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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
 
DC
 
20549
___________________________________
FORM
10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Capital City Bank Group, Inc.
(Exact name of Registrant as specified in its charter)
Florida
0-13358
59-2273542
(State of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
217 North Monroe Street
,
Tallahassee
,
Florida
32301
(Address of principal executive offices)
(Zip Code)
(
850
)
402-7821
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class
 
Trading Symbol(s)
 
Name of Each Exchange on Which Registered
Common Stock, $0.01 par value
 
CCBG
 
The
Nasdaq Stock Market
 
LLC
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if
 
the registrant is a well-known
 
seasoned issuer, as defined in
 
Rule 405 of the Securities
 
Act. Yes
No
 
Indicate by check mark if the registrant is not required to file
 
reports pursuant to Section 13 or Section 15(d) of
 
the Exchange Act. Yes
No
Indicate by check mark whether the registrant (1) has filed
 
all reports required to be filed by Section 13 or 15(d) of
 
the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant
 
was required to file such reports), and (2) has been subject
 
to such filing requirements for the past
90 days. Yes
 
No
 
Indicate by check mark whether the registrant has submitted
 
electronically every Interactive Data File required to be submitted
 
pursuant to Rule 405 of Regulation S-
T (§232.405 of this chapter) during the preceding 12 months
 
(or for such shorter period that the registrant was required
 
to submit such files). Yes
 
No
Indicate by check mark whether the registrant is a large accelerated
 
filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company.
 
See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
 
12b-2 of the
Exchange Act
Large accelerated filer
 
Accelerated filer
 
Non-accelerated filer
 
Smaller reporting company
 
Emerging growth company
If an emerging growth company,
 
indicate by check mark if the registrant
 
has elected not to use the
 
extended transition period for complying with any new
 
or revised
financial accounting standards provided pursuant to Section 13(a)
 
of the Exchange Act.
 
Indicate by check mark whether the registrant has filed a
 
report on and attestation to its management’s assessment of the effectiveness of its internal control
 
over
financial reporting under Section 404(b) of the Sarbanes-Oxley
 
Act (15 U.S.C. 7262(b)) by the registered public accounting
 
firm that prepared or issued its audit
report.
 
If securities are registered pursuant to Section 12(b) of the Act,
 
indicate by check mark whether the financial statements
 
of the registrant included in the filing reflect
the correction of an error to previously issued financial statements
.
Indicate by check mark whether any of those error corrections
 
are restatements that required a recovery analysis of
 
incentive-based compensation received by any of
the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Indicate by check mark whether the registrant is a shell company
 
(as defined in Rule 12b-2 of the Exchange Act). Yes
No
The aggregate market value of the registrant’s common stock, $0.01 par value
 
per share, held by non-affiliates of the registrant on June
 
30, 2023, the last business day
of the registrant’s most recently completed second fiscal quarter, was approximately $
400,209,385
 
(based on the closing sales price of the registrant’s common stock
on that date). Shares of the registrant’s common stock held by each officer and director
 
and each person known to the registrant to own 10% or more of
 
the
outstanding voting power of the registrant have been excluded
 
in that such persons may be deemed to be affiliates. This
 
determination of affiliate status is not a
determination for other purposes.
Indicate the number of shares outstanding of each of the
 
issuer’s classes of common stock, as of the latest practicable date.
Class
Outstanding at February 29, 2024
Common Stock, $0.01 par value per share
16,943,238
DOCUMENTS INCORPORATED BY REFERENCE
Portions of our Proxy Statement for the Annual Meeting of Shareowners to be held on April 23, 2024, are incorporated by reference in Part III.
 
 
 
3
EXPLANATORY
 
NOTE
The Consolidated Statements of Cash Flows of Capital City Bank
 
Group, Inc. (the “Company”)
 
for the years ended December
31, 2021 and December 31, 2022 and for the each of the three month periods
 
ended March 31, 2022 and 2023, six month periods
ended June 30, 2022 and 2023 and nine month periods ended September 30,
 
2022 and 2023 (collectively,
 
the “Impacted
Statements of Cash Flows”) included in this Annual Report on Form 10-K
 
for the year ended December 31, 2023 (this “Form 10-
K”) have been restated.
 
For additional information, see “Part II – Item 8. Financial Statements and Supplementary
 
– Note 1 –
Restatement of Previously Issued Consolidated Financial Statements” in this Form
 
10-K. The Company has not filed and does not
intend to file amendments to the Company’s
 
previously filed Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q
containing any of the Impacted Statements of Cash Flow.
 
Investors and others should rely on the financial information and other
disclosures regarding the affected period contained in this Form
 
10-K and in future filings with the Securities and Exchange
Commission (as applicable).
 
4
INTRODUCTORY NOTE
This Annual Report on Form 10-K 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.
In addition to those risks discussed in this Annual Report under Item 1A Risk Factors, factors
 
that could cause our actual results
to differ materially from those in the forward-looking
 
statements, include, without limitation:
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 bank failures and any related impact 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;
 
inflation, interest rate, market and monetary fluctuations;
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 effects of actions taken by governmental agencies to stabilize the
 
recent volatility in the financial system and the
effectiveness of such actions;
 
changes in monetary and fiscal policies of the U.S. Government;
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;
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 impact of the restatement of the Impacted Statements of Cash Flows;
any inability to implement and maintain effective internal
 
control over financial reporting and/or disclosure control or
inability to remediate our existing material weaknesses in our internal
 
controls deemed ineffective;
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 cost and effects of cybersecurity incidents or other failures, interruptions,
 
or security breaches of our systems or those
of our customers or third-party providers;
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;
5
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.
However, other factors besides those listed in
 
Item 1A Risk Factors 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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6
PART
 
I
Item 1.
 
Business
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 63 banking offices and 103 ATMs/ITMs
 
in
Florida, Georgia, and Alabama.
 
Through Capital City Home Loans, LLC (“CCHL”), we have 29 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 48% of the revenue from CCHL is derived from our Georgia
 
market areas while
approximately 38% and 14% 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 73.
Dollars in millions
Year
 
Ended
December 31,
 
Assets
Deposits
Shareowners’
Equity
Revenue
(1)
Net Income
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
 
2021
$4,263.8
 
$3,712.9
 
$383.2
 
$213.9
 
$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.
 
Item 6 contains other financial and statistical information about us.
Subsidiaries of CCBG
 
CCBG’s principal asset is the capital
 
stock of CCB, our wholly owned banking subsidiary,
 
which accounted for nearly 100% of
consolidated assets and net income attributable to CCBG at December 31,
 
2023.
 
CCBG also maintains an insurance subsidiary,
Capital City Strategic Wealth,
 
LLC.
 
CCB has two primary subsidiaries, which are wholly owned, Capital City Trust
 
Company
and Capital City Investments.
 
CCB also maintains
 
a 51% membership interest in a consolidated subsidiary,
 
CCHL, which we
acquired on March 1, 2020.
 
The nature of these subsidiaries is provided below.
 
Operating Segment
We have one
 
reportable segment with two principal services: Banking Services and Wealth
 
Management Services.
 
Banking
Services are operated at CCB, and Wealth
 
Management Services are operated under three separate subsidiaries (Capital City
Trust Company,
 
Capital City Investments, and Capital City Strategic Wealth,
 
LLC).
 
Revenues from these principal services for
the year ended 2023
 
totaled approximately 93.5% and 6.5% of our total revenue, respectively.
 
In 2022
 
and 2021, Banking
Services (CCB) revenue was approximately 90.3% and 93.2% of our total revenue
 
for each respective year.
 
7
Capital City Bank
CCB is a Florida-chartered full-service bank engaged in the commercial and
 
retail banking business. Significant services offered
by CCB include:
Business Banking
 
– We provide banking
 
services to corporations and other business clients. Credit products are available
for a wide variety of general business purposes, including financing for
 
commercial business properties, equipment,
inventories and accounts receivable, as well as commercial leasing and
 
letters of credit. We also provide
 
treasury
management services, and, through a marketing alliance with Elavon, Inc., merchant
 
credit card transaction processing
services.
Commercial Real Estate Lending
 
– We provide
 
a wide range of products to meet the financing needs of commercial
developers and investors, residential builders and developers, and community
 
development. Credit products are available
to purchase land and build structures for business use and for investors
 
who are developing residential or commercial
property.
Residential Real Estate Lending
 
– We provide products
 
through our strategic alliance with CCHL and its existing
network of locations to help meet the home financing needs of consumers,
 
including conventional permanent and
construction/ permanent (fixed, adjustable, or variable rate) financing
 
arrangements, and FHA/VA/Government
 
National
Mortgage Association (“GNMA”) loan products.
 
We offer
 
both fixed and adjustable-rate residential mortgage (ARM)
loans.
 
We offer
 
these products through our existing network of CCHL locations.
 
We do not originate
 
subprime
residential real estate loans.
 
Retail Credit
 
– We provide
 
a full-range of loan products to meet the needs of consumers, including personal
 
loans,
automobile loans, boat/RV
 
loans, home equity loans, and through a marketing alliance with ELAN, we offer
 
credit card
programs.
Institutional Banking –
We provide banking
 
services to meet the needs of state and local governments, public schools
and colleges, charities, membership and not-for-profit
 
associations including customized checking and savings accounts,
cash management systems, tax-exempt loans, lines of credit, and term
 
loans.
Retail Banking
– We provide a full-range
 
of consumer banking services, including checking accounts, savings programs,
interactive/automated teller machines (ATMs/ITMs),
 
debit/credit cards, night deposit services, safe deposit facilities,
online banking, and mobile banking.
Capital City Trust Company
Capital City Trust Company,
 
or the Trust Company,
 
provides asset management for individuals through agency,
 
personal trust,
IRA, and personal investment management accounts. Associations, endowments,
 
and other nonprofit entities hire the Trust
Company to manage their investment portfolios. Additionally,
 
a staff of well-trained professionals serves individuals requiring
 
the
services of a trustee, personal representative, or a guardian.
 
The market value of trust assets under discretionary management
exceeded $1.121 billion at December 31, 2023, with total assets under administration
 
exceeding $1.136 billion.
Capital City Investments
We offer
 
our customers access to retail investment products through LPL Financial pursuant to
 
which retail investment products
would be offered through LPL. LPL offers a full line
 
of retail securities products, including U.S. Government bonds, tax-free
municipal bonds, stocks, mutual funds, unit investment trusts, annuities, life insurance
 
and long-term health care. Non-deposit
investment and insurance products are: (i) not FDIC insured; (ii) not deposits,
 
obligations, or guarantees by any bank; and (iii)
subject to investment risk, including the possible loss of principal amount
 
invested.
 
Capital City Strategic Wealth,
 
LLC.
We provide
 
a multi-disciplinary strategic planning approach that requires examining all facets of our
 
clients’ financial lives
through our business, estate, financial, insurance and business planning,
 
tax planning, and asset protection advisory services.
 
Insurance sales within this division include life, health, disability,
 
long-term care, and annuity solutions.
 
8
Lending Activities
One of our core goals is to support the communities in which we operate. We
 
seek loans from within our primary market area,
which is defined as the counties in which our banking offices are located.
 
We will also originate
 
loans within our secondary
market area, defined as counties adjacent to those in which we have banking offices.
 
There may also be occasions when we will
have opportunities to make loans that are out of both the primary and secondary
 
market areas, including participation loans.
These loans are only approved if the underwriting is consistent with our criteria and generally
 
the project or applicant’s primary
business is in or near our primary or secondary market areas. Approval of all loans is subject to
 
our policies and standards
described in more detail below.
We have adopted
 
comprehensive lending policies, underwriting standards and loan review procedures.
 
Management and our
Board of Directors reviews and approves these policies and procedures on a regular
 
basis (at least annually).
Management has also implemented reporting systems designed to
 
monitor loan originations, loan quality,
 
concentrations of
credit, loan delinquencies, nonperforming loans, and potential problem
 
loans. Our management and the Credit Risk Oversight
Committee periodically review our lines of business to monitor asset quality
 
trends and the appropriateness of credit policies. In
addition, we establish total borrower exposure limits and monitor concentration
 
risk. As part of this process, the overall
composition of the portfolio is reviewed to gauge diversification of risk,
 
client concentrations, industry group, loan type,
geographic area, or other relevant classifications of loans.
 
Specific segments of the portfolio are monitored and reported to our
Board on a quarterly basis, and we have strategic plans in place to supplement
 
Board approved credit policies governing exposure
limits and underwriting standards. We
 
recognize that exceptions to the below-listed policy guidelines may
 
occasionally occur and
have established procedures for approving exceptions to these policy guidelines.
Residential Real Estate Loans
We originate
 
1-4 family, owner-occupied
 
residential real estate loans at CCHL for sale in the secondary market.
 
Historically, a
vast majority of residential loan originations are fixed-rate loans which
 
are sold in the secondary market on a non-recourse basis.
 
We will frequently
 
sell loans and retain the servicing rights.
 
Note 4 – Mortgage Banking Activities in the Notes to Our
Consolidated Financial Statements provides additional information on our
 
servicing portfolio.
 
CCB also maintains a portfolio of residential loans held for investment and
 
will periodically purchase newly originated 1-4
family secured adjustable-rate loans from CCHL for that portfolio.
 
Residential loans held for investment are generally
underwritten in accordance with secondary market guidelines in effect
 
at the time of origination, including loan-to-value, or LTV,
and documentation requirements.
 
Residential real estate loans also include home equity lines of credit, or HELOCs, and
 
home equity loans. Our home equity
portfolio includes revolving open-ended equity loans with interest-only
 
or minimal monthly principal payments and closed-end
amortizing loans. Open-ended equity loans typically have an interest only
 
10-year draw period followed by a five-year repayment
period of 0.75% of principal balance monthly and balloon payment at maturity.
 
As of December 31, 2023, approximately 53% of
our residential home equity loan portfolio consisted of first mortgages.
 
Interest rates may be fixed or adjustable.
 
Adjustable-rate
loans are tied to the Prime Rate with a typical margin of 1.0% or more.
 
Commercial Loans
Our policy sets forth guidelines for debt service coverage ratios, LTV
 
ratios and documentation standards. Commercial loans are
primarily made based on identified cash flows of the borrower with consideration
 
given to underlying collateral and personal or
other guarantees. We
 
have established debt service coverage ratio limits that require a borrower’s cash
 
flow to be sufficient to
cover principal and interest payments on all new and existing debt. The majority
 
of our commercial loans are secured by the
assets being financed or other business assets such as accounts receivable or inventory.
 
Many of the loans in the commercial
portfolio have variable interest rates tied to the Prime Rate or U.S. Treasury
 
indices.
9
Commercial Real Estate Loans
We have adopted
 
guidelines for debt service coverage ratios, LTV
 
ratios and documentation standards for commercial real estate
loans. These loans are primarily made based on identified cash flows of the
 
borrower with consideration given to underlying real
estate collateral and personal guarantees. Our policy establishes a maximum
 
LTV specific to
 
property type and minimum debt
service coverage ratio limits that require a borrower’s cash flow to be
 
sufficient to cover principal and interest payments on all
new and existing debt. Commercial real estate loans may be fixed
 
or variable-rate loans with interest rates tied to the Prime Rate
or U.S. Treasury indices. We
 
require appraisals for loans in excess of $500,000 that are secured by real property
 
unless we deem
the real property used as security to be a complex property type, in which case we require
 
appraisals for loans in excess of
$250,000. For loans secured by real property that fall beneath the applicable
 
thresholds above, we will generally use a third-party
evaluation to assess the value of the real property used as security.
 
Consumer Loans
Our consumer loan portfolio includes personal installment loans, direct
 
and indirect automobile financing, and overdraft lines of
credit. The majority of the consumer loan portfolio consists of indirect
 
and direct automobile loans. The majority of our consumer
loans are short-term and have fixed rates of interest that are priced based on
 
current market interest rates and the financial
strength of the borrower. Our policy
 
establishes maximum debt-to-income ratios, minimum credit scores, and includes
 
guidelines
for verification of applicants’ income and receipt of credit reports.
Expansion of Business
See Item 7.
 
Management’s Discussion and Analysis of
 
Financial Condition and Results of Operations under the section captioned
“Business Overview” for discussion related to the expansion of our
 
Business.
Competition
There is significant competition among commercial banks in our market
 
areas. We compete
 
against a wide range of banking and
nonbanking institutions including banks, savings and loan associations, credit
 
unions, money market funds, mutual fund advisory
companies, mortgage banking companies, investment banking companies,
 
insurance agencies and companies, securities firms,
brokerage firms, finance companies and other types of financial institutions.
 
Some of our competitors are larger financial
institutions with greater resources and, as such, may have higher lending
 
limits and may offer other services that are not provided
by us. However, we believe that the larger
 
financial institutions are less familiar with the markets in which we operate and
typically target a different client base. We
 
also believe clients who bank at community banks tend to prefer the relationship
 
style
service of community banks compared to larger banks.
As a result, 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. See Item 1A. Risk Factors under the section captioned “Our future success is dependent
 
on our ability to compete
effectively in the highly competitive banking industry” for further discussion
 
related to the competitive environment in which we
operate.
Our primary market area consists of 21 counties in Florida, six counties in
 
Georgia, and one county in Alabama. Most of Florida’s
major banking concerns have a presence in Leon County,
 
where our main office is located.
 
