Capital City Bank Group, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS	12 Months Ended
EMPLOYEE BENEFIT PLANS	Dec. 31, 2023
Employee benefits plans [Abstract]
EMPLOYEE BENEFIT PLANS	Note 15 EMPLOYEE BENEFIT PLANS Pension Plan The Company sponsors a noncontributory pension plan covering a portion of its associates. On December 30, 2019, the plan was amended to remove plan eligibility for new associates hired after December 31, 2019. There were no amendments to the Plan in 2020 or 2021. The Plan was also amended in December 2022, effective January 1, 2020, increasing the required minimum distribution age to 72 , per the SECURE Act 1.0. Benefits under this plan generally are based on the associate’s total years of service and average of the five highest years of compensation during the ten years immediately preceding their departure. The Company’s general funding policy is to contribute amounts sufficient to meet minimum funding requirements as set by law and to ensure deductibility for federal income tax purposes. The following table details on a consolidated basis the changes in benefit obligation, changes in plan assets, the funded status of the plan, components of pension expense, amounts recognized in the Company’s Consolidated Statements of Financial Condition, and major assumptions used to determine these amounts. (Dollars in Thousands) 2023 2022 2021 Change in Projected Benefit Obligation: Benefit Obligation at Beginning of Year $ 108,151 $ 172,508 $ 212,566 Service Cost 3,488 6,289 6,971 Interest Cost 5,831 4,665 4,885 Actuarial Loss (Gain) 6,936 (39,962) (14,934) Benefits Paid (3,843) (2,139) (2,087) Expenses Paid (276) (416) (259) Settlements - (32,794) (34,634) Projected Benefit Obligation at End of Year $ 120,287 $ 108,151 $ 172,508 Change in Plan Assets: Fair Value of Plan Assets at Beginning of Year $ 104,276 $ 165,274 $ 171,775 Actual Return on Plan Assets 19,138 (25,649) 30,479 Employer Contributions 6,000 - - Benefits Paid (3,843) (2,139) (2,087) Expenses Paid (276) (416) (259) Settlements - (32,794) (34,634) Fair Value of Plan Assets at End of Year $ 125,295 $ 104,276 $ 165,274 Funded Status of Plan and Accrued Liability Recognized at End of Year: Other (Assets) Liabilities $ (5,008) $ 3,875 $ 7,234 Accumulated Benefit Obligation at End of Year $ 102,642 $ 91,770 $ 149,569 Components of Net Periodic Benefit Costs: Service Cost $ 3,488 $ 6,289 $ 6,971 Interest Cost 5,831 4,665 4,885 Expected Return on Plan Assets (6,805) (10,701) (11,147) Amortization of Prior Service Costs 5 15 15 Net Loss Amortization 934 1,713 6,764 Net Loss Settlements - 2,321 3,072 Net Periodic Benefit Cost $ 3,453 $ 4,302 $ 10,560 Weighted-Average Assumptions Used to Determine Benefit Obligation: Discount Rate 5.29% 5.63% 3.11% Rate of Compensation Increase (1) 5.10% 5.10% 4.40% Measurement Date 12/31/23 12/31/22 12/31/21 Weighted-Average Assumptions Used to Determine Benefit Cost: Discount Rate 5.63% 3.11% 2.88% Expected Return on Plan Assets 6.75% 6.75% 6.75% Rate of Compensation Increase (1) 5.10% 4.40% 4.00% Amortization Amounts from Accumulated Other Comprehensive Loss: Net Actuarial Loss (Gain) $ (5,397) $ (3,612) $ (34,265) Prior Service Cost (5) (15) (15) Net Loss (934) (4,034) (9,836) Deferred Tax Expense 1,606 1,942 11,183 Other Comprehensive Gain, net of tax $ (4,730) $ (5,719) $ (32,933) Amounts Recognized in Accumulated Other Comprehensive Loss: Net Actuarial Losses $ 1,322 $ 7,653 $ 15,300 Prior Service Cost - 5 20 Deferred Tax Benefit (335) (1,941) (3,884) Accumulated Other Comprehensive Loss, net of tax $ 987 $ 5,717 $ 11,436 (1) The Company utilized an age-graded approach that varies the rate based on the age of the participants. During 2022 and 2021, lump sum payments made under the Company’s defined benefit pension plan triggered settlement accounting. In accordance with applicable accounting guidance for defined benefit plans, the Company recorded no settlement losses during 2023 and $ 2.3 million and $ 3.1 million during 2022 and 2021, respectively. The service cost component of net periodic benefit cost is reflected in compensation expense in the accompanying Consolidated Statements of Income. The other components of net periodic cost are included in “other” within the noninterest expense category in the Consolidated Statements of