Skip to main content

CAPITAL CITY BANK GROUP INC

For the period ended Mar 31, 2024. Filed Jul 12, 2024.

View on SEC.gov

About this filing

A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.

Mar 31, 2024 · Filed Jul 12, 2024

CCBG$51.35+2.1%Stored close · as of Nov 9, 2026

Extracted filing text, with the paragraph anchors used by the comparison.

See the whole filing, with its images and exhibits
Contents

Item 2. Results of Operations

Performance Summary

.

Net income attributable to common shareowners totaled $12.6 million,

or $0.74 per diluted share, for the first

quarter of 2024 compared to $11.7 million,

or $0.70 per diluted share, for the fourth quarter of 2023, and $13.7

million, or $0.80 per

diluted share, for the first quarter of 2023.

.

Tax-equivalent net

interest income for the first quarter of 2024 totaled $38.4 million compared to

$39.3 million

for the fourth quarter of 2023, and $40.5 million for the first quarter of

Compared to both prior periods, the decline was

primarily attributable to an increase in deposit interest expense, partially offset

by higher loan interest income.

Our net interest margin

for the first quarter of 2024 was 4.01%, a decrease of six basis points from

the fourth quarter of 2023 and a decrease of three basis

points from the first quarter of 2023.

Provision and Allowance for Credit

Losses.

We recorded

a provision for credit losses of $0.9 million for the first quarter of 2024

compared to $2.0 million for the fourth quarter of 2023 and $3.1

million for the first quarter of 2023.

The decrease in the provision

compared to the fourth quarter of 2023 was primarily attributable to a lower

level of reserves required for new loans, favorable loan

grade migration, and lower loss rates.

Compared to the first quarter of 2023, the decrease was driven by lower new

loan growth in the

first quarter of 2024.

.

Noninterest income for the first quarter of 2024 totaled $18.1 million compared to

$17.2 million for the fourth

quarter of 2023 and $17.8 million for the first quarter of 2023.

The $0.9 million increase over the fourth quarter of 2023 was due to a

$0.5 million increase in mortgage banking revenues and a $0.4 million increase

in wealth management fees.

Compared to the first

quarter of 2023, the $0.3 million increase was primarily attributable to higher

wealth management fees of $0.7 million partially offset

by lower other income of $0.3 million.

.

Noninterest expense for the first quarter of 2024 totaled $40.2 million compared to $40.0

million for the fourth

quarter of 2023 and $37.7 million for the first quarter of 2023.

The $0.2 million increase over the fourth quarter of 2023 reflected a

$0.6 million increase in compensation expense that was partially offset

by decreases in occupancy expense of $0.1 million and other

expense of $0.3 million.

Compared to the first quarter of 2023, the $2.5 million increase reflected

higher other expense as we realized

a $1.8 million gain from the sale of other real estate (banking office) in

Further, compensation expense was

$0.9 million higher primarily due to a lower level of realized loan cost (credit offset

to salary expense) due to decreased new loan

production.

Financial Condition

Earning Assets.

Average earning

assets totaled $3.850 billion for the first quarter of 2024, an increase of $25.6 million,

or 0.7%, over

the fourth quarter of 2023, and a decrease of $213.1 million, or 5.2%, from the

first quarter of 2023.

The variance for both prior

period comparisons was driven by change in deposit balances.

Compared to both prior periods, the mix of earning assets improved as

overnight funds were utilized to fund loan growth.

Loans.

Average loans held for

investment (“HFI”) increased $17.4 million, or 0.6%, over the fourth

quarter of 2023 and $146.2

million, or 5.7%, over the first quarter of 2023.

Compared to both prior periods, the increase was primarily due to an increase in

residential loans partially offset by a decline in consumer

loans (primarily auto).

Period end loans decreased $2.7 million, or 0.1%,

from the fourth quarter of 2023 and increased $74.0 million, or 2.8%, over the

first quarter of 2023.

Compared to the first quarter of

2023, the increase reflected growth in residential loans and to a lesser extent commercial

real estate loans partially offset by lower

consumer (auto) loan balances.

Credit Quality

. Overall credit quality remained stable.

Nonperforming assets (nonaccrual loans and other real estate) totaled $6.8

million at March 31, 2024 compared to $6.2 million at December 31, 2023

and $4.6 million at March 31, 2023.

At March 31, 2024,

nonperforming assets as a percent of total assets equaled 0.16% compared to

0.15% at December 31, 2023 and 0.10% at March 31,

Nonaccrual loans totaled $6.8 million at March 31, 2024, a $0.6 million increase over December

31, 2023 and a $2.2 million

increase over March 31, 2023.

Further, classified loans totaled $22.3 million at March

31, 2024, a $0.1 million increase over

December 31, 2023 and a $10.1 million increase over March 31, 2023.

. Average total

deposits were $3.577 billion for the first quarter of 2024, an increase of $28.0 million,

or 0.8%, over the fourth

quarter of 2023 and a decrease of $240.8 million, or 6.3%, from the first

Compared to the fourth quarter of 2023, the

increase reflected a higher average balance for public funds (municipal clients

  • primarily NOW accounts) which typically peak late in

the fourth quarter.

Further, we realized growth in both our money market

and certificates of deposit (“CD”) balances which reflected

a combination of balances migrating from noninterest bearing and savings accounts,

in addition to receiving new deposits from

existing and new clients.

Compared to the first quarter of 2023, the decrease was primarily attributable to lower noninterest

bearing

and savings accounts, partially offset by increases in money market

and CD balances.

The decrease in noninterest bearing and savings

accounts reflected a combination of consumer/business spend of pandemic

related stimulus funds and rate sensitive clients seeking

higher yields, partially offset by the aforementioned migration

to higher rate deposit products (money market and CD).

Capital

. At March 31, 2024, we were “well-capitalized”

with a total risk-based capital ratio of 16.84% and a tangible common equity

ratio (a non-GAAP financial measure) of 8.53% compared to 16.57%

and 8.26%, respectively,

at December 31, 2023 and 15.29% and

7.20%, respectively,

at March 31, 2023.

At March 31, 2024, all of our regulatory capital ratios exceeded the threshold to be “well-

capitalized”

under the Basel III capital standards.

RESULTS

OF OPERATIONS

The following table provides a condensed summary of our results of operations

  • a discussion of the various components are discussed

in further detail below.