Our Leon County deposits totaled
$1.272 billion, or 34.4% of our consolidated deposits at December 31, 2023.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10
The table below depicts our market share percentage within each county,
 
based on commercial bank deposits within the county.
Market Share as of June 30,
(1)
County
2023
2022
2021
Florida
 
Alachua
5.1%
4.9%
4.6%
 
Bay
0.3%
0.3%
0.2%
 
Bradford
37.1%
34.9%
32.4%
 
Citrus
4.4%
4.7%
4.1%
 
Clay
2.4%
2.3%
2.8%
 
Dixie
17.5%
19.8%
18.9%
 
Gadsden
81.9%
82.1%
81.1%
 
Gilchrist
42.2%
41.2%
39.6%
 
Gulf
12.4%
14.8%
14.6%
 
Hernando
4.9%
5.0%
3.9%
 
Jefferson
28.3%
24.8%
24.4%
 
Leon
16.9%
15.4%
11.9%
 
Levy
26.4%
25.4%
26.4%
 
Madison
13.5%
14.0%
14.5%
 
Putnam
34.4%
26.4%
23.2%
 
St. Johns
0.8%
0.7%
0.7%
 
Suwannee
6.6%
7.0%
6.8%
 
Taylor
75.0%
73.8%
73.2%
 
Wakulla
8.4%
10.0%
10.5%
 
Walton
0.3%
-
-
 
Washington
9.2%
11.2%
11.2%
Georgia
 
Bibb
2.9%
3.2%
3.3%
 
Cobb
0.1%
0.0%
0.0%
 
Gwinnett
(2)
0.0%
-
-
 
Grady
13.8%
16.3%
14.8%
 
Laurens
6.7%
7.8%
7.9%
 
Troup
5.6%
6.4%
6.1%
Alabama
 
Chambers
8.6%
9.3%
9.3%
(1)
Obtained from the FDIC Summary of Deposits Report for the year indicated.
(2)
Bank office opened in the second quarter of 2023.
Seasonality
We believe our
 
commercial banking operations are not generally seasonal in nature; however,
 
public deposits tend to increase
with tax collections in the fourth and first quarters of each year and decline
 
as a result of governmental spending thereafter.
Human Capital Matters
 
Our culture distinguishes us from our competitors and is the driving force
 
behind our continued success. Our leadership is
committed to a culture that values people alongside results.
 
Our brand promise (“More than your bank. Your
 
banker.”)
 
and purpose (“We
 
empower our clients’ financial wellness and help
them build secure futures”), together with our core values statement (“Do
 
the Right Thing, Build Relationships & Loyalty,
Embrace Individuality & Value
 
Others, Promote Career Growth, Be Committed to Community,
 
and Represent the Star (our bank)
Proudly”), are the foundation on which our culture is built.
11
The bank has grown significantly since its beginnings in 1895. Our commitment
 
to fostering a culture that values our associates
across our entire footprint remains unwavering. We
 
have a Chief Culture Officer and a Chief Diversity Officer
 
who make it a
priority to ensure our culture is maintained and associates exemplify our values.
Diversity and Inclusion
. Integral to our culture and values is a commitment to an equitable, diverse, and inclusive work
environment whereby respect, acceptance and belonging are practiced
 
and experienced by all.
Our associates are our most valuable assets, and our differences make
 
us stronger. The individual perspectives,
 
life experiences,
capabilities and talents, which our associates invest in their work, represent a
 
significant part of our culture, reputation and
collective achievements.
 
The Chief Diversity Officer and the Diversity,
 
Equity, and Inclusion (DE&I) Council,
 
which comprises diverse associates from
various levels and offices throughout our organization,
 
connect the company’s diversity and inclusion
 
initiatives with our broader
business strategies. A diverse team produces more creative solutions, offers
 
better client service and is vital to attracting and
retaining talent—key factors that contribute to our success. We
 
continue to build an inclusive culture through a variety of DE&I
initiatives for internal promotions and hiring practices.
 
At February 8, 2024, we had approximately 811
 
associates, which included approximately 784 full-time associates and
approximately 27 part-time associates. At February 8, 2024, approximately
 
70% of our workforce was female, 30% was male,
and approximately 22% was ethnic minorities. None of our associates are represented
 
by a labor union or covered by a collective
bargaining agreement.
 
Our commitment to people and being an employer with integrity and heart has
 
earned us numerous accolades including:
 
one of
the “Best Companies to Work
 
for in Florida” by Florida Trend for 12 consecutive
 
years, a “Best Bank to Work
 
For” by American
Bankers Association for 11 consecutive years
 
and being named by Forbes in 2023 as one of “America’s
 
Best-in-State Banks, a
selection made from direct consumer feedback and online reviews.
 
The average tenure of our associates is approximately 9.6 years, and the
 
average tenure of our management team is 28 years.
Tenure statistics support
 
these accolades and further demonstrate that associates enjoy working
 
for CCB.
 
Compensation and Benefits Program
. To attract and retain experienced
 
associates we offer a competitive compensation and
benefits program, foster a culture where everyone feels included and empowered
 
to do to their best work, and give associates the
opportunity to give back to their communities and make a social impact.
Our compensation program is designed to attract and reward talented individuals
 
who possess the skills necessary to support our
business objectives, assist in the achievement of our strategic goals and
 
create long-term value for our shareowners. We
 
provide
our associates with compensation packages that include base salary and
 
annual incentive bonuses, and certain associates can
receive equity awards tied to the Company’s
 
performance.
 
Experience has taught us that a compensation program with both
 
short-
 
and long-term awards provides fair and competitive
compensation and aligns associate and shareowner interests by incentivizing
 
business and individual performance. This dual
approach also encourages long-term company performance and integrates compensation
 
with our business plans.
 
In addition to cash and equity compensation, we offer associates benefits
 
including life and health (medical, dental & vision)
insurance, paid time off, an associate stock purchase plan, and a
 
401(k) plan. Associates hired prior to 2020 are eligible to
participate in a pension plan.
A core value is providing associates the ability to “grow a career.”
 
To that end, we support and encourages
 
associates to develop a
life-long habit of continuous learning that focuses on personal and professional
 
development through higher education. We
 
offer
an educational Tuition Assistance Plan to help eligible
 
associates continue or begin post-high school education, develop skills,
increase knowledge and aid in career development.
We have invested
 
in tools and capabilities that allow our team members to work remotely as appropriate.
Health and Safety
. Our business success is fundamentally connected to our associates’ well-being.
 
We make available to our
associates a voluntary wellness program,
 
StarFit that provides associates with resources and good-health opportunities through
exercise, diet and preventive care.
In response to emerging workplace practices, we made changes to our
 
flex–work program to assist our associates in maintaining a
work/life balance consistent with their professional and personal goals.
 
 
12
We continue
 
to follow local and federal guidance, including guidance prescribed by the Centers for
 
Disease Control and
Prevention (“CDC”), regarding COVID-19 precautions and health measures.
 
Social Matters
Community Involvement
. We aim to give back
 
to the communities where we live and work and believe that this commitment
helps in our efforts to attract and retain associates. Our commitment
 
to help our community starts with our associates. Community
involvement is a hallmark for our organization, and it comes naturally
 
to our associates. We
 
encourage our associates to volunteer
their hours with service organizations and philanthropic groups in
 
the communities we serve.
 
We recorded
 
10,526 community service hours in 2023, and 9,508, and 8,697 hours in
 
2022 and 2021, respectively. Furthermore,
the CCBG Foundation donated $0.3 million in 2023 to various non-profit organizations
 
in the communities we serve and $0.3
million and $0.2 million in 2022, and 2021, respectively.
 
Since 2015, we have annually supported the United Way
 
of the Big Bend in analyzing financial information for its annual grant
review process. Many of these grants are provided to low-moderate income
 
communities in the Big Bend area.
Access, affordability,
 
and financial inclusion.
Our community commitment to further financial literacy in the markets we service
remains an ongoing focus. In 2023, the CCBG Foundation made grants totaling
 
$143,000 to Community Reinvestment Act of
1977 (“CRA”) eligible organizations in our market
 
area. We are committed
 
to providing educational outreach regarding home
ownership and financial access for minorities. We
 
are a long-time supporter of Habitat for Humanity,
 
with our associates
providing volunteer hours on home builds.
 
During 2020 to 2023, we partnered with Habitat for Humanity and Warrick
 
Dunn
Charities to build and furnish four homes.
 
 
During tax season, we provide locations for community residents to access Volunteer
 
Income Tax Assistance (VITA)
 
services.
VITA is a nationwide
 
IRS program that offers free tax preparation assistance to people who generally
 
make $60,000 or less,
persons with disabilities, the elderly,
 
and limited English-speaking taxpayers who need assistance in preparing their
 
own tax
returns.
 
Environmental Matters
 
We recognize
 
the value of environmental stewardship and seek opportunities to reduce our carbon
 
footprint and incorporate
energy efficiency products into business operations.
 
We have implemented
 
company-wide recycling programs and have
converted exterior lighting to LED at 64 offices. Further reducing
 
our environmental impact, our office model design is reduced
from an average 5,500 square feet to 3,300 square feet. As we renovate or build
 
new facilities, we employ energy efficient
equipment such as HVAC
 
systems and lighting controls in offices.
 
In 2022, we made a commitment for a $7 million investment in SOLCAP 2022-1,
 
LLC and, in 2023, we made a commitment for
a $7 million investment in SOLCAP 2023-1, LLC. Each of these funds were formed
 
to make solar tax equity investments in
renewable solar energy projects that will provide us with
 
tax credits and other tax benefits. These projects will produce
approximately 20,186,357 kw hours of clean power each year.
 
The clean power produced is equivalent to removing
approximately 14,306 metric tons of greenhouse gas emissions. We
 
plan to continue to review these kinds of investment
opportunities as they arise.
 
We work to ensure
 
lending activities do not encourage business activities that could cause irreparable
 
damage to our reputation or
the environment. In general, we evaluate each credit or transaction
 
on its individual merits, with larger deals receiving more
attention and deeper analysis, including a review of environmental matters
 
related to certain real estate loans, which is overseen
by our Credit Risk Oversight Committee.
To prepare for any climate-related
 
occurrences, we have a business continuity plan that addresses how to maintain
 
business
operations in the event of a disastrous event. We
 
also offer disaster assistance to our associates, which includes
accommodation/shelter reimbursement in case of evacuations or sustained
 
power outages.
Regulatory Considerations
We must comply
 
with state and federal banking laws and regulations
 
that control virtually all aspects of our operations.
 
These
laws and regulations generally aim to protect
 
our depositors, not necessarily our shareowners or our creditors.
 
Any changes in
applicable laws or regulations may materially affect
 
our business and prospects. Proposed
 
legislative or regulatory changes may
also affect our operations. The following description summarizes some of the laws and
 
regulations to which we are
 
subject.
References to applicable statutes and regulations
 
are brief summaries, do not purport to be complete, and
 
are qualified in their
entirety by reference
 
to such statutes and regulations.
 
13
Capital City Bank Group, Inc.
We are registered
 
with the Board of Governors of the Federal Reserve as a bank holding company under
 
the Bank Holding
Company Act of 1956 (“BHC Act”) and have also elected to be a financial
 
holding company. As a result,
 
we are subject to
supervisory regulation and examination by the Federal Reserve. The BHC Act, the Dodd
 
-Frank Wall Street Reform
 
and
Consumer Protection Act (the “Dodd-Frank Act”), the Gramm-Leach-Bliley Financial
 
Modernization Act (the “GLBA”), and
other federal laws subject financial holding companies to restrictions on the types of
 
activities in which they may engage, and to a
range of supervisory requirements and activities, including regulatory
 
enforcement actions for violations of laws and regulations.
 
Permitted Activities
The GLBA reformed the U.S. banking system by: (i) allowing bank holding companies
 
(“BHCs”) that qualify as “financial
holding companies,” such as CCBG, to engage in a broad range of financial
 
and related activities; (ii) allowing insurers and other
financial service companies to acquire banks; (iii) removing restrictions that applied
 
to bank holding company ownership of
securities firms and mutual fund advisory companies; and (iv) establishing the
 
overall regulatory scheme applicable to bank
holding companies that also engage in insurance and securities operations.
 
The general effect of the law was to establish a
comprehensive framework to permit affiliations among
 
commercial banks, insurance companies, securities firms, and other
financial service providers. Activities that are financial in nature are broadly
 
defined to include not only banking, insurance, and
securities activities, but also merchant banking and additional activities that the Federal
 
Reserve, in consultation with the
Secretary of the Treasury,
 
determines to be financial in nature, incidental to such financial activities, or complementary
 
activities
that do not pose a substantial risk to the safety and soundness of depository institutions
 
or the financial system generally.
 
In contrast to financial holding companies, bank holding companies are
 
limited to managing or controlling banks, furnishing
services to or performing services for its subsidiaries, and engaging
 
in other activities that the Federal Reserve determines by
regulation or order to be so closely related to banking or managing or controlling
 
banks as to be a proper incident thereto. In
determining whether a particular activity is permissible, the Federal Reserve must
 
consider whether the performance of such an
activity reasonably can be expected to produce benefits to the public that outweigh
 
possible adverse effects. Possible benefits
include greater convenience, increased competition, and gains in efficiency.
 
Possible adverse effects include undue concentration
of resources, decreased or unfair competition, conflicts of interest, and unsound
 
banking practices. Despite prior approval, the
Federal Reserve may order a bank holding company or its subsidiaries to terminate
 
any activity or to terminate ownership or
control of any subsidiary when the Federal Reserve has reasonable cause
 
to believe that a serious risk to the financial safety,
soundness or stability of any bank subsidiary of that bank holding company
 
may result from such an activity.
Changes in Control
Subject to certain exceptions, the BHC Act and the Change in Bank Control Act
 
(“CBCA”), together with the applicable
regulations, require Federal Reserve approval (or,
 
depending on the circumstances, no notice of disapproval) prior to any
acquisition of “control” of a bank or bank holding company.
 
Under the BHC Act, a company (a broadly defined term that includes
partnerships among other things) that acquires the power,
 
directly or indirectly, to direct
 
the management or policies of an insured
depository institution or to vote 25% or more of any class of voting securities of
 
any insured depository institution is deemed to
control the institution and to be a bank holding company.
 
A company that acquires less than 5% of any class of voting security
(and that does not exhibit the other control factors) is presumed not to have control.
 
For ownership levels between the 5% and
25% thresholds, the Federal Reserve has developed an extensive body of
 
law on the circumstances in which control may or may
not exist.
 
Further, on January 30, 2020, the Federal Reserve finalized
 
a rule that simplifies and increases the transparency of its
rules for determining when one company controls another company for
 
purposes of the BHC Act.
 
The rule became effective
September 30, 2020. It has and will likely continue to have a meaningful impact on
 
control determinations related to investments
in banks and bank holding companies and investments by bank holding
 
companies in nonbank companies.
Under the CBCA, if an individual or a company that acquires 10% or more of any
 
class of voting securities of an insured
depository institution or its holding company and either that institution or
 
company has registered securities under Section 12 of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or no
 
other person will own a greater percentage of that
class of voting securities immediately after the acquisition, then that investor is presumed
 
to have control and may be required to
file a change in bank control notice with the institution’s
 
or the holding company’s primary
 
federal regulator. Our common
 
stock
is registered under Section 12 of the Exchange Act so we are subject to these rules.
14
As a financial holding company,
 
we are required to obtain prior approval from the Federal Reserve before (i) acquiring
 
all or
substantially all of the assets of a bank or bank holding company,
 
(ii) acquiring direct or indirect ownership or control of more
than 5% of the outstanding voting stock of any bank or bank holding company
 
(unless we own a majority of such bank’s voting
shares), or (iii) acquiring, merging or consolidating with
 
any other bank or bank holding company.
 
In determining whether to
approve a proposed bank acquisition, federal bank regulators will consider,
 
among other factors, the effect of the acquisition on
competition, the public benefits expected to be received from the acquisition,
 
the projected capital ratios and levels on a post-
acquisition basis, and the companies’ records of addressing the credit needs of
 
the communities they serve, including the needs of
low and moderate income neighborhoods, consistent with the safe and sound
 
operation of the bank, under the CRA.
Under Florida law,
 
a person or entity proposing to directly or indirectly acquire control of a Florida bank must
 
also obtain
permission from the Florida Office of Financial Regulation. The
 
Florida Statutes define “control” as either (i) indirectly or
directly owning, controlling or having power to vote 25% or more of the voting
 
securities of a bank; (ii) controlling the election of
a majority of directors of a bank; (iii) owning, controlling, or having power to vote 10%
 
or more of the voting securities as well as
directly or indirectly exercising a controlling influence over management
 
or policies of a bank; or (iv) as determined by the
Florida Office of Financial Regulation. These requirements
 
will affect us because the Bank is chartered under Florida law and
changes in control of CCBG are indirect changes in control of CCB.
Prohibitions Against Tying Arrangements
Banks are subject to the prohibitions on certain tying arrangements.
 
