SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended |
---|---|
Dec. 31, 2022 | |
Significant accounting policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES |
Note 1
SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Capital City Bank Group, Inc. (“CCBG”) provides a full range of banking
corporate clients through its wholly-owned subsidiary,
“Company”), with banking offices located in Florida,
financial institutions, is subject to regulation by certain government
regulatory authorities.
Basis of Presentation
The consolidated financial statements include the accounts of CCBG
Capital City Strategic Wealth,
Company and Capital City Investments. CCB also maintains a
51
% membership interest in a consolidated subsidiary,
Home Loans, LLC (“CCHL”).
The Company, which operates
Florida, Georgia, and Alabama, follows accounting principles generally
practices applicable to the banking industry.
and cash flows are summarized below.
The Company determines whether it has a controlling financial interest in an
voting interest entity or a variable interest entity under accounting principles
Voting
independently and provide the equity holders with the obligation to absorb losses, the
right to make decisions about the entity’s
least a majority of, the voting interest.
entities that lack one or more of the characteristics of a voting interest entity.
present when an enterprise has a variable interest, or a combination of variable
expected losses, receive a majority of the entity’s
interest, known as the primary beneficiary,
Trust I (established November 1, 2004) and
is not the primary beneficiary.
financial statements.
Certain previously reported amounts have been reclassified to conform
evaluated subsequent events for potential recognition and/or disclosure
included in this Annual Report on Form 10-K were filed with the
Use of Estimates
The preparation of financial statements in conformity with accounting
America requires management to make estimates and assumptions that affect
disclosure of contingent assets and liabilities at the date of financial statements and
expenses during the reporting period.
susceptible to significant changes in the near-term
income taxes, loss contingencies, valuation of other real estate owned, and
impairment.
Business Combination
On April 30, 2021, a newly formed subsidiary of CCBG, CCSW acquired
Group, LLC and certain related businesses (“SWG”), including advisory,
assignment of all related revenues thereof. Under the terms of the purchase agreement,
and will continue the operation of their five offices in South Georgia
risk management and asset protection services for individuals and businesses.
CCBG paid $
4.5
recorded goodwill of $
2.8
1.6
On March 1, 2020, CCB completed its acquisition of a
51
% membership interest in Brand Mortgage Group, LLC (“Brand”),
which is now operated as CCHL.
acquired totaled $
52
42
primarily of warehouse line borrowings).
access to an expanded residential mortgage product line-up and investor
sales), to hedge our net interest income business and to generate other operational
7.1
million cash payment for its
51
% membership interest and entered into a buyout agreement for the remaining
49
% noncontrolling
interest resulting in temporary equity with a fair value of $
7.4
4.3
with this acquisition.
team and expertise in the mortgage industry,
strategic alliance.
Recently Adopted Accounting Pronouncements
Since 2019, the Company has adopted ASU 2016-13
Financial Instruments – Credit Losses (Topic
Losses on Financial Instruments,
ASU 2019-12 “
Income Taxes (Topic
2020-01 “
Investments – Equity Securities (Topic
ASU
2020-04 “
Reference Rate Reform (Topic
ASU 2020-08 “
Codification Improvements to Subtopic 310-20,
Nonrefundable Fees and Other Costs”,
and ASU 2020-09 “
Debt (Topic
Release No. 33-10762”
.
Restatement of Previously Issued Consolidated Financial
We have restated
restated interim financial statement periods for the each of the quarters
2022 and restated the impacted balances within the accompanying
Restatement Background
As part of the normal course of business, CCHL sold residential mortgage
revenue and a mortgage servicing right on the aforementioned loans.
for servicing these loans on behalf of CCB, which required elimination entries
were not made, resulting in misstatements. As a result of this misstatement, assets are overstated
6.7
31, 2022 and net income is overstated by $
6.7
0.15
% of previously reported total assets as of December 31, 2022 and
16.78
% of previously reported net income for the year
ended December 31, 2022. As a result, diluted EPS decreased from $
2.36
1.97
Description of Misstatements
Misstatements Associated with Mortgage Loan Sale Transactions
a)
CCHL originated certain mortgage loans that were sold to the Bank for
corresponding loan purchase premium recorded by the Bank should
the Company did not defer net loan origination costs on these loans. The
on sale of loan misstatements on each period are presented in this note and Note 24,
Quarterly Financial Data
(Unaudited)
.