(Dollars in Thousands, except per share data)

Interest Income

$

46,820

$

46,184

$

43,926

Taxable Equivalent Adjustments

Total Interest Income (FTE)

46,900

46,277

44,026

Interest Expense

8,465

7,013

3,526

Net Interest Income (FTE)

38,435

39,264

40,500

2,025

3,099

Taxable Equivalent Adjustments

Net Interest Income After Provision for Credit Losses

37,435

37,146

37,301

18,097

17,157

17,758

40,171

39,958

37,675

Income Before Income Taxes

15,361

14,345

17,384

3,536

2,909

3,710

Loss Attributable to Noncontrolling Interests

$

12,557

$

11,720

$

13,709

Basic Net Income Per Share

$

0.74

$

0.69

$

0.81

Diluted Net Income Per Share

$

0.74

$

0.70

$

0.80

Net interest income represents our single largest source of

earnings and is equal to interest income and fees generated by earning

assets less interest expense paid on interest bearing liabilities.

This information is provided on a “taxable equivalent” basis to reflect

the tax-exempt status of income earned on certain loans and state and local

government debt obligations.

We provide an analysis of

our net interest income including average yields and rates in Table

I, “Average Balances

& Interest Rates,” on page 47.

Tax-equivalent net

interest income for the first quarter of 2024 totaled $38.4 million compared to $39.3 million

for the fourth quarter

of 2023, and $40.5 million for the first quarter of 2023.

Compared to both prior periods, the decline was primarily attributable to an

increase in deposit interest expense, partially offset by higher

loan interest income.

The increase in deposit interest expense was

primarily attributable to higher average money market balances and to a lesser extent

CD balances and reflected a combination of re-

mix from other deposit categories and higher rates for these products.

The increase in loan interest income reflected existing loans re-

pricing at higher rates and new loan volume at higher rates.

Further, the first quarter of 2024 had one less calendar

day compared to

the fourth quarter of 2023 and one additional calendar day compared to the first

Our net interest margin for the first quarter of 2024 was 4.01%, a decrease

of six basis points from the fourth quarter of 2023 and a

decrease of three basis points from the first quarter of 2023. For the month

of March, our net interest margin was 4.02%. The decrease

compared to both prior periods primarily reflected higher deposit cost related

to re-mix within the deposit base and higher rates paid

on deposits, partially offset by higher yields from new loan volume

and loan repricing at higher rates. For the first quarter of 2024, our

cost of funds was 88 basis points, an increase of 15 basis points over the fourth

quarter of 2023 and an increase of 53 basis points over

Our cost of deposits (including noninterest bearing accounts) was 85 basis points, 66 basis points,

and 26

basis points, respectively,

for the same periods.

We recorded

a provision for credit losses of $0.9 million for the first quarter of 2024 compared to $2.0 million for

the fourth quarter of

2023 and $3.1 million for the first quarter of 2023.

The decrease in the provision compared to the fourth quarter of 2023 was

primarily attributable to a lower level of reserves required for new loans, favorable

loan grade migration, and lower loss rates.

Compared to the first quarter of 2023, the decrease was driven by lower new

loan growth in the first quarter of 2024.

We discuss the

allowance for credit losses further below.

Noninterest income for the first quarter of 2024 totaled $18.1 million compared

to $17.2 million for the fourth quarter of 2023 and

$17.8 million for the first quarter of 2023.

The $0.9 million increase over the fourth quarter of 2023 was due to a $0.5 million

increase in mortgage banking revenues and a $0.4 million increase in wealth management

fees.

Compared to the first quarter of 2023,

the $0.3 million increase was primarily attributable to higher wealth management

fees of $0.7 million partially offset by lower other

income of $0.3 million.

For both prior period comparisons, the increase in mortgage banking revenues

reflected a higher volume of

rate locks and third-party loan sales.

A combination of higher trust fees, retail brokerage fees, and insurance commissions

drove the

increase in wealth management fees over the fourth quarter of 2023.

Higher retail brokerage fees of $0.4 million and trust fees of $0.2

million drove the increase over the first quarter of 2023.

The decrease in other income was primarily due to lower loan servicing

income and miscellaneous income.

Noninterest income represented 32.06% of operating revenues (net interest

income plus noninterest income) for the first quarter of

2024 compared to 30.46% for the fourth quarter of 2023 and 30.53% for

The table below reflects the major components of noninterest income.

$

5,250

$

5,304

$

5,239

3,620

3,713

3,726

Wealth Management

Fees

4,682

4,276

3,928

2,878

2,327

2,871

Other

1,667

1,537

1,994

Total

$

18,097

$

17,157

$

17,758

Significant components of noninterest income are discussed in more

detail below.

.

Deposit fees for the first quarter of 2024 totaled $5.2 million, comparable to the fourth

quarter of 2023 and the first

Compared to the fourth quarter of 2023, a $0.1 million increase in commercial account

analysis fees was offset by a

$0.1 million decrease in overdraft fees.

Compared to the first quarter of 2023, a $0.1 million increase in overdraft fees was offset

by a

$0.1 million decrease in account maintenance fees.

.

Bank card fees for the first quarter of 2024 totaled $3.6 million, a $0.1 million decrease

from both the fourth quarter

of 2023 and first quarter of 2023 and reflected lower debit card usage related to

a decline in consumer spending.

Wealth

Management Fees

.

Wealth management fees,

which include both trust fees (i.e., managed accounts and trusts/estates), retail

brokerage fees (i.e., investment, insurance products, and retirement accounts),

and insurance commission revenues,

totaled $4.7

million for the first quarter of 2024, an increase of $0.4 million, or 9.5%, over the fourth

quarter of 2023 and an increase of $0.8

million, or 19.2%, over the first quarter of 2023.

Compared to the fourth quarter of 2023, the increase reflected a combination of

higher trust fees and retail brokerage fees due to growth in assets under management,

and higher insurance commission revenues.

The

increase over the first quarter of 2023 was primarily attributable to higher retail

brokerage fees reflective of increased assets under

management, and to a lesser extent higher trust fees and insurance commission

revenues.

At March 31, 2024, total assets under

management were approximately $2.686 billion compared

to $2.588 billion at December 31, 2023 and $2.330 billion at March 31,

Compared to December 31, 2023, the increase was primarily attributable to growth in trust assets and

the growth over March

31, 2023 was primarily in retail brokerage assets reflecting increases in investments

in fixed income and annuity products, and higher

account values/returns reflective of the improved market returns.

.

