to income tax matters in other expenses.
Cybersecurity
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Cybersecurity
Risk Management
and Strategy
Our enterprise risk management program is designed to identify, assess, and mitigate risks across various aspects of our
Company, including financial, operational, market, regulatory, technology, legal, and reputational. Cybersecurity risk is a critical
component of our technology risk management program, specifically our information security program given the increasing
reliance on technology and potential of cyber risk threats.
Our Chief Information Security Officer (“CISO”) is primarily
responsible for coordinating the various aspects of the information security program with cross-functional support teams. The
Chief Operating Officer (“COO”), management risk committees, and the Board of Directors provide oversight of the program and
its activities.
Our objective for managing cybersecurity risk is to avoid or minimize the impacts of external threat events or other efforts to
penetrate, disrupt or misuse systems or information. Our cybersecurity risk management infrastructure is designed around
regulatory guidance, other industry standards and the National Institute of Standards and Technology (“NIST”) Cybersecurity
Framework, although this does not imply that we meet all technical standards, specification, or requirements under the NIST. Our
CISO and Information Security Officer (“ISO”) along with key members of their respective teams, regularly collaborate with peer
banks, industry groups, and policymakers to discuss cybersecurity trends and issues and identify best practices. Our information
security program and cyber risk management policies and procedures are periodically reviewed by the CISO and ISO with the
goal of addressing changing threats and conditions.
The parts of our information security program relating to cybersecurity are built on a multi-layered and integrated defense model
and include the following processes:
Risk-based controls for information systems and information on our networks:
We maintain risk management
processes designed to identify, assess, and manage cybersecurity risks associated with external service providers and the
services we provide to our clients. We leverage people, processes, and technology as part of our efforts to manage and
maintain cybersecurity controls. We also employ a variety of preventative and detective tools designed to monitor, block,
and provide alerts regarding suspicious activity, as well as to report on suspected advanced persistent threats. We seek to
maintain a risk management infrastructure that implements physical, administrative and technical controls that are
designed, based on risk, to protect our information systems and the information stored on our networks, including personal
information, intellectual property and proprietary information of our Company and our clients.
Incident response program:
We have an incident response program and dedicated teams to respond to cybersecurity,
physical and administrative incidents. When a cybersecurity incident occurs, we have cross-functional teams that are
responsible for leading the initial assessment of priority and severity and communicating material cybersecurity incidents
to the appropriate members of management and the Board of Directors.
Training and testing:
We have established processes and systems designed to mitigate cybersecurity risk, including
regular and on-going education and training for associates, preparedness simulations and tabletop exercises, and recovery
and resilience tests. We also actively monitor our email gateways for malicious phishing email campaigns and monitor
remote connections.
Internal and external risk assessments:
We engage in regular assessments of our infrastructure, software systems, and
network architecture using internal experts and
third-party
specialists. Our internal auditor and other independent external
partners will periodically
review
our processes, systems, and controls, including with respect to our information security
program, to assess their design and operating effectiveness and make recommendations to strengthen our risk management
processes.
Notwithstanding our defensive measures and processes, the threat posed by cyber-attacks is severe. Our internal systems,
processes, and controls are designed to mitigate loss from cyber-attacks and, while we have experienced cybersecurity incidents
in the past, to date, risks from cybersecurity threats have
not materially
affected our Company.
For further discussion of risks
from cybersecurity threats, see Item 1A. Risk Factors under the section captioned “Cybersecurity incidents, including security
breaches and failures of our information systems could significantly disrupt our business, result in the unintended disclosure or
misuse of confidential or proprietary information, damage our reputation, increase our costs, and cause losses.”
Governance
Our CISO is responsible for managing our Corporate Security Department and overseeing our information security program,
including cybersecurity risks.
The CISO reports the day-to-day status of the program to the
COO
who in turn reports to our Bank
President.