Income. See Note 1 – Significant Accounting Policies for additional information. The Company expects to recognize $ 0.2 million of the net actuarial loss reflected in accumulated other comprehensive loss at December 31, 2023 as a component of net periodic benefit cost during 2024. Plan Assets. The Company’s pension plan asset allocation at December 31, 2023 and 2022, and the target asset allocation for 2023 are as follows: Target Percentage of Plan Allocation Assets at December 31 (1) 2024 2023 2022 Equity Securities 68 % 70 % 73 % Debt Securities 27 % 18 % 23 % Cash and Cash Equivalents 5 % 12 % 4 % Total 100 % 100 % 100 % (1) Represents asset allocation at December 31 which may differ from the average target allocation for the year due to the year- end cash contribution to the plan. The Company’s pension plan assets are overseen by the CCBG Retirement Committee. Capital City Trust Company acts as the investment manager for the plan. The investment strategy is to maximize return on investments while minimizing risk. The Company believes the best way to accomplish this goal is to take a conservative approach to its investment strategy by investing in mutual funds that include various high-grade equity securities and investment -grade debt issuances with varying investment strategies. The target asset allocation will periodically be adjusted based on market conditions and will operate within the following investment policy statement allocation ranges: equity securities ranging from 55 % and 81 %, debt securities ranging from 17 % and 37 %, and cash and cash equivalents ranging from 0 % and 10 %. The overall expected long-term rate of return on assets is a weighted-average expectation for the return on plan assets. The Company considers historical performance data and economic/financial data to arrive at expected long-term rates of return for each asset category. The major categories of assets in the Company’s pension plan at December 31 are presented in the following table. Assets are segregated by the level of the valuation inputs within the fair value hierarchy established by ASC Topic 820 utilized to measure fair value (see Note 22 – Fair Value Measurements). (Dollars in Thousands) 2023 2022 Level 1: U.S. Treasury Securities $ 16,126 $ 17,264 Mutual Funds 92,991 81,231 Cash and Cash Equivalents 15,717 5,327 Level 2: Corporate Notes/Bonds 461 454 Total Fair Value of Plan Assets $ 125,295 $ 104,276 Expected Benefit Payments. At December 31, expected benefit payments related to the defined benefit pension plan were as follows: (Dollars in Thousands) 2023 2024 $ 10,105 2025 11,119 2026 10,496 2027 10,042 2028 8,983 2029 through 2033 45,942 Total $ 96,687 Contributions. The following table details the amounts contributed to the pension plan in 2023 and 2022, and the expected amount to be contributed in 2024. Expected Contribution (Dollars in Thousands) 2022 2023 2024 (1) Actual Contributions $ - $ 6,000 $ 5,000 (1) For 2023, the Company will have the option to make a cash contribution to the plan or utilize pre-funding balances. Supplemental Executive Retirement Plan The Company has a Supplemental Executive Retirement Plan (“SERP”) and a Supplemental Executive Retirement Plan II (“SERP II”) covering selected executive officers. Benefits under this plan generally are based on the same service and compensation as used for the pension plan, except the benefits are calculated without regard to the limits set by the Internal Revenue Code on compensation and benefits. The net benefit payable from the SERP is the difference between this gross benefit and the benefit payable by the pension plan. The SERP II was adopted by the Company’s Board on May 21, 2020 and covers certain executive officers that were not covered by the SERP. The following table details on a consolidated basis the changes in benefit obligation, the funded status of the plan, components of pension expense, amounts recognized in the Company’s Consolidated Statements of Financial Condition, and major assumptions used to determine these amounts. (Dollars in Thousands) 2023 2022 2021 Change in Projected Benefit Obligation: Benefit Obligation at Beginning of Year $ 10,948 $ 13,534 $ 13,402 Service Cost 18 31 35 Interest Cost 501 315 243 Actuarial (Gain) Loss 201 (2,932) (146) Net Settlements (2,464) - - Projected Benefit Obligation at End of Year $ 9,204 $ 10,948 $ 13,534 Funded Status of Plan and Accrued Liability Recognized at End of Year: Other Liabilities $ 9,204 $ 10,948 $ 13,534 Accumulated Benefit Obligation at End of Year $ 8,943 $ 10,887 $ 12,803 Components of Net Periodic Benefit Costs: Service Cost $ 18 $ 31 $ 35 Interest Cost 501 315 243 Amortization of Prior Service Cost 151 277 277 Net Loss Amortization (531) 718 970 Net Gain Settlements (291) - - Net Periodic Benefit Cost $ (152) $ 1,341 $ 1,525 Weighted-Average Assumptions Used to Determine Benefit Obligation: Discount Rate 5.11% 5.45% 2.80% Rate of Compensation Increase (1) 5.10% 5.10% 4.40% Measurement Date 12/31/23 12/31/22 12/31/21 Weighted-Average Assumptions Used to Determine Benefit Cost: Discount Rate 5.45% 2.80% 2.38% Rate of Compensation Increase (1) 5.10% 4.40% 4.00% Amortization Amounts from Accumulated Other Comprehensive Loss: Net Actuarial Loss (Gain) $ 201 $ (2,932) $ (146) Prior Service (Benefit) Cost (151) (277) (219) Net Gain (Loss) 531 (718) (970) Settlement Gain 291 - - Deferred Tax (Benefit) Expense (222) 995 154 Other Comprehensive (Gain) Loss, net of tax $ 650 $ (2,932) $ (1,181) Amounts Recognized in Accumulated Other Comprehensive Loss: Net Actuarial (Loss) Gain $ (753) $ (1,775) $ 1,875 Prior Service Cost - 151 429 Deferred Tax Benefit (Expense) 191 412 (584) Accumulated Other Comprehensive (Loss) Gain, net of tax $ (562) $ (1,212) $ 1,720 (1) The Company utilized an age-graded approach that varies the rate based on the age of the participants. The Company expects to recognize approximately $ 0.3 million of the net actuarial gain reflected in accumulated other comprehensive loss at December 31, 2023 as a component of net periodic benefit cost during 2024. In June 2023, lump sum retirement distributions to two plan participants required the application of settlement accounting. The amount of the settlement gain was $ 0.3 million. Expected Benefit Payments . As of December 31, expected benefit payments related to the SERP were as follows: (Dollars in Thousands) 2023 2024 $ 8,800 2025 32 2026 38 2027 42 2028 64 2029 through 2033 748 Total $ 9,724 401(k) Plan The Company has a 401(k) Plan which enables CCB and CCBG associates to defer a portion of their salary on a pre-tax basis. The plan covers substantially all associates of the Company who meet minimum age requirements. The plan is designed to enable participants to contribute any amount, up to the maximum annual limit allowed by the IRS, of their compensation withheld in any plan year placed in the 401(k) Plan trust account. Matching contributions of 50 % from the Company are made for up to 6 % of the participant’s compensation for eligible associates. Further, in addition to the 50 % match, all associates hired after December 31, 2019 will receive annually a contribution by the Company equal to 3 % of their compensation. For 2023, the Company made annual matching contributions of $ 1.7 million. For 2022 and 2021, the Company made annual matching contributions of $ 1.4 million and $ 1.0 million, respectively. The participant may choose to invest their contributions into thirty- four investment options available to 401(k) participants, including the Company’s common stock. A total of 50,000 shares of CCBG common stock have been reserved for issuance. Shares issued to participants have historically been purchased in the open market. CCHL has a 401(k) Plan available to all CCHL associates who are employed. The plan allows participants to contribute any amount, up to the maximum annual limit allowed by the IRS, of their compensation withheld in any plan year placed in the 401(k) Plan trust account. A discretionary matching contribution is determined annually by CCHL. For 2023, 2022, and 2021, matching contributions were made by CCHL up to 3 % of eligible participant’s compensation totaling $ 0.4 million, $ 0.4 million, and $ 0.7 million, respectively. Other Plans The Company has a Dividend Reinvestment and Optional Stock Purchase Plan. A total of 250,000 shares have been reserved for issuance. In recent years, shares for the Dividend Reinvestment and Optional Stock Purchase Plan have been acquired in the open market and, thus, the Company did no t issue any new shares under this plan in 2023, 2022 and 2021.