Mortgage banking revenues totaled $2.9 million for the first quarter of

2024, an increase of $0.5

million, or 23.7%, over the fourth quarter of 2023 and comparable to

Compared to the fourth quarter of

2023, the increase reflected a higher level of rate locks and third-party

loan sales.

We provide a detailed

overview of our mortgage

banking operation, including a detailed break-down of mortgage banking

revenues, mortgage servicing activity,

and warehouse

funding within Note 4 - Mortgage Banking Activities in the Notes to Consolidated

Financial Statements.

Other

.

Other income totaled $1.7 million for the first quarter of 2024, a decrease of $0.1

million, or 8.5%, from the fourth quarter of

and a decrease of $0.3

million, or 16.4%, from the first quarter of 2023.

Compared to the first quarter of 2023, the decrease was

primarily attributable to lower loan servicing income (due to sale of mortgage

servicing rights) and miscellaneous income.

Noninterest expense for the first quarter of 2024 totaled $40.2 million compared

to $40.0 million for the fourth quarter of 2023 and

$37.7 million for the first quarter of 2023.

The $0.2 million increase over the fourth quarter of 2023 reflected a $0.6 million

increase

in compensation expense that was partially offset by decreases in

occupancy expense of $0.1 million and other expense of $0.3

The increase in compensation expense was primarily attributable to higher payroll taxes (annual

re-set) and 401k plan

matching expense.

Compared to the first quarter of 2023, the $2.5 million increase reflected higher other expense

as we realized a

$1.8 million gain from the sale of other real estate (banking office)

in the first quarter of 2023.

Further, compensation expense was

$0.9 million higher primarily due to a lower level of realized loan cost (credit offset

to salary expense) due to decreased new loan

production.

The table below reflects the major components of noninterest expense.

Salaries

$

20,604

$

20,258

$

19,517

Associate Benefits

3,803

3,564

4,007

Total Compensation

24,407

23,822

23,524

Premises

3,173

3,402

3,245

Equipment

3,821

3,696

3,517

Total Occupancy

6,994

7,098

6,762

Legal Fees

Professional Fees

1,258

1,629

1,324

Processing Services

1,833

1,497

1,742

Advertising

Telephone

Insurance - Other

Other Real Estate Owned, net

(123)

(1,827)

Pension - Other

(419)

Miscellaneous

3,206

3,272

3,370

Total Other

8,770

9,038

7,389

Total

$

40,171

$

39,958

$

37,675

Significant components of noninterest expense are discussed in

more detail below.

Compensation

.

Compensation expense totaled $24.4 million for the first quarter of 2024, an increase

of $0.6 million, or 2.5%, over

the fourth quarter of 2023 and an increase of $0.9 million, or 3.8%, over

the first quarter of 2023. Compared to the fourth quarter of

2023, the increase reflected an increase in salary expense of $0.3

million and associate benefit expense of $0.3

million. The increase in

salary expense was primarily attributable to an increase in payroll tax

expense which reflected the annual re-set of this tax as well as

payroll taxes related to a high level of cash/stock incentives paid in the

first quarter.

The increase in associate benefit expense reflected

increases in stock compensation expense (higher expected pay-out

for incentive plan) and other associate benefit expense (annual

sales/service awards event). Compared to the first quarter of 2023, the

increase reflected an increase in salary expense of $1.1

million

partially offset by a $0.2 million decrease in associate benefit expense.

The increase in salary expense was primarily due to a lower

level of realized loan cost (credit offset to salary expense) due to decreased

new loan production and to a lesser extent base salaries

(annual merit) that was partially offset by lower commission expense

at CCHL. Lower stock compensation expense drove the

decrease in associate benefit expense and reflected a higher pay-out for the

prior year long-term incentive plan.

Occupancy.

Occupancy expense (including premises and equipment) totaled $7.0

million for the first quarter of 2024, a decrease of

$0.1

million, or 1.5% from the fourth quarter of 2023 and an increase of $0.2 million, or 3.4%, over

the first quarter of 2023. The

decrease from the fourth quarter of 2023 was due to lower building

maintenance, and the increase over the first quarter of 2023

reflected higher FF&E depreciation and maintenance agreement

expense partially attributable to new offices opened in 2023.

Other

.

Other noninterest expense totaled $8.8 million for the first quarter of

2024, a decrease of $0.3 million, or 2.9%, from the fourth

quarter of 2023 and an increase of $1.4 million, or 18.7%, from the first quarter

of 2023. The decrease from the fourth quarter was

primarily due to lower pension-other expense (non-service component

)

of $0.4 million and professional fees of $0.4 million that was

partially offset by higher processing fees of $0.3 million and insurance

-other of $0.2 million. The increase over the first quarter of

2023 was primarily due to a $1.8 million increase in other real estate expense

as we realized a $1.8 million gain from the sale of a

banking office in the first quarter of 2023. A $0.4 million decrease in

pension-other expense was partially offsetting.

Our operating efficiency ratio (expressed as noninterest

expense as a percent of the sum of taxable-equivalent net interest income plus

noninterest income) was 71.06% for the first quarter of 2024 compared

to 70.82% for the fourth quarter of 2023 and 64.67% for the

first quarter of 2023. The decrease from the first quarter of 2023 was primarily

attributable to lower noninterest expense which

included a $1.8 million gain from the sale of a banking office, and

to a lesser extent lower net interest income.

Income Taxes

We realized income

tax expense of $3.5 million (effective rate of 23.0%) for the first quarter of

2024 compared to $2.9 million

(effective rate of 20.3%) for the fourth quarter of 2023 and $3.7

million (effective rate of 21.3%) for the first quarter of 2023.

The

increase in our effective tax rate for the first quarter of 2024

compared to both prior periods was primarily due to a lower level of tax

benefit accrued from an investment in a solar tax credit equity fund.

Absent discrete items or new tax credit investments, we expect

our annual effective tax rate to approximate 23% for 2024.

FINANCIAL CONDITION

Average earning

assets totaled $3.850 billion for the first quarter of 2024, an increase of $25.6 million, or 0.7%, over

the fourth

quarter of 2023, and a decrease of $213.1 million, or 5.2%, from the first quarter

The variance for both prior period

comparisons was driven by change in deposit balances (see below –

Deposits).

Compared to both prior periods, the mix of earning

assets improved as overnight funds were utilized to fund loan growth.

Investment Securities

Average investments

decreased $10.0 million, or 1.0%, from the fourth quarter of 2023. Our

investment portfolio represented 24.8%

of our average earning assets for the first quarter of 2024 compared

to 25.2% for the fourth quarter of 2023.

