Capital City Bank Extends Net Interest Margin Expansion

The Tip Desk · October 27, 2026 · 3 min read

Tax-equivalent net interest income was $45.1 million as the margin reached 4.42% and nonperforming assets fell to $9.7 million.

Capital City Bank Group, Inc. (CCBG), a Florida-headquartered financial holding company with about $4.4 billion in assets, expanded its net interest margin for a second consecutive quarter as it deployed liquidity into higher-yielding securities and deposit costs continued to ease.

Tax-equivalent net interest income was $45.1 million in the third quarter of 2026, compared with $44.2 million in the second quarter. The company said the increase reflected higher investment-securities and loan interest income and lower deposit interest expense, plus one additional calendar day, partially offset by lower overnight-funds income due to lower average balances.

The net interest margin rose 7 basis points to 4.42% after an 11 basis-point expansion to 4.35% in the prior quarter. Earning-asset yield increased 4 basis points to 5.15% and cost of funds decreased 2 basis points to 73 basis points. Cost of deposits, including noninterest-bearing accounts, fell to 74 basis points from 76 basis points. The company attributed the margin gain largely to higher investment-security yield from new purchases at higher rates and lower deposit costs.

Average loans held for investment declined $10.3 million, or 0.4%, after a $32.4 million, or 1.3%, average decline in the second quarter. Commercial real estate, residential real estate and construction loans fell, partly offset by consumer loans (primarily indirect auto), home equity and commercial loans. Average total deposits fell $31.2 million, or 0.9%, on a $63.8 million seasonal drop in public funds, primarily NOW accounts, partly offset by $32.6 million of core growth in money market and noninterest-bearing checking. Period-end deposits were $3.667 billion.

The bank recorded a $0.1 million provision benefit versus a $0.9 million provision expense in the second quarter. Net loan charge-offs slowed to 8 basis points of average loans from 14 basis points. The allowance for credit losses on loans held for investment was $30.4 million at September 30, 2026, or 1.22% of loans held for investment, down from 1.24% at June 30.

Nonperforming assets fell $3.7 million to $9.7 million, or 0.22% of total assets, from $13.4 million, or 0.30%. Nonaccrual loans declined $2.7 million to $7.4 million and other real estate declined $1.1 million to $2.4 million. Classified loans declined $9.0 million to $20.8 million.

Noninterest income fell $1.2 million, or 5.9%, to $19.4 million, reversing a $0.7 million, or 3.3%, increase in the second quarter. Mortgage banking revenues declined $1.0 million on lower production volume and deposit fees declined $0.5 million, partly offset by a $0.5 million rise in wealth-management fees from higher retail brokerage. Noninterest expense decreased $0.3 million, or 0.8%, to $42.3 million, after a $1.3 million, or 3.1%, increase in the prior quarter, primarily on $0.2 million lower compensation expense.

Net income attributable to common shareowners was $16.9 million, or $0.99 a share, versus $16.3 million, or $0.95 a share. Return on assets was 1.53% and return on equity 11.67%.

Common equity tier 1 capital ratio rose to 20.43% from 19.80%. Total risk-based capital was 22.99% and leverage 12.31%. Tangible common equity ratio was 11.25%. Shareowners’ equity was $573.9 million at September 30.

Chairman and Chief Executive Officer William G. Smith, Jr., said continued net interest margin expansion and improved credit quality contributed meaningfully to third-quarter results and that the company remains well positioned to finish the year strong.