b)
Mortgage Servicing Right (“MSR”) Asset
CCHL recorded an MSR asset and recognized a corresponding gain related
serviced for the Bank. As the MSR asset is recorded at amortized cost, CCHL also recorded
each period in other non-interest expense. The MSR asset, gain, and amortization
in consolidation. The impacts of the MSR asset misstatements on each period
Quarterly Financial Data (Unaudited)
.
c)
Mortgage Servicing
The Bank recorded servicing fee expense and CCHL recorded servicing
eliminated in consolidation. The impacts of the mortgage servicing misstatements
note and Note 24,
Quarterly Financial Data (Unaudited)
.
d)
Statement of Financial Condition Misclassification
CCHL classifies all mortgage production as loans held for sale. The portion
sold to the Bank should have been designated as loans held for investment
This reclassification includes the reversal of the related mark-to-market
Allowance for Credit Losses (“ACL”) on these loans. While previously the mark-to-market
reversed and the ACL established at the time the loans were sold to the Bank,
appropriate periods. The impacts of the restatement on each period
Quarterly
Financial Data (Unaudited)
.
Other Immaterial Adjustments
As part of the restatement, we made corrections to the Consolidated
determined to be immaterial, both individually and in the aggregate
(the “Other Adjustments”).
The Other Adjustments included corrections and reclassifications on
December 31, 2022 that had no impact on shareowners’ equity.
the misstatements associated with mortgage loan sale transactions noted
Statement of Financial Condition to record net deferred fees and costs that
3.4
which represent the amount that should have been recorded in prior periods. Additionally,
market and ACL adjustments that were related to the “Statement of
resulted in less than a $
156
156
The combined impacts of the correction of the misstatement associated with the
Adjustments are reflected in the “restatement impacts” column of
Quarterly Financial
Data (Unaudited)
.
Description of Restatement Tables
The following tables present the amounts previously reported and a reconciliation
restated Consolidated Statement of Financial Condition as of December
the restated Consolidated Statement of Comprehensive Income,
’
Equity and the restated Consolidated Statement of Cash Flows for the year ended
reported for the year ended December 31, 2022 were derived from our Annual
31, 2022, originally filed March 1, 2023.
CAPITAL CITY BANK
CONSOLIDATED STATEMENT
As of December 31, 2022
(Dollars in Thousands, except per share data)
As
Previously
Reported
Restatement
Impact
As Restated
ASSETS:
Cash and Due From Banks
$
72,114
$
-
$
72,114
Federal Funds Sold and Interest Bearing Deposits
528,536
-
528,536
Total Cash and Cash Equivalents
600,650
-
600,650
Investment Securities, Available
$
455,232
)
413,294
-
413,294
Investment Securities Held to Maturity (fair value of $
612,701
)
660,744
-
660,744
Other Equity Securities
10
-
10
1,074,048
-
1,074,048
Loans Held For Sale
54,635
(27,726)
26,909
Loans, Net of Unearned Income
2,525,180
22,505
2,547,685
Allowance for Loan Losses
(24,736)
(332)
(25,068)
Loans, Net
2,500,444
22,173
2,522,617
Premises and Equipment, Net
82,138
-
82,138
Goodwill
93,093
-
93,093
Other Real Estate Owned
431
-
431
Other Assets
120,519
(1,182)
119,337
Total Assets
$
4,525,958
$
(6,735)
$
4,519,223
LIABILITIES
Deposits:
Noninterest Bearing Deposits
$
1,653,620
$
-
$
1,653,620
Interest Bearing Deposits
2,285,697
-
2,285,697
Total Deposits
3,939,317
-
3,939,317
Short-Term
56,793
-
56,793
Subordinated Notes Payable
52,887
-
52,887
Other Long-Term
513
-
513
Other Liabilities
73,675
-
73,675
Total Liabilities
4,123,185
-
4,123,185
Temporary Equity
8,757
-
8,757
SHAREOWNERS' EQUITY