For the remainder of

2024, we will continue to monitor our overall liquidity position and market conditions

to determine if cash flow from the investment

portfolio should be reinvested or allowed to run-off

into overnight funds.

The investment portfolio is a significant component of our operations and, as such,

it functions as a key element of liquidity and

asset/liability management.

Two types of classifications are approved

for investment securities which are Available

-for-Sale (“AFS”)

and Held-to-Maturity (“HTM”).

At March 31, 2024, $603.4 million, or 64.6%, of the investment portfolio

was classified as HTM

and $330.7 million, or 35.4% was classified as AFS. The average maturity

of our total portfolio at March 31, 2024 was 2.76 years

compared to 2.91 years at December 31, 2023.

The duration of our investment portfolio at March 31, 2024 and December 31,

was 2.39 years and 2.91 years, respectively.

Additional information on unrealized gains/losses in the AFS and HTM portfolios

is

provided in Note 2 – Investment Securities.

We determine

the classification of a security at the time of acquisition based on how the purchase will affect

our asset/liability strategy

and future business plans and opportunities.

We consider multiple

factors in determining classification, including regulatory

capital

requirements, volatility in earnings or other comprehensive income,

and liquidity needs.

Securities in the AFS portfolio are recorded

at fair value with unrealized gains and losses associated with these securities recorded

net of tax, in the accumulated other

comprehensive income component of shareowners’ equity.

HTM securities are acquired or owned with the intent of holding them

to

maturity.

HTM investments are measured at amortized cost.

We do not

trade, nor do we presently intend to begin trading investment

securities for the purpose of recognizing gains and therefore we do not maintain

a trading portfolio.

At March 31, 2024, there were 876 positions (combined AFS and HTM) with unrealized

losses totaling $64.8 million. 85 of these

positions are U.S. Treasuries and carry the full faith

and credit of the U.S. Government.

690 were U.S. government agency securities

issued by U.S. government sponsored entities. The remaining 101 positions

(municipal securities and corporate bonds) have a credit

component. At March 31, 2024, corporate debt securities had an

allowance for credit losses of $43,000 and municipal securities had

an allowance of $39,000.

At March 31, 2024, all collateralized mortgage obligation securities, mortgage

-backed securities, Small

Business Administration securities,

U.S. Agency, and

U.S. Treasury bonds held were AAA rated.

Loans HFI

Average loans

HFI increased $17.4 million, or 0.6%, over the fourth quarter of 2023 and $146.2 million,

or 5.7%, over the first quarter

Compared to both prior periods, the increase was primarily due to an increase in

residential loans partially offset by a decline

in consumer loans (primarily auto).

Period end loans decreased $2.7 million, or 0.1%, from the fourth quarter of 2023 and increased

$74.0 million, or 2.8%, over the first quarter of 2023.

The decrease from the fourth quarter of 2023 was primarily due to lower

consumer (auto) loan portfolio balances partially offset by

growth in residential loans.

Compared to the first quarter of 2023, the

increase reflected growth in residential loans and to a lesser extent commercial real

estate loans partially offset by lower consumer

(auto) loan balances.

Without compromising our credit standards

,

changing our underwriting standards, or taking on inordinate interest rate risk,

we

continue to closely monitor our markets and make minor adjustments as necessary.

Credit Quality

Overall credit quality remained stable.

Nonperforming assets (nonaccrual loans and other real estate) totaled $6.8 million at

March

31, 2024 compared to $6.2 million at December 31, 2023 and $4.6 million at March

At March 31, 2024, nonperforming

assets as a percent of total assets equaled 0.16% compared to 0.15% at December 31, 2023

and 0.10% at March 31, 2023.

loans totaled $6.8 million at March 31, 2024, a $0.6 million increase over December

31, 2023 and a $2.2 million increase over March

Further, classified loans totaled $22.3 million

at March 31, 2024, a $0.1 million increase over December 31, 2023 and a

$10.1 million increase over March 31, 2023.

The allowance for credit losses is a valuation account that is deducted from the

loans’ amortized cost basis to present the net amount

expected to be collected on the loans.

The allowance for credit losses is adjusted by a credit loss provision which is reported in

earnings and reduced by the charge-off of loan amounts

(net of recoveries).

Loans are charged off against the allowance when

management believes the uncollectability of a loan balance is confirmed.

Expected recoveries do not exceed the aggregate of amounts

previously charged-off and expected to be charged

-off.

Expected credit loss inherent in non-cancellable off-balance sheet credit

exposures is provided through the credit loss provision but recorded as a separate

liability included in other liabilities.

Management estimates the allowance balance using relevant available information,

from internal and external sources relating to past

events, current conditions, and reasonable and supportable forecasts.

Historical loan default and loss experience provides the basis for

the estimation of expected credit losses.

Adjustments to historical loss information incorporate management’s

view of current

conditions and forecasts.

At March 31, 2024, the allowance for credit losses for HFI loans totaled

$29.3 million compared to $29.9 million at December 31,

2023 and $26.8 million at March 31, 2023.

Activity within the allowance is provided in Note 3 – Loans Held for Investment and

Allowance for Credit Losses in the Consolidated Financial Statements.

The decrease in the allowance from December 31, 2023 was

primarily due to favorable loan grade migration, lower loss rates, and a combination

of lower loan balances and shift in mix within the

portfolio.

Compared to March 31, 2023, the increase was primarily driven by loan growth.

At March 31, 2024, the allowance

represented 1.07% of HFI loans compared to 1.10% at December 31, 2023, and 1.01%

at March 31, 2023.

At March 31, 2024, the allowance for credit losses for unfunded commitments

totaled $3.1 million compared to $3.2

million at

December 31, 2023 and $2.8 million at March 31, 2023.

The allowance for unfunded commitments is recorded in other liabilities.

Average total

deposits were $3.577 billion for the first quarter of 2024, an increase of $28.0 million,

or 0.8%, over the fourth quarter

of 2023 and a decrease of $240.8 million, or 6.3%, from the first quarter

Compared to the fourth quarter of 2023, the

increase reflected a higher average balance for public funds (municipal clients

  • primarily NOW accounts) which typically peak late in

the fourth quarter.

Further, we realized growth in both our money market

and CD balances which reflected a combination of balances

migrating from noninterest bearing and savings accounts, in addition

to receiving new deposits from existing and new clients.

