CCBG Capital City Bank Group Inc

Capital City Bank Group, Inc. (NASDAQ: CCBG) today reported net income attributable to common shareowners of $14.6 million, or $0.85 per diluted share, for the second quarter of 2023 compared to $15.0 million, or $0.88 per diluted share, for the first quarter of 2023, and $8.7 million, or $0.51 per diluted share, for the second quarter of 2022.

QUARTER HIGHLIGHTS (2nd Quarter 2023 versus 1st Quarter 2023)

• Tax-equivalent net interest income totaled $40.1 million compared to $40.5 million – net interest margin increased from 4.04% to 4.05% - total deposit cost increased 17 basis points to 43 basis points
• Loan balances grew $75.3 million, or 2.9% (average), and $30.1 million, or 1.1% (end of period)
• Deposit balances (including repurchase agreements) declined $89.2 million, or 2.3% (average), and $16.9 million, or 0.4% (end of period)
• Continued strong credit quality metrics – lower provision expense of $0.9 million reflected lower loan growth and net loan charge-offs (7 basis points of average loans) – the allowance coverage ratio increased from 1.01% to 1.05%
• Noninterest income increased $0.7 million, or 2.8%, due to higher wealth management fees, deposit fees, and bankcard fees. Total revenues and earnings (break-even) at Capital City Home Loans were comparable to the prior quarter and included a $1.4 million gain from the sale of mortgage servicing rights
• Noninterest expense increased $2.1 million, or 5.1%, primarily due to a $1.8 million gain on the sale of a banking office in the first quarter of 2023. A consulting payment of $0.8 million related to the negotiation of our core processing system outsourcing contract and a $0.3 million gain related to our supplemental executive retirement plan also impacted noninterest expense for the second quarter
• Tangible book value per share increased $0.59, or 3.2%, driven by strong earnings – net unrealized loss on available for sale securities remained stable
• Repurchased 40,495 shares of common stock for the second quarter of 2023 compared to 25,241 shares for the first quarter of 2023

“Capital City realized another solid quarter of earnings and growth in tangible book value,” said William G. Smith, Jr., Chairman, President, and CEO of Capital City Bank Group. “I feel good about our fundamental performance factors – our margin and credit quality have remained stable, we’ve realized nice loan growth, and our deposit balances have behaved as expected. We anticipate that funding pressures will continue for the industry into the second half of the year, but I continue to feel good about our balance sheet positioning and the value that our core deposit franchise contributes to our performance.”

Discussion of Operating Results

Net Interest Income/Net Interest Margin

Tax-equivalent net interest income for the second quarter of 2023 totaled $40.1 million, compared to $40.5 million for the first quarter of 2023, and $28.4 million for the second quarter of 2022. Compared to the first quarter of 2023, the decrease reflected higher deposit interest expense and a lower level of interest income from overnight funds, partially offset by higher loan interest due to loan growth and higher interest rates. For the first six months of 2023, tax-equivalent net interest income totaled $80.6 million compared to $53.2 million for the same period of 2022. The increases over both prior year periods were driven by strong loan growth and higher interest rates across a majority of our earning assets.

Our net interest margin for the second quarter of 2023 was 4.05%, an increase of one basis point over the first quarter of 2023 and an increase of 118 basis points over the second quarter of 2022. For the month of June 2023, our net interest margin was 4.06%. For the first six months of 2023, our net interest margin was 4.04%, an increase of 133 basis points over the same period of 2022. The increase compared to all prior periods reflected a combination of higher interest rates and loan growth, partially offset by a higher cost of deposits. For the second quarter of 2023, our cost of funds was 51 basis points, an increase of 16 basis points over the first quarter of 2023 and 41 basis points over the second quarter of 2022. Our total cost of deposits (including noninterest bearing accounts) was 43 basis points, 26 basis points, and 3 basis points, respectively, for the same periods.

Provision for Credit Losses

We recorded a provision for credit losses of $2.2 million for the second quarter of 2023 compared to $3.1 million for the first quarter of 2023 and $1.5 million for the second quarter of 2022. The decrease in the provision compared to the first quarter of 2023 was primarily attributable to a lower level of loan growth and a decrease in net loan charge-offs. For the first six months of 2023, we recorded a provision for credit losses of $5.3 million compared to $1.5 million for the same period of 2022. The release of reserves held for pandemic related losses favorably impacted our provision in 2022. We discuss the allowance for credit losses further below.

Noninterest Income and Noninterest Expense

Noninterest income for the second quarter of 2023 totaled $22.9 million compared to $22.2 million for the first quarter of 2023 and $24.9 million for the second quarter of 2022. The $0.7 million increase over the first quarter of 2023 reflected an increase in other income of $1.4 million, wealth management fees of $0.2 million, deposit fees of $0.1 million, and bankcard fees of $0.1 million, partially offset by a decrease in mortgage banking revenues of $1.1 million. The increase in other income was attributable to a $1.4 million gain from the sale of mortgage servicing rights. The decrease in mortgage banking revenues was attributable to a lower gain on sale margin.    