Preferred Stock, $
.01
3,000,000
no
outstanding
-
-
-
Common Stock, $
.01
90,000,000
16,986,785
issued and outstanding at December 31, 2022
170
-
170
Additional Paid-In Capital
37,331
-
37,331
Retained Earnings
393,744
(6,735)
387,009
Accumulated Other Comprehensive Loss, Net of Tax
(37,229)
-
(37,229)
Total Shareowners' Equity
394,016
(6,735)
387,281
$
4,525,958
$
(6,735)
$
4,519,223
CAPITAL CITY BANK
CONSOLIDATED STATEMENT
For Year
(Dollars in thousands, except per share data)
As
Previously
Reported
Restatement
Impact
As Restated
INTEREST INCOME
Loans, Including Fees
$
105,882
$
562
$
106,444
Investment Securities:
Taxable Securities
15,917
-
15,917
Tax Exempt Securities
38
-
38
Funds Sold
9,511
-
9,511
Total Interest Income
131,348
562
131,910
INTEREST EXPENSE
Deposits
3,444
-
3,444
Short-Term
1,761
-
1,761
Subordinated Notes Payable
1,652
-
1,652
Other Long-Term
31
-
31
Total Interest Expense
6,888
-
6,888
Net Interest Income
124,460
562
125,022
Provision for Loan Losses
7,162
332
7,494
Net Interest Income After Provision For Loan Losses
117,298
230
117,528
NONINTEREST INCOME
Deposit Fees
22,121
-
22,121
Bank Card Fees
15,401
-
15,401
Wealth Management
18,059
-
18,059
Mortgage Banking Fees
30,624
(18,715)
11,909
Other
8,422
(731)
7,691
Total Noninterest
94,627
(19,446)
75,181
NONINTEREST EXPENSE
Compensation
100,542
(9,023)
91,519
Occupancy, Net
24,574
-
24,574
Other
36,712
(1,171)
35,541
Total Noninterest
161,828
(10,194)
151,634
INCOME BEFORE INCOME TAXES
50,097
(9,022)
41,075
Income Tax Expense
10,085
(2,287)
7,798
NET INCOME
40,012
(6,735)
33,277
Pre-Tax Income
135
-
135
NET INCOME ATTRIBUTABLE
$
40,147
$
(6,735)
$
33,412
BASIC NET INCOME PER SHARE
$
2.37
$
(0.40)
$
1.97
DILUTED NET INCOME PER SHARE
$
2.36
$
(0.39)
$
1.97
AVERAGE
Basic
16,951
-
16,951
Diluted
16,985
-
16,985
CAPITAL CITY BANK
CONSOLIDATED STATEMENT
For Year
(Dollars in thousands, except per share data)
As
Previously
Reported
Restatement
Impact
As Restated
NET INCOME
$
40,147
$
(6,735)
$
33,412
Other comprehensive income (loss), before
Investment Securities:
Change in net unrealized (loss) gain on securities available for sale
(35,814)
-
(35,814)
Unrealized losses on securities transferred from available for sale to held
maturity
(9,384)
-
(9,384)
Amortization of unrealized losses on securities transferred from available
held to maturity
1,469
-
1,469
Total Investment
(43,729)
-
(43,729)
Derivative:
Change in net unrealized gain on effective cash flow
4,146
-
4,146
Benefit Plans:
Reclassification adjustment for amortization of prior service cost
292
-
292
Reclassification adjustment for amortization of net loss
4,752
-
4,752
Defined benefit plan settlement
2,321
-
2,321
Current year actuarial loss
4,223
-
4,223
11,588
-
11,588
Other comprehensive income (loss), before
(27,995)
-
(27,995)
Deferred tax expense (benefit) related to other comprehensive income
6,980
-
6,980
Other comprehensive income (loss), net of tax
(21,015)
-
(21,015)
TOTAL COMPREHENSIVE
$
19,132
$
(6,735)
$
12,397
CAPITAL CITY BANK
CONSOLIDATED STATEMENT
(Dollars in thousands, except per share data)
Shares
Outstanding
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss, Net of
Taxes
Total
As Previously Reported
Balance, January 1, 2022, as previously reported
16,892,060
$
169
$
34,423
$
364,788
$
(16,214)
$
383,166
Net Income
-
-
-
40,147
-
40,147
Other Comprehensive Loss, Net of Tax
-
-
-
-
(21,015)
(21,015)
Cash Dividends ($
0.66
-
-
-
(11,191)
-
(11,191)
-
-
1,630
-
-
1,630
94,725
1
1,278
-
-
1,279
Balance, December 31, 2022, as previously reported
16,986,785
170
37,331
393,744
(37,229)
394,016
Restatement Impacts
Net Income
-
-
-
(6,735)
-
(6,735)
Balance, December 31, 2022
-
-
-
(6,735)
-
(6,735)
As Restated
Balance, January 1, 2022, as restated