We are prohibited,
 
subject to some exceptions, from
extending credit to or offering any other service, or fixing or varying
 
the consideration for such extension of credit or service, on
the condition that the customer obtain some additional service from the institution
 
or its affiliates or not obtain services of a
competitor of the institution.
Capital; Dividends; Source of Strength
The Federal Reserve imposes certain capital requirements on financial
 
holding companies under the BHC Act, including a
minimum leverage ratio and a minimum ratio of “qualifying” capital to risk-weighted
 
assets. These requirements are described
below under “Capital Regulations.” Subject to these capital requirements
 
and certain other restrictions, we are generally able to
borrow money to make a capital contribution to CCB, and such loans may
 
be repaid from dividends paid from CCB to us. We
 
are
also able to raise capital for contributions to CCB by issuing securities without having
 
to receive regulatory approval, subject to
compliance with federal and state securities laws.
It is the Federal Reserve’s policy
 
that bank holding companies should generally pay dividends on common
 
stock only out of
income available over the past year,
 
and only if prospective earnings retention is consistent with the organization’s
 
expected
future needs and financial condition. It is also the Federal Reserve’s
 
policy that bank holding companies should not maintain
dividend levels that undermine their ability to be a source of strength to their banking
 
subsidiaries. Additionally,
 
the Federal
Reserve has indicated that bank holding companies should carefully review
 
their dividend policies and has discouraged payment
ratios that are at maximum allowable levels unless both asset quality and capital are
 
very strong. The Federal Reserve possesses
enforcement powers over bank holding companies and their non-bank subsidiaries
 
to prevent or remedy actions that represent
unsafe or unsound practices or violations of applicable statutes and regulations. Among
 
these powers is the ability to proscribe the
payment of dividends by banks and bank holding companies.
 
Bank holding companies are expected to consult with the Federal Reserve before
 
redeeming any equity or other capital instrument
included in Tier 1 or Tier
 
2 capital prior to stated maturity,
 
if such redemption could have a material effect on the level or
composition of the organization’s
 
capital base. In addition, a bank holding company may not repurchase shares equal
 
to 10% or
more of its net worth if it would not be well-capitalized (as defined by the Federal Reserve)
 
after giving effect to such repurchase.
Bank holding companies experiencing financial weaknesses, or that
 
are at significant risk of developing financial weaknesses,
must consult with the Federal Reserve before redeeming or repurchasing common
 
stock or other regulatory capital instruments.
In accordance with Federal Reserve policy,
 
which has been codified by the Dodd-Frank Act, we are expected to act as a source of
financial strength to CCB and to commit resources to support CCB in circumstances in
 
which we might not otherwise do so. In
furtherance of this policy,
 
the Federal Reserve may require a financial holding company to terminate any activity or
 
relinquish
control of a nonbank subsidiary (other than a nonbank subsidiary of a bank) upon
 
the Federal Reserve’s determination
 
that such
activity or control constitutes a serious risk to the financial soundness or stability of
 
any subsidiary depository institution of the
financial holding company.
 
Further, federal bank regulatory authorities have
 
additional discretion to require a financial holding
company to divest itself of any bank or nonbank subsidiary if the agency determines
 
that divestiture may aid the depository
institution’s financial condition.
 
Safe and Sound Banking Practices
15
Bank holding companies and their nonbanking subsidiaries are prohibited
 
from engaging in activities that represent unsafe and
unsound banking practices or that constitute a violation of law or regulations.
 
Under certain conditions the Federal Reserve may
conclude that some actions of a bank holding company,
 
such as a payment of a cash dividend, would constitute an unsafe and
unsound banking practice. The Federal Reserve also has the authority
 
to regulate the debt of bank holding companies, including
the authority to impose interest rate ceilings and reserve requirements on such debt.
 
The Federal Reserve may also require a bank
holding company to file written notice and obtain its approval prior to purchasing
 
or redeeming its equity securities, unless certain
conditions are met.
 
Capital City Bank
Capital City Bank is a state-chartered commercial banking institution that is chartered
 
by and headquartered in the State of Florida
and is subject to supervision and regulation by the Florida Office of
 
Financial Regulation. The Florida Office of Financial
Regulation supervises and regulates all areas of our operations including,
 
without limitation, the making of loans, the issuance of
securities, the conduct of our corporate affairs, the satisfaction
 
of capital adequacy requirements, the payment of dividends, and
the establishment or closing of banking centers. We
 
are also a member bank of the Federal Reserve System, which makes our
operations subject to broad federal regulation and oversight by the Federal
 
Reserve. In addition, our deposit accounts are insured
by the FDIC up to the maximum extent permitted by law,
 
and the FDIC has certain supervisory enforcement powers over us.
 
As a Florida state-chartered bank, we are empowered by statute, subject to
 
the limitations contained in those statutes, to take and
pay interest on savings and time deposits, to accept demand deposits, to
 
make loans on residential and other real estate, to make
consumer and commercial loans, to invest (with certain limitations) in equity securities
 
and in debt obligations of banks and
corporations and to provide various other banking services for the benefit
 
of our clients. Various
 
consumer laws and regulations
also affect our operations, including state usury laws, laws relating to
 
fiduciaries, consumer credit and equal credit opportunity
laws, and fair credit reporting. In addition, the Federal Deposit Insurance Corporation
 
Improvement Act of 1991, or FDICIA,
prohibits insured state-chartered institutions from conducting activities as principal
 
that are not permitted for national banks. A
bank, however, may engage in certain otherwise
 
prohibited activity if it meets its minimum capital requirements and the FDIC
determines that the activity does not present a significant risk to the Deposit Insurance
 
Fund (“DIF”).
Safety and Soundness Standards / Risk Management
The federal banking agencies have adopted guidelines establishing
 
operational and managerial standards to promote the safety
and soundness of federally insured depository institutions. The guidelines
 
set forth standards for internal controls, information
systems, internal audit systems, loan documentation, credit underwriting,
 
interest rate exposure, asset growth, compensation, fees
and benefits, asset quality and earnings.
In general, the safety and soundness guidelines prescribe the goals to be achieved
 
in each area, and each institution is responsible
for establishing its own procedures to achieve those goals. If an institution fails to
 
comply with any of the standards set forth in
the guidelines, the financial institution’s
 
primary federal regulator may require the institution to submit a plan for
 
achieving and
maintaining compliance. If a financial institution fails to submit an acceptable
 
compliance plan or fails in any material respect to
implement a compliance plan that has been accepted by its primary federal
 
regulator, the regulator is required to issue an order
directing the institution to cure the deficiency.
 
Until the deficiency cited in the regulator’s order is cured, the regulator
 
may
restrict the financial institution’s
 
rate of growth, require the financial institution to increase its capital, restrict the
 
rates the
institution pays on deposits or require the institution to take any action
 
the regulator deems appropriate under the circumstances.
Noncompliance with the standards established by the safety and soundness guidelines
 
may also constitute grounds for other
enforcement action by the federal bank regulatory agencies, including
 
cease and desist orders and civil money penalty
assessments.
 
The bank regulatory agencies have increasingly emphasized the importance
 
of sound risk management processes and strong
internal controls when evaluating the activities of the financial institutions they
 
supervise. Properly managing risks has been
identified as critical to the conduct of safe and sound banking activities and has
 
become even more important as new
technologies, product innovation and the size and speed of financial transactions have
 
changed the nature of banking markets. The
agencies have identified a spectrum of risks facing a banking institution including,
 
but not limited to, credit, market, liquidity,
operational, legal and reputational risk. In particular,
 
recent regulatory pronouncements have focused on operational risk, which
arises from the potential that inadequate information systems, operational problems,
 
breaches in internal controls, fraud or
unforeseen catastrophes will result in unexpected losses. New products and services,
 
third party risk management and
cybersecurity are critical sources of operational risk that financial institutions are expected
 
to address in the current environment.
The Bank is expected to have active board and senior management oversight; adequate
 
policies, procedures and limits; adequate
risk measurement, monitoring and management information systems; and
 
comprehensive internal controls.
Reserves
16
The Federal Reserve requires all depository institutions to maintain reserves
 
against transaction accounts (noninterest bearing and
NOW checking accounts). The balances maintained to meet the reserve requirements
 
imposed by the Federal Reserve may be
used to satisfy liquidity requirements. An institution may borrow from
 
the Federal Reserve Bank “discount window” as a
secondary source of funds, provided that the institution meets the Federal Reserve
 
Bank’s credit standards.
Dividends
CCB is subject to legal limitations on the frequency and amount of dividends
 
that can be paid to CCBG. The Federal Reserve may
restrict the ability of CCB to pay dividends if such payments would constitute an
 
unsafe or unsound banking practice.
Additionally, financial
 
institutions are now required to maintain a capital conservation buffer
 
of at least 2.5% of risk-weighted
assets in order to avoid restrictions on capital distributions and other payments.
 
If a financial institution’s capital conservation
buffer falls below the minimum requirement, its maximum payout
 
amount for capital distributions and discretionary payments
declines to a set percentage of eligible retained income based on the size of the
 
buffer. See “Capital Regulations” below
 
for
additional details on this capital requirement.
In addition, Florida law and Federal regulation place restrictions on the declaration
 
of dividends from state-chartered banks to
their holding companies. Under the Florida Financial Institutions Code,
 
the board of directors of a state-chartered bank, after it
charges off bad debts, depreciation and other
 
worthless assets, if any, and makes provisions
 
for reasonably anticipated future
losses on loans and other assets, may quarterly,
 
semi-annually or annually declare a dividend of up to the aggregate net profits of
that period combined with the bank’s
 
retained net profits for the preceding two years. In addition, with the approval of the Florida
Office of Financial Regulation and Federal Reserve,
 
the bank’s board of directors may declare a
 
dividend from retained net
profits which accrued prior to the preceding two years. Before declaring such dividends,
 
20% of the net profits for the preceding
period as is covered by the dividend must be transferred to the surplus fund of the
 
bank until this fund becomes equal to the
amount of the bank’s common stock
 
then issued and outstanding. However, a Florida
 
state-chartered bank may not declare any
dividend if (i) its net income (loss) from the current year combined with the retained net
 
income (loss) for the preceding two years
aggregates a loss or (ii) the payment of such dividend would cause the capital account
 
of the bank to fall below the minimum
amount required by law, regulation,
 
order or any written agreement with the Florida Office of Financial
 
Regulation or a federal
regulatory agency.
 
Under Federal Reserve regulations, a state member bank may,
 
without the prior approval of the Federal
Reserve, pay a dividend in an amount that, when taken together with all dividends
 
declared during the calendar year, does not
exceed the sum of the bank’s net income
 
during the current calendar year and the retained net income of the prior
 
two calendar
years. The Federal Reserve may approve greater amounts.
Insurance of Accounts and Other Assessments
 
Deposits at U.S. domiciled banks are insured by the FDIC, subject to limits and conditions of
 
applicable laws and regulations.
Our deposit accounts are insured by the DIF generally up to a maximum of
 
$250,000 per separately insured depositor.
 
In order to
fund the DIF,
 
all insured depository institutions are required to pay quarterly assessments to
 
the FDIC that are based on an
institutions assignment to one of four risk categories based on supervisory
 
evaluations, regulatory capital levels and certain other
factors. The FDIC has the discretion to adjust an institution’s
 
risk rating and may terminate its insurance of deposits upon a
finding that the institution engaged or is engaging in unsafe and unsound practices,
 
is in an unsafe or unsound condition to
continue operations, or violated any applicable law,
 
regulation, rule, order or condition imposed by the FDIC or written
agreement entered into with the FDIC. The FDIC may also prohibit any FDIC-insured
 
institution from engaging in any activity it
determines to pose a serious risk to the DIF.
In October 2022, the FDIC finalized a rule to increase the initial base deposit insurance
 
assessment rate schedules uniformly by 2
basis points beginning with the first quarterly assessment period of 2023. The increased
 
assessment is intended to improve the
likelihood that the DIF reserve ratio would reach the statutory minimum of 1.35%
 
by the statutory deadline of September 30,
2028 prescribed under the FDIC’s amended
 
restoration plan. In November 2023, the FDIC adopted a final rule with respect to a
special assessment to recover the costs associated with protecting uninsured
 
depositors following the closures of Silicon Valley
Bank and Signature Bank. The final rule does not apply to any banking organization
 
with less than $5 billion in total consolidated
assets and therefore the special assessment is not expected to impact the Company.
Transactions with Affiliates and
 
Insiders
Pursuant to Sections 23A and 23B of the Federal Reserve Act and Regulation
 
W, the authority
 
of CCB to engage in transactions
with related parties or “affiliates” or to make loans to insiders is limited. Loan
 
transactions with an affiliate generally must be
collateralized and certain transactions between CCB and its affiliates,
 
including the sale of assets, the payment of money or the
provision of services, must be on terms and conditions that are substantially the same,
 
or at least as favorable to CCB, as those
prevailing for comparable nonaffiliated transactions. In
 
addition, CCB generally may not purchase securities issued or
underwritten by affiliates.
 
17
Loans to executive officers and directors of an insured depository institution
 
or any of its affiliates or to any person who directly
or indirectly, or acting
 
through or in concert with one or more persons, owns, controls or has the power
 
to vote more than 10% of
any class of voting securities of a bank, which we refer to as “10% Shareowners,”
 
or to any political or campaign committee the
funds or services of which will benefit those executive officers, directors,
 
or 10% Shareowners or which is controlled by those
executive officers, directors or 10% Shareowners, are subject to Sections
 
22(g) and 22(h) of the Federal Reserve Act and the
corresponding regulations (Regulation O) and Section 13(k) of the
 
Exchange Act relating to the prohibition on personal loans to
executives (which exempts financial institutions in compliance with the insider
 
lending restrictions of Section 22(h) of the Federal
Reserve Act). Among other things, these loans must be made on terms substantially
 
the same as those prevailing on transactions
made to unaffiliated individuals and certain extensions of
 
credit to those persons must first be approved in advance by a
disinterested majority of the entire board of directors. Section 22(h) of the Federal
 
Reserve Act prohibits loans to any of those
individuals where the aggregate amount exceeds an amount equal to
 
15% of an institution’s unimpaired
 
capital and surplus plus
an additional 10% of unimpaired capital and surplus in the case of loans that are fully
 
secured by readily marketable collateral, or
when the aggregate amount on all of the extensions of credit outstanding
 
to all of these persons would exceed our unimpaired
capital and unimpaired surplus. Section 22(g) identifies limited circumstances
 
in which we are permitted to extend credit to
executive officers.
 
Community Reinvestment Act
The CRA and its corresponding regulations are intended to encourage banks to
 
help meet the credit needs of the communities
they serve, including low- and moderate-income (“LMI”) neighborhoods,
 
consistent with safe and sound banking practices. These
regulations provide for regulatory assessment of a bank’s
 
record in meeting the credit needs of its market area. Federal banking
agencies are required to publicly disclose each bank’s
 
rating under the CRA. The Federal Reserve considers a bank’s
 
CRA rating
when the bank submits an application to establish bank branches, merge
 
with another bank, or acquire the assets and assume the
liabilities of another bank. In the case of a financial holding company,
 
the CRA performance record of all banks involved in a
merger or acquisition are reviewed in connection with
 
the application to acquire ownership or control of shares or assets of a bank
or to merge with another bank or bank holding company.
 
An unsatisfactory record can substantially delay or block the
transaction. We
 
received a satisfactory rating on our most recent CRA assessment.
 
In October 2023, the Federal Reserve, along with the FDIC and OCC, issued a joint final
 
rule that made significant amendments
to the regulations implementing the CRA to “strengthen and modernize”
 
those regulations, including by creating rigorous data-
driven performance tests and growing the geographic areas in which
 
a bank’s CRA performance may be
 
evaluated. The final rules
are intended to achieve the following key goals, among others: strengthen
 
the achievement of the core purpose of the CRA;
encourage banks to expand access to credit, investment, and banking services
 
in LMI communities; adapt to changes in the
banking industry, including
 
internet and mobile banking; provide greater clarity and consistency in the application
 
of the CR
A
regulations; and tailor CRA evaluations and data collection to bank size and
 
type. Although the effective date of the final rule is
April 1, 2024, the compliance date for the majority of the rule’s
 
provisions is January 1, 2026. The remaining requirements,
including the data reporting requirements, will be applicable on January 1, 2027.
 
We are planning for
 
compliance with the final
rules and continue to evaluate the impact of the final rules to our financial condition,
 
results of operations, and liquidity,
 
which
cannot be predicted at this time.
 
Capital Regulations
The federal banking regulators have adopted rules implementing
 
risk-based, capital adequacy guidelines for financial holding
companies and their subsidiary banks based on the Basel III standards. Under these
 
guidelines, assets and off-balance sheet items
are assigned to specific risk categories each with designated risk weightings.
 
These risk-based capital guidelines were designed to
make regulatory capital requirements more sensitive to differences
 
in risk profiles among banks and bank holding companies, to
account for off-balance sheet exposure, to minimize disincentives
 
for holding liquid assets, and to achieve greater consistency in
evaluating the capital adequacy of major banks throughout the world.
 
The resulting capital ratios represent capital as a percentage
of total risk-weighted assets and off-balance sheet items.
 
In computing total risk-weighted assets, bank and bank holding company
 
assets are given risk-weights of 0%, 20%, 50%, 100%
and 150%. In addition, certain off-balance sheet items are given similar
 
credit conversion factors to convert them to asset
equivalent amounts to which an appropriate risk-weight will apply.
 
