Net income rose 6.2% against a year earlier as net interest margin reached 4.42% and a provision benefit replaced a year-earlier expense 8-K. Fee income fell 13.2% from a year earlier and loans keep shrinking 8-K.
Capital City Bank Group · Q3 2026 · Reported 20 Oct 2026 · US
Key figures
Million USD | Q3 2026 | Q3 2025 | Change |
|---|---|---|---|
Profit before tax | 22.18 | 21.09 | +5.2 % |
Net profit | 16.94 | 15.95 | +6.2 % |
Tax-equivalent net interest income | 45.1 | 43.6 | +3.4% |
Diluted EPS | 0.99 | 0.93 | +6.5% |
Figures in USD, as reported.
Profit rose on spread income and credit costs while fees fell
Net income was $16.94 million against $15.95 million a year earlier, up 6.2%, and pre-tax income rose 5.2% to $22.18 million 8-K. Diluted EPS was $0.99 against $0.93 in the third quarter of 2025 and $0.95 in the second quarter of 2026 8-K. Return on assets was 1.53% against 1.47% a year earlier, while return on equity was 11.67% in both periods 8-K.
Tax-equivalent net interest income was $45.1 million against $43.6 million a year earlier 8-K. The company recorded a $0.1 million provision benefit, against $1.9 million of expense a year earlier 8-K. Net income grew faster than pre-tax income because the effective tax rate fell to 23.6% from 24.4%, which management attributes to a solar tax credit investment 8-K.
Margin expansion came from securities purchases and cheaper funding, not loan growth
Net interest margin was 4.42%, up seven basis points from the second quarter and eight basis points from a year earlier 8-K. Management credits higher investment security yields from new purchases at higher rates, and lower deposit costs. Cost of funds was 73 basis points, down five basis points from a year earlier, and cost of deposits was 74 basis points against 80 8-K.
The loan book is not contributing. Loans held for investment fell $10.1 million, or 0.4%, from June 30 and $56.4 million, or 2.2%, from December 31, 2025, mainly in commercial real estate 8-K. Average investment securities rose $171.8 million from the fourth quarter of 2025 while overnight funds fell $99.7 million 8-K. My reading is that margin is being built by redeploying liquidity, which has a natural limit as the overnight balance shrinks.
Fee income fell 13.2% from a year earlier, partly because of last year's insurance sale
Noninterest income was $19.4 million, down $2.9 million, or 13.2%, from a year earlier 8-K. Mortgage banking fell $1.1 million on lower production volume and gain-on-sale margin 8-K. Deposit fees fell $0.7 million on lower overdraft fees, and other income fell $0.7 million because the year-earlier quarter included a $0.7 million gain on sale of the insurance subsidiary 8-K. Wealth management fees fell $0.5 million, which management links to the same sale 8-K.
Against the prior quarter, noninterest income fell $1.2 million, or 5.9%, on lower mortgage banking and deposit fees 8-K.
Credit metrics improved, but classified loans remain above year-end
Net loan charge-offs were 8 basis points of average loans, against 14 basis points in the second quarter and 18 basis points a year earlier 8-K. Nonperforming assets were $9.7 million, or 0.22% of total assets, against $13.4 million, or 0.30%, at June 30 8-K. The allowance was 1.22% of loans, against 1.24% at June 30 and 1.22% at December 31 8-K.
The provision benefit and lower allowance reflect improving metrics, so part of the profit gain depends on credit staying calm.
What to watch next
Management said it is well positioned to build on this momentum and finish the year strong, and expects an annual effective tax rate of about 23-24% for 2026 absent discrete items or new tax credit investments 8-K.
Whether net interest margin can keep rising while loan balances shrink and overnight liquidity is already being redeployed into securities 8-K.
Whether mortgage banking and overdraft fee income stabilise, and whether classified loans, $6.5 million above year-end, keep falling 8-K.
The report does not give operating cash flow or management outlook for loan growth and net interest income.
Sources
Produced by Clarifo Research with the Clarifo financial research engine from the company's public filings. AI was used in parts of the analysis and drafting. Figures are checked automatically against the filings they come from. This is not investment advice.