16,892,060
169
34,423
364,788
(16,214)
383,166
Net Income
-
-
-
33,412
-
33,412
Other Comprehensive Loss, Net of Tax
-
-
-
-
(21,015)
(21,015)
Cash Dividends ($
0.66
-
-
-
(11,191)
-
(11,191)
-
-
1,630
-
-
1,630
94,725
1
1,278
-
-
1,279
Balance, December 31, 2022, as restated
16,986,785
$
170
$
37,331
$
387,009
$
(37,229)
$
387,281
CAPITAL CITY BANK
CONSOLIDATED STATEMENT
For the Year
(Dollars in Thousands)
As Previously
Reported
Restatement
Impact
As Restated
CASH FLOWS FROM OPERATING
Net Income Attributable to Common Shareowners
$
40,147
$
(6,735)
$
33,412
Adjustments to Reconcile Net Income to
7,162
332
7,494
7,596
-
7,596
8,333
(561)
7,772
160
-
160
2,321
-
2,321
(1,024,526)
28,214
(996,312)
1,053,047
(19,203)
1,033,844
(30,624)
18,715
(11,909)
(2,742)
3,468
726
1,630
-
1,630
(27)
-
(27)
(1,583)
(2,287)
(3,870)
(108)
-
(108)
(422)
-
(422)
(8,636)
-
(8,636)
8,837
-
8,837
Net Cash Provided (Used In) By Operating Activities
60,565
21,943
82,508
CASH FLOWS FROM INVESTING ACTIVITIES
Securities Held to Maturity:
(219,865)
-
(219,865)
55,314
-
55,314
Securities Available for
(52,238)
-
(52,238)
3,365
-
3,365
81,596
-
81,596
Purchase of loans held for investment
(438,415)
-
(438,415)
Net Increase in Loans Held for Investment
(162,406)
(21,943)
(184,349)
Proceeds From Sales of Other Real Estate Owned
2,406
-
2,406
Purchases of Premises and Equipment
(6,322)
-
(6,322)
Noncontrolling interest contributions received
2,867
-
2,867
Net Cash Used In Investing Activities
(733,698)
(21,943)
(755,641)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Deposits
226,455
-
226,455
Net (Decrease) Increase
22,114
-
22,114
Repayment of Other Long-Term
(249)
-
(249)
Dividends Paid
(11,191)
-
(11,191)
Issuance of Common Stock Under Compensation Plans
1,300
-
1,300
Net Cash Provided By Financing Activities
238,429
-
238,429
NET DECREASE IN CASH AND CASH EQUIVALENTS
(434,704)
-
(434,704)
Cash and Cash Equivalents at Beginning of Period
1,035,354
-
1,035,354
Cash and Cash Equivalents at End of Period
$
600,650
$
-
$
600,650
Supplemental Cash Flow Disclosures:
$
6,586
$
-
$
6,586
$
7,466
$
-
$
7,466
Noncash Investing and Financing Activities:
$
2,398
$
-
$
2,398
The accompanying Notes to Consolidated Financial Statements are
Cash and Cash Equivalents
Cash and cash equivalents include cash and due from banks, interest-bearing
sold. Generally,
days or less.
percentage of deposits.
zero
.
The Company maintains certain cash balances that are restricted under warehouse
agreements.
0.5
Investment Securities
Investment securities are classified as held-to-maturity (“HTM”) and
intent and ability to hold them until maturity.
for-sale (“AFS”) and carried at fair value.
classified as equity securities that do not have readily determinable fair
when impaired or upon observable transaction prices.
time of purchase.
security which correlates to its risk profile: U.S. government treasury,
mortgage-backed securities,
the Federal Reserve Bank and the Federal Home Loan Bank, are classified as available
Interest income includes amortization and accretion of purchase premiums
from the amortized cost of the security sold.
determined using the specific identification method.
recorded at amortized cost plus or minus any unrealized gain or loss at the time
loss continues to be reported in accumulated other comprehensive income
income over the remaining life of the security.
Subsequent to transfer, the allowance for credit
policy for held-to-maturity securities.
presented on a gross basis in the Consolidated Statement of Income.
The accrual of interest is generally suspended on securities more than 90 days
a security is placed on nonaccrual status, all previously accrued and uncollected interest
thus not included in the estimate of credit losses.