Compared to the second quarter of 2022, the $2.0 million decrease in noninterest income reflected decreases in mortgage banking revenues of $3.2 million, wealth management fees of $0.3 million, deposit fees of $0.1 million, and bank card fees of $0.2 million, partially offset by an increase in other income of $1.8 million. The decrease in mortgage banking revenues was attributable to a lower gain on sale margin. The increase in other income was primarily related to a $1.4 million gain from the sale of mortgage servicing rights. For the first six months of 2023, noninterest income totaled $45.1 million compared to $50.7 million for the same period of 2022 with the $5.6 million decrease primarily attributable to lower mortgage banking revenues of $5.2 million and wealth management fees of $2.4 million, partially offset by a $2.3 million increase in other income. The decrease in mortgage banking revenues was attributable to a lower gain on sale margin. The decrease in wealth management fees was driven by a decrease in insurance commissions due to the sale of large policies in 2022. The increase in other income was primarily due to a $1.4 million gain from the sale of mortgage servicing rights, and increases in miscellaneous income of $0.4 million, loan servicing fees of $0.2 million, and miscellaneous loan fees of $0.1 million.  

Noninterest expense for the second quarter of 2023 totaled $42.5 million compared to $40.5 million for the first quarter of 2023 and $40.5 million for the second quarter of 2022. Compared to the first quarter of 2023, the $2.1 million increase was primarily due to an increase in other expense of $2.8 million that was partially offset by a $0.8 million decrease in compensation expense. The unfavorable variance in other expense reflected a $1.8 million gain from the sale of a banking office in the first quarter of 2023. Further, the second quarter of 2023 included a $0.8 million expense related to a consulting engagement to assist in negotiating a multi-year contract for the outsourcing of our core processing system as well as higher expense for advertising and travel/entertainment totaling $0.3 million, and $0.2 million related to our VISA (class B shares) swap. Partially offsetting these increases was a $0.3 million gain related to our supplemental executive retirement plan. The decrease in compensation expense was primarily attributable to a $0.5 million decrease in stock-based compensation expense and a $0.2 million decrease in other associate benefit expense.

Compared to the second quarter of 2022, the $2.0 million increase in noninterest expense reflected a $1.8 million increase in other expense and occupancy expense of $0.7 million, partially offset by a decrease in compensation expense of $0.5 million. For the first six months of 2023, noninterest expense totaled $83.0 million compared to $79.7 million for the same period of 2022 with the $3.3 million increase attributable to an increase in other expense of $1.6 million increase, occupancy expense of $1.4 million, and compensation expense of $0.3 million. The increase in other expense over both prior year periods was primarily related to the previously mentioned consulting payment of $0.8 million made in the second quarter of 2023 and increases in pension plan expense (non-service-related component), FDIC insurance fees, and loan servicing (for residential loans). The aforementioned gain from the sale of a banking office in the first quarter of 2023 partially offset these increases for the six-month period comparison. The addition of four new banking offices since mid/late 2022 and higher property/equipment insurance premiums drove the increase in occupancy expense for both prior period comparisons. The favorable variance in compensation expense versus the second quarter of 2022 was primarily due to a $0.7 million decrease in pension plan expense (service cost) that was partially offset by a $0.3 million increase in associate insurance expense which reflected an increase in premiums. The slight unfavorable variance in compensation expense versus the six-month period of 2022 reflected an increase in salary expense of $1.0 million (primarily the addition of staffing in our new markets), associate insurance expense of $0.3 million, and stock-based compensation of $0.3 million, that was partially offset by a $1.4 million decrease in pension plan expense (service cost).

Income Taxes

We realized income tax expense of $3.5 million (effective rate of 19.6%) for the second quarter of 2023 compared to $4.1 million (effective rate of 21.7%) for the first quarter of 2023 and $2.2 million (effective rate of 19.4%) for the second quarter of 2022. For the first six months of 2023, we realized income tax expense of $7.7 million (effective rate of 20.6%) compared to $4.4 million (effective rate of 19.6%) for the same period of 2022. The decrease in our effective tax rate for the second quarter of 2023 reflected tax benefit accrued from an investment in a solar tax credit equity fund. Absent discrete items, we expect our annual effective tax rate to approximate 20-21% for 2023.

Discussion of Financial Condition

Earning Assets

Average earning assets totaled $3.975 billion for the second quarter of 2023, a decrease of $87.9 million, or 2.2%, from the first quarter of 2023, and a decrease of $57.9 million, or 1.4%, from the fourth quarter of 2022. The decrease from both prior periods was attributable to lower deposit balances (see below – Deposits). The mix of earning assets continues to improve as overnight funds are being utilized to fund loan growth.

Average loans held for investment (“HFI”) increased $75.3 million, or 2.9%, over the first quarter of 2023 and $218.3 million, or 9.0%, over the fourth quarter of 2022. Period end loans increased $30.1 million, or 1.1%, over the first quarter of 2023 and $141.8 million, or 5.6%, over the fourth quarter of 2022. Compared to both prior periods, the growth was primarily in the residential real estate and commercial real estate categories and was partially offset by lower indirect auto and home equity loan balances.

Allowance for Credit Losses

At June 30, 2023, the allowance for credit losses for HFI loans totaled $28.0 million compared to $26.5 million at March 31, 2023 and $24.7 million at December 31, 2022. Activity within the allowance is provided on Page 9. The increase in the allowance was driven primarily by loan growth. At June 30, 2023, the allowance represented 1.05% of HFI loans compared to 1.01% at March 31, 2023, and 0.98% at December 31, 2022.

