10-K: Capital City Bank Group Reports Strong 2025 Earnings Growth

Capital City Bank Group, Inc. announced a significant increase in net income and diluted EPS for fiscal year 2025, driven by higher net interest income and noninterest income.

Summary

• Net income attributable to common shareowners increased to $61.6 million in 2025, up from $52.9 million in 2024 and $52.3 million in 2023.
• Diluted net income per share rose to $3.60 in 2025, compared to $3.12 in 2024 and $3.07 in 2023.
• Tax-equivalent net interest income grew by $12.6 million, or 7.9%, to $171.8 million in 2025, primarily due to increased investment securities income and lower deposit interest expense.
• Net interest margin (FTE) expanded to 4.28% in 2025, up from 4.08% in 2024 and 4.05% in 2023.
• Noninterest income increased by $6.4 million, or 8.4%, to $82.4 million in 2025, driven by higher mortgage banking revenues, wealth management fees, and a gain from the sale of an insurance subsidiary.
• Noninterest expense increased by $1.7 million, or 1.0%, to $167.0 million in 2025, mainly due to higher compensation expense partially offset by lower pension expense and gains from banking facility sales.
• The efficiency ratio improved to 65.71% in 2025 from 70.30% in 2024.
• Total assets reached $4.386 billion at December 31, 2025, an increase of $60.8 million from $4.325 billion at December 31, 2024.
• Shareowners' equity increased to $552.9 million at December 31, 2025, from $495.3 million at December 31, 2024.
• Tangible book value per diluted share (non-GAAP) increased by $3.38, or 14.3%, to $27.03 at December 31, 2025.
• Loans held for investment decreased by $105.4 million, or 4.0%, to $2.546 billion at December 31, 2025.
• Average deposit balances increased by $53.9 million, or 1.5%, in 2025, driven by strong core deposit growth.
• The allowance for credit losses (ACL) for loans held for investment increased to $31.0 million in 2025, representing 1.22% of HFI loans, up from 1.10% in 2024.
• Net loan charge-offs decreased to 0.14% of average HFI loans in 2025, down from 0.21% in 2024.
• Nonperforming assets (NPAs) increased to $10.5 million at December 31, 2025, from $6.7 million at December 31, 2024, representing 0.24% of total assets.
• The company's regulatory capital ratios (CET1, Tier 1, Total Capital, Leverage) all exceeded well-capitalized standards at December 31, 2025.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong performance, with significant growth in key profitability metrics, improved efficiency, and robust capital levels. While there are noted increases in nonperforming assets and ongoing competitive and regulatory challenges, the overall financial health and strategic direction appear positive.

Positives

• Net income attributable to common shareowners increased by 16.3% to $61.6 million in 2025.
• Diluted net income per share increased by 15.4% to $3.60 in 2025.
• Net interest income (FTE) grew by 7.9% to $171.8 million, driven by higher investment securities income and lower deposit interest expense.
• Net interest margin (FTE) improved by 20 basis points to 4.28% in 2025.
• Noninterest income increased by 8.4% to $82.4 million, with strong contributions from mortgage banking revenues and wealth management fees.
• The efficiency ratio improved significantly to 65.71% in 2025, indicating better cost management.
• Tangible book value per diluted share (non-GAAP) increased by 14.3% to $27.03.
• Allowance for credit losses to loans held for investment increased to 1.22%, providing stronger coverage.
• Net loan charge-offs decreased to 0.14% of average HFI loans, indicating improved loan quality.
• All regulatory capital ratios (CET1 18.56%, Tier 1 20.20%, Total Capital 21.45%, Leverage 11.77%) remain well above well-capitalized standards.
• The company completed the acquisition of the remaining 49% interest in Capital City Home Loans, LLC (CCHL) on January 1, 2025, making it wholly owned.
• Expansion into new higher-growth markets, including new full-service offices in Watersound, FL (2023), Panama City, FL (Lynn Haven, 2024; West Bay, 2025), and Gainesville, FL (2023), and Northern Arc of Atlanta, GA (Marietta, 2022; Duluth, 2023).
• Sale of Capital City Strategic Wealth, LLC in August 2025 resulted in a $0.7 million gain.
• Strong culture and human capital management recognized with numerous accolades, including 'Best Companies to Work for in Florida' for 14 consecutive years and 'Best Bank to Work For' for 13 consecutive years.
• High average associate tenure of 9.8 years and management team tenure of 24.3 years, indicating strong employee retention.
• Significant community involvement, including 7,914 community service hours in 2025 and $0.3 million in grants from the CCBG Foundation.