Credit losses and changes thereto, are established as an allowance for credit loss through
Losses are charged against the allowance when management
either of the criteria regarding intent or requirement to sell is met.
Certain debt securities in the Company’s
explicitly or implicitly guaranteed by the U.S. government.
securities indicates that the expectation of nonpayment of the amortized
technically default.
government guaranteed treasuries.
credit losses due to the zero loss assumption.
Impairment - Available
.
Unrealized gains on available-for-sale securities are excluded from
income.
sell, or whether it is more likely than not it will be required to sell the security before
either of the criteria regarding intent or requirement to sell is met, the security’s
through income.
Company evaluates whether the decline in fair value has resulted from credit
management considers the extent to which fair value is less than amortized
rating agency, and adverse
credit loss exists, the present value of cash flows to be collected from the security are compared
security.
an allowance for credit losses is recorded through a provision for
than the amortized cost basis.
Allowance for Credit Losses - Held-to-Maturity Securities.
Management measures expected credit losses on each individual held-to-maturity debt security
a zero assumption.
value, or the difference between the discounted value of
recorded amortized basis of the security.
through a provision for credit loss expense.
Loans Held for Investment
Loans held for investment (“HFI”) are stated at amortized cost which includes the
and discounts, and net deferred loan fees and costs.
included in the amortized cost basis of loans.
principal balances and includes loan late fees.
amortized over the life of the loan as a yield adjustment.
The Company defines loans as past due when one full payment is past due or a contractual maturity
accrual of interest is generally suspended on loans more than 90 days past due
placed on nonaccrual status, all previously accrued and uncollected interest
election has been made to not include in the estimate of credit losses.
ultimate collectability is no longer considered doubtful.
amounts contractually due are brought current or when future payments
Loan charge-offs on commercial and investor
loan confirm the loan is not fully collectible and the loss is reasonably quantifiable.
determinations are the borrower’s and any guarantor’s
(if applicable), and collateral value.
Examination Council’s Uniform
classification and treatment of consumer loans, which generally require
The Company has adopted comprehensive lending policies, underwriting
maximize loan income within an acceptable level of risk.
concentrations, loan delinquencies, nonperforming and potential problem
review of loan portfolio quality and trends by Management and the Credit Risk Oversight
estimating the allowance for credit losses.
Allowance for Credit Losses
The allowance for credit losses is a valuation account that is deducted from the
amount expected to be collected on the loans.
reported in earnings, and reduced by the charge-off
allowance when management believes the uncollectability of a loan balance
aggregate of amounts previously charged-off
off-balance sheet credit exposures is provided for through the credit
Management estimates the allowance balance using relevant available
past events, current conditions, and reasonable and supportable forecasts.
basis for the estimation of expected credit losses.
current conditions and forecasts.
The methodology for estimating the amount of credit losses reported in the
first, an asset-specific component involving loans that do not share risk characteristics
losses for such individual loans; and second, a pooled component for expected
risk characteristics.
Loans That Do Not Share Risk Characteristics (Individually
Loans that do not share similar risk characteristics are evaluated on an individual
have differing risk characteristics and are individually analyzed to
dependent when the borrower is experiencing financial difficulty
sale of the underlying collateral.
measured based on the difference between the fair
asset.
by Financial Accounting Standards Board (“FASB”)
expected credit loss under the same approach as those loans where foreclosure
$250,000,
balances less than $250,000, the Company has made a policy election to measure expected
loss rates for similar loan types.
restructurings.
Loans That Share Similar Risk Characteristics (Pooled
The general steps in determining expected credit losses for the pooled loan component
●
Segment loans into pools according to similar risk characteristics
●
Develop historical loss rates for each loan pool segment
●
Incorporate the impact of forecasts
●
Incorporate the impact of other qualitative factors
●
Calculate and review pool specific allowance for credit loss estimate
A discounted cash flow methodology is utilized to calculate expected
discounted present value of expected cash flow is then compared to
estimate.
