CAPITAL CITY BANK GROUP INC

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.

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.

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.

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.

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.

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,

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,

Liquidity and Capital Risks

Liquidity risk could impair our ability to fund operations and jeopardize our financial

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

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

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,

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

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

extensive regulation, which could restrict our activities

and impose financial requirements or limitations

on the conduct of our business.

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.

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.

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

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.

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

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.

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.

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

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.

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.

certain operational risks, including, but not limited to

risk arising from failure or circumvention

of our

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.

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,

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

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

reporting

in

the

future

or

otherwise

fail

to

maintain

an

effective

system

of

control

over

reporting,

we

may

not

be

able

to

accurately

report

our

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

control

over

This

assessment

requires

of

any

material

weaknesses

identified

by

our

in

our

control

over

Our

independent

registered

public

accounting firm

also needs

to attest to

the effectiveness

of our

over financial

reporting. Effective

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

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.

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

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

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.

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

of

our

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.

incidents,

security

breaches

and

failures

of

our

systems

could

significantly

disrupt

our

result

in

the

unintended

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

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.

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,

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

We may not be able to attract and

retain skilled people, which may have a negative impact

on our business and

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.

Litigation may adversely affect our results.

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

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.

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,

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.

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.

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.