Negatives

• Total deposits decreased by $9.7 million, or 0.3%, at December 31, 2025, compared to December 31, 2024, reflecting a shift from noninterest-bearing to interest-bearing accounts.
• Loans held for investment decreased by $105.4 million, or 4.0%, at December 31, 2025, primarily due to decreases in consumer loans (indirect auto), construction loans, and commercial real estate loans.
• Nonperforming assets increased to $10.5 million at December 31, 2025, from $6.7 million at December 31, 2024, with nonaccrual loans increasing by $2.3 million.
• The effective tax rate increased to 24.7% in 2025 from 21.2% in 2024, primarily due to a lower tax benefit from a solar tax credit equity fund and higher IRC Section 162(m) limitation.
• The company did not repurchase any shares under its Share Repurchase Program in 2025, despite having 676,561 shares remaining for purchase.

Risks

• Incurring losses due to inability to successfully manage interest rate risk, including changes in short-term vs. long-term rates and volatility in the mortgage industry.
• Inflationary pressures and rising prices affecting business customers' ability to repay loans and increasing operating costs.
• Deterioration in economic conditions in Florida and Georgia, where the loan portfolio is heavily concentrated, could lead to increased loan delinquencies and decreased demand for services.
• Changes in customer behavior (borrowing, repayment, investment, deposit practices) could negatively impact business needs and regulatory requirements.
• Decline in the fair value of investment securities, particularly available-for-sale securities, could reduce shareowners' equity.
• Limited trading activity and concentration of ownership of common stock may contribute to price volatility and make it difficult for shareholders to benefit from takeover attempts.
• Higher risk of loss in specific loan categories such as commercial real estate, commercial, construction, vacant land, home equity lines of credit (HELOCs), and consumer loans.
• Heavy concentration of the loan portfolio in mortgage loans secured by properties in Florida and Georgia increases risk from economic downturns or natural disasters.
• Inadequate allowance for credit losses could reduce earnings if future loan losses exceed current estimates.
• Failures in analytical and forecasting models used for accounting estimates and risk management could materially affect financial condition and results.
• Significant costs associated with the ownership of real property as a result of foreclosures.
• Reliance on inaccurate or misleading financial statements, credit reports, or other financial information from customers and counterparties.
• Liquidity risk, including the inability to fund operations, meet commitments, or replace maturing deposits and advances, especially if public fund deposits decrease.
• Unrealized losses in the securities portfolio could materially and adversely affect liquidity and market perception.
• Potential need to raise additional capital in the future, which may not be available on acceptable terms or at all.
• Inability to pay dividends in the future due to regulatory restrictions or insufficient profits.
• Extensive regulation, supervision, and examination by federal and state agencies, which could restrict activities and impose financial requirements.
• Increased regulatory scrutiny and new regulations in response to negative developments in the banking industry, potentially increasing costs and reducing profitability.
• Requirement by U.S. federal banking agencies to increase regulatory capital, long-term debt, or liquidity requirements.
• Changes in accounting standards or assumptions in applying accounting policies could adversely affect financial reporting.
• Government regulation and oversight relating to data and privacy protection, with potential for liability and reputational damage from non-compliance or breaches.
• Operational risks, including technological failures, security breaches, human errors, fraud, and reliance on third-party vendors.
• Cybersecurity incidents, including sophisticated attacks, could disrupt business, lead to data disclosure, damage reputation, and increase costs.
• Increased fraudulent activity, including wire, card, and check fraud, potentially exacerbated by artificial intelligence, leading to losses and brand damage.
• Development and use of Artificial Intelligence (AI) presents risks and challenges, including legal/regulatory uncertainty, model errors, bias, and intellectual property infringement.
• Inability to attract and retain skilled personnel due to intense competition.
• Issues with external vendors, including operational errors, security breaches, or failure to perform, could disrupt operations.
• Severe weather, natural disasters (e.g., hurricanes in Florida), widespread health emergencies, acts of terrorism, and global conflicts negatively impacting business and operations.
• Litigation and regulatory matters, including claims pertaining to fiduciary responsibilities, could involve large monetary claims and significant defense costs.
• Failure to maintain an effective system of internal control over financial reporting could lead to inaccurate financial reports or fraud.
• Inability to compete effectively in the highly competitive banking and financial services industry against traditional and non-traditional providers (fintechs, wealthtechs, digital-only banks, payment stablecoins).
• Inability to adapt business strategies, products, and services to rapidly evolving industry standards and consumer preferences.
• Concentration of ownership by directors, executive officers, and principal shareowners, potentially influencing matters requiring shareholder approval.
• Provisions in Articles of Incorporation, Bylaws, and certain laws/regulations that may prevent or delay transactions such as a sale or merger.
• Risks associated with potential acquisitions and other strategic transactions, including unknown liabilities, integration difficulties, and regulatory approvals.
• Damage to reputation from negative public opinion, amplified by social media, could harm competitive position and business prospects.
• Changes in federal, state, or local tax laws and regulations, or challenges from tax authorities, may negatively impact financial performance.