The primary inputs used to calculate expected cash flows include historical
and loss given default (“LGD”), and prepayment rates.
rate and is based on management’s assessment
the Company’s risk rating process are
reflect the historical average net loss rate by loan pool.
prepayments which will vary by loan segment and interest rate conditions.
prepayment rates occurring in the loan portfolio and consideration of forecasted
In developing loss rates, adjustments are made to incorporate the impact of forecasted
applied, including the length of the forecast and reversion periods.
able to make a reasonable and supportable assessment of future conditions.
management believes it can develop a reasonable and supportable forecast,
the use of historical default and loss rates.
and reversion periods are periodically evaluated and based on management’s
may vary by loan pool.
utilizes established industry and economic data points and sources,
the forecasted unemployment rate being a significant factor.
on management’s assessment of
Reversion period PD rates reflect the difference between forecast
adjustment over the reversion period.
Loss rates are further adjusted to account for other risk factors that impact loan defaults
on management’s assessment of
and external factors that are independent of and not reflected in the quantitative
considers in this assessment include trends in underwriting standards,
loan review systems, collateral valuations, concentrations, legal/regulatory/political
natural disasters.
Allowance for Credit Losses on Off-Balance
The Company estimates expected credit losses over the contractual period
contractual obligation to extend credit, unless that obligation is unconditionally
credit losses on off-balance sheet credit exposures is adjusted as a provision
liabilities.
on commitments expected to be funded over its estimated life and applies the same
outstanding loan balances by segment.
the allowance for credit losses with similar risk characteristics that have been previously
Mortgage Banking Activities
Mortgage Loans Held for Sale and Revenue Recognition
Mortgage loans held for sale (“HFS”) are carried at fair value under the fair value
mortgage banking revenues on the Consolidated Statements of
to investors is calculated using observable market information such
mandatory delivery commitment prices. The Company bases loans committed
(“FNMA”), Government National Mortgage Association (“GNMA”), and
(“FHLMC”) (“Agency”) investors based on the Agency’s
mortgage loans held for sale not committed to investors is based on quoted best execution
quoted price exists, the fair value is determined using quoted prices for
the specific attributes of that loan, which would be used by other market
Gains and losses from the sale of mortgage loans held for sale are recognized based upon
proceeds and carrying value of the related loans upon sale and are recorded
Statements of Income. Sales proceeds reflect the cash received from investors
premium. If the related mortgage loan is sold with servicing retained, the
on the Consolidated Statements of Income.
with the changes in the fair value of mortgage loans held for sale, and the realized and
instruments.
Mortgage loans held for sale are considered sold when the Company surrenders
considered to have been surrendered when the transferred assets have been
Company and its creditors; the purchaser obtains the right (free of conditions that
to pledge or exchange the transferred assets; and the Company does not
through either an agreement that both entitles and obligates the Company
their maturity or the ability to unilaterally cause the holder to return specific
criteria to have been met upon acceptance and receipt of sales proceeds
Government National Mortgage Association (“GNMA”) optional
individual delinquent mortgage loans that meet certain criteria from
servicing.
for an amount equal to 100 percent of the remaining principal balance of
Servicing,” this buy-back option is considered a conditional option until
becomes unconditional.
unconditional buy-back option, the loans can no longer be reported
Statement of Financial Condition, regardless of whether there is intent to exercise
in other assets with the offsetting liability being reported
Derivative Instruments (IRLC/Forward Commitments)
The Company holds and issues derivative financial instruments such as interest rate
forward sale commitments. IRLCs are subject to price risk primarily related
interest rate risk on certain IRLCs, the Company uses forward sale commitments,
mandatory delivery commitments with investors. Management expects
fair value opposite to the changes in fair value of the IRLCs thereby reducing
also used to hedge the interest rate risk on mortgage loans held for sale that are not
price risk. If the mandatory delivery commitments are not fulfilled, the Company
commitments are also executed with investors, whereby certain loans
to an investor at a fixed price. If the best effort IRLC does not fund,
The Company considers various factors and strategies in determining
held for sale to economically hedge.
Consolidated Statements of Financial Condition at their fair value.
recognized in mortgage banking revenues on the Consolidated Statements
losses resulting from the pairing-out of forward sale commitments are recognized
Consolidated Statements of Income. The Company accounts for
and does not designate any for hedge accounting.
Mortgage Servicing Rights (“MSRs”) and Revenue Recognition
The Company sells residential mortgage loans in the secondary market and may
sale, an MSR asset is capitalized, which represents the then current fair value of
performing servicing activities.
fair value measurement method, the Company follows the amortization method.