Most loans will be assigned to the 100% risk category,
 
except
for performing first mortgage loans fully secured by 1-to-4 family and
 
certain multi-family residential property,
 
which carry a
50% risk rating. Most investment securities (including, primarily,
 
general obligation claims on states or other political
subdivisions of the United States) will be assigned to the 20% category,
 
except for municipal or state revenue bonds, which have
a 50% risk-weight, and direct obligations of the U.S. Treasury
 
or obligations backed by the full faith and credit of the U.S.
Government, which have a 0% risk-weight. In covering off
 
-balance sheet items, direct credit substitutes, including general
guarantees and standby letters of credit backing financial obligations, are
 
given a 100% conversion factor. Transaction
 
-related
contingencies such as bid bonds, standby letters of credit backing nonfinancial
 
obligations, and undrawn commitments (including
commercial credit lines with an initial maturity of more than one year) have a
 
50% conversion factor. Short-term
 
commercial
letters of credit are converted at 20% and certain short-term unconditionally
 
cancelable commitments have a 0% factor.
 
18
The rules implement strict eligibility criteria for regulatory capital instruments
 
and improve the methodology for calculating risk-
weighted assets to enhance risk sensitivity.
 
Consistent with the international Basel III framework, the rules include
 
a minimum
ratio of Common Equity Tier 1 Capital to Risk-Weighted
 
Assets of 4.5%. The rules provide for a Common Equity Tier
 
1 Capital
conservation buffer of 2.5% of risk-weighted assets. This buffer
 
is added to each of the three risk-based capital ratios to determine
whether an institution has established the buffer.
 
The rules provide for a minimum ratio of Tier 1 Capital to Risk-Weighted
 
Assets
of 6% and include a minimum leverage ratio of 4% for all banking organizations.
 
If a financial institution’s capital conservation
buffer falls below 2.5% (e.g., if the institution’s
 
Common Equity Tier 1 Capital to Risk-Weighted
 
Assets is less than 7.0%), then
capital distributions and discretionary payments will be limited or prohibited
 
based on the size of the institution’s buffer.
 
The
types of payments subject to this limitation include dividends, share buybacks,
 
discretionary payments on Tier 1 instruments,
 
and
discretionary bonus payments.
The capital regulations may also impact the treatment of accumulated
 
other comprehensive income (“AOCI”) for regulatory
capital purposes. AOCI generally flows through to regulatory capital; however,
 
community banks and their holding companies
were allowed a one-time irrevocable opt-out election to continue
 
to treat AOCI the same as under the old regulations for
regulatory capital purposes. This election was required to be made on the first call
 
report or bank holding company annual report
(on form FR Y-9C)
 
filed after January 1, 2015. We
 
made the opt-out election. Additionally,
 
the rules also permitted community
banks with less than $15 billion in total assets to continue to count certain non
 
-qualifying capital instruments issued prior to May
19, 2010, as Tier 1 capital, including trust preferred
 
securities and cumulative perpetual preferred stock (subject to a limit of 25%
of Tier 1 capital). However,
 
non-qualifying capital instruments issued on or after May 19, 2010, would not
 
qualify for Tier 1
capital treatment.
Commercial Real Estate Concentration Guidelines
 
The federal banking regulators have implemented guidelines to address increased
 
concentrations in commercial real estate loans.
These guidelines describe the criteria regulatory agencies will use as indicators to
 
identify institutions potentially exposed to
commercial real estate concentration risk. An institution that has (i) experienced
 
rapid growth in commercial real estate lending,
(ii) notable exposure to a specific type of
 
commercial real estate, (iii) total reported loans for construction, land development,
 
and
other land representing 100% or more of total risk-based capital, or (iv)
 
total commercial real estate (including construction) loans
representing 300% or more of total risk-based capital and the outstanding
 
balance of the institutions commercial real estate
portfolio has increased by 50% or more in the prior 36 months, may be identified for
 
further supervisory analysis of a potential
concentration risk.
 
At December 31, 2023, CCB’s ratio of
 
construction, land development and other land loans to total risk-based
 
capital was 77%,
its ratio of total commercial real estate loans to total risk-based capital was 235%
 
and, therefore, CCB was under the 100% and
300% thresholds, respectively,
 
set forth in clauses (iii) and (iv) above.
 
As a result, we are not deemed to have a concentration in
commercial real estate lending under applicable regulatory guidelines.
Prompt Corrective Action
The federal banking agencies are required to take “prompt corrective
 
action” with respect to financial institutions that do not meet
minimum capital requirements. The law establishes five categories for
 
this purpose: “well-capitalized,” “adequately capitalized,”
“undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.”
 
To be considered “well-capitalized,”
 
an
insured depository institution must maintain minimum capital ratios and
 
must not be subject to any order or written directive to
meet and maintain a specific capital level for any capital measure. An institution
 
that fails to remain well-capitalized becomes
subject to a series of restrictions that increase in severity as its capital condition weakens. Such
 
restrictions may include a
prohibition on capital distributions, restrictions on asset growth or restrictions
 
on the ability to receive regulatory approval of
applications. The regulations apply only to banks and not to BHCs. However,
 
the Federal Reserve is authorized to take
appropriate action at the holding company level based on the undercapitalized
 
status of the holding company’s subsidiary
 
banking
institutions. In certain instances relating to an undercapitalized banking
 
institution, the BHC would be required to guarantee the
performance of the undercapitalized subsidiary’s
 
capital restoration plan and could be liable for civil money damages for failure
to fulfill those guarantee commitments.
In addition, failure to meet capital requirements may cause an institution to
 
be directed to raise additional capital. Federal law
further mandates that the agencies adopt safety and soundness standards generally
 
relating to operations and management, asset
quality and executive compensation, and authorizes administrative action
 
against an institution that fails to meet such standards.
Failure to meet capital guidelines may subject a banking organization
 
to a variety of other enforcement remedies, including
additional substantial restrictions on its operations and activities, termination of
 
deposit insurance by the FDIC and, under certain
conditions, the appointment of a conservator or receiver.
19
At December 31, 2023, we exceeded the requirements contained in the applicable
 
regulations, policies and directives pertaining to
capital adequacy to be classified as “well capitalized” and are unaware
 
of any material violation or alleged violation of these
regulations, policies or directives (see table below). Rapid growth, poor loan
 
portfolio performance, or poor earnings
performance, or a combination of these factors, could change our capital position
 
in a relatively short period of time, making
additional capital infusions necessary.
 
Our capital ratios can be found in Note 17 to the Notes to our Consolidated Financial
Statements.
Interstate Banking and Branching
The Dodd-Frank Act relaxed interstate branching restrictions by modifying
 
the federal statute governing de novo interstate
branching by state member banks. Consequently,
 
a state member bank may open its initial branch in a state outside of the bank’s
home state by way of an interstate bank branch, so long as a bank chartered under the
 
laws of that state would be permitted to
open a branch at that location.
 
Anti-money Laundering
The Uniting and Strengthening America by Providing Appropriate Tools
 
Required to Intercept and Obstruct Terrorism
 
Act of
2001 (the “USA Patriot Act”), provides the federal government with additional
 
powers to address terrorist threats through
enhanced domestic security measures, expanded surveillance powers,
 
increased information sharing and broadened anti-money
laundering requirements. By way of amendments to the Bank Secrecy
 
Act (the “BSA”), the USA Patriot Act puts in place
measures intended to encourage information sharing among bank regulatory
 
and law enforcement agencies. In addition, certain
provisions of the USA Patriot Act impose affirmative obligations
 
on a broad range of financial institutions.
The USA Patriot Act, BSA, and the related federal regulations require banks
 
to establish anti-money laundering programs that
include policies, procedures and controls to detect, prevent and report
 
money laundering and terrorist financing and to verify the
identity of their customers and of beneficial owners of their legal entity customers.
The Anti-Money Laundering Act (“AMLA”), which amends the BSA, was enacted in
 
early 2021. The AMLA is intended to be a
comprehensive reform and modernization of U.S. bank
 
secrecy and anti-money laundering laws. In particular,
 
it codifies a risk-
based approach to anti-money laundering compliance for financial institutions,
 
requires the U.S. Department of the Treasury to
promulgate priorities for anti-money laundering and countering the
 
financing of terrorism policy,
 
requires the development of
standards for testing technology and internal processes for BSA compliance,
 
expands enforcement-
 
and investigation-related
authority (including increasing available sanctions for certain BSA violations),
 
and expands BSA whistleblower incentives and
protections.
 
Many AMLA provisions require additional rulemakings, reports, and
 
other measures, and the impact of the AMLA will depend
on, among other things, rulemaking and implementation guidance.
 
In June 2021, the Financial Crimes Enforcement Network, a
bureau of the U.S. Department of the Treasury,
 
issued the priorities for anti-money laundering and countering the financing of
terrorism policy required under the AMLA. The priorities include corruption,
 
cybercrime, terrorist financing, fraud, transnational
crime, drug trafficking, human trafficking
 
and proliferation financing.
There is also increased scrutiny of compliance with the sanctions programs
 
and rules administered and enforced by the Office of
Foreign Assets Control of the U.S. Department of Treasury,
 
or “OFAC.” OFAC
 
administers and enforces economic and trade
sanctions against targeted foreign countries and regimes, terrorists, international
 
narcotics traffickers, those engaged in activities
related to the proliferation of weapons of mass destruction, and other threats to
 
the national security, foreign
 
policy or economy of
the United States, based on U.S. foreign policy and national security goals.
 
OFAC issues regulations
 
that restrict transactions by
U.S. persons or entities (including banks), located in the U.S. or abroad,
 
with certain foreign countries, their nationals or
“specially designated nationals.” OFAC
 
regularly publishes listings of foreign countries and designated
 
nationals that are
prohibited from conducting business with any U.S. entity or individual. While OFAC
 
is responsible for promulgating, developing
and administering these controls and sanctions, all of the bank regulatory
 
agencies are responsible for ensuring that financial
institutions comply with these regulations.
Privacy
A variety of federal and state privacy laws govern the collection, safeguarding, sharing
 
and use of customer information, and
require that financial institutions have policies regarding information privacy
 
and security. The GLBA and related
 
regulations
require banks and their affiliated companies to adopt and disclose
 
privacy policies, including policies regarding the sharing of
personal information with third parties. Some state laws also protect the privacy of
 
information of state residents and require
adequate security of such data, and certain state laws may require us to notify
 
affected individuals of security breaches of
computer databases that contain their personal information. These laws may
 
also require us to notify law enforcement, regulators
or consumer reporting agencies in the event of a data breach, as well as businesses and
 
governmental agencies that own data.
20
Cybersecurity
The federal banking regulators regularly issue new guidance and standards,
 
and update existing guidance and standards, regarding
cybersecurity intended to enhance cyber risk management among financial
 
institutions. Financial institutions are expected to
comply with such guidance and standards and to accordingly develop appropriate
 
security controls and risk management
processes. If we fail to observe such regulatory guidance or standards, we
 
could be subject to various regulatory sanctions,
including financial penalties. In 2023, the SEC issued a final rule that requires
 
disclosure of material cybersecurity incidents, as
well as cybersecurity risk management, strategy and governance. Under
 
this rule, banking organizations that are SEC registrants
must generally disclose information about a material cybersecurity incident
 
within four business days of determining it is material
with periodic updates as to the status of the incident in subsequent filings,
 
as necessary.
Under a final rule adopted by federal banking agencies in 2021, banking organizations
 
are required to notify their primary
banking regulator within 36 hours of determining that a “computer-security
 
incident” has materially disrupted or degraded, or is
reasonably likely to materially disrupt or degrade, the banking organization’s
 
ability to carry out banking operations or deliver
banking products and services to a material portion of its customer base,
 
its businesses and operations that would result in
material loss, or its operations that would impact the stability of the United States.
State regulators have also been increasingly active in implementing privacy
 
and cybersecurity standards and regulations.
Recently, several states have
 
adopted regulations requiring certain financial institutions to implement
 
cybersecurity programs and
many states have also recently implemented or modified their data breach
 
notification, information security and data privacy
requirements. We
 
expect this trend of state-level activity in those areas to continue and are continually
 
monitoring developments
in the states in which our customers are located.
Risks and exposures related to cybersecurity attacks, including litigation
 
and enforcement risks, are expected to be elevated for
the foreseeable future due to the rapidly evolving nature and sophistication of
 
these threats, as well as due to the expanding use of
internet banking, mobile banking, and other technology-based products
 
and services by us and our customers.
See Item 1A. Risk Factors for a further discussion of risks related to cybersecurity
 
and Item 1C. Cybersecurity for a further
discussion of risk management strategies and governance processes related to
 
cybersecurity.
Overdraft Fee Regulation
The Electronic Fund Transfer Act prohibits
 
financial institutions from charging consumers fees for paying overdrafts
 
on
automated teller machines, or ATM,
 
and one-time debit card transactions, unless a consumer consents, or opts
 
in, to the overdraft
service for those type of transactions.
 
If a consumer does not opt in, any ATM
 
transaction or debit that overdraws the consumer’s
account will be denied.
 
Overdrafts on the payment of checks and regular electronic bill payments are not covered
 
by this rule.
 
Before opting in, the consumer must be provided a notice that explains the financial
 
institution’s overdraft services,
 
including the
fees associated with the service, and the consumer’s choices.
 
Financial institutions must provide consumers who do not opt in
with the same account terms, conditions and features (including pricing)
 
that they provide to consumers who do opt in.
Consumer Laws and Regulations
CCB is also subject to other federal and state consumer laws and regulations that
 
are designed to protect consumers in
transactions with banks. While the list set forth below is not exhaustive,
 
these laws and regulations include the Truth in Lending
Act, the Truth in Savings Act, the Electronic Fund
 
Transfer Act, the Expedited Funds Availability
 
Act, the Check Clearing for the
21st Century Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
 
Equal Credit Opportunity Act, the
Fair Housing Act, the Home Mortgage Disclosure Act, the Fair and
 
Accurate Credit Transactions Act, the Mortgage Disclosure
Improvement Act, and the Real Estate Settlement Procedures Act, among
 
others. These laws and regulations mandate certain
disclosures and regulate the manner in which financial institutions must deal
 
with clients when taking deposits or making loans to
clients. CCB must comply with these consumer protection laws and regulations as part
 
of its ongoing client relations.
 
21
In addition, the Consumer Financial Protection Bureau (“CFPB”) issues regulations
 
and standards under these federal consumer
protection laws that affect our consumer businesses. These
 
include regulations setting “ability to repay” standards for residential
mortgage loans and mortgage loan servicing and originator compensation
 
standards, which generally require creditors to make a
reasonable, good faith determination of a consumer’s ability
 
to repay any consumer credit transaction secured by a dwelling
(excluding an open-end credit plan, timeshare plan, reverse mortgage,
 
or temporary loan) and establishes certain protections from
liability under this requirement for loans that meet the requirements of the “qualified
 
mortgage” safe harbor. Also, the more
 
recent
TILA-RESPA
 
Integrated Disclosure, or TRID, rules for mortgage closings have
 
impacted our loan applications. These rules,
including the required loan forms, generally increased the time it takes to approve
 
mortgage loans.
Future Legislative Developments
Various
 
bills are from time to time introduced in the U.S. Congress and the Florida legislature.
 
This legislation may change
banking and tax statutes and the environment in which our banking subsidiary
 
and we operate in substantial and unpredictable
ways. We cannot
 
determine the ultimate effect that potential legislation, if enacted, or
 
implementing regulations with respect
thereto, would have upon our financial condition or results of operations or
 
that of our banking subsidiary.
Legislative and Regulatory Responses to the COVID-19 Pandemic
The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, which came
 
into law in 2020, was a $2.2 trillion
economic stimulus bill that was intended to provide relief in response to the
 
COVID-19 pandemic. The CARES Act, among other
things, amended the SBA’s
 
loan program, in which the Bank participates, to create a guaranteed,
 
unsecured loan program (the
“PPP”) to fund operational costs of eligible businesses, organizations
 
and self-employed persons during COVID-19. The PPP
authorized financial institutions to make federally guaranteed loans to
 
qualifying small businesses and non-profit organizations.
These loans carry an interest rate of 1% per annum and a maturity of two years for loans
 
originated prior to June 5, 2020 and five
years for loans originated on or after June 5, 2020. The PPP provides that
 
such loans may be forgiven if the borrowers meet
certain requirements with respect to maintaining employee headcount
 
and payroll and the use of the loan proceeds after the loan is
originated. Although the PPP ended in accordance with its terms on May 31,
 
2021, outstanding PPP loans continue to go through
the process of either obtaining forgiveness from the SBA or pursuing
 
claims under the SBA guaranty.
 
There have also been a number of regulatory actions intended to help mitigate the adverse economic
 
impact of the COVID-19
pandemic on borrowers, including several mandates from the bank regulatory
 
agencies, requiring financial institutions to work
constructively with borrowers affected by the COVID-19
 
pandemic.
 