Future Outlook

The company expects to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2026. The annual effective tax rate is anticipated to approximate 24% for 2026, absent discrete items or new tax credit investments. Management plans to reinvest cash flow from the investment portfolio and allocate funds to support loan demand and other liquidity management strategies in 2026. The company will continue to review and evaluate opportunities to optimize delivery operations and invest in technology that provides favorable returns/scale and/or mitigates risk.

Management Comments

• 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 strategic plan guides us in the areas of client experience, channel optimization, market expansion, and culture.
• 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 expect to be able to effectively compete in our markets with larger financial institutions through providing superior client service and leveraging our knowledge and experience in providing banking products and services in our market areas.
• Our commitment to fostering a culture that values our associates across our entire footprint remains unwavering.
• 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.
• Management believes that the Company and the Bank meet all capital adequacy requirements to which they are subject.
• Based on current estimates, we expect the Company and the Bank to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2026.
• Absent discrete items or new tax credit investments, we expect our annual effective tax rate to approximate 24% for 2026.

Industry Context

StockSavvy.ai notes that Capital City Bank Group operates in a highly competitive banking and financial services industry, facing challenges from both larger traditional institutions and a rapidly expanding group of non-traditional financial service providers, including wealthtechs, fintechs, digital-only banks, and crowdfunding platforms. These non-traditional competitors often leverage advanced technologies, agile product development, and streamlined digital interfaces, sometimes with lower overhead and fewer regulatory requirements. The company's strategy of focusing on relationship banking and leveraging local market knowledge is a key differentiator against larger, more diversified competitors. The filing also highlights increasing regulatory scrutiny across the banking industry, particularly concerning deposit composition, uninsured deposits, liquidity, commercial real estate loan concentrations, and capital, which could increase compliance costs. The emergence of new technologies like AI and the regulatory framework for payment stablecoins (GENIUS Act) are identified as potential disruptors that could accelerate customer migration and impact deposit products.

Comparison to Industry Standards

• The company was ranked by Forbes in 2025 as one of the 'Worlds Best Banks', 'Americas Best Banks' (ranked #13), and 'Americas Best-in-State Banks' (ranked #5 in Florida and #4 in Georgia), based on direct consumer feedback and online reviews, indicating strong customer satisfaction and reputation relative to peers.

Corporate Governance

Legal Proceedings

• The company is a 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 the consolidated results of operations, financial position, or cash flows.