(other income) in proportion to and over the period of estimated net servicing
reporting date.
value, and included in other assets, net, on the Consolidated Statements of
The Company periodically evaluates its MSRs asset for impairment.
date using estimated prepayment speeds of the underlying mortgage
characteristics of the underlying loans (predominantly loan type and note
prepayment speeds are usually faster and the value of the MSRs asset generally
Conversely, as mortgage
increases, requiring less valuation reserve.
amortized cost of the MSRs exceeds the estimated fair value by stratification.
temporary impairment no longer exists for a stratification, the valuation
temporary impairment (i.e., recoverability is considered remote when
recognized as a write-down of the MSRs asset and the related valuation allowance
available) and then against earnings.
valuation allowance, precluding subsequent recoveries.
Derivative/Hedging Activities
At the inception of a derivative contract, the Company designates the derivative
intentions and belief as to the likely effectiveness as a hedge. These three
asset or liability or of an unrecognized firm commitment (“fair value
variability of cash flows to be received or paid related to a recognized
with no hedging designation (“standalone derivative”). For a fair value hedge,
offsetting loss or gain on the hedged item, are recognized
gain or loss on the derivative is reported in other comprehensive income and is reclassified
during which the hedged transaction affects earnings. For
not highly effective in hedging the changes in fair value or expected
current earnings. Net cash settlements on derivatives that qualify for hedge
expense, based on the item being hedged. Net cash settlements on derivatives
reported in non-interest income. Cash flows on hedges are classified in the cash flow
items being hedged.
The Company formally documents the relationship between derivatives
objective and the strategy for undertaking hedge transactions at the inception
includes linking fair value or cash flow hedges to specific assets and liabilities on the
Condition or to specific firm commitments or forecasted transactions. The Company
inception and on an ongoing basis, whether the derivative instruments that are used
fair values or cash flows of the hedged items. The Company discontinues hedge
is no longer effective in offsetting changes in the
terminates, a hedged forecasted transaction is no longer probable, a hedged
derivative as a hedge is no longer appropriate or intended. When hedge accounting
value of the derivative are recorded as non-interest income. When a fair
is no longer adjusted for changes in fair value and the existing basis adjustment is amortized
the asset or liability. When
expected to occur, gains or losses that were accumulated
same periods, in which the hedged transactions will affect earnings.
Long-Lived Assets
Premises and equipment is stated at cost less accumulated depreciation,
useful lives for each type of asset with premises being depreciated over
10
40
depreciated over a range of
3
10
depreciated over the lesser of the useful life or the remaining lease term.
expense as incurred.
Long-lived assets are evaluated for impairment if circumstances suggest that their
comparing the carrying value to estimated undiscounted cash flows.
recorded equal to the carrying value less the fair value. See Note 6 – Premises and
Leases
The Company has entered into various operating leases, primarily for
terms from one to ten years.
at the Company’s sole discretion.
Certain of the lease contain early termination options.
calculation of the operating right-of-use assets or operating lease liabilities.
adjustments to rental payments for inflation.
the present value of the lease payments not yet paid, discounted using
incremental borrowing rate.
incremental borrowing rate at the commencement date in determining
borrowing rate is based on the term of the lease.
measured at (i) the initial measurement of the lease liability; (ii) any lease payments made
commencement date less any lease incentives received; and (iii) any initial direct
initial term of 12 months or less are not recorded on the Consolidated Statement
leases, lease expense is recognized on a straight-line basis over the lease term.
leases.
Bank Owned Life Insurance
The Company, through
insurance is recorded at the amount that can be realized under the insurance contract
which is the cash surrender value adjusted for other charges or
Goodwill and Other Intangibles
Goodwill represents the excess of the cost of businesses acquired over the fair
with FASB ASC Topic
annually during the fourth quarter or on an interim basis if an event occurs
not reduce the fair value of the reporting unit below its carrying value.
purchased as part of a business acquisition.
circumstances indicate the carrying amount of the assets may not
– Goodwill and Other Intangibles for additional information
. Other Real Estate Owned
Assets acquired through, or in lieu of, loan foreclosure are held for sale and are
less estimated selling costs, establishing a new cost basis.
management and the assets are carried at the lower of carrying amount or fair value
assets is subjective in nature and may be adjusted in the future because of changes in economic
expenses from operations and changes in value are included in noninterest
Loss Contingencies
Loss contingencies, including claims and legal actions arising in the ordinary
the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.
Contingencies for additional information.
Noncontrolling Interest
To the extent
recognizes noncontrolling interests in subsidiaries.