Credit Quality

Credit quality metrics remained strong for the quarter. Nonperforming assets (nonaccrual loans and other real estate) totaled $6.6 million at June 30, 2023 compared to $4.6 million at March 31, 2023 and $2.7 million at December 31, 2022.  At June 30, 2023, nonperforming assets as a percent of total assets equaled 0.15%, compared to 0.10% at March 31, 2023 and 0.06% at December 31, 2022.   Nonaccrual loans totaled $6.6 million at June 30, 2023, a $2.0 million increase over March 31, 2023 and a $4.3 million increase over December 31, 2022. The increase was primarily due to the addition of one large residential loan ($1.1 million) to nonaccrual status which was adequately secured and reserved for. Further, classified loans totaled $15.0 million at June 30, 2023, a $2.8 million increase over March 31, 2023 and a $4.4 million decrease from December 31, 2022.   

Deposits

Average total deposits were $3.720 billion for the second quarter of 2023, a decrease of $97.8 million, or 2.6%, from the first quarter of 2023 and a decrease of $83.5 million, or 2.2%, from the fourth quarter of 2022. Compared to both prior periods, the decreases were primarily attributable to lower noninterest bearing and savings balances, primarily offset by higher money market balances. Compared to the first quarter of 2023, the decrease in NOW account balances reflected the seasonal decline in our public funds balances. Compared to the fourth quarter of 2022, the increase in NOW accounts reflected higher average public funds balances which begin to build in December and affect the average comparison.

At June 30, 2023, total deposits were $3.789 billion, a decrease of $35.1 million, or 0.9%, from March 31, 2023 and $150.5 million, or 3.8%, from December 31, 2022. The June 30, 2023 deposit balance included a $103 million short-term deposit (in the NOW category) made late in June by a municipal client. Compared to both prior periods, the decreases were primarily attributable to lower noninterest bearing balances, savings balances, and NOW balances (primarily public funds, excluding the previously mentioned large municipal client deposit), primarily offset by higher money market balances.

For comparison to the prior periods, both the average and period-end balance variances in noninterest bearing and savings balances generally reflected higher tax payments made by clients in April, continued client spend of stimulus savings, the migration (re-mix) of balances to an interest-bearing product type (primarily money market accounts), and clients seeking higher yielding investment products outside of the Bank, including the migration of $13 million in the second quarter of 2023 and $43 million in the first six months of 2023 to our wealth management division.

Repurchase agreement balances averaged $17.9 million for the second quarter of 2023, an increase of $8.5 million over the first quarter of 2023 and $9.4 million over the fourth quarter of 2022. At June 30, 2023, repurchase agreement balances were $22.6 million compared to $4.4 million at March 31, 2023 and $6.6 million at December 31, 2022.

Liquidity

The Bank maintained an average net overnight funds (deposits with banks plus FED funds sold less FED funds purchased) sold position of $218.9 million in the second quarter of 2023 compared to $361.0 million in the first quarter of 2023 and $469.4 million in the fourth quarter of 2022. The declining overnight funds position reflected growth in average loans and lower average deposit balances.      At June 30, 2023, we had the ability to generate approximately $1.506 billion (excludes overnight funds position of $285 million) in additional liquidity through various sources including various federal funds purchased lines, Federal Home Loan Bank borrowings, the Federal Reserve Discount Window, and through brokered deposits.

We also view our investment portfolio as a liquidity source and have the option to pledge securities in our portfolio as collateral for borrowings or deposits, and/or to sell selected securities.  Our portfolio consists of debt issued by the U.S. Treasury, U.S. governmental agencies, municipal governments, and corporate entities.  At June 30, 2023, the weighted-average maturity and duration of our portfolio were 3.07 years and 2.76 years, respectively, and the available-for-sale portfolio had a net unrealized pre-tax loss of $28.5 million.

Capital

Shareowners’ equity was $420.8 million at June 30, 2023 compared to $411.2 million at March 31, 2023 and $394.0 million at December 31, 2022. For the first six months of 2023, shareowners’ equity was positively impacted by net income attributable to common shareowners of $29.5 million, a $4.2 million decrease in the unrealized loss on investment securities, the issuance of stock of $2.1 million, and stock compensation accretion of $0.5 million. Shareowners’ equity was reduced by common stock dividends of $6.1 million ($0.36 per share), the repurchase of stock of $2.0 million (65,736 shares), net adjustments totaling $1.2 million related to transactions under our stock compensation plans, and a $0.2 million decrease in the fair value of the interest rate swap related to subordinated debt.

At June 30, 2023, our total risk-based capital ratio was 15.95% compared to 15.53% at March 31, 2023 and 15.52% at December 31, 2022. Our common equity tier 1 capital ratio was 13.02%, 12.68%, and 12.64%, respectively, on these dates. Our leverage ratio was 9.74%, 9.28%, and 9.06%, respectively, on these dates. At June 30, 2023, all our regulatory capital ratios exceeded the threshold to be designated as “well-capitalized” under the Basel III capital standards. Further, our tangible common equity ratio was 7.61% at June 30, 2023 compared to 7.37% and 6.79% at March 31, 2023 and December 31, 2022, respectively.   If our unrealized HTM securities losses of $30.0 million (after-tax) were recognized in accumulated other comprehensive loss, our adjusted tangible capital ratio would be 6.91%.

About Capital City Bank Group, Inc.

Capital City Bank Group, Inc. (NASDAQ: CCBG) is one of the largest publicly traded financial holding companies headquartered in Florida and has approximately $4.4 billion in assets. We provide a full range of banking services, including traditional deposit and credit services, mortgage banking, asset management, trust, merchant services, bankcards, securities brokerage services and financial advisory services, including the sale of life insurance, risk management and asset protection services. Our bank subsidiary, Capital City Bank, was founded in 1895 and now has 62 banking offices and 99 ATMs/ITMs in Florida, Georgia and Alabama. For more information about Capital City Bank Group, Inc., visit www.ccbg.com.