While these programs have generally expired, governmental
authorities may take additional actions in the future to limit the adverse impacts of
 
COVID-19 that may affect the Bank and its
clients.
Effect of Governmental Monetary Policies
The commercial banking business is affected not only by general
 
economic conditions, but also by the monetary policies of the
Federal Reserve. Changes in the discount rate on member bank borrowing,
 
availability of borrowing at the “discount window,”
open market operations, changes in the Fed Funds target
 
interest rate, changes in interest rates payable on reserve accounts, the
imposition of changes in reserve requirements against member banks’ deposits
 
and assets of foreign banking centers and the
imposition of and changes in reserve requirements against certain borrowings
 
by banks and their affiliates are some of the
instruments of monetary policy available to the Federal Reserve. These monetary
 
policies are used in varying combinations to
influence overall growth and distributions of bank loans, investments and deposits,
 
which may affect interest rates charged on
loans or paid on deposits. The monetary policies of the Federal Reserve have
 
had a significant effect on the operating results of
commercial banks and are expected to continue to do so in the future. The
 
Federal Reserve’s policies are primarily
 
influenced by
its dual mandate of price stability and full employment, and, to a lesser degree by
 
short-term and long-term changes in the
international trade balance and in the fiscal policies of the U.S. Government. Future
 
changes in monetary policy and the effect of
such changes on our business and earnings in the future cannot be predicted.
Website Access to Company’s
 
Reports
Our Internet website is www.ccbg.com.
 
Our annual reports on Form 10-K, quarterly reports on Form 10-Q,
 
current reports on
Form 8-K, including any amendments to those reports filed or furnished pursuant
 
to section 13(a) or 15(d), and reports filed
pursuant to Section 16, 13(d), and 13(g) of the Exchange Act are available
 
free of charge through our website as soon as
reasonably practicable after they are electronically filed with, or furnished
 
to, the Securities and Exchange Commission.
 
The
information on our website is not incorporated by reference into this report.
 
22
Item 1A.
 
Risk Factors
An investment in our common stock contains a high degree
 
of risk. You should
 
consider carefully the following risk factors before
deciding whether to invest in our common stock. Our business, including our operating
 
results and financial condition, could be
harmed by any of these risks. Additional risks and uncertainties not currently
 
known to us or that we currently deem to be
immaterial also may materially and adversely affect our business. The trading
 
price of our common stock could decline due to
any of these risks, and you may lose all or part of your investment. In assessing these risks, you
 
should also refer to the other
information contained in our filings with the SEC, including our financial
 
statements and related notes.
Market Risks
We may incur losses if we are
 
unable to successfully manage interest rate risk.
Our profitability depends to a large extent on Capital City Bank’s
 
net interest income, which is the difference between income on
interest-earning assets, such as loans and investment securities, and
 
expense on interest-bearing liabilities such as deposits and
borrowings. We
 
are unable to predict changes in market interest rates, which are affected
 
by many factors beyond our control,
including inflation, recession, unemployment, federal funds target
 
rate, money supply, domestic and
 
international events and
 
changes in the United States and other financial markets. Our net interest income
 
may be reduced if: (i) more interest-earning
assets than interest-bearing liabilities reprice or mature during a time when
 
interest rates are declining or (ii) more interest-bearing
liabilities than interest-earning assets reprice or mature during a time when
 
interest rates are rising.
Changes in the difference between short-term
 
and long-term interest rates may also harm our business. We
 
generally use short-
term deposits to fund longer-term assets. When interest rates change,
 
assets and liabilities with shorter terms reprice more quickly
than those with longer terms, which could have a material adverse effect
 
on our net interest margin. During 2022 and 2023, the
Federal Reserve raised the federal funds rate 11
 
times for a cumulative increase of 5.25% and there is no guarantee that it will
reduce the federal funds rate in the near-term.
 
Prior to 2022, the Federal Reserve had not raised the federal funds rate since
December 2018. The increase in the federal funds rate could have an
 
adverse effect on our net interest income and profitability.
 
If
market interest rates start rising again, interest rate adjustment caps may also limit
 
increases in the interest rates on adjustable-rate
loans, which could further reduce our net interest income. Further,
 
increased price competition for deposits resulting from the
return to a historically normal interest rate environment could adversely
 
affect our net interest margin.
Although we continuously monitor interest rates and have a number
 
of tools to manage our interest rate risk exposure, changes in
market assumptions regarding future interest rates could significantly impact our
 
interest rate risk strategy, our financial
 
position
and results of operations. If we do not properly monitor our interest rate risk management
 
strategies, these activities may not
effectively mitigate our interest rate sensitivity or have the desired
 
impact on our results of operations or financial condition.
Interest rates and economic conditions affect consumer
 
demand for housing and can create volatility in the mortgage industry.
 
These risks can have a material impact on the volume of mortgage originations
 
and refinancings, adversely affecting mortgage
banking revenues and the profitability of our mortgage banking business.
 
See Item 7.
 
Management’s Discussion and Analysis of
 
Financial Condition and Results of Operations under the section captioned
“Net Interest Income” and “Market Risk and Interest Rate Sensitivity” elsewhere
 
in this report for further discussion related to
interest rate sensitivity and our management of interest rate risk.
The fair value of our investments could decline which would cause a reduction
 
in shareowners’ equity.
A portion of our investment securities portfolio (35.1%) at December
 
31, 2023 has been designated as available-for-sale pursuant
to U.S. generally accepted accounting principles relating to accounting for
 
investments. Such principles require that unrealized
gains and losses in the estimated value of the available-for-sale
 
portfolio be “marked to market” and reflected as a separate item in
shareowners’ equity (net of tax) as accumulated other comprehensive
 
income/losses. Shareowners’ equity will continue to reflect
the unrealized gains and losses (net of tax) of these investments. The fair value
 
of our investment portfolio may decline, causing a
corresponding decline in shareowners’ equity.
Management believes that several factors will affect the
 
fair values of our investment portfolio. These include, but are not limited
to, changes in interest rates or expectations of changes in interest rates, the degree
 
of volatility in the securities markets, inflation
rates or expectations of inflation and the slope of the interest rate yield curve
 
(the yield curve refers to the differences between
short-term and long-term interest rates; a positively sloped yield curve means short
 
-term rates are lower than long-term rates).
These and other factors may impact specific categories of the portfolio differently,
 
and we cannot predict the effect these factors
may have on any specific category.
23
Inflationary pressures and rising prices may
 
affect our results of operations and financial condition.
Inflation rose sharply at the end of 2021 and continued rising in 2022 at levels not
 
seen for over 40 years. Inflationary pressures
eased but remained elevated throughout 2023. Small to medium-sized
 
businesses may be impacted more during periods of high
inflation as they are not able to leverage economies of scale to mitigate cost pressures compared
 
to larger businesses.
Consequently, the
 
ability of our business customers to repay their loans may deteriorate, and in some cases this deterioration
 
may
occur quickly,
 
which would adversely impact our results of operations and financial condition. Furthermore,
 
a prolonged period
of inflation could cause wages and other costs to further increase which could
 
adversely affect our results of operations and
financial condition. Sustained higher interest rates by the Federal Reserve may
 
be needed to tame persistent inflationary price
pressures, which could push down asset prices and weaken economic
 
activity. A deterioration in economic
 
conditions in the
United States and our markets could result in an increase in loan delinquencies
 
and non-performing assets, decreases in loan
collateral values and a decrease in demand for our products and services, all of
 
which, in turn, would adversely affect our
business, financial condition and results of operations.
The impact of interest rates on our mortgage banking business can
 
have a significant impact on revenues.
Changes in interest rates can impact our mortgage-related revenues and net revenues
 
associated with our mortgage activities.
 
A
decline in mortgage rates generally increases the demand for mortgage loans
 
as borrowers refinance, but also generally leads to
accelerated payoffs. Conversely,
 
in a constant or increasing rate environment, we would expect fewer loans to be refinanced
 
and a
decline in payoffs. Although we use models to assess the impact
 
of interest rates on mortgage-related revenues, the estimates of
revenues produced by these models are dependent on estimates and assumptions
 
of future loan demand, prepayment speeds and
other factors which may differ from actual subsequent
 
experience.
Our profitability depends significantly on economic
 
conditions in the States of Florida and Georgia.
Our profitability and the success of our business depends substantially on the general
 
economic conditions of the States of Florida
and, to a lesser extent, Georgia, as well as the specific local markets in
 
which we operate. Unlike larger national or other regional
banks that are more geographically diversified, we provide banking
 
and financial services primarily to customers across northern
Florida and Georgia. The local economic conditions in
 
these areas have a significant impact on the demand for our products and
services as well as the ability of our customers to repay loans, the value of the
 
collateral securing loans and the stability of our
deposit funding sources. As a result, a significant decline in general economic
 
conditions in Florida or Georgia, whether caused
by recession, inflation, unemployment, in-flows and out-flows of residents,
 
shifts in political landscape, changes in securities
markets, acts of terrorism, pandemics, natural disasters, climate change,
 
outbreak of hostilities or other occurrences or other
factors could have a material adverse effect on our business, financial
 
condition and results of operations.
Shares of our common stock are not an insured
 
deposit and may lose value.
The shares of our common stock are not a bank deposit and will not be insured or
 
guaranteed by the FDIC or any other
government agency.
 
Your
 
investment will be subject to investment risk, and you must be capable of affording the
 
loss of your
entire investment.
Limited trading activity for shares of our common stock may
 
contribute to price volatility.
While our common stock is listed and traded on the Nasdaq Global Select Market, there
 
has historically been limited trading
activity in our common stock.
 
The average daily trading volume of our common stock over the 12-month
 
period ending
December 31, 2023 was approximately 33,775 shares. Due to the limited
 
trading activity of our common stock, relativity small
trades may have a significant impact on the price of our common stock.
 
Similarly, significant sales of our common
 
stock, or the
expectation of these sales, could cause our stock prices to fall.
Securities analysts may not initiate coverage or continue to cover our common
 
stock, and this may have a negative impact
on its market price.
The trading market for our common stock will depend in part on the research
 
and reports that securities analysts publish about us
and our business. We do
 
not have any control over securities analysts, and they may not initiate coverage
 
or continue to cover our
common stock. If securities analysts do not cover our common stock, the lack
 
of research coverage may adversely affect its
market price. If we are covered by securities analysts, and our common stock is the subject of
 
an unfavorable report, our stock
price would likely decline. If one or more of these analysts ceases to cover our Company
 
or fails to publish regular reports on us,
we could lose visibility in the financial markets, which may cause our
 
stock price or trading volume to decline.
 
24
Credit Risks
Our loan portfolio includes loans with a higher risk of loss which could lead to higher loan losses and nonperforming
assets.
We originate
 
commercial real estate loans, commercial loans, construction loans, vacant land
 
loans, consumer loans, and
residential mortgage loans primarily within our market area. Commercial
 
real estate, commercial, construction, vacant land, and
consumer loans may expose a lender to greater credit risk than traditional
 
fixed-rate fully amortizing loans secured by single-
family residential real estate because the collateral securing these loans may
 
not be sold as easily as single-family residential real
estate. In addition, these loan types tend to involve larger loan balances
 
to a single borrower or groups of related borrowers and
are more susceptible to a risk of loss during a downturn in the business cycle. These
 
loans also have historically had greater credit
risk than other loans for the following reasons:
Commercial Real Estate Loans
. Repayment is dependent on income being generated in amounts sufficient
 
to cover
operating expenses and debt service. These loans also involve greater risk because
 
they are generally not fully amortizing
over the loan period, but rather have a balloon payment due at maturity.
 
A borrower’s ability to make a balloon payment
typically will depend on the borrower’s ability to either refinance
 
the loan or timely sell the underlying property.
 
At
December 31, 2023, commercial mortgage loans comprised approximately
 
30.2% of our total loan portfolio.
Commercial Loans
. Repayment is generally dependent upon the successful operation of the borrower’s
 
business. In
addition, the collateral securing the loans may depreciate over time, be
 
difficult to appraise, be illiquid, or fluctuate in
value based on the success of the business. At December 31, 2023, commercial
 
loans comprised approximately 8.2% of
our total loan portfolio.
Construction Loans
. The risk of loss is largely dependent on our initial estimate of whether
 
the property’s value at
completion equals or exceeds the cost of property construction and the availability
 
of take-out financing. During the
construction phase, a number of factors can result in delays or cost overruns. If
 
our estimate is inaccurate or if actual
construction costs exceed estimates, the value of the property securing our
 
loan may be insufficient to ensure full
repayment when completed through a permanent loan, sale of the property,
 
or by seizure of collateral.
 
At December 31,
2023, construction loans comprised approximately 7.2% of our total loan
 
portfolio.
Vacant
 
Land Loans
. Because vacant or unimproved land is generally held by the borrower
 
for investment purposes or
future use, payments on loans secured by vacant or unimproved land will typically
 
rank lower in priority to the borrower
than a loan the borrower may have on their primary residence or business. These loans
 
are susceptible to adverse
conditions in the real estate market and local economy.
 
At December 31, 2023, vacant land loans comprised
approximately 3.5% of our total loan portfolio.
HELOCs
. Our open-ended home equity loans have an interest-only draw period
 
followed by a five-year repayment
period of 0.75% of the principal balance monthly and a balloon payment
 
at maturity. Upon the commencement
 
of the
repayment period, the monthly payment can increase significantly,
 
thus, there is a heightened risk that the borrower will
be unable to pay the increased payment. Further,
 
these loans also involve greater risk because they are generally not fully
amortizing over the loan period, but rather have a balloon payment due
 
at maturity.
 
A borrower’s ability to make a
balloon payment may depend on the borrower’s ability
 
to either refinance the loan or timely sell the underlying property.
 
At December 31, 2023, HELOCs comprised approximately 7.7% of
 
our total loan portfolio.
Consumer Loans
. Consumer loans (such as automobile loans and personal lines of
 
credit) are collateralized, if at all,
with assets that may not provide an adequate source of payment of the loan due
 
to depreciation, damage, or loss. At
December 31, 2023, consumer loans comprised approximately 9.9%
 
of our total loan portfolio, with indirect auto loans
making up a majority of this portfolio at approximately 91.2% of the total
 
balance.
The increased risks associated with these types of loans result in a correspondingly
 
higher probability of default on such loans (as
compared to fixed-rate fully amortizing single-family real estate loans). Loan
 
defaults would likely increase our loan losses and
nonperforming assets and could adversely affect our allowance
 
for credit losses and our results of operations.
25
Our loan portfolio is heavily concentrated in mortgage loans secured
 
by properties in Florida and Georgia which causes
our risk of loss to be higher than if we had a more geographically diversified
 
portfolio.
 
Our interest-earning assets are heavily concentrated in mortgage loans secured
 
by real estate, particularly real estate located in
Florida and Georgia.
 
At December 31, 2023, approximately 81.8% of our loans included real estate as a primary,
 
secondary, or
tertiary component of collateral. The real estate collateral in each case provides
 
an alternate source of repayment in the event of
default by the borrower; however, the value
 
of the collateral may decline during the time the credit is extended. If we are required
to liquidate the collateral securing a loan during a period of reduced real estate values
 
to satisfy the debt, our earnings and capital
could be adversely affected.
Additionally, at December
 
31, 2023, a significant number of our loans secured by real estate are secured by commercial and
residential properties located in Florida and Georgia. The
 
concentration of our loans in these areas subjects us to risk that a
downturn in the economy or recession in these areas could result in a decrease in
 
loan originations and increases in delinquencies
and foreclosures, which would more greatly affect us than
 
if our lending were more geographically diversified. In addition, since
a large portion of our portfolio is secured by properties located
 
in Florida and Georgia, the occurrence of a natural disaster,
 
such
as a hurricane, or a man-made disaster could result in a decline in loan originations,
 
a decline in the value or destruction of
mortgaged properties and an increase in the risk of delinquencies, foreclosures
 
or loss on loans originated by us. We
 
may suffer
further losses due to the decline in the value of the properties underlying our
 
mortgage loans, which would have an adverse
impact on our results of operations and financial condition.
Our concentration in loans secured by real estate
 
may increase our credit losses, which would negatively
 
affect our
financial results.
 
Due to the lack of diversified industry within some of the markets served by CCB and the relatively
 
close proximity of our
geographic 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 the portfolio has historically
 
been secured with real estate. At December
31, 2023, approximately 30.2% and 44.4% of our $2.7 billion
 
loan portfolio was secured by commercial real estate and residential
real estate, respectively.
 
As of this same date, approximately 7.2% was secured by property under construction.
In the event we are required to foreclose on a property securing one of our mortgage
 
loans or otherwise pursue our remedies in
order to protect our investment, we may be unable to recover funds in an amount
 
equal to our projected return on our investment
or in an amount sufficient to prevent a loss to us due to prevailing economic
 
conditions, real estate values and other factors
associated with the ownership of real property.
 
As a result, the market value of the real estate or other collateral underlying our
loans may not, at any given time, be sufficient to satisfy the outstanding
 
principal amount of the loans, and consequently,
 
we
would sustain loan losses.
An inadequate allowance for credit losses would reduce our
 
earnings.
We are exposed
 
to the risk that our clients may be unable to repay their loans according to their terms and
 
that any collateral
securing the payment of their loans may not be sufficient
 
to assure full repayment. This could result in credit losses that are
inherent in the lending business. We
 
evaluate the collectability of our loan portfolio and provide an allowance
 
for credit losses
that we believe is adequate based upon such factors as:
the risk characteristics of various classifications of loans;
previous loan loss experience;
specific loans that have loss potential;
delinquency trends;
estimated fair market value of the collateral;
current and future economic conditions; and
geographic and industry loan concentrations.
At December 31, 2023, our allowance for credit losses for loans held for investment
 
was $29.9 million, which represented
approximately 1.10% of our total loans held for investment.
 