Related Party Transactions

• Certain officers and directors were indebted to the Bank for an aggregate amount of $5.3 million at December 31, 2025, compared to $4.8 million at December 31, 2024. These loans were all current.
• Deposits from certain directors, executive officers, and their related interests totaled $40.9 million at December 31, 2025, compared to $42.7 million at December 31, 2024.
• The company leases land from Smith Interests General Partnership L.L.P., in which William G. Smith, Jr. (Chairman and CEO) has an interest. Lease payments totaled $0.1 million in 2025. The lease provides for annual payments of approximately $0.1 million through December 2033, with subsequent increases.
• The company made reimbursement payments of $0.5 million in May 2024 and $0.2 million in July 2025 to Smith Interests General Partnership L.L.P. for property development related to a new banking office.
• William G. Smith, III, son of the Chairman and CEO, is employed as Chief Lending Officer at Capital City Bank, with compensation determined in accordance with standard company practices.

Stakeholder Impact

• **Shareholders:** Positive impact from increased net income, diluted EPS, and tangible book value, along with higher cash dividends. However, limited trading activity and concentrated ownership could affect stock price volatility and control.
• **Employees:** Positive impact from competitive compensation and benefits, a strong culture valuing people and career growth, wellness programs, tuition assistance, and flexible work arrangements. The merger of CCHL's 401(k) plan into the company's plan streamlines benefits.
• **Customers:** Benefit from a full range of banking, mortgage, and wealth management services, with a focus on relationship banking and expansion into new markets. The company's commitment to financial literacy and community development also supports customer well-being.
• **Communities:** Positive impact through significant community service hours volunteered by associates and substantial grants from the CCBG Foundation to non-profit organizations, including those supporting low-moderate income areas and affordable housing initiatives.
• **Creditors:** Positive impact from the company's strong capital position, exceeding all well-capitalized regulatory standards, which enhances financial stability and reduces credit risk.

Next Steps

• Reinvest cash flow from the investment portfolio and allocate to support loan demand and other liquidity management strategies in 2026.
• Continue to review and evaluate opportunities to optimize delivery operations and invest in technology.
• Expect the annual effective tax rate to approximate 24% for 2026, absent discrete items or new tax credit investments.
• The company and the Bank are expected to exceed all applicable well-capitalized regulatory capital requirements and the capital conservation buffer in 2026.
• The company intends to renew its warehouse lines of credit and master repurchase agreements when they mature.
• The company expects to recognize approximately $1.9 million of the net actuarial gain from its pension plan as a component of net periodic benefit cost during 2026.
• ASU 2024-03 (Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures) is effective for the company as of January 1, 2026.
• ASU 2025-06 (Intangibles Goodwill and Other Internal-Use Software) is effective for the company as of January 1, 2027.
• ASU 2025-08 (Financial Instruments—Credit Losses—Purchased Loans) is effective for the company as of January 1, 2027.
• ASU 2025-11 (Interim Reporting) is effective for interim reporting periods beginning after December 15, 2027.
• ASU 2025-12 (Codification Improvements) is effective for the company as of January 1, 2027.
• The Annual Meeting of Shareowners is scheduled for April 21, 2026.

Key Dates

Recommendation

The company demonstrated strong financial performance in 2025, with significant increases in net income, diluted EPS, net interest income, and net interest margin. The efficiency ratio improved, and capital ratios remain robust, well above regulatory minimums. While nonperforming assets saw a slight increase, the allowance for credit losses provides strong coverage, and net charge-offs decreased. Strategic expansions into new markets and the full acquisition of CCHL position the company for continued growth. The consistent dividend increases and strong employee/community engagement further enhance its investment appeal. Despite competitive pressures and regulatory risks, the overall trajectory and financial health suggest a favorable outlook for investors.

Keywords

Banking, Financial Services, Community Bank, Mortgage Banking, Wealth Management, SEC Filing, 10-K, Financial Performance, Net Interest Income, Net Interest Margin, Loan Portfolio, Deposits, Capital Ratios, Credit Quality, Nonperforming Assets, Cybersecurity, Risk Management, Florida, Georgia, Alabama, Regional Bank