FORWARD-LOOKING STATEMENTS

Forward-looking statements in this Press Release are based on current plans and expectations that are subject to uncertainties and risks, which could cause our future results to differ materially. The words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “target,” “vision,” “goal,” and similar expressions are intended to identify forward-looking statements. The following factors, among others, could cause our actual results to differ: our ability to successfully manage credit risk, interest rate risk, liquidity risk, and other risks inherent to our industry; legislative or regulatory changes; adverse developments in the financial services industry generally, such as the recent bank failures and any related impacts on depositor behavior; the effects of changes in the level of checking or savings account deposits and the competition for deposits on our funding costs, net interest margin and ability to replace maturing deposits and advances, as necessary; the effects of actions taken by governmental agencies to stabilize the financial system and the effectiveness of such actions; changes in monetary and fiscal policies of the U.S. Government; inflation, interest rate, market and monetary fluctuations; the effects of security breaches and computer viruses that may affect our computer systems or fraud related to debit card products; the accuracy of our financial statement estimates and assumptions, including the estimates used for our allowance for credit losses, deferred tax asset valuation and pension plan; changes in our liquidity position; changes in accounting principles, policies, practices or guidelines; the frequency and magnitude of foreclosure of our loans; the effects of our lack of a diversified loan portfolio, including the risks of loan segments, geographic and industry concentrations; the strength of the United States economy in general and the strength of the local economies in which we conduct operations; our ability to declare and pay dividends, the payment of which is subject to our capital requirements; changes in the securities and real estate markets; structural changes in the markets for origination, sale and servicing of residential mortgages; uncertainty in the pricing of residential mortgage loans that we sell, as well as competition for the mortgage servicing rights related to these loans and related interest rate risk or price risk resulting from retaining mortgage servicing rights and the potential effects of higher interest rates on our loan origination volumes; the effect of corporate restructuring, acquisitions or dispositions, including the actual restructuring and other related charges and the failure to achieve the expected gains, revenue growth or expense savings from such corporate restructuring, acquisitions or dispositions; the effects of natural disasters, harsh weather conditions (including hurricanes), widespread health emergencies (including pandemics, such as the COVID-19 pandemic), military conflict, terrorism, civil unrest or other geopolitical events; our ability to comply with the extensive laws and regulations to which we are subject, including the laws for each jurisdiction where we operate; the willingness of clients to accept third-party products and services rather than our products and services and vice versa; increased competition and its effect on pricing; technological changes; the outcomes of litigation or regulatory proceedings; negative publicity and the impact on our reputation; changes in consumer spending and saving habits; growth and profitability of our noninterest income; the limited trading activity of our common stock; the concentration of ownership of our common stock; anti-takeover provisions under federal and state law as well as our Articles of Incorporation and our Bylaws; other risks described from time to time in our filings with the Securities and Exchange Commission; and our ability to manage the risks involved in the foregoing. Additional factors can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and our other filings with the SEC, which are available at the SEC’s internet site (http://www.sec.gov). Forward-looking statements in this Press Release speak only as of the date of the Press Release, and we assume no obligation to update forward-looking statements or the reasons why actual results could differ.

USE OF NON-GAAP FINANCIAL MEASURESUnaudited

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

The GAAP to non-GAAP reconciliations are provided below.

(Dollars in Thousands, except per share data)		Jun 30, 2023			Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Jun 30, 2022
Shareowners' Equity (GAAP)		$	420,779		$	411,240		$	394,016		$	373,165		$	371,675
Less: Goodwill and Other Intangibles (GAAP)			93,013			93,053			93,093			93,133			93,173
Tangible Shareowners' Equity (non-GAAP)	A		327,766			318,187			300,923			280,032			278,502
Total Assets (GAAP)			4,399,563			4,409,742			4,525,958			4,332,671			4,354,297
Less: Goodwill and Other Intangibles (GAAP)			93,013			93,053			93,093			93,133			93,173
Tangible Assets (non-GAAP)	B	$	4,306,550		$	4,316,689		$	4,432,865		$	4,239,538		$	4,261,124
Tangible Common Equity Ratio (non-GAAP)	A/B		7.61	%		7.37	%		6.79	%		6.61	%		6.54	%
Actual Diluted Shares Outstanding (GAAP)	C		17,026,360			17,049,913			17,039,401			16,998,177			16,981,614
Tangible Book Value per Diluted Share (non-GAAP)	A/C	$	19.25		$	18.66		$	17.66		$	16.47		$	16.40