Compared to the first quarter of 2023, the decrease was primarily attributable

to lower noninterest bearing and savings accounts,

partially offset by increases in money market and CD balances.

The decrease in noninterest bearing and savings accounts reflected

a

combination of consumer/business spend of pandemic related stimulus

funds and rate sensitive clients seeking higher yields, partially

offset by the aforementioned migration to higher rate deposit products

(money market and CD).

At March 31, 2024, total deposits were $3.654 billion, a decrease of $47.0

million, or 1.3%, from December 31, 2023 and $169.1

million, or 4.4% from March 31, 2023.

The decrease from December 31, 2023 was primarily attributable to lower public funds

(municipal clients - primarily NOW accounts) partially offset by

higher money market balances and to a lesser extent CD balances.

The decrease from March 31, 2023 was due to the same aforementioned factors

driving the average variance. Total

public funds

balances were $615.0 million at March 31, 2024, $709.8 million December

31, 2023, and $637.8 million at March 31, 2023.

Business deposit transaction accounts classified as repurchase agreements

averaged $25.7 million for the first quarter of 2024, a

decrease of $1.1 million from the fourth quarter of 2023 and an increase of $16.4

million over the first quarter of 2023.

At March 31,

2024, repurchase agreement balances were $23.5 million compared

to $27.0 million at December 31, 2023 and $4.4 million at March

We continue

to closely monitor our cost of deposits and deposit mix as we manage through the current rate

environment.

MARKET RISK AND INTEREST RATE

SENSITIVITY

Market Risk and Interest Rate Sensitivity

Overview.

Market risk arises from changes in interest rates, exchange rates,

commodity prices, and equity prices.

We have risk

management policies designed to monitor and limit exposure to market

risk and we do not participate in activities that give rise to

significant market risk involving exchange rates, commodity prices, or

equity prices.

In asset and liability management activities, our

policies are designed to minimize structural interest rate risk.

Interest Rate Risk Management.

Our net income is largely dependent on net interest income.

Net interest income is susceptible to

interest rate risk to the degree that interest-bearing liabilities mature

or reprice on a different basis than interest-earning assets.

When

interest-bearing liabilities mature or reprice more quickly

than interest-earning assets in a given period, a significant increase in

market rates of interest could adversely affect net interest

income.

Similarly, when interest-earning

assets mature or reprice more

quickly than interest-bearing liabilities, falling market interest rates could

result in a decrease in net interest income.

Net interest

income is also affected by changes in the portion of interest-earning

assets that are funded by interest-bearing liabilities rather than by

other sources of funds, such as noninterest-bearing deposits and shareowners’

equity.

We have established

what we believe to be a comprehensive interest rate risk management policy,

which is administered by

management’s Asset Liability Management

Committee (“ALCO”).

The policy establishes limits of risk, which are quantitative

measures of the percentage change in net interest income (a measure of net

interest income at risk) and the fair value of equity capital

(a measure of economic value of equity (“EVE”) at risk) resulting from a hypothetical change

in interest rates for maturities from one

day to 30 years.

We measure the potential

adverse impacts that changing interest rates may have on our short-term

earnings, long-

term value, and liquidity by employing simulation analysis through the use of

computer modeling.

The simulation model captures

optionality factors such as call features and interest rate caps and floors imbedded

in investment and loan portfolio contracts.

As with

any method of gauging interest rate risk, there are certain shortcomings

inherent in the interest rate modeling methodology used by

us.

When interest rates change, actual movements in different categories

of interest-earning assets and interest-bearing liabilities, loan

prepayments, and withdrawals of time and other deposits, may deviate significantly

from assumptions used in the model.

Finally, the

methodology does not measure or reflect the impact that higher rates may have

on adjustable-rate loan clients’ ability to service their

debts, or the impact of rate changes on demand for loan and deposit products.

The statement of financial condition is subject to testing for interest rate shock

possibilities to indicate the inherent interest rate risk.

We apply instantaneous,

parallel rate shocks to the base case in 100 basis point (bp) increments ranging from down

400bp to up

400bps at least once per quarter, with the

analysis reported to ALCO, our Market Risk Oversight Committee (“MROC”),

our

Enterprise Risk Oversight Committee (“EROC”) and the Board of Directors.

We augment our interest rate

shock analysis with

alternative interest rate scenarios on a quarterly basis that may include ramps,

and a flattening or steepening of the yield curve (non-

parallel shift).

In addition, more frequent forecasts may be produced when interest rates are particularly

uncertain or when other

business conditions so dictate.

Our goal is to structure the statement of financial condition so that net interest earnings at risk over

12-month and 24-month periods

and the economic value of equity at risk do not exceed policy guidelines

at the various interest rate shock levels. We

attempt to

achieve this goal by balancing, within policy limits, the volume of floating-rate

liabilities with a similar volume of floating-rate assets,

by keeping the average maturity of fixed-rate asset and liability contracts

reasonably matched, by managing the mix of our core

deposits, and by adjusting our rates to market conditions on a continuing

basis.

Analysis.

Measures of net interest income at risk produced by simulation analysis are

indicators of an institution’s short-term

performance in alternative rate environments.

These measures are typically based upon a relatively brief period, and do not

necessarily indicate the long-term prospects or economic value of the institution.

ESTIMATED CHANGES

IN NET INTEREST INCOME

(1)

Percentage Change (12-month shock)

+400 bp

+300 bp

+200 bp

+100 bp

-100 bp

-200 bp

-300 bp

-400 bp

-15.0%

-12.5%

-10.0%

-7.5%

-7.5%

-10.0%

-12.5%

-15.0%

10.0%

7.5%

4.8%

2.5%

-3.1%

-6.5%

-10.5%

-15.1%

3.0%

2.1%

1.3%

0.7%

-1.2%

-3.6%

-7.5%

-12.8%

Percentage Change (24-month shock)

+400 bp

+300 bp

+200 bp

+100 bp

-100 bp

-200 bp

-300 bp

-400 bp

-17.5%

-15.0%

-12.5%

-10.0%

-10.0%

-12.5%

-15.0%

-17.5%

38.2%

31.3%

24.4%

18.0%

3.5%

-5.4%

-15.4%

-26.0%

29.5%

24.4%

19.3%

14.8%

4.1%

-3.5%

-12.9%

-23.6%

The Net Interest Income (“NII”) at Risk position of an instantaneous,

parallel rate shock indicates that in the short-term (over the next

12 months), all rising rate environments will positively impact the net interest

margin of the Company,

while declining rate

environments

will have a negative impact on the net interest margin. Compared

to the fourth quarter of 2023, these metrics became

more favorable in the rising rate scenarios and less favorable in the falling

rate scenarios primarily attributable to the update of our

deposit beta assumptions which will vary depending on the rate shock.

