Business Overview and History

Capital City Bank Group, Inc. (CCBG) is a leading financial holding company headquartered in Tallahassee, Florida, with a storied history dating back to 1895. The company provides a comprehensive range of banking services, including traditional deposit and credit offerings, mortgage banking, asset management, and wealth management solutions, serving customers across Florida, Georgia, and Alabama.

Capital City Bank Group was founded in 1895 as Capital City Bank, established to serve the financial needs of the local Tallahassee community. Over the decades, the bank has grown organically and through strategic acquisitions, expanding its footprint and diversifying its product offerings to become one of the largest publicly traded financial institutions headquartered in Florida.

In 1982, the company reorganized as a bank holding company, forming Capital City Bank Group, Inc. This move allowed the organization to broaden its capabilities and better serve its growing customer base. In the same year, Capital City Bank converted to a state-chartered bank, enabling it to operate across state lines and further expand its reach.

Throughout its history, Capital City Bank has faced various challenges, including navigating changes in the regulatory environment and adapting to advancements in technology. The company has consistently demonstrated its ability to overcome these obstacles and continue its growth trajectory.

In the late 1990s and early 2000s, Capital City Bank Group executed several strategic acquisitions to expand its geographic presence and diversify its service offerings. These acquisitions helped strengthen the company's position in the regional market and allowed it to offer a more comprehensive range of financial solutions to its customers.

Today, Capital City Bank Group operates a network of 63 full-service banking offices and 105 ATMs/ITMs across Florida, Georgia, and Alabama, serving a diverse customer base that includes individuals, businesses, and public entities. The company's core banking services are complemented by its mortgage banking, wealth management, and trust operations, providing clients with a comprehensive suite of financial solutions. Additionally, through its subsidiary, Capital City Home Loans, the company has established a presence in the Southeast for its mortgage banking business, with an additional 29 offices.

Financial Performance and Outlook

For the full year of 2024, Capital City Bank Group reported net income attributable to common shareowners of $52.9 million, or $3.12 per diluted share, compared to $52.3 million, or $3.07 per diluted share, for the same period in 2023. The company's total revenue for the year was $234.9 million, reflecting a solid year-over-year increase.

In the fourth quarter of 2024, the company reported net income attributable to common shareowners of $13.1 million, or $0.77 per diluted share, compared to $13.1 million, or $0.77 per diluted share, in the third quarter of 2024 and $11.7 million, or $0.70 per diluted share, in the fourth quarter of 2023. This performance was driven by strong net interest income, which totaled $41.2 million in the fourth quarter of 2024, up from $40.3 million in the prior quarter.

Capital City Bank Group's net interest margin expanded to 4.12% in the fourth quarter of 2024, up 10 basis points from the previous quarter, as the company benefited from favorable loan and investment repricing amid the rising interest rate environment. The company's credit quality metrics remained stable, with a credit loss provision of $1.2 million for the quarter.

Looking ahead, Capital City Bank Group has demonstrated its ability to navigate various economic conditions and deliver consistent financial performance. The company continues to focus on organic growth, strategic acquisitions, and diversifying its revenue streams to enhance its market position and shareholder value.

Financials

Capital City Bank Group's financial performance has been solid, with consistent growth in net income and revenue. The company's net income attributable to common shareowners increased from $52.3 million in 2023 to $52.9 million in 2024, representing a year-over-year growth of 1.15%. The total revenue for 2024 reached $234.9 million, indicating the company's ability to generate sustainable income streams.

For the most recent fiscal year (2023), Capital City Bank Group reported revenue of $223.61 million, net income of $52.26 million, operating cash flow of $54.78 million, and free cash flow of $47.74 million. In the most recent quarter (Q3 2024), the company reported revenue of $68.84 million and net income of $13.12 million, showing a 9.5% increase in net income compared to Q3 2023. This growth was driven by higher net interest income and mortgage banking revenues, partially offset by increases in noninterest expense.

Liquidity

The company maintains a strong liquidity position, which is crucial for meeting its financial obligations and supporting growth initiatives. Capital City Bank Group's liquidity is supported by its diverse funding sources, including deposits, borrowings, and cash flows from operations. The company's ability to maintain a healthy net interest margin of 4.12% in the fourth quarter of 2024 demonstrates its effective management of liquidity and interest rate risk.

As of Q3 2024, Capital City Bank Group reported a debt-to-equity ratio of 0.14, cash and cash equivalents of $345.21 million, a current ratio of 1.11, and a quick ratio of 1.11. The company also has access to a $25 million master repurchase agreement and a $25 million warehouse line of credit, both expiring in December 2024, providing additional liquidity if needed.

Business Segments

Capital City Bank Group operates through three main business segments: Community Banking, Wealth Management, and Mortgage Banking.

Community Banking Segment: This is CCBG's core business, representing the majority of the company's operations. It offers a wide array of deposit and credit services to retail and commercial customers. In Q3 2024, average loans held for investment in this segment totaled $2.69 billion, a slight decrease of 1.2% from the prior quarter but an increase of 0.7% compared to Q4 2023. Net interest income for this segment totaled $40.26 million in Q3 2024, up 2.4% from Q2 2024 and 2.3% from Q3 2023.

Wealth Management Segment: This segment provides trust administration, investment management, retail brokerage, and financial planning services. Wealth management fees totaled $4.77 million in Q3 2024, an increase of 7.5% from the prior quarter and 19.7% from the same period in 2023. At the end of Q3 2024, total assets under management were approximately $2.95 billion, up from $2.77 billion at the end of Q2 2024 and $2.59 billion at the end of 2023.

Mortgage Banking Segment: This segment originates, markets, and services conventional and government-sponsored residential mortgage loans. Mortgage banking revenues totaled $3.97 million in Q3 2024, a decrease of 9.5% from the prior quarter but an increase of 115.7% from Q3 2023. At the end of Q3 2024, the company had $31.25 million in residential mortgage loans held for sale.

Risks and Challenges

While Capital City Bank Group has a strong track record, the company faces several risks and challenges common to the banking industry, including interest rate fluctuations, competitive pressures, regulatory changes, and potential credit quality issues. The company's geographic concentration in Florida, Georgia, and Alabama also exposes it to regional economic conditions and natural disasters, which could impact its operations and financial results.

Furthermore, the COVID-19 pandemic had a significant impact on the banking sector, and Capital City Bank Group was not immune to the challenges presented. The company navigated the crisis by implementing prudent risk management strategies, supporting its customers and communities, and maintaining a strong capital position.

Conclusion

Capital City Bank Group's long history, diversified service offerings, and consistent financial performance have positioned the company as a leading regional financial institution in the Southeast. Despite the challenges faced by the banking industry, the company has demonstrated its ability to adapt and capitalize on growth opportunities, making it a compelling investment proposition for those seeking exposure to the financial sector.

As Capital City Bank Group continues to execute its strategic plan, investors will closely monitor the company's ability to sustain its financial strength, expand its customer base, and navigate the evolving regulatory and competitive landscape. With a strong foundation and a proven management team, the company appears well-equipped to navigate the road ahead and create long-term value for its shareholders.

The company's capital ratios remained strong, with a total risk-based capital ratio of 17.97% and a tangible common equity ratio of 9.28% at the end of Q3 2024, well above regulatory well-capitalized thresholds. This strong capital position, combined with its diverse business segments and consistent financial performance, positions Capital City Bank Group favorably for future growth and stability in the competitive banking landscape.