CAPITAL CITY BANK GROUP, INC.
EARNINGS HIGHLIGHTS
Unaudited
		Three Months Ended						Six Months Ended
(Dollars in thousands, except per share data)		Jun 30, 2023		Mar 31, 2023		Jun 30, 2022		Jun 30, 2023		Jun 30, 2022
EARNINGS
Net Income Attributable to Common Shareowners	$	14,551	$	14,954	$	8,713		29,505	$	17,168
Diluted Net Income Per Share	$	0.85	$	0.88	$	0.51		1.73	$	1.01
PERFORMANCE
Return on Average Assets (annualized)		1.35	%	1.37	%	0.81	%	1.36	%	0.81	%
Return on Average Equity (annualized)		13.94		15.01		9.36		14.46		9.14
Net Interest Margin		4.05		4.04		2.87		4.04		2.71
Noninterest Income as % of Operating Revenue		36.38		35.52		46.78		35.95		48.89
Efficiency Ratio		67.55	%	64.48	%	75.96	%	66.02	%	76.73	%
CAPITAL ADEQUACY
Tier 1 Capital		14.84	%	14.51	%	15.13	%	14.84	%	15.13	%
Total Capital		15.95		15.53		16.07		15.95		16.07
Leverage		9.74		9.28		8.77		9.74		8.77
Common Equity Tier 1		13.02		12.68		13.07		13.02		13.07
Tangible Common Equity (1)		7.61		7.37		6.54		7.61		6.54
Equity to Assets		9.56	%	9.33	%	8.54	%	9.56	%	8.54	%
ASSET QUALITY
Allowance as % of Non-Performing Loans		422.23	%	577.63	%	677.57	%	422.23	%	677.57	%
Allowance as a % of Loans HFI		1.05		1.01		0.96		1.05		0.96
Net Charge-Offs as % of Average Loans HFI		0.07		0.24		0.22		0.15		0.19
Nonperforming Assets as % of Loans HFI and OREO		0.25		0.17		0.15		0.25		0.15
Nonperforming Assets as % of Total Assets		0.15	%	0.10	%	0.07	%	0.15	%	0.07	%
STOCK PERFORMANCE
High	$	34.16	$	36.86	$	28.55		36.86	$	28.88
Low		28.03		28.18		24.43		28.03		24.43
Close	$	30.64	$	29.31	$	27.89		30.64	$	27.89
Average Daily Trading Volume		33,412		41,737		25,342		37,574		24,681
(1) Tangible common equity ratio is a non-GAAP financial measure. For additional information, including a reconciliation to GAAP, refer to Page 6.

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
Unaudited
	2023							2022
(Dollars in thousands)	Second Quarter				First Quarter			Fourth Quarter			Third Quarter			Second Quarter
ASSETS
Cash and Due From Banks	$	83,679		$	84,549		$	72,114		$	72,686		$	91,209
Funds Sold and Interest Bearing Deposits		285,129			303,403			528,536			497,679			603,315
Total Cash and Cash Equivalents		368,808			387,952			600,650			570,365			694,524
Investment Securities Available for Sale		386,220			402,943			413,294			416,745			601,405
Investment Securities Held to Maturity		641,398			651,755			660,744			676,178			528,258
Other Equity Securities		1,703			1,883			10			1,349			900
Total Investment Securities		1,029,321			1,056,581			1,074,048			1,094,272			1,130,563
Loans Held for Sale		67,908			55,118			54,635			50,304			48,708
Loans Held for Investment ("HFI"):
Commercial, Financial, & Agricultural		227,219			236,263			247,362			246,304			247,902
Real Estate - Construction		226,404			253,903			234,519			237,718			225,664
Real Estate - Commercial		831,285			798,438			782,557			715,870			699,093
Real Estate - Residential		876,867			827,124			721,759			573,963			478,121
Real Estate - Home Equity		203,150			207,241			208,120			202,512			194,658
Consumer		295,646			305,324			324,450			347,949			359,906
Other Loans		5,425			7,660			5,346			20,822			6,854
Overdrafts		1,007			931			1,067			1,047			1,455
Total Loans Held for Investment		2,667,003			2,636,884			2,525,180			2,346,185			2,213,653
Allowance for Credit Losses		(27,964	)		(26,507	)		(24,736	)		(22,510	)		(21,281	)
Loans Held for Investment, Net		2,639,039			2,610,377			2,500,444			2,323,675			2,192,372
Premises and Equipment, Net		82,062			82,055			82,138			81,736			82,932
Goodwill and Other Intangibles		93,013			93,053			93,093			93,133			93,173
Other Real Estate Owned		1			13			431			13			90
Other Assets		119,411			124,593			120,519			119,173			111,935
Total Other Assets		294,487			299,714			296,181			294,055			288,130
Total Assets	$	4,399,563		$	4,409,742		$	4,525,958		$	4,332,671		$	4,354,297
LIABILITIES
Deposits:
Noninterest Bearing Deposits	$	1,520,134		$	1,601,388		$	1,653,620		$	1,737,046		$	1,724,671
NOW Accounts		1,269,839			1,242,721			1,290,494			990,021			1,036,757
Money Market Accounts		321,743			271,880			267,383			292,932			289,337
Savings Accounts		590,245			617,310			637,374			646,526			639,594
Certificates of Deposit		86,905			90,621			90,446			92,853			95,899
Total Deposits		3,788,866			3,823,920			3,939,317			3,759,378			3,786,258
Repurchase Agreements		22,619			4,429			6,583			6,943			3,807
Other Short-Term Borrowings		28,054			22,203			50,210			45,328			35,656
Subordinated Notes Payable		52,887			52,887			52,887			52,887			52,887
Other Long-Term Borrowings		414			463			513			562			612
Other Liabilities		77,192			85,878			73,675			84,657			93,319
Total Liabilities		3,970,032			3,989,780			4,123,185			3,949,755			3,972,539
Temporary Equity		8,752			8,722			8,757			9,751			10,083
SHAREOWNERS' EQUITY
Common Stock		170			170			170			170			170
Additional Paid-In Capital		36,853			37,512			37,331			36,234			35,738
Retained Earnings		417,128			405,634			393,744			384,964			376,532
Accumulated Other Comprehensive Loss, Net of Tax		(33,372	)		(32,076	)		(37,229	)		(48,203	)		(40,765	)
Total Shareowners' Equity		420,779			411,240			394,016			373,165			371,675
Total Liabilities, Temporary Equity and Shareowners' Equity	$	4,399,563		$	4,409,742		$	4,525,958		$	4,332,671		$	4,354,297
OTHER BALANCE SHEET DATA
Earning Assets	$	4,049,361		$	4,051,987		$	4,182,399		$	3,988,440		$	3,996,238
Interest Bearing Liabilities		2,350,087			2,298,085			2,389,307			2,121,109			2,150,742
Book Value Per Diluted Share	$	24.71		$	24.12		$	23.12		$	21.95		$	21.89
Tangible Book Value Per Diluted Share(1)		19.25			18.66			17.66			16.47			16.40
Actual Basic Shares Outstanding		16,992			17,022			16,987			16,962			16,959
Actual Diluted Shares Outstanding		17,026			17,050			17,039			16,998			16,982
(1) Tangible book value per diluted share is a non-GAAP financial measure. For additional information, including a reconciliation to GAAP, refer to Page 6.