We had $6.2
 
million in nonaccruing loans at December 31, 2023.
 
The allowance is based on management’s
 
reasonable estimate and may not prove sufficient to cover future loan
 
losses.
 
Although
management uses the best information available to make determinations
 
with respect to the allowance for credit losses, future
adjustments may be necessary if economic conditions differ substantially
 
from the assumptions used or adverse developments
arise with respect to our nonperforming or performing loans.
 
In addition, regulatory agencies, as an integral part of their
examination process, periodically review our estimated losses on loans.
 
Our regulators may require us to recognize additional
losses based on their judgments about information available to them at the time of
 
their examination.
 
Accordingly, the allowance
for credit losses may not be adequate to cover all future loan losses and significant increases
 
to the allowance may be required in
the future if, for example, economic conditions worsen.
 
A material increase in our allowance for credit losses would adversely
impact our net income and capital in future periods, while having the effect
 
of overstating our current period earnings.
 
26
We may incur significant costs associated
 
with the ownership of real property
 
as a result of foreclosures, which could
reduce our net income.
Since we originate loans secured by real estate, we may have to foreclose on the
 
collateral property to protect our investment and
may thereafter own and operate such property,
 
in which case we would be exposed to the risks inherent in the ownership of real
estate.
The amount that we, as a mortgagee, may realize after a foreclosure is dependent
 
upon factors outside of our control, including,
but not limited to:
general or local economic conditions;
environmental cleanup liability;
neighborhood values;
interest rates;
real estate tax rates;
operating expenses of the mortgaged properties;
supply of and demand for rental units or properties;
ability to obtain and maintain adequate occupancy of the properties;
zoning laws;
governmental rules, regulations and fiscal policies; and
acts of God.
Certain expenditures associated with the ownership of real estate, including
 
real estate taxes, insurance and maintenance costs,
may adversely affect the income from the real estate. Furthermore,
 
we may need to advance funds to continue to operate or to
protect these assets. As a result, the cost of operating real property
 
assets may exceed the rental income earned from such
properties or we may be required to dispose of the real property at a loss.
Reliance on inaccurate or misleading financial statements, credit
 
reports, or other financial information could have a
material adverse impact on our business, financial condition,
 
and results of operations.
In deciding whether to extend credit or enter into other transactions, we
 
rely on information furnished by or on behalf of
customers and counterparties, including financial statements, credit
 
reports, and other financial information. We
 
also rely on
representations of those customers, counterparties, or other third parties, such
 
as independent auditors, as to the accuracy and
completeness of that information. Reliance on inaccurate or misleading
 
financial statements, credit reports, or other financial
information could have a material adverse impact on our business, financial condition,
 
and results of operations.
Liquidity and Capital Risks
Liquidity risk could impair our ability to fund operations and jeopardize our financial
 
condition.
Effective liquidity management is essential for the operation of
 
our business. We require
 
sufficient liquidity to meet client loan
requests, client deposit maturities and withdrawals, payments on our debt obligations
 
as they come due and other cash
commitments under both normal operating conditions and other unpredictable
 
circumstances causing industry or general financial
market stress. If we are unable to raise funds through deposits, borrowings,
 
earnings and other sources, it could have a substantial
negative effect on our liquidity.
 
In particular, a majority of our liabilities during 2023
 
were checking accounts and other liquid
deposits, which are generally payable on demand or upon short notice.
 
By comparison, a substantial majority of our assets were
loans, which cannot generally be called or sold in the same time frame. Although
 
we have historically been able to replace
maturing deposits and advances as necessary,
 
we might not be able to replace such funds in the future, especially if a large
number of our depositors seek to withdraw their accounts at the same time, regardless
 
of the reason. Our access to funding
sources in amounts adequate to finance our activities on terms that are acceptable
 
to us could be impaired by factors that affect us
specifically or the financial services industry or economy in general.
 
Factors that could negatively impact our access to liquidity
sources include a decrease in the level of our business activity as a result of a downturn
 
in the markets in which our loans are
concentrated, adverse regulatory action against us, or our inability to attract and
 
retain deposits. Our access to deposits may be
negatively impacted by,
 
among other factors, periods of low interest rates or high interest rates.
 
Periods of high interest rates
could promote increased competition for deposits, including from new
 
financial technology competitors, or provide customers
with alternative investment options.
 
Our ability to borrow could also be impaired by factors that are not specific to us, such
 
as a
disruption in the financial markets or negative views and expectations about
 
the prospects for the financial services industry.
 
If we
are unable to maintain adequate liquidity,
 
it could materially and adversely affect our business, results of operations
 
or financial
condition.
27
A
significant
 
decrease
 
in
 
our
 
public
 
fund
 
deposit
 
balances
 
as
 
a
 
result
 
of
 
increased
 
competition
 
in
 
the
 
current
 
higher
interest-rate environment and seasonal nature
 
of these deposits could materially and adversely affect our liquidity.
 
The Company has many long-standing relationships with municipal entities
 
throughout its markets and the deposits held by these
customers have provided a relatively attractive and stable (although seasonal)
 
funding source for the Company over an extended
period of time. Public fund deposits from local government entities such as universities,
 
counties, school districts, and other
municipalities generally have higher average balances and historically been
 
more volatile than nonpublic deposits because they
are heavily impacted by the seasonality of tax collection, changes in competitive
 
and market forces, and fiscal spending patterns,
as well as the longer-term financial position of local government entities, which
 
can change from year to year. Such public
 
fund
deposits are often subject to competitive bidding and in many cases must be secured
 
by pledging a portion of our investment
securities.
The Company’s inability to
 
retain public fund deposit balances due to increased competition in the current higher
interest-rate environment and seasonal nature of these deposits could materially
 
and adversely affect our liquidity or result in the
use of higher-cost funding sources, which, in turn, could
 
materially and adversely affect our business, results of operations or
financial condition.
 
Unrealized losses in our securities portfolio could materially
 
and adversely affect our liquidity.
As market interest rates have increased, we have experienced significant unrealized
 
losses on our available-for-sale securities
portfolio. Unrealized losses related to available-for-sale securities are reflected
 
in accumulated other comprehensive income in
our consolidated statements of financial condition and reduce the level of our book
 
capital and tangible common equity.
 
However,
such unrealized losses do not affect our regulatory capital ratios. We
 
actively monitor our available-for-sale securities portfolio
and we do not currently anticipate the need to realize material losses from the sale of securities for
 
liquidity purposes.
Furthermore, we believe it is unlikely that we would be required to sell any such securities
 
before recovery of their amortized cost
bases, which may be at maturity.
 
Nonetheless, our access to liquidity sources could be affected by unrealized
 
losses if securities
must be sold at a loss, tangible capital ratios decline from an increase in unrealized
 
losses or realized credit losses, the Federal
Home Loan Bank of Atlanta (“FHLB”) or other funding sources reduce
 
capacity, or bank regulators impose
 
restrictions on us that
impact the level of interest rates we may pay on deposits or our ability to access federal
 
funds lines or brokered deposits.
Additionally, significant
 
unrealized losses could negatively impact market and customer perceptions
 
of the Company, which
could lead to a loss of depositor confidence and an increase in deposit withdrawals,
 
particularly among those with uninsured
deposits.
We may need to raise additional capital
 
in the future, and such capital may not be available on acceptable terms or at all.
We
may
 
need
 
to
 
raise
 
additional
 
capital
 
in
 
the
 
future
 
to
 
provide
 
us
 
with
 
sufficient
 
capital
 
resources
 
and
 
liquidity
 
to
 
meet
 
our
commitments and business
 
needs, particularly if our
 
asset quality or earnings
 
were to deteriorate significantly.
 
Our ability to raise
additional capital,
 
if needed, will
 
depend on, among
 
other things, conditions
 
in the capital
 
markets at that
 
time, which are
 
outside
of our
 
control, and
 
our financial
 
condition. Economic
 
conditions and
 
the loss of
 
confidence in
 
financial institutions
 
may increase
our
 
cost
 
of
 
funding
 
and
 
limit
 
access
 
to
 
certain
 
customary
 
sources
 
of
 
capital,
 
including
 
inter-bank
 
borrowings,
 
repurchase
agreements and borrowings from the discount window of the Federal Reserve.
Further, as a result of our failure to timely file our
 
Quarterly Report on Form 10-Q for the three-month period ended September
30, 2023, we are currently ineligible to file new short form registration statements on
 
Form S-3 and, absent a waiver of the Form
S-3 eligibility requirements, we are not currently permitted to use our existing
 
registration statement on Form S-3D. If we seek to
access the capital markets through a registered offering during the
 
period of time that we are unable to use Form S-3, we may be
required to publicly disclose the proposed offering and the material
 
terms thereof before the offering commences and we will be
required to use a registration statement on Form S-1 to register securities with
 
the SEC, which would hinder our ability to act
quickly in raising capital to take advantage of market conditions in our capital
 
raising activities and would increase our cost of
raising capital.
 
As a result, we may be unable to raise capital on terms favorable to us, in a timely manner
 
or at all, which could materially and
adversely affect our liquidity,
 
business, results of operations, or financial condition. Moreover,
 
if we need to raise capital in the
future, we may have to do so when many other financial institutions are also seeking
 
to raise capital and would have to compete
with those institutions for investors.
We may be unable to pay dividends in the future.
In 2023, our Board of Directors declared four quarterly cash dividends.
 
Declarations of any future dividends will be contingent on
our ability to earn sufficient profits and to remain well capitalized, including
 
our ability to hold and generate sufficient capital to
comply with the Common Equity Tier 1 (“CET1”)
 
Capital conservation buffer requirement. In addition,
 
due to our contractual
obligations with the holders of our trust preferred securities, if we defer the payment of accrued
 
interest owed to the holders of our
trust preferred securities, we may not make dividend payments to our
 
shareowners.
 
28
Further, under applicable statutes and regulations,
 
CCB’s board of directors,
 
after charging-off bad debts, depreciation and other
worthless assets, if any,
 
and making provisions for reasonably anticipated future losses on loans and other assets, may
 
quarterly,
semi-annually, or
 
annually declare and pay dividends to CCBG of up to the aggregate net income
 
of that period combined with
the CCB’s retained net income for
 
the preceding two years and, with the approval of the Florida Office of Financial
 
Regulation
and Federal Reserve, declare a dividend from retained net income which accrued
 
prior to the preceding two years.
 
Additional
state laws generally applicable to Florida corporations may also limit our ability
 
to declare and pay dividends. Thus, our ability to
fund future dividends may be restricted by state and federal laws and regulations.
Regulatory and Compliance Risks
We are subject to
 
extensive regulation, which could restrict our activities
 
and impose financial requirements or limitations
on the conduct of our business.
We are subject to
 
extensive regulation, supervision and examination by our regulators, including
 
the Florida Office of Financial
Regulation, the Federal Reserve, and the FDIC. Our compliance with
 
these industry regulations is costly and restricts certain of
our activities, including payment of dividends, mergers
 
and acquisitions, investments, lending and interest rates charged on
 
loans,
interest rates paid on deposits, access to capital and brokered deposits and locations
 
of banking offices. If we are unable to meet
these regulatory requirements, our financial condition, liquidity and results of
 
operations would be materially and adversely
affected.
Our activities are also regulated under consumer protection laws applicable to
 
our lending, deposit, and other activities. Many of
these regulations are intended primarily for the protection of our
 
depositors, the DIF,
 
and the banking system as a whole, and not
for the benefit of our shareowners. In addition to the regulations of the bank regulatory
 
agencies, as a member of the FHLB of
Atlanta, we must also comply with applicable regulations of the Federal
 
Housing Finance Agency and the Federal Home Loan
Bank.
Our failure to comply with these laws and regulations could subject us to the loss of
 
FDIC insurance, reputational damage, the
revocation of our banking charter,
 
enforcement actions, sanctions, or other legal actions by regulatory agencies, restrictions
 
on our
business activities, fines, and other penalties, any of which could adversely
 
affect our results of operations, capital base, and the
price of our securities. Further, any new laws, rules,
 
regulations, policies, and supervisory guidance or changes in existing
 
laws,
rules, regulations, policies, and supervisory guidance (including changes
 
in interpretation and implementation) could make
compliance more difficult or expensive or otherwise adversely
 
affect our business and financial condition.
 
Government authorities, including the bank regulatory agencies, are pursuing
 
aggressive enforcement actions with respect to
compliance and other legal matters involving financial activities, which heightens
 
the risks associated with actual and perceived
compliance failures. Directives issued to enforce such actions may be
 
confidential and thus, in some instances, we are not
permitted to publicly disclose these actions. Any of the foregoing could have
 
a material adverse effect on our business, financial
condition, and results of operations.
 
In addition, we anticipate increased regulatory scrutiny,
 
in the course of routine examinations and otherwise, and new regulations
in response to recent negative developments in the banking industry,
 
which may increase our cost of doing business and reduce
our profitability.
 
Among other things, there may be increased focus by both regulators and investors on deposit
 
composition, the
level of uninsured deposits, brokered deposits, unrealized losses in securities portfolios,
 
liquidity, commercial real estate loan
composition and concentrations, and capital as well as general oversight
 
and control of the foregoing. We
 
could face increased
scrutiny or be viewed as higher risk by regulators and the investor community,
 
which could have a material adverse effect on our
business, financial condition, and results of operations.
Please refer to the Section entitled “Business – Regulatory Considerations”
 
on page 10.
U.S. federal banking agencies may require us to increase
 
our regulatory capital, long-term debt or liquidity
 
requirements,
which could result in the need to issue additional qualifying securities or to
 
take other actions, such as to sell company
assets.
We are subject to
 
U.S. regulatory capital and liquidity rules. These rules, among other things, establish minimum
 
requirements to
qualify as a well-capitalized institution. If CCB fails to maintain its status as well capitalized
 
under the applicable regulatory
capital rules, the Federal Reserve will require us to agree to bring the bank back to
 
well-capitalized status. For the duration of
such an agreement, the Federal Reserve may impose restrictions on our
 
activities. If we were to fail to enter into or comply with
such an agreement or fail to comply with the terms of such agreement, the Federal
 
Reserve may impose more severe restrictions
on our activities, including requiring us to cease and desist activities permitted
 
under the Bank Holding Company Act of 1956.
Additionally, if our
 
CET1 to Risk Weighted Assets ratio
 
does not exceed the minimum required plus the additional CET1
conservation buffer,
 
we may be restricted in our ability to pay dividends or make other distributions of capital to our shareowners.
29
Capital and liquidity requirements are frequently introduced and amended.
 
It is possible that regulators may increase regulatory
capital requirements, change how regulatory capital is calculated or increase liquidity
 
requirements. Requirements to maintain
higher levels of capital may lower our return on equity.
Further changes to and compliance with the regulatory capital and liquidity requirements
 
may impact our operations by requiring
us to liquidate assets, increase borrowings, issue additional equity or other securities,
 
cease or alter certain operations, sell
company assets or hold highly liquid assets, which may adversely affect
 
our results of operations. We
 
may be prohibited from
taking capital actions such as paying or increasing dividends or repurchasing
 
securities.
Changes in accounting standards or assumptions in applying accounting policies
 
could adversely affect us.
Our accounting policies and methods are fundamental to how we record and report
 
our financial condition and results of
operations. Some of these policies require use of estimates and assumptions that
 
may affect the reported value of our assets or
liabilities and results of operations and are critical because they require management
 
to make difficult, subjective and complex
judgments about matters that are inherently uncertain. If those assumptions, estimates or
 
judgments were incorrectly made, we
could be required to correct and restate prior-period financial statements. Accounting
 
standard-setters and those who interpret the
accounting standards, the SEC, banking regulators and our independent registered
 
public accounting firm may also amend or even
reverse their previous interpretations or positions on how various standards
 
should be applied. These changes may be difficult to
predict and could impact how we prepare and report our financial statements. In
 
some cases, we could be required to apply a new
or revised standard retrospectively,
 
resulting in us revising prior-period financial statements.
 
 
Florida financial institutions, such as CCB, face a higher risk of noncompliance
 
and enforcement actions with the Bank
Secrecy Act and other anti-money laundering statutes and regulations.
Since September 11, 2001, banking regulators
 
have intensified their focus on anti-money laundering and BSA compliance
requirements, particularly the anti-money laundering provisions of
 
the USA PATRIOT
 
Act. There is also increased scrutiny of
compliance with the rules enforced by the Office of Foreign Assets
 
Control, or OFAC.
 
Since 2004, federal banking regulators and
examiners have been extremely aggressive in their supervision and examination
 
of financial institutions located in the State of
Florida with respect to the institution’s
 
BSA/anti-money laundering compliance. Consequently,
 
numerous formal enforcement
actions have been instituted against financial institutions. If CCB’s
 
policies, procedures and systems are deemed deficient or
 
the
policies, procedures and systems of the financial institutions that it has already
 
acquired or may acquire in the future are deficient,
CCB would be subject to liability,
 
including fines and regulatory actions such as restrictions on its ability to pay
 
dividends and the
necessity to obtain regulatory approvals to proceed with certain aspects of its business plan,
 
including its acquisition plans.
We are subject to
 
government regulation and oversight relating to
 
data and privacy protection.
Our business requires the collection and retention of large
 
volumes of customer data, including personally identifiable
 
information
in various information systems that we maintain and in those maintained
 
by third parties with whom we contract. We
 
also
maintain important internal company data such as personally identifiable information
 
about our associates and information
relating to our operations. The integrity and protection of that customer and company
 
data is important to us.
 