Combination), the noncontrolling interest represents equity which is redeemable
holder and is classified within temporary equity in the mezzanine
The call/put option is redeemable at the option of either CCBG (call) or the
January 1, 2025, and therefore, not entirely within CCBG’s
allocated to CCBG and the noncontrolling interest holder based on their relative
interest carrying value is adjusted on a quarterly basis to the higher of the
Statement of Financial Condition date, through a corresponding adjustment
calculated quarterly and is based on the higher of a predetermined book value
redemption value exceeds the fair value of the noncontrolling interest,
shareowners is adjusted by that amount.
of the noncontrolling interest using: 1) the discounted cash flow methodology
public company methodology under the market approach.
each of the two methodologies.
volumes; (2) projected pre-tax profit margins; (3) tax rates
Income Taxes
Income tax expense is the total of the current year income tax due or
liabilities (excluding deferred tax assets and liabilities related to business
income).
amounts and tax bases of assets and liabilities, computed using enacted tax
deferred tax assets to the expected amount most likely to be realized.
generation of a sufficient level of future taxable income and recoverable
to settlements of share-based payment awards are reported in earnings as an
The Company files a consolidated federal income tax return and a separate
separate state income tax return.
Earnings Per Common Share
Basic earnings per common share is based on net income divided by the
during the period excluding non-vested stock.
non-vested stock awards granted using the treasury stock method.
calculating basic earnings per common share and the weighted average
common share for the reported periods is provided in Note 16 — Earnings
Comprehensive Income
Comprehensive income includes all changes in shareowners’ equity
shareowners.
changes in the net unrealized gain/loss on securities available-for-sale,
in the funded status of defined benefit and supplemental executive retirement plans.
accompanying Consolidated Statements of Comprehensive Income
Stock Based Compensation
Compensation cost is recognized for share-based awards issued to employees,
of grant.
price of the Company’s common
a Black-Scholes model is utilized to estimate the fair value of the award.
compensation expense is recognized as forfeitures occur.
Revenue Recognition
FASB ASC Topic
about the nature, amount, timing and uncertainty of revenue and cash flows
services to customers. The core principle requires an entity to recognize revenue
customers in an amount that reflects the consideration that it expects to be entitled
services recognized as performance obligations are satisfied.
The majority of the Company’s revenue
financial instruments, such as our loans, letters of credit, and investment securities,
mortgages in the secondary market, as these activities are subject to other
Company recognizes revenue from these activities as it is earned based on
are provided and collectability is reasonably assured.
scope of ASC 606, which are presented in the accompanying Consolidated
income are as follows:
Deposit Fees - these represent general service fees for monthly account maintenance
consist of transaction-based revenue, time-based revenue (service period),
based revenue.
account maintenance services or when a transaction has been completed.
received at the time the performance obligations are satisfied.
Wealth Management
as consideration for managing the client’s
services and similar fiduciary activities. Revenue is recognized when the Company’s
month or quarter, which is the time that payment is received.
dealer, for which the Company acts as an agent,
referred to the third party.
basis and recognized ratably throughout the quarter as the Company’s
Bank Card Fees – bank card related fees primarily includes interchange
cards.
Interchange fees are set by the credit card associations and are based on cardholder purchase volumes.
interchange income as transactions occur.
Gains and Losses from the Sale of Bank Owned Property – the performance
typically will be the delivery of control over the property to the buyer.
the transaction price is typically identified in the purchase and sale agreement.
financing, the Company must determine a transaction price, depending
account the credit risk inherent in the arrangement.
Insurance Commissions – insurance commissions recorded by the
contractual agreements to sell policies to customers on behalf of the carriers.
sell life and health insurance policies to customers.
or when an existing policy renews. New policies and renewals generally have
insurance carriers, a commission rate is agreed upon. The commission is recognized
date) or when a policy renews.
Other non-interest income primarily includes items such as mortgage
loans held for sale), bank-owned life insurance, and safe deposit box fees,
606.
The Company has made no significant judgments in applying the revenue guidance
determination of the amount and timing of revenue from the above-described
Accounting Standard Updates ASU 2022-02, “Financial Instruments – Credit Losses
The
amendments eliminate the accounting guidance for troubled debt
and enhance the disclosure requirements for loan modifications and
difficulty.
investment in leases by year of origination in the vintage disclosures.
beginning after December 15, 2022, including interim periods within those
this guidance will not have a material impact on its consolidated financial
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