CAPITAL CITY BANK GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Unaudited
		2023					2022							Six Months Ended June 30,
(Dollars in thousands, except per share data)		Second Quarter			First Quarter		Fourth Quarter		Third Quarter		Second Quarter			2023		2022
INTEREST INCOME
Loans, including Fees	$	37,477		$	34,880	$	31,916	$	27,761	$	24,072		$	72,357	$	46,205
Investment Securities		4,815			4,924		4,847		4,372		3,840			9,739		6,736
Federal Funds Sold and Interest Bearing Deposits		2,782			4,111		4,463		3,231		1,408			6,893		1,817
Total Interest Income		45,074			43,915		41,226		35,364		29,320			88,989		54,758
INTEREST EXPENSE
Deposits		4,008			2,488		1,902		1,052		266			6,496		490
Repurchase Agreements		115			9		7		5		-			124		1
Other Short-Term Borrowings		336			452		683		531		343			788		534
Subordinated Notes Payable		604			571		522		443		370			1,175		687
Other Long-Term Borrowings		5			6		8		6		8			11		17
Total Interest Expense		5,068			3,526		3,122		2,037		987			8,594		1,729
Net Interest Income		40,006			40,389		38,104		33,327		28,333			80,395		53,029
Provision for Credit Losses		2,219			3,130		3,521		2,099		1,542			5,349		1,542
Net Interest Income after Provision for Credit Losses		37,787			37,259		34,583		31,228		26,791			75,046		51,487
NONINTEREST INCOME
Deposit Fees		5,326			5,239		5,536		5,947		5,447			10,565		10,638
Bank Card Fees		3,795			3,726		3,744		3,860		4,034			7,521		7,797
Wealth Management Fees		4,149			3,928		3,649		3,937		4,403			8,077		10,473
Mortgage Banking Revenues		5,837			6,995		5,497		7,116		9,065			12,832		18,011
Other		3,766			2,360		2,546		2,074		1,954			6,126		3,802
Total Noninterest Income		22,873			22,248		20,972		22,934		24,903			45,121		50,721
NONINTEREST EXPENSE
Compensation		24,884			25,636		25,565		24,738		25,383			50,520		50,239
Occupancy, Net		6,820			6,762		6,253		6,153		6,075			13,582		12,168
Other		10,830			8,057		10,469		8,919		9,040			18,887		17,324
Total Noninterest Expense		42,534			40,455		42,287		39,810		40,498			82,989		79,731
OPERATING PROFIT		18,126			19,052		13,268		14,352		11,196			37,178		22,477
Income Tax Expense		3,544			4,133		2,599		3,074		2,177			7,677		4,412
Net Income		14,582			14,919		10,669		11,278		9,019			29,501		18,065
Pre-Tax Loss (Income) Attributable to Noncontrolling Interest		(31	)		35		995		37		(306	)		4		(897	)
NET INCOME ATTRIBUTABLE TO COMMON SHAREOWNERS	$	14,551		$	14,954	$	11,664	$	11,315	$	8,713		$	29,505	$	17,168
PER COMMON SHARE
Basic Net Income	$	0.86		$	0.88	$	0.69	$	0.67	$	0.51		$	1.73	$	1.01
Diluted Net Income		0.85			0.88		0.68		0.67		0.51			1.73		1.01
Cash Dividend	$	0.18		$	0.18	$	0.17	$	0.17	$	0.16		$	0.36	$	0.32
AVERAGE SHARES
Basic		17,002			17,016		16,963		16,960		16,949			17,009		16,940
Diluted		17,036			17,045		17,016		16,996		16,971			17,041		16,958