We are subject to
 
complex and evolving laws and regulations relating to the privacy of the information
 
of our customers,
associates and others, and any failure to comply with these laws and regulations,
 
or any misuse or mismanagement of such
information, could expose us to liability and reputational damage, which could
 
adversely affect our financial condition and results
of operations. As new privacy-related laws and regulations are implemented,
 
the time and resources needed for us to comply with
such laws and regulations, as well as our potential liability for non-compliance
 
and reporting obligations in the case of data
breaches, may significantly increase. It is possible that these laws may be interpreted
 
and applied by various jurisdictions in a
manner inconsistent with our current or future practices, or that is inconsistent
 
with one another.
 
Fee revenues from overdraft protection
 
programs constitute a significant portion of our noninterest income
 
and may be
subject to increased supervisory scrutiny.
 
Revenues derived from transaction fees associated with overdraft protection
 
programs offered to consumers represent a
significant portion of our noninterest income. In 2023, the Company
 
collected approximately $9.6 million in net consumer
overdraft transaction fees.
 
 
30
In 2022, certain members of Congress and the leadership of the CFPB have expressed
 
a heightened interest in bank consumer
overdraft protection programs. In 2022, the CFPB piloted a supervision
 
effort to collect key metrics from some supervised
institutions regarding the consumer impact of their overdraft and
 
non-sufficient fund practices, with the intent of using this
information to identify institutions for further examination and review.
 
The CFPB has indicated that it intends to pursue
enforcement actions against banking organizations,
 
and their executives, that oversee overdraft practices that are deemed to be
unlawful, and indeed took action against a large bank for charging
 
“surprise” overdraft fees known as authorized positive fee. In
October of 2022, the CFPB issued guidance to help banks avoid charging
 
illegal surprise overdraft fees. In addition, the
Comptroller of the Currency has identified potential options for reform of
 
national bank overdraft protection practices, including
providing a grace period before the imposition of a fee, refraining
 
from charging multiple fees in a single day and eliminating fees
altogether.
 
In response to this increased congressional and regulatory scrutiny,
 
and in anticipation of enhanced supervision and enforcement
of overdraft protection practices in the future, certain banking organizations
 
have begun to modify their overdraft protection
programs, including by discontinuing the imposition of overdraft transaction
 
fees and amending their payment priority policies
and procedures. These competitive pressures from our peers, as well as any adoption
 
by our regulators of new rules or supervisory
guidance or more aggressive examination and enforcement policies in respect
 
of banks’ overdraft protection practices, could
cause us to modify our program and practices in ways that may have a negative impact
 
on our revenue and earnings, which, in
turn, could have an adverse effect on our financial condition and
 
results of operations.
Operational Risks
Many types of operational risks can affect our earnings negatively.
We regularly
 
assess and monitor operational risk in our businesses. Despite our efforts to
 
assess and monitor operational risk, our
risk management framework may not be effective in all cases.
 
Factors that can impact operations and expose us to risks varying
 
in
size, scale and scope include:
failures of technological systems or breaches of security measures, including, but not
 
limited to, those resulting from
computer viruses or cyber-attacks;
unsuccessful or difficult implementation of computer
 
systems upgrades;
human errors or omissions, including failures to comply with applicable
 
laws or corporate policies and procedures;
theft, fraud or misappropriation of assets, whether arising from the intentional
 
actions of internal personnel or external
third parties;
breakdowns in processes, breakdowns in internal controls or failures of
 
the systems and facilities that support our
operations;
deficiencies in services or service delivery;
negative developments in relationships with key counterparties, third-party
 
vendors, or associates in our day-to-day
operations; and
external events that are wholly or partially beyond our control, such as pandemics,
 
geopolitical events, political unrest,
natural disasters or acts of terrorism.
While we have in place many controls and business continuity plans designed
 
to address these factors and others, these plans may
not operate successfully to mitigate these risks effectively.
 
If our controls and business continuity plans do not mitigate the
associated risks successfully,
 
such factors may have a negative impact on our business, financial condition or results
 
of
operations. In addition, an important aspect of managing our operational
 
risk is creating a risk culture in which all associates fully
understand that there is risk in every aspect of our business and the importance of
 
managing risk as it relates to their job functions.
We continue
 
to enhance our risk management program to support our risk culture.
 
Nonetheless, if we fail to provide the
appropriate environment that sensitizes all of our associates to managing
 
risk, our business could be impacted adversely.
31
We are subject to
 
certain operational risks, including, but not limited to
risk arising from failure or circumvention
 
of our
controls and procedures.
Our internal controls, including fraud detection and controls, disclosure controls
 
and procedures, and corporate governance
procedures are based in part on certain assumptions and can provide only reasonable,
 
not absolute, assurances that the objectives
of the controls and procedures are met. Notwithstanding the proliferation of
 
technology and technology-based risk and control
systems, we rely on the ability of our associates and systems to process a high number
 
of transactions, and we are subject to the
risk that our associates may make mistakes or engage in violations of applicable
 
policies, laws, rules, or procedures that in the
past have not, and in the future may not, always be prevented by our technological
 
processes or by our controls and other
procedures intended to prevent and detect such errors or violations. Any
 
failure or circumvention of our controls and procedures,
failure to comply with regulations related to controls and procedures, failure to comply
 
with our corporate governance procedures,
fraud by associates or persons outside our Company,
 
the execution of unauthorized transactions by associates, or errors relating to
transaction processing and technology could have a material adverse effect
 
on our reputation, business, financial condition and
results of operations, including subjecting us to litigation, customer attrition,
 
regulatory fines, penalties, or other sanctions.
Insurance coverage may not be available for losses relating to such event,
 
or where available, such losses may exceed insurance
limits.
We are subject to
 
credit and/or settlement risk arising from
 
the soundness of other financial institutions and
counterparties which may have a material adverse effect on our business, financial condition,
 
and results of operations.
Financial services institutions are interrelated as a result of trading,
 
clearing, counterparty, or other
 
relationships. We
 
have
exposure to many different industries and counterparties,
 
and routinely execute transactions with counterparties in the financial
services industry, including
 
commercial banks, brokers and dealers, investment banks, other institutional clients,
 
and certain
vendors. Many of these transactions expose us to credit or settlement risk in the
 
event of a default or other failure to adhere to
contractual obligations by a counterparty or client. In addition, our credit or
 
settlement risk may be exacerbated when any
collateral held by us cannot be realized upon or is liquidated at prices not sufficient
 
to recover the full amount of the credit or
derivative exposure due to us. Increased interconnectivity amongst
 
financial institutions also increases the risk of cyber-attacks
and information system failures for financial institutions. Any such losses could
 
have a material adverse effect on our business,
financial condition, and results of operations.
The Company recently
 
identified a material
 
weakness in its
 
internal control over
 
financial reporting.
 
If we are
 
not able to
remediate this
 
material weakness,
 
or if we
 
experience additional
 
material weaknesses
 
or other deficiencies
 
in our internal
control
 
over
 
financial
 
reporting
 
in
 
the
 
future
 
or
 
otherwise
 
fail
 
to
 
maintain
 
an
 
effective
 
system
 
of
 
internal
 
control
 
over
financial
 
reporting,
 
we
 
may
 
not
 
be
 
able
 
to
 
accurately
 
report
 
our
 
financial
 
results,
 
prevent
 
fraud,
 
or
 
file
 
our
 
periodic
reports in
 
a timely
 
manner,
 
which may
 
cause investors
 
to lose
 
confidence in
 
our reported
 
financial information
 
and may
lead to a decline in our stock price.
As a public
 
company,
 
we are required
 
to maintain internal
 
control over financial
 
reporting and to
 
report any material
 
weaknesses
in such internal control.
 
Section 404 of the Sarbanes
 
-Oxley Act requires that
 
we furnish a report
 
by management on, among
 
other
things,
 
the
 
effectiveness
 
of
 
our
 
internal
 
control
 
over
 
financial
 
reporting.
 
This
 
assessment
 
requires
 
disclosure
 
of
 
any
 
material
weaknesses
 
identified
 
by
 
our
 
management
 
in
 
our
 
internal
 
control
 
over
 
financial
 
reporting.
 
Our
 
independent
 
registered
 
public
accounting firm
 
also needs
 
to attest to
 
the effectiveness
 
of our
 
internal control
 
over financial
 
reporting. Effective
 
internal control
over financial reporting is necessary for us to provide reliable financial
 
reports and, together with adequate disclosure controls and
procedures, is designed
 
to prevent fraud.
 
Any failure to
 
maintain or implement
 
required new or
 
improved controls,
 
or difficulties
encountered in implementation could cause us to fail to meet our reporting obligations.
 
In the fourth
 
quarter of 2023, management
 
identified a material weakness
 
in its internal control
 
over financial reporting
 
related to
certain
 
inter-company
 
transactions.
 
As
 
discussed
 
in
 
Item
 
9A.
 
Controls
 
and
 
Procedures,
 
the
 
Company's
 
management
 
has
 
re-
evaluated its assessment of
 
the effectiveness of
 
internal control over financial
 
reporting and its disclosure controls
 
and procedures
and concluded that they were
 
not effective as of December
 
31, 2023. Management has implemented
 
controls in accordance with a
remediation plan to
 
address the material
 
weakness. For additional
 
information related to
 
the material weakness
 
in internal control
over financial reporting and the related remedial measures, see Item 9A.
 
Controls and Procedures.
There can
 
be no
 
assurance as
 
to when
 
the material
 
weakness will
 
be remediated
 
or that
 
additional material
 
weaknesses will
 
not
arise in
 
the future.
 
If the
 
Company is
 
unable to
 
maintain effective
 
internal control
 
over financial
 
reporting, its
 
ability to
 
record,
process and
 
report financial
 
information timely
 
and accurately
 
could be
 
adversely affected,
 
which could
 
subject the
 
Company to
litigation,
 
investigations,
 
or
 
breach
 
of
 
contract
 
claims,
 
require
 
management
 
resources,
 
increase
 
costs,
 
negatively
 
affect
 
investor
confidence, and adversely impact its stock price.
We face risks related
 
to the restatement of our Impacted Statements of Cash Flows.
 
 
 
32
As discussed in the Explanatory Note,
 
we determined to restate the Impacted
 
Statements of Cash Flows. These restatements
 
are in
addition to
 
the restatements
 
contained in
 
our Form
 
10-K/A for
 
2022 and
 
our Form
 
10-Q/A filings
 
for March
 
31, 2023
 
and June
30, 2023, each
 
of which were
 
filed with the
 
SEC on December
 
22, 2023. As
 
a result, we
 
have become subject
 
to some additional
risks
 
and
 
uncertainties,
 
which
 
could
 
affect
 
investor
 
confidence
 
in
 
the
 
accuracy
 
of
 
our
 
financial
 
disclosures
 
and
 
may
 
cause
reputational harm to our business. We
 
may face potential for litigation or other disputes, which may
 
include, among others, claims
invoking the
 
federal and
 
state securities
 
laws. In
 
addition, the
 
processes undertaken
 
to effect
 
the restatements
 
may not have
 
been
adequate to
 
identify and
 
correct all
 
errors in
 
our historical
 
financial statements.
 
If one
 
or more
 
of the
 
foregoing risks
 
persist, our
business, operations and financial condition could be materially and
 
adversely affected.
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.
In the ordinary course of business, we rely on electronic communications
 
and information systems to conduct our operations and
to store sensitive data
, including our proprietary business information and that of our clients, and personally
 
identifiable
information of our clients and associates. The secure processing, maintenance,
 
and transmission of this information is critical to
our operations.
 
Our systems, or those of our clients, could be vulnerable to cybersecurity-related incidents, which
 
include
breaches of information systems, attempts to access information, including
 
customer and company information, malicious code,
computer viruses and denial of service attacks that could result in unauthorized
 
access, theft, misuse, loss, release, or destruction
of data (including confidential customer information), account takeovers, unavailability
 
of service, or other events. These types of
threats may derive from human error, fraud, or
 
malice on the part of external or internal parties or may result from accidental
technological failure. Any failure, interruption, or breach in security of these
 
systems could result in significant disruption to our
operations.
Financial institutions and companies engaged in data processing have
 
increasingly reported breaches in the security of their
websites or other systems, some of which have involved sophisticated and
 
targeted attacks intended to obtain unauthorized access
to confidential information, destroy data, disrupt or degrade service, sabotage
 
systems, or cause other damage. Our technologies,
systems, networks, and software have been and continue to be subject to cybersecurity
 
threats and attacks, which range from
uncoordinated individual attempts to sophisticated and targeted
 
measures directed at us. Our customers, associates, and third
parties that we do business with have been, and will likely continue to be,
 
targeted in cybersecurity-related incidents by parties
using fraudulent e-mails, artificial intelligence, and other communications
 
in attempts to misappropriate passwords, bank account
information, or other personal information or to introduce viruses or other
 
malware programs to our information systems, the
information systems of our third-party service providers and our customers’
 
personal devices, which are beyond our security
control systems. Though we endeavor to mitigate these threats through product
 
improvements, use of encryption and
authentication technology and customer and employee education, such cyber-attacks
 
against us, our third-party service providers
and our customers remain a serious issue and have been successful in the past.
We may be required
 
to spend significant capital and other resources to protect against the threat of
 
cybersecurity-related incidents
or to alleviate problems caused by such incidents. Any failures related to upgrades
 
and maintenance of our technology and
information systems could increase our information and system security
 
risk. Our increased use of cloud and other technologies,
such as remote work technologies, also increases our risk of being subject to a cyber-related
 
incident. The risk of a cybersecurity-
related incident has increased as the number,
 
intensity, and sophistication of
 
attempted attacks and intrusions from around the
world have increased. A cybersecurity-related incident or other significant
 
disruption of our information systems or those of our
customers or third-party vendors could (i) disrupt the proper functioning
 
of our networks and systems and therefore our
operations and those of our customers; (ii) result in the unauthorized access to,
 
and destruction, loss, theft, misappropriation, or
release of confidential, sensitive, or otherwise valuable information
 
of ours or our customers; (iii) result in a violation of
applicable privacy,
 
data protection, and other laws, subjecting us to additional regulatory scrutiny and
 
exposing us to civil
litigation, enforcement actions, governmental fines, and possible financial
 
liability; (iv) require significant management attention
and resources to remedy the damages that result; or (v) harm our reputation or
 
cause a decrease in the number of customers that
choose to do business with us, damaging our ability to generate deposits. The occurrence
 
of any of the foregoing could have a
material adverse effect on our business, financial condition,
 
and results of operations. Furthermore, in the event of a cyber-related
incident, we may be delayed in identifying or responding to the incident,
 
which could increase the negative impact of the incident
on our business, financial condition, and results of operations. While we maintain
 
“cyber” insurance coverage, which would apply
in the event of certain cyber-related incidents, the amount of coverage
 
may not be adequate depending on the magnitude of the
incident. Furthermore, because cyber-related incidents are inherently difficult
 
to predict and can take many forms, some incidents
may not be covered under our cyber insurance coverage.
33
Increased fraudulent activity may cause losses to us or our clients, damage
 
to our brand, and increases in our costs, in
turn, materially and adversely affecting our business, financial condition,
 
and results of operations.
Additionally, fraud
 
losses have risen in recent years due in large part to growing and evolving schemes.
 
Fraudulent activity has
taken many forms, ranging from wire fraud, debit card fraud, credit card fraud,
 
check fraud, mechanical devices attached to
ATMs,
 
social engineering, and phishing attacks to obtain personal information, business
 
email compromise, or impersonation of
clients through the use of falsified or stolen credentials. Many financial
 
institutions have suffered significant losses in recent years
due to the theft of cardholder data that has been illegally exploited for personal gain.
 
The potential for debit and credit card fraud,
as well as check fraud, against us or our clients and our third-party
 
service providers is a serious issue. Debit and credit card fraud
and check fraud are pervasive, and the risks of cybercrime are complex
 
and continue to evolve. While we have policies and
procedures, as well as fraud detection tools, designed to prevent fraud losses, such
 
policies, procedures, and tools may be
insufficient to accurately detect and prevent fraud. A significant increase
 
in fraudulent activities could lead us to take additional
steps to reduce fraud risk, which could increase our costs. Fraud losses
 
could cause losses to us or our clients, damage to our
brand, and an increase in our costs, in turn, materially and adversely affecting
 
our business, financial condition, and results of
operations.
We may not be able to attract and
 
retain skilled people, which may have a negative impact
 
on our business and
operations.
Our success depends, in large part, on our ability to attract and retain
 
key people. Competition for the best people in many
activities engaged in by us is intense, including with respect to compensation
 
and emerging workplace practices and
accommodations, and, as a result, we may not be able to sufficiently
 
hire or to retain key people. We
 
do not currently have
employment agreements or non-competition agreements with any of our senior officers.
 