The instantaneous,

parallel rate shock results over the next 12-

months

are slightly outside of policy in the rates down 400 bps scenario and outside

of policy over 24 months

in the rates down 300

bps and 400 bps scenarios primarily due to change in our deposit beta assumptions

discussed above.

The measures of equity value at risk indicate our ongoing economic value

by considering the effects of changes in interest rates on all

of our cash flows by discounting the cash flows to estimate the present value of

assets and liabilities. The difference between these

discounted values of the assets and liabilities is the economic value of equity,

which in theory approximates the fair value of our net

assets.

ESTIMATED CHANGES

IN ECONOMIC VALUE

OF EQUITY

(1)

Changes in Interest Rates

+400 bp

+300 bp

+200 bp

+100 bp

-100 bp

-200 bp

-300 bp

-400 bp

-30.0%

-25.0%

-20.0%

-15.0%

-15.0%

-20.0%

-25.0%

-30.0%

19.5%

15.3%

10.4%

5.4%

-8.7%

-17.8%

-24.9%

-28.4%

12.9%

10.7%

7.8%

4.4%

-6.4%

-14.0%

-23.6%

-27.8%

EVE Ratio (policy minimum 5.0%)

20.6%

19.5%

18.4%

17.2%

14.4%

12.7%

11.4%

10.8%

At March 31, 2024, the economic value of equity was favorable in

all rising rate environments and unfavorable in the falling rate

environments. Compared to the fourth quarter of 2023, EVE metrics were

slightly more favorable in the rising rate environment and

less favorable in falling rate environments.

EVE is currently in compliance with policy in all rate scenarios,

and the EVE ratio

exceeds 5.0% in each shock scenario.

As the interest rate environment and the dynamics of the economy continue to change,

additional simulations will be analyzed to

address not only the changing rate environment, but also the change

in mix of our financial assets and liabilities, measured over

multiple years, to help assess the risk to the Company.

LIQUIDITY AND CAPITAL

RESOURCES

Liquidity

In general terms, liquidity is a measurement of our ability to meet our

cash needs.

Our objective in managing our liquidity is to

maintain our ability to meet loan commitments, purchase securities or repay deposits and

other liabilities in accordance with their

terms, without an adverse impact on our current or future earnings.

Our liquidity strategy is guided by policies that are formulated and

monitored by our ALCO and senior management, which take into account

the marketability of assets, the sources and stability of

funding and the level of unfunded commitments.

We regularly evaluate

all of our various funding sources with an emphasis on

accessibility, stability,

reliability and cost-effectiveness.

Our principal source of funding has been our client deposits, supplemented

by our short-term and long-term borrowings, primarily from securities sold under

repurchase agreements, federal funds purchased and

FHLB borrowings.

We believe that the cash

generated from operations, our borrowing capacity and our access to capital resources

are

sufficient to meet our future operating capital and funding requirements.

At March 31, 2024, we had the ability to generate approximately $1.542 billion

(excludes overnight funds position of $231 million) in

additional liquidity through various sources including various federal funds

purchased lines, Federal Home Loan Bank borrowings, the

Federal Reserve Discount Window,

and brokered deposits.

We recognize

the importance of maintaining liquidity and have developed

a Contingent Liquidity Plan, which addresses various liquidity stress levels and

our response and action based on the level of severity.

We periodically

test our credit facilities for access to the funds, but also understand that as the severity

of the liquidity level increases

that certain credit facilities may no longer be available.

We conduct

a liquidity stress test on a quarterly basis based on events that

could potentially occur at the Bank and report results to our ALCO, MROC

,

EROC, and Board of Directors.

At March 31, 2024, we

believe the liquidity available to us was sufficient to meet our on-going

needs and execute our business strategy.

We also view our

investment portfolio as a liquidity source and have the option to pledge securities in our

portfolio as collateral for

borrowings or deposits, and/or to sell selected securities.

Additional information on our investment portfolio is provided within

Note

2 – Investment Securities.

The Bank maintained an average net overnight funds (deposits with banks plus

FED funds sold less FED funds purchased) sold

position of $140.5 million in the first quarter of 2024 compared to $99.8 million

in the fourth quarter of 2023 and $361.0 million in

Compared to the fourth quarter of 2023, the increase was driven by average deposit

growth and investment

portfolio run-off, partially offset by average

loan growth.

Compared to the first quarter of 2023, the decrease was attributable to lower

average deposit balances and growth in our loan portfolio, partially offset

by investment portfolio run-off.

We expect our

capital expenditures will be approximately $12.0 million over the next 12 months,

which will primarily consist of

construction of new offices, office remodeling,

office equipment/furniture, and technology purchases.

Management expects that these

capital expenditures will be funded with existing resources without impairing

our ability to meet our on-going obligations.

Average short

-term borrowings totaled $29.5 million for the first quarter of 2024 compared to $43.8

million for the fourth quarter of

2023 and $47.1 million for the first quarter of 2023.

Compared to both prior periods, the decrease was attributable to a lower balance

maintained on CCHL’s

warehouse line.

Additional detail on these warehouse borrowings is provided in Note 4 – Mortgage Banking

Activities in the Consolidated Financial Statements.

We have issued two

junior subordinated deferrable interest notes to our wholly owned

Delaware statutory trusts.

The first note for

$30.9 million was issued to CCBG Capital Trust I in

November 2004, of which $10 million was retired in April 2016.

The second

note for $32.0 million was issued to CCBG Capital Trust II

in May 2005.

The interest payment for the CCBG Capital Trust I

borrowing is due quarterly and adjusts quarterly to a variable rate of three-month

CME Term SOFR (secured overnight

financing rate)

plus a margin of 1.90%.

This note matures on December 31, 2034.

The interest payment for the CCBG Capital Trust II borrowing

is

due quarterly and adjusts quarterly to a variable interest rate based on three-month

CME Term SOFR plus a margin

of 1.80%.

This

note matures on June 15, 2035.

The proceeds from these borrowings were used to partially fund acquisitions.

Under the terms of each

junior subordinated deferrable interest note, in the event of default or

if we elect to defer interest on the note, we may not, with certain

exceptions, declare or pay dividends or make distributions on our capital

stock or purchase or acquire any of our capital stock.