CAPITAL CITY BANK GROUP, INC.
ALLOWANCE FOR CREDIT LOSSES ("ACL")
AND CREDIT QUALITY
Unaudited
		2023						2022									Six Months Ended June 30,
(Dollars in thousands, except per share data)		Second Quarter			First Quarter			Fourth Quarter			Third Quarter			Second Quarter			2023			2022
ACL - HELD FOR INVESTMENT LOANS
Balance at Beginning of Period	$	26,507		$	24,736		$	22,510		$	21,281		$	20,756		$	24,736		$	21,606
Provision for Credit Losses		1,944			3,291			3,543			1,931			1,670			5,235			1,591
Net Charge-Offs (Recoveries)		487			1,520			1,317			702			1,145			2,007			1,916
Balance at End of Period	$	27,964		$	26,507		$	24,736		$	22,510		$	21,281		$	27,964		$	21,281
As a % of Loans HFI		1.05	%		1.01	%		0.98	%		0.96	%		0.96	%		1.05	%		0.96	%
As a % of Nonperforming Loans		422.23	%		577.63	%		1,076.89	%		934.53	%		677.57	%		422.23	%		677.57	%
ACL - UNFUNDED COMMITMENTS
Balance at Beginning of Period		2,833		$	2,989		$	3,012		$	2,853		$	2,976		$	2,989		$	2,897
Provision for Credit Losses		287			(156	)		(23	)		159			(123	)		131			(44	)
Balance at End of Period(1)		3,120			2,833			2,989			3,012			2,853			3,120			2,853
ACL - DEBT SECURITIES
Provision for Credit Losses	$	(12	)	$	(5	)	$	1		$	9		$	(5	)	$	(17	)	$	(5	)
CHARGE-OFFS
Commercial, Financial and Agricultural	$	54		$	164		$	129		$	2		$	1,104		$	218		$	1,177
Real Estate - Construction		-			-			-			-			-			-			-
Real Estate - Commercial		-			120			88			1			-			120			266
Real Estate - Home Equity		39			-			160			-			-			39			33
Consumer		993			1,732			976			770			533			2,725			1,155
Overdrafts		894			634			720			989			660			1,528			1,440
Total Charge-Offs	$	1,980		$	2,650		$	2,073		$	1,762		$	2,297		$	4,630		$	4,071
RECOVERIES
Commercial, Financial and Agricultural	$	71		$	95		$	25		$	58		$	59		$	166		$	224
Real Estate - Construction		1			1			-			2			-			2			8
Real Estate - Commercial		11			8			13			8			56			19			85
Real Estate - Residential		132			57			98			44			115			189			142
Real Estate - Home Equity		131			25			36			22			67			156			125
Consumer		514			571			175			260			453			1,085			636
Overdrafts		633			373			409			666			402			1,006			935
Total Recoveries	$	1,493		$	1,130		$	756		$	1,060		$	1,152		$	2,623		$	2,155
NET CHARGE-OFFS (RECOVERIES)	$	487		$	1,520		$	1,317		$	702		$	1,145		$	2,007		$	1,916
Net Charge-Offs as a % of Average Loans HFI(2)		0.07	%		0.24	%		0.21	%		0.12	%		0.22	%		0.15	%		0.19	%
CREDIT QUALITY
Nonaccruing Loans	$	6,623		$	4,589		$	2,297		$	2,409		$	3,141
Other Real Estate Owned		1			13			431			13			90
Total Nonperforming Assets ("NPAs")	$	6,624		$	4,602		$	2,728		$	2,422		$	3,231
Past Due Loans 30-89 Days	$	4,207		$	5,061		$	7,829		$	6,263		$	3,554
Past Due Loans 90 Days or More		-			-			-			-			-
Classified Loans		14,973			12,179			19,342			20,988			19,620
Nonperforming Loans as a % of Loans HFI		0.25	%		0.17	%		0.09	%		0.10	%		0.14	%
NPAs as a % of Loans HFI and Other Real Estate		0.25	%		0.17	%		0.11	%		0.10	%		0.15	%
NPAs as a % of Total Assets		0.15	%		0.10	%		0.06	%		0.06	%		0.07	%
(1) Recorded in other liabilities
(2) Annualized