The unexpected loss of service of key
personnel could have a material adverse impact on our business, financial
 
condition, and results of operations because of their
customer relationships, skills, knowledge of our market, years of industry
 
experience, and the difficulty of promptly finding
qualified replacement personnel. In addition, the scope and content of U.S. banking
 
regulators’ policies on incentive
compensation, as well as changes to these policies, could adversely affect
 
our ability to hire, retain, and motivate our key
associates.
Issues we encounter with respect to external vendors upon which we rely
 
could have a material adverse effect on our
business and, in turn, our financial condition and results of operations.
We rely on
 
certain external vendors to provide products and services necessary to maintain our day-to-day
 
operations. These
third-party vendors are sources of operational and informational security
 
risk to us, including risks associated with operational
errors, information system failures, interruptions or breaches, and
 
unauthorized disclosures of sensitive or confidential client or
customer information. If we encounter any of these issues in connection
 
with our external vendors, or if we have difficulty
communicating with these vendors, we could be exposed to disruption
 
of operations, loss of service, or connectivity to customers,
reputational damage, and litigation risk that could have a material adverse effect
 
on our business and, in turn, our financial
condition and results of operations.
In addition, our operations are exposed to risk that these vendors will not perform in
 
accordance with the contracted arrangements
under service level agreements. Although we have selected these external vendors
 
carefully, we do not control their actions.
 
The
failure of an external vendor to perform in accordance with the contracted
 
arrangements under service level agreements could be
disruptive to our operations, which could have a material adverse effect
 
on our business and, in turn, our financial condition and
results of operations. Replacing these external vendors could also entail
 
significant delay and expense.
Pandemics, severe weather,
 
natural disasters, global climate change, acts of terrorism and global
 
conflicts may have a
negative impact on our business and operations.
Pandemics (such as the COVID-19 pandemic), severe weather,
 
natural disasters, global climate change, acts of terrorism, global
conflicts, or other similar events have in the past, and may in the future have, a negative
 
impact on our business and operations.
These events impact us negatively to the extent that they result in reduced capital
 
markets activity, lower asset price
 
levels, or
disruptions in general economic activity in the United States or abroad, or
 
in financial market settlement functions. In addition,
such events could affect the stability of our deposit base, impair the
 
ability of borrowers to repay outstanding loans, impair the
value of collateral securing loans, cause significant property damage, result
 
in loss of revenue, cause us to incur additional
expenses, and impact economic growth negatively.
 
If any of these risks materialized, they could have an adverse effect on our
business and operations and may have other adverse effects on
 
us in ways that we are unable to predict.
 
34
Litigation may adversely affect our results.
We are subject to
 
litigation in the ordinary course of business. Claims and legal actions, including
 
claims pertaining to our
performance of our fiduciary responsibilities as well as supervisory actions
 
by our regulators, could involve large monetary
claims and significant defense costs. The outcome of litigation and regulatory
 
matters as well as the timing of ultimate resolution
are inherently difficult to predict.
Actual legal and other costs of resolving claims may be greater than our
 
legal reserves. The ultimate resolution of a pending legal
proceeding, depending on the remedy sought and granted, could
 
materially adversely affect our results of operations and financial
condition.
In addition, governmental authorities have, at times, sought criminal penalties
 
against companies in the financial services sector
for violations, and, at times, have required an admission of wrongdoing from
 
financial institutions in connection with resolving
such matters. Criminal convictions or admissions of wrongdoing in a settlement with
 
the government can lead to greater exposure
in civil litigation and reputational harm.
Substantial legal liability or significant regulatory action against us could have material
 
adverse financial effects or cause
significant reputational harm, which adversely impact our business prospects. Further,
 
we may be exposed to substantial
uninsured liabilities, which could adversely affect
 
our results of operations and financial condition.
Strategic Risks
Our future success is dependent on our ability to compete effectively
 
in the highly competitive banking industry.
We face vigorous
 
competition for deposits, loans and other financial services in our market area
 
from other banks and financial
institutions, including savings and loan associations, savings banks,
 
finance companies and credit unions. A number of our
competitors are significantly larger than we are and have greater access to
 
capital and other resources. Many of our competitors
also have higher lending limits, more expansive branch networks, and offer
 
a wider array of financial products and services. To
 
a
lesser extent, we also compete with other providers of financial services, such as money
 
market mutual funds, brokerage firms,
consumer finance companies, insurance companies and governmental
 
organizations, which may offer financial products and
services on more favorable terms than we are able to. Many of our non-bank
 
competitors are not subject to the same extensive
regulations that govern our activities. As a result, these non-bank competitors have advantages over
 
us in providing certain
services. The effect of this competition may reduce or limit our
 
margins or our market share and may adversely affect our
 
results
of operations and financial condition.
Our inability to adapt our business strategies, products, and services could
 
harm our business.
We rely on
 
a diversified mix of financial products and services through multiple distribution channels.
 
Our success depends on
our and our third-party providers’ of products and services abilities to adapt our
 
business strategies, products, and services and
their respective features in a timely manner,
 
including available payment processing services and technology to rapidly
 
evolving
industry standards and consumer preferences.
The widespread adoption and rapid evolution of emerging
 
technologies, including artificial intelligence, analytic capabilities, self-
service digital trading platforms and automated trading markets, internet
 
services, and digital assets, such as central bank digital
currencies, cryptocurrencies (including stablecoins), tokens, and other cryptoassets
 
that utilize distributed ledger technology
(DLT),
 
as well as DLT in
 
payment, clearing, and settlement processes creates additional risks, could
 
negatively impact our ability
to compete, and require substantial expenditures to the extent we were to modify
 
or adapt our existing products and services. As
such new technologies evolve and mature, our businesses and results of operations
 
could be adversely impacted, including as a
result of the introduction of new competitors to the payment ecosystem and increased
 
volatility in deposits and significant long-
term reduction in deposits. In addition, cloud technologies are also critical
 
to the operation of our systems, and our reliance on
cloud technologies is growing. Failure to successfully keep pace with technological
 
change affecting the financial services
industry could have a material adverse effect on our business,
 
financial condition, and results of operations.
35
Also, we may not be timely or successful in developing or introducing new products and
 
services, integrating new products or
services into our existing offerings, responding, managing,
 
or adapting to changes in consumer behavior, preferences,
 
spending,
investing and saving habits, achieving market acceptance of our
 
products and services, or reducing costs in response to pressures
to deliver products and services at lower prices. There are substantial risks and uncertainties
 
associated with these efforts,
particularly in instances where the markets are not fully developed.
 
In developing and marketing new products and services, we
invest significant time and resources. Initial timetables for the introduction
 
and development of new products or services may not
be achieved, and price and profitability targets may not prove feasible.
 
External factors, such as compliance with regulations,
competitive alternatives, and shifting market preferences, may also impact
 
the successful implementation of new products or
services. The Company’s, or
 
its third-party providers’, inability or resistance to timely innovate or adapt its operations, products,
and services to evolving industry standards and consumer preferences could result
 
in service disruptions and harm our business
and adversely affect our results of operations and reputation.
Furthermore, any new products, services, or technology could have
 
a significant impact on the effectiveness of our system of
internal controls. Failure to successfully manage these risks in the development
 
and implementation of new products or services
could have a material adverse effect on our business, financial condition,
 
and results of operations.
Our directors, executive officers, and principal shareowners,
 
if acting together,
 
have substantial control over all matters
requiring shareowner approval,
 
including changes of control. Because Mr.
 
William G. Smith, Jr.
 
is a principal
shareowner and our Chairman, President, and Chief Executive
 
Officer and Chairman of CCB, he has substantial control
over all matters on a day-to-day basis.
Our directors, executive officers, and principal shareowners beneficially
 
owned approximately 19.2% of the outstanding shares of
our common stock at December 31, 2023.
 
William G. Smith, Jr.,
 
our Chairman, President and Chief Executive Officer
beneficially owned 17.2% of our shares as of that date.
 
Accordingly, these directors, executive
 
officers, and principal
shareowners, if acting together, may be
 
able to influence or control matters requiring approval by our shareowners, including
 
the
election of directors and the approval of mergers, acquisitions or
 
other extraordinary transactions. Moreover,
 
because William G.
Smith, Jr. is the Chairman, President,
 
and Chief Executive Officer of CCBG and Chairman of CCB, he has substantial
 
control
over all matters on a day-to-day basis, including the nomination and election
 
of directors.
These directors, executive officers, and principal shareowners may
 
also have interests that differ from yours and may vote in a
way with which you disagree, and which may be adverse to your interests. The concentration
 
of ownership may have the effect of
delaying, preventing or deterring a change of control of our Company,
 
could deprive our shareowners of an opportunity to receive
a premium for their common stock as part of a sale of our Company and might ultimately
 
affect the market price of our common
stock. You
 
may also have difficulty changing management, the composition of
 
the Board of Directors, or the general direction of
our Company.
Our Articles of Incorporation, Bylaws, and certain laws and regulations
 
may prevent or delay transactions you might
favor,
 
including a sale or merger of CCBG.
CCBG is registered with the Federal Reserve as a financial holding
 
company under the Bank Holding Company Act, or BHC Act.
As a result, we are subject to supervisory regulation and examination by the
 
Federal Reserve. The GLBA, the BHC Act, and other
federal laws subject financial holding companies to restrictions on
 
the types of activities in which they may engage, and to a range
of supervisory requirements and activities, including regulatory
 
enforcement actions for violations of laws and regulations.
Provisions of our Articles of Incorporation, Bylaws, certain laws and regulations
 
and various other factors may make it more
difficult and expensive for companies or persons to acquire control
 
of us without the consent of our Board of Directors. It is
possible, however, that you would want a
 
takeover attempt to succeed because, for example, a potential buyer could offer
 
a
premium over the then prevailing price of our common stock.
For example, our Articles of Incorporation permit our Board of Directors
 
to issue preferred stock without shareowner action. The
ability to issue preferred stock could discourage a company from attempting
 
to obtain control of us by means of a tender offer,
merger, proxy contest or
 
otherwise. We are also subject to
 
certain provisions of the Florida Business Corporation Act and our
Articles of Incorporation that relate to business combinations with interested
 
shareowners. Other provisions in our Articles of
Incorporation or Bylaws that may discourage takeover attempts or make them
 
more difficult include:
 
Supermajority voting requirements to remove a director from office;
Provisions regarding the timing and content of shareowner proposals
 
and nominations;
Supermajority voting requirements to amend Articles of Incorporation
 
unless approval is received by a majority of
“disinterested directors”;
Absence of cumulative voting; and
Inability for shareowners to take action by written consent.
 
36
Reputational Risks
Damage to our reputation could harm our businesses, including our
 
competitive position and business prospects.
Reputation risk, or the risk to our earnings, liquidity,
 
and capital from negative public opinion, is inherent in our business.
Negative public opinion could adversely affect our ability to attract
 
and retain customers, clients, investors and associates and
expose us to adverse legal and regulatory consequences. Negative public
 
opinion could result from our actual or alleged conduct
and can arise from various sources, including (a) officer,
 
director or associate fraud, misconduct, and unethical behavior; (b)
security breaches; (c) litigation or regulatory outcomes; (d) compensation
 
practices; (e) lending practices; (f) branching strategy;
(g) the suitability or reasonableness of recommending particular trading or
 
investment strategies, including the reliability of our
research and models; (h) prohibiting clients from engaging in certain transactions;
 
(h) associate sales practices; (i) failure to
deliver products and services; (j) subpar standards of service and quality expected
 
by our customers, clients, and the community;
(k) compliance failures; (l) mergers and acquisitions; (m) the inability
 
to manage technology change or maintain effective data
management; (n) cyber incidents; (o) internal and external fraud (including
 
check fraud and debit card and credit card fraud); (p)
inadequacy of responsiveness to internal controls; (q) unintended
 
disclosure of personal, proprietary or confidential information;
(r) failure (or perceived failure) to identify and manage actual and potential conflicts
 
of interest; (s) breach of fiduciary
obligations; (t) the handling of health emergencies or pandemics, (u)
 
the activities of our clients, customers, counterparties, and
third parties, including vendors; (v) our environmental, social, and
 
governance practices and disclosures, including practices and
disclosures related to climate change; (w) our response (or lack of response)
 
to social and sustainability concerns; and (x) actions
by the financial services industry generally or by certain members or individuals
 
in the industry. In addition, adverse publicity
 
or
negative information posted on social media by associates, the media or otherwise,
 
whether or not factually correct, may
adversely impact our reputation. Harm to our reputation may adversely
 
and materially affect our competitive position, business
prospects, and financial results.
Item 1B.
 
Unresolved Staff Comments
 
None.
Item 1C.
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.
37
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.
Item 2.
 
Properties
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, 2023, Capital City Bank had 63 banking offices.
 
Of these locations, we lease the land, buildings, or both at 13
locations and own the land and buildings at the remaining 50. CCHL had
 
30 loan production offices, 29 of which were leased.
 
Capital City Strategic Wealth,
 
LLC. maintained five offices, all of which were leased.
 
 
Item 3.
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.
Item 4
.
Mine Safety Disclosure
Not applicable.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
38
PART
 
II
Item 5.
Market for the Registrant’s
 
Common Equity, Related Shareowner Matters,
 
and Issuer Purchases of Equity
Securities
Common Stock Market Prices and Dividends
Our common stock trades on the Nasdaq Global Select Market under
 
the symbol “CCBG.”
 
We had a
 
total of 1,080 shareowners
of record at January 31, 2024.
The following table presents the range of high and low closing sales prices reported
 
on the Nasdaq Global Select Market and cash
dividends declared for each quarter during the past two years.
 
 
2023
2022
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Common stock price:
High
 
$
32.56
$
33.44
$
34.16
$
36.86
$
36.23
$
33.93
$
28.55
$
28.88
Low
 
26.12
28.64
28.03
28.18
31.14
27.41
24.43
25.96
Close
 
29.43
29.83
30.64
29.31
32.50
31.11
27.89
26.36
Cash dividends per share
 
0.20
0.20
0.18
0.18
0.17
0.17
0.16
0.16
Florida law and Federal regulations impose restrictions on our ability to
 
pay dividends and limitations on the amount of dividends
that the Bank can pay annually to us.
 
See Item 1. “Capital; Dividends; Sources of Strength” and “Dividends” in the Business
section on page 11 and 13, Item 1A. “Market
 
Risks” in the Risk Factors section on page 19, Item 7. “Liquidity and Capital
Resources – Dividends” – in Management’s
 
Discussion and Analysis of Financial Condition and Operating Results on page
 
56
and Note 17 in the Notes to Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ccbg-20231231p39i0
39
Performance Graph
This performance graph compares the cumulative total shareowner
 
return on our common stock with the cumulative total
shareowner return of the Nasdaq Composite Index and the S&P U.S. Small Cap Banks Index
 
for the past five years.
 
The graph
assumes that $100 was invested on December 31, 2018 in our common stock and each of
 
the above indices, and that all dividends
were reinvested.
 
The shareowner return shown below represents past performance and should not
 
be considered indicative of
future performance.
Period Ending
Index
12/31/18
12/31/19
12/31/20
12/31/21
12/31/22
12/31/23
Capital City Bank Group, Inc.
 
$
100.00
$
133.95
$
110.72
$
121.82
$
153.27
$
142.32
Nasdaq Composite
 
100.00
136.69
198.10
242.03
163.28
236.17
SNL $1B-$5B Bank Index
 
100.00
125.46
113.94
158.62
139.85
140.55
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table contains information about all purchases made during
 
the fourth quarter of 2023 by, or on behalf
 
of, us and
any affiliated purchaser (as defined in Rule 10b-18(a)(3)
 
under the Exchange Act) of shares or other units of any class of our
equity securities that is registered pursuant to Section 12 of the Exchange
 
Act.
Total
 
number of
 
Maximum Number of
Total
 
number
Average
shares purchased as
 
shares that may yet be
 
of shares
price paid
part of our share
 
purchased under our share
Period
purchased
per share
repurchase program
(1)
repurchase program
October 1, 2023 to
October 31, 2023
4,000
$28.05
4,000
466,901
November 1, 2023 to
November 30, 2023
16,391
$29.07
16,391
450,510
December 1, 2023 to
December 31, 2023
-
-
-
450,510
Total
20,391
$30.24
20,391
450,510
(1)
This balance represents the number of shares that were repurchased during
 
the fourth quarter of 2023 through the Capital City
Bank Group, Inc. Share Repurchase Program (the “Program”), which
 
was approved on January 31, 2019 for a five year
period, under which we were authorized to repurchase up to 750,000 shares of
 
our common stock.
 
The Program is flexible
and shares are acquired from the public markets and other sources using
 
free cash flow.
 
No shares are repurchased outside of
the Program.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
41
Item 6.
Selected Financial Data
(Dollars in Thousands, Except Per Share Data)
2023
2022
2021
Interest Income
$
181,068
$
131,910
$
106,351
Net Interest Income
158,988
125,022
102,861
Provision for Credit Losses
9,714
7,494
(1,553)
Noninterest Income
71,610
75,181
107,545
Noninterest Expense
(1)
157,023
151,634
162,508
Pre-Tax Loss (Income) Attributable to Noncontrolling Interests
(2)
1,437
135
(6,220)
Net Income Attributable to Common Shareowners
52,258
33,412
33,396
Per Common Share:
Basic Net Income
$
3.08
$
1.97
$
1.98
Diluted Net Income
3.07
1.97
1.98
Cash Dividends Declared
0.76
0.66
0.62
Diluted Book Value
25.92
22.73