On a quarterly basis, and as needed, the CISO reports the status of the program, notable threats or incidents, and other
developments related to information security and cybersecurity risks to our Operations Risk Oversight Committee (“OROC”) and
to our Enterprise Risk Oversight Committee (“ROC”).
The CISO also provides
reports
to our Board of Directors at least annually
on the status of the information security program and risks, notable threats and incidents, and other developments related to
cybersecurity. In addition, the CISO provides more frequent reports to the Audit Committee on the aforementioned activities,
including remediation efforts and the status of incident response, as needed.
Properties
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We are headquartered in Tallahassee, Florida. Our executive office is in the Capital City Bank building located on the corner of
Tennessee and Monroe Streets in downtown Tallahassee. The building is owned by CCB, but is located on land leased under a
long-term agreement.
At December 31, 2024, Capital City Bank had 62 banking offices. Of these locations, we lease the land, buildings, or both at 11
locations and own the land and buildings at the remaining 51. CCHL had 27 loan production offices, 26 of which were leased.
Capital City Strategic Wealth, LLC maintained five offices, all of which were leased.
Legal proceedings
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Legal Proceedings
We are party to lawsuits and claims arising out of the normal course of business. In management’s opinion, there are no known
pending claims or litigation, the outcome of which would, individually or in the aggregate, have a material effect on our
consolidated results of operations, financial position, or cash flows.
Management's discussion and analysis
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s discussion and analysis (“MD&A”) provides supplemental information, which sets forth the major factors that
have affected our financial condition and results of operations and should be read in conjunction with the Consolidated Financial
Statements and related notes included in the Annual Report on Form 10-K. The MD&A is divided into subsections entitled
“Business Overview,” “Executive Overview,” “Results of Operations,” “Financial Condition,” “Liquidity and Capital Resources,”
“Off-Balance Sheet Arrangements,” and “Accounting Policies.” The following information should provide a better understanding
of the major factors and trends that affect our earnings performance and financial condition, and how our performance during
2024 compares with prior years. Throughout this section, Capital City Bank Group, Inc., and its subsidiaries, collectively, are
referred to as “CCBG,” “Company,” “we,” “us,” or “our.”
CAUTION CONCERNING FORWARD -LOOKING STATEMENTS
This Annual Report on Form 10-K, including this MD&A section, contains “forward -looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements about
our beliefs, plans, objectives, goals, expectations, estimates and intentions that are subject to significant risks and uncertainties
and are subject to change based on various factors, many of which are beyond our control. 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.
All forward-looking statements, by their nature, are subject to risks and uncertainties. Our actual future results may differ
materially from those set forth in our forward-looking statements. Please see the Introductory Note and
Market risk
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QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
See “Financial Condition - Market Risk and Interest Rate Sensitivity” in Management’s Discussion and Analysis of Financial
Condition and Results of Operations, above, which is incorporated herein by reference.
Controls and procedures
As filed, 9,416 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
Evaluation of Disclosure Controls and Procedures for 2024.
At December 31, 2024, the end of the period covered by this
Annual Report on Form 10-K, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934).
Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer each concluded that our disclosure controls
and procedures were effective as of December 31, 2024.
Management’s Report on Internal Control Over Financial Reporting.
Our management is responsible for establishing and
maintaining effective internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities
Exchange Act of 1934). Internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.
generally accepted accounting principles.
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of
its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is
subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting can also be
circumvented by collusion or improper management override. Because of such limitations, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these
inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process
safeguards to reduce, though not eliminate, this risk.
Management is also responsible for the preparation and fair presentation of the consolidated financial statements and other
financial information contained in this report. The accompanying consolidated financial statements were prepared in conformity
with U.S. generally accepted accounting principles and include, as necessary, best estimates and judgments by management.
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial
Officer, we conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) (the COSO criteria). Based on this evaluation under the framework in Internal Control - Integrated
Framework, our management has concluded that our internal control over financial reporting, as such term is defined in Exchange
Act Rule 13a-15(f), was effective as of December 31, 2024.