CAPITAL CITY BANK GROUP, INC.
AVERAGE BALANCE AND INTEREST RATES
Unaudited
		Second Quarter 2023												First Quarter 2023															Fourth Quarter 2022															Third Quarter 2022															Second Quarter 2022																	Jun 2023 YTD															Jun 2022 YTD
(Dollars in thousands)		AverageBalance			Interest			AverageRate						AverageBalance					Interest				AverageRate						AverageBalance					Interest				AverageRate						AverageBalance					Interest				AverageRate						AverageBalance					Interest				AverageRate								AverageBalance					Interest				AverageRate						AverageBalance					Interest				AverageRate
ASSETS:
Loans Held for Sale	$	54,350		$	801			5.90		%		$		55,110			$		644				4.74		%		$		42,910			$		581				5.38		%		$		55,164					486				4.82		%		$		52,860			$		711				4.44		%				$		54,728			$		1,445				5.32		%		$		47,959			$		1,108				4.66		%
Loans Held for Investment(1)		2,657,693			36,758			5.55						2,582,395					34,331				5.39						2,439,379					31,418				5.11						2,264,075					27,354				4.76						2,084,679					23,433				4.53								2,620,252					71,089				5.47						2,024,463					45,244				4.51
Investment Securities
Taxable Investment Securities		1,041,202			4,804			1.84						1,061,372					4,912				1.86						1,078,265					4,835				1.78						1,117,789					4,359				1.55						1,142,269					3,834				1.34								1,051,232					9,716				1.85						1,099,739					6,723				1.22
Tax-Exempt Investment Securities(1)		2,656			16			2.47						2,840					17				2.36						2,827					17				2.36						2,939					17				2.30						2,488					10				1.73								2,747					33				2.41						2,449					20				1.67
Total Investment Securities		1,043,858			4,820			1.84						1,064,212					4,929				1.86						1,081,092					4,852				1.78						1,120,728					4,376				1.55						1,144,757					3,844				1.34								1,053,979					9,749				1.85						1,102,188					6,743				1.23
Federal Funds Sold and Interest Bearing Deposits		218,902			2,782			5.10						360,971					4,111				4.62						469,352					4,463				3.77						569,984					3,231				2.25						691,925					1,408				0.82								289,543					6,893				4.80						782,011					1,817				0.47
Total Earning Assets		3,974,803		$	45,161			4.56		%				4,062,688			$		44,015				4.39		%				4,032,733			$		41,314				4.07		%				4,009,951			$		35,447				3.51		%				3,974,221			$		29,396				2.97		%						4,018,502			$		89,176				4.47		%				3,956,621			$		54,912				2.80		%
Cash and Due From Banks		75,854												74,639															74,178															79,527															79,730																	75,250															77,007
Allowance for Credit Losses		(27,893	)											(25,637		)													(22,596		)													(21,509		)													(20,984		)															(26,771		)													(21,318		)
Other Assets		297,837												300,175															297,510															289,709															288,421																	298,999															281,922
Total Assets	$	4,320,601										$		4,411,865													$		4,381,825													$		4,357,678													$		4,321,388															$		4,365,980													$		4,294,232
LIABILITIES:
Noninterest Bearing Deposits	$	1,539,877										$		1,601,750													$		1,662,443													$		1,726,918													$		1,722,325															$		1,570,642													$		1,687,524
NOW Accounts		1,200,400		$	3,038			1.01		%				1,228,928			$		2,152				0.71		%				1,133,733			$		1,725				0.60		%				1,016,475			$		868				0.34		%				1,033,190			$		120				0.05		%						1,214,585			$		5,190				0.86		%				1,056,419			$		206				0.04		%
Money Market Accounts		288,466			747			1.04						267,573					208				0.31						273,328					63				0.09						288,758					71				0.10						286,210					36				0.05								278,077					955				0.69						285,810					69				0.05
Savings Accounts		602,848			120			0.08						629,388					76				0.05						641,153					80				0.05						643,640					80				0.05						628,472					77				0.05								616,045					196				0.06						613,996					149				0.05
Time Deposits		87,973			103			0.47						89,675					52				0.24						92,385					34				0.15						94,073					33				0.14						95,132					33				0.14								88,819					155				0.35						96,088					66				0.14
Total Interest Bearing Deposits		2,179,687			4,008			0.74						2,215,564					2,488				0.46						2,140,599					1,902				0.35						2,042,946					1,052				0.20						2,043,004					266				0.05								2,197,526					6,496				0.60						2,052,313					490				0.05
Total Deposits		3,719,564			4,008			0.43						3,817,314					2,488				0.26						3,803,041					1,902				0.20						3,769,864					1,052				0.11						3,765,328					266				0.03								3,768,169					6,496				0.35						3,739,837					490				0.03
Repurchase Agreements		17,888			115			2.58						9,343					9				0.37						8,464					7				0.34						11,665					5				0.18						5,064					0				0.03								13,639					124				1.83						6,093					1				0.03
Other Short-Term Borrowings		17,834			336			7.54						37,766					452				4.86						42,380					683				6.39						35,014					531				6.01						26,718					343				5.15								27,745					788				5.73						25,973					534				4.14
Subordinated Notes Payable		52,887			604			4.52						52,887					571				4.32						52,887					522				3.86						52,887					443				3.28						52,887					370				2.76								52,887					1,175				4.42						52,887					687				2.58
Other Long-Term Borrowings		431			5			4.80						480					6				4.80						530					8				4.80						580					6				4.74						722					8				4.54								455					11				4.80						777					17				4.51
Total Interest Bearing Liabilities		2,268,727		$	5,068			0.90		%				2,316,040			$		3,526				0.62		%				2,244,860			$		3,122				0.55		%				2,143,092			$		2,037				0.38		%				2,128,395			$		987				0.19		%						2,292,252			$		8,594				0.76		%				2,138,043			$		1,729				0.16		%
Other Liabilities		84,305												81,206															84,585															98,501															87,207																	82,765															79,728
Total Liabilities		3,892,909												3,998,996															3,991,888															3,968,511															3,937,927																	3,945,659															3,905,295
Temporary Equity		8,935												8,802															9,367															9,862															10,096																	8,869															10,306
SHAREOWNERS' EQUITY:		418,757												404,067															380,570															379,305															373,365																	411,452															378,631
Total Liabilities, Temporary Equity and Shareowners' Equity	$	4,320,601										$		4,411,865													$		4,381,825													$		4,357,678													$		4,321,388															$		4,365,980													$		4,294,232
Interest Rate Spread				$	40,093			3.66		%							$		40,489				3.77		%							$		38,192				3.52		%							$		33,410				3.13		%							$		28,409				2.78		%									$		80,582				3.72		%							$		53,183				2.64		%
Interest Income and Rate Earned(1)					45,161			4.56											44,015				4.39											41,314				4.07											35,447				3.51											29,396				2.97													89,176				4.47											54,912				2.80
Interest Expense and Rate Paid(2)					5,068			0.51											3,526				0.35											3,122				0.31											2,037				0.20											987				0.10													8,594				0.43											1,729				0.09
Net Interest Margin				$	40,093			4.05		%							$		40,489				4.04		%							$		38,192				3.76		%							$		33,410				3.31		%							$		28,409				2.87		%									$		80,582				4.04		%							$		53,183				2.71		%
(1) Interest and average rates are calculated on a tax-equivalent basis using a 21% Federal tax rate.
(2) Rate calculated based on average earning assets.

For Information Contact:Jep LarkinExecutive Vice President and Chief Financial Officer850.402. 8450