During the second quarter of 2020, we entered into a derivative cash

flow hedge of our interest rate risk related to our subordinated

debt.

The notional amount of the derivative is $30 million ($10 million of the CCBG Capital Trust

I borrowing and $20 million of the

CCBG Capital Trust II borrowing).

The interest rate swap agreement requires CCBG to pay fixed and receive variable (three-month

CME Term SOFR plus spread)

and has an average all-in fixed rate of 2.50% for 10 years.

Additional detail on the interest rate swap

agreement is provided in Note 5 – Derivatives in the Consolidated Financial

Statements.

Capital

Our capital ratios are presented in the Selected Quarterly Financial Data

table on page 35.

At March 31, 2024, our regulatory capital

ratios exceeded the threshold to be designated as “well-capitalized”

under the Basel III capital standards.

Shareowners’ equity was $448.3 million at March 31, 2024 compared to

$440.6 million at December 31, 2023 and $403.3 million at

March 31, 2023.

For the first three months of 2024, shareowners’ equity was positively impacted by net

income attributable to

shareowners of $12.6 million, net adjustments totaling $0.5 million

related to transactions under our stock compensation plans, stock

compensation accretion of $0.4 million, and a $0.3 million increase in the fair value

of the interest rate swap related to subordinated

debt.

Shareowners’ equity was reduced by a common stock dividend of $3.6 million

($0.21 per share), the repurchase of stock of $2.3

million (82,540 shares), and a $0.2 million increase in the net unrealized

loss on available for sale securities.

At March 31, 2024, our total risk-based capital ratio was 16.84% compared

to 16.57% at December 31, 2023 and 15.29% at March 31,

Our common equity tier 1 capital ratio was 13.82%, 13.52%, and 12.40%, respectively,

on these dates.

Our leverage ratio was

10.45%, 10.30%, and 9.09%, respectively,

on these dates.

At March 31, 2024, all our regulatory capital ratios exceeded the thresholds

to be designated as “well-capitalized” under the Basel III capital standards.

Further, our tangible common equity

ratio (non-GAAP

financial measure) was 8.53% at March 31, 2024 compared to 8.26% and 7.20%

at December 31, 2023 and March 31, 2023,

respectively.

If our unrealized held-to-maturity securities losses of $21.6 million (after-tax)

were recognized in accumulated other

comprehensive loss, our adjusted tangible capital ratio would be 8.01%.

Our tangible capital ratio is also impacted by the recording of our unfunded pension

liability through other comprehensive income in

accordance with ASC Topic

At March 31, 2024, the net pension liability reflected in other comprehensive loss was

$0.4 million

compared to $0.4 million at December 31, 2023 and $4.5 million at March

This liability is re-measured annually on

December 31

st

based on an actuarial calculation of our pension liability.

Significant assumptions used in calculating the liability

include the weighted average discount rate used to measure the present

value of the pension liability, the

weighted average expected

long-term rate of return on pension plan assets, and the assumed rate of annual compensation

increases, all of which will vary when

re-measured.

The discount rate assumption used to calculate the pension liability is subject to long

-term corporate bond rates at

December 31

st

.

These assumptions and sensitivities are discussed in the section entitled “Critical Accounting

Policies and Estimates”

in Part II, Item7. Management’s Discussion

and Analysis of Financial Condition and Results of Operations, of

our 2023 Form 10-K/A.

OFF-BALANCE SHEET ARRANGEMENTS

We are a party

to financial instruments with off-balance sheet risks in the normal

course of business to meet the financing needs of our

clients.

At March 31, 2024, we had $753.5 million in commitments to extend credit

and $6.3 million in standby letters of credit.

Commitments to extend credit are agreements to lend to a client so long as there is no violation of

any condition established in the

contract.

Commitments generally have fixed expiration dates or other termination

clauses and may require payment of a fee.

Since

many of the commitments are expected to expire without being drawn upon,

the total commitment amounts do not necessarily

represent future cash requirements.

Standby letters of credit are conditional commitments issued by us to guarantee

the performance

of a client to a third party.

We use the same credit

policies in establishing commitments and issuing letters of credit as we do for on-

balance sheet instruments.

If commitments arising from these financial instruments continue to require

funding at historical levels, management does not

anticipate that such funding will adversely impact our ability to meet our on-going

obligations.

In the event these commitments

require funding in excess of historical levels, management believes current

liquidity, advances available from the

FHLB and the

Federal Reserve, and investment security maturities provide a sufficient

source of funds to meet these commitments.

Certain agreements provide that the commitments are unconditionally

cancellable by the bank and for those agreements no allowance

for credit losses has been recorded.

We have recorded

an allowance for credit losses on loan commitments that are not

unconditionally cancellable by the bank, which is included in other

liabilities on the consolidated statements of financial condition and

totaled $3.1 million at March 31, 2024.

CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are described in Note 1 to the Consolidated

Financial Statements included in our 2023 Form 10-

K/A.

The preparation of our Consolidated Financial Statements

in accordance with GAAP and reporting practices applicable to the

banking industry requires us to make estimates and assumptions that affect

the reported amounts of assets, liabilities, revenues and

expenses, and to disclose contingent assets and liabilities.

Actual results could differ from those estimates.

We have identified

accounting for (i) the allowance for credit losses, (ii) goodwill,

(iii) pension assumptions, and (iv) income taxes as

our most critical accounting policies and estimates in that they are important

to the portrayal of our financial condition and results, and

they require our subjective and complex judgment as a result of the need to make estimates about

the effects of matters that are

inherently uncertain.

These accounting policies, including the nature of the estimates and types of assumptions

used, are described

throughout this Item 2, Management’s

Discussion and Analysis of Financial Condition and Results of Operations, and

Part II, Item 7,

Management’s Discussion and Analysis

of Financial Condition and Results of Operations included

in our 2023 Form 10-K/A.