Forvis Mazars, LLP, an independent registered public accounting firm, has audited our consolidated financial statements as of and
for the year ended December 31, 2024, and opined as to the effectiveness of internal control over financial reporting at December
31, 2024, as stated in its report, which is included herein on page 129.
Remediation of Previously Reported Material Weakness
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is
a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be
prevented or detected on a timely basis. As reported in our Annual Report on Form 10-K for the year ended December 31, 2023,
as amended (the “2023 Form 10-K”), we did not maintain effective internal control over financial reporting as of December 31,
2023 as a result of a material weakness in our internal control over financial reporting for the review of significant inter-company
mortgage loan sales and servicing transactions was not designed effectively. Further, financial information obtained for certain
construction/permanent loan activity was not in sufficient detail to appropriately classify this activity within the Statements of
Cash Flows. For more information regarding the previously identified material weakness, please see Item 9A in the 2023 Form
10-K under the section captioned “Existence of Material Weakness as of December 31, 2023.”
With oversight from the Audit Committee and input from the Board of Directors, we devoted substantial resources to implement
the controls as previously disclosed in the 2023 Form 10-K under the caption “Remediation Plan.” We have implemented and
completed our testing of the operating effectiveness of the Remediation Plan controls and have concluded that the material
weakness was remediated as of December 31, 2024.
Change in Internal Control.
There have been no changes in our internal control during our most recently completed fiscal quarter
that materially affected, or are likely to materially affect, our internal control over financial reporting.
Report of Independent Registered Public Accounting Firm
Shareowners, Board of Directors, and Audit Committee
Capital City Bank Group, Inc.
Tallahassee, Florida
Opinion on the Internal Control Over Financial Reporting
We have audited Capital City Bank Group, Inc.’s (Company) internal control over financial reporting as of December 31, 2024
based on criteria established in
Internal Control – Integrated Framework: (2013)
issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2024, based on criteria established in
Internal Control – Integrated
Framework: (2023)
issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements of the Company as of December 31, 2024 and 2023, and for each of the three
years in the period ended December 31, 2024, and our report dated March 11, 2025 expressed an unqualified opinion on those
financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over
financial reporting based on our audit.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definitions and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of reliable consolidated financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Forvis Mazars, LLP
Little Rock, Arkansas
March 11, 2025
Figures reported in this filing
Standardized line items from the XBRL in this filing, for the period ended 2024-12-31. Comparative periods it repeats are left out.
| Line item | Period | Value | XBRL concept |
|---|---|---|---|
| Income tax | 12 months2024-01-01 to 2024-12-31 | $13.9m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 12 months2024-01-01 to 2024-12-31 | $52.9m | us-gaap:NetIncomeLoss |
| Diluted EPS | 12 months2024-01-01 to 2024-12-31 | $3.12 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 12 months2024-01-01 to 2024-12-31 | $3.12 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 12 months2024-01-01 to 2024-12-31 | 16,969,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 12 months2024-01-01 to 2024-12-31 | $63.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 12 months2024-01-01 to 2024-12-31 | $8.7m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 12 months2024-01-01 to 2024-12-31 | $14.9m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 12 months2024-01-01 to 2024-12-31 | $2.3m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Total assets | At period end2024-12-31 | $4.32bn | us-gaap:Assets |
| Total liabilities | At period end2024-12-31 | $3.83bn | us-gaap:Liabilities |
| Short-term borrowings | At period end2024-12-31 | $28.3m | us-gaap:ShortTermBorrowings |
| Shareholders' equity | At period end2024-12-31 | $495.3m | us-gaap:StockholdersEquity |
Source: SEC EDGAR, the filing index for accession 0000726601-25-000013. Last ingested by Listed: Oct 31, 2026, 16:24 ET. Listed shows no prices and gives no investment advice.