TABLE I

AVERAGE

BALANCES & INTEREST RATES

Average

Average

Average

Average

Average

Average

Rate

Rate

Rate

Assets:

$

27,314

$

5.99

%

$

49,790

$

6.50

%

$

55,110

$

4.74

%

(1)(2)

2,728,629

40,196

5.95

2,711,243

39,679

5.81

2,582,395

34,342

5.39

Taxable Securities

952,328

4,238

1.78

962,322

4,389

1.81

1,061,372

4,912

1.86

Tax-Exempt Securities

(2)

4.34

4.32

2,840

2.36

Interest Bearing Deposits

140,488

1,893

5.42

99,763

1,385

5.51

360,971

4,111

4.62

Total Earning Assets

3,849,615

46,900

4.90

%

3,823,980

46,277

4.80

%

4,062,688

44,026

4.39

%

Cash & Due From Banks

75,763

76,681

74,639

Allowance For Credit Losses

(30,030)

(29,998)

(25,637)

295,275

296,114

300,175

TOTAL ASSETS

$

$

$

Liabilities:

Noninterest Bearing Deposits

$

1,344,188

$

%

$

1,416,825

$

%

$

1,601,750

$

%

NOW Accounts

1,201,032

4,497

1.51

1,138,461

3,696

1.29

1,228,928

2,152

0.71

Money Market Accounts

353,591

1,985

2.26

318,844

1,421

1.77

267,573

0.31

Savings Accounts

539,374

0.14

557,579

0.14

629,388

0.05

Other Time Deposits

138,328

2.69

116,797

1.88

89,675

0.24

Total Interest Bearing Deposits

2,232,325

7,594

1.37

2,131,681

5,872

1.09

2,215,564

2,488

0.46

Total Deposits

3,576,513

7,594

0.85

3,548,506

5,872

0.66

3,817,314

2,488

0.26

Repurchase Agreements

25,725

3.14

26,831

2.94

9,343

0.37

Short-Term Borrowings

3,758

4.16

16,906

7.29

37,766

4.86

52,887

4.70

52,887

4.64

52,887

4.32

Other Long-Term Borrowings

4.80

4.72

4.80

Total Interest Bearing Liabilities

2,314,976

8,465

1.47

%

2,228,641

7,013

1.25

%

2,316,040

3,526

0.62

%

Other Liabilities

68,295

78,772

81,206

TOTAL LIABILITIES

3,727,459

3,724,238

3,998,996

Temporary Equity

7,150

7,423

8,802

TOTAL SHAREOWNERS’ EQUITY

456,014

435,116

404,067

TOTAL LIABILITIES, TEMPORARY

AND SHAREOWNERS’ EQUITY

$

$

$

Interest Rate Spread

3.43

%

3.55

%

3.77

%

$

38,435

$

39,264

$

40,500

Net Interest Margin

(3)

4.01

%

4.07

%

4.04

%

(1)

Average Balances include net loan fees, discounts and premiums and nonaccrual loans.

Interest income includes net loan costs of $0.1 million for

the three months ended

March 31, 2024 and December 31, 2023, and net loan fees

of $0.1 million for the three months ended March 31,

(2)

Interest income includes the effects of taxable equivalent adjustments

using a 21% tax rate.

(3)

Taxable equivalent net interest income divided by average earnings assets.

QUANTITATIVE

AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

See “Market Risk and Interest Rate Sensitivity” in Management’s

Discussion and Analysis of Financial Condition and Results of

Operations, above, which is incorporated herein by reference.

Management has determined that no additional disclosures are

necessary to assess changes in information about market risk that have occurred

since December 31, 2023.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

At March 31, 2024, the end of the period covered by this Form 10-Q, our management,

including our Chief Executive Officer and

Chief Financial Officer, evaluated

the effectiveness of our disclosure controls and procedures (as defined

in Rule 13a-15(e) under the

Securities Exchange Act of 1934).

Based upon that evaluation, our Chief Executive Officer and Chief

Financial Officer concluded

that, as of the end of the period covered by this report our disclosure controls and procedures

were ineffective due to the identification

of the material weakness discussed below.

Previously Reported Material Weakness

in Internal Control Over Financial Reporting

A material weakness is a deficiency,

or a combination of deficiencies, in internal control over financial reporting such

that there is a

reasonable possibility that a material misstatement of the Company’s

annual interim financial statements will not be prevented or

detected on a timely basis.

As reported in our 2023 Form 10-K/A, we did not maintain effective

internal control over financial

reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange

Act of 1934) as of December 31, 2023 as a result of

a material weakness in our internal control over financial reporting for the review of

significant inter-company mortgage loan sales

and servicing transactions was not designed effectively.

Specifically, management’s

review control over the completeness and

accuracy of elimination entries in the consolidation process was not designed

effectively, as the review

was not sufficiently precise to

identify all the necessary elimination entries between CCB and its subsidiary,

CCHL. The Company determined inter-company

transactions related to the sale of residential mortgage loans were not properly eliminated

and net loan fees were not properly

recorded. Further, financial information obtained

from CCHL for certain construction/permanent loan activity was not in sufficient

detail to appropriately classify this activity within the Statement of Cash Flows.

Specifically, management’s

review control over the

completeness, accuracy and review of financial information provided

from CCHL related to the Statement of Cash Flows was not

designed effectively as the review was not sufficiently

precise to identify all errors in financial reporting. Refer to our 2023 Form 10-

K/A for a description of our material weakness.

Remediation Plan

Since identifying the material weakness described above, management,

with oversight from the Audit Committee and input from the

Board of Directors, has devoted substantial resources to the ongoing

implementation of remediation efforts. These remediation

efforts,

summarized below are intended to address both the identified material weakness

and to enhance the Company’s overall

internal

control over financial reporting and disclosure controls and procedures.

Based on additional procedures and post-closing review,

management concluded that the consolidated financial statements

included in this report present fairly,

in all material respects, our

financial position, results of operations, and cash flows for the periods presented,

in conformity with GAAP.

The internal control and procedural enhancements and remedial actions that

have been implemented include:

Enhance the precision level review of activity within existing accounts that are

subject to elimination during consolidation, to

ensure appropriate elimination;

Enhance review procedures to identify new inter-company

accounts and activities subject to elimination during

consolidation;

Increase the granularity of general ledger mapping for inter-company

accounts subject to elimination during consolidation;

Enhance financial close checklist and pre-close meeting agenda to assist the reviewer

identifying and assessing inter-

company activities that are subject to elimination in a timely manner; and

Enhance the detail of review procedures of financial information obtained

from a subsidiary

to identify, assess and validate

appropriate classification when preparing the consolidated financial statements,

including when reviewing items in the

operating, investing or financing activity sections within the Statement of

Cash Flows.

To remediate

the material weakness, the Company implemented the internal control and procedural enhancements

noted above in

items 1-4 during the fourth quarter of 2023 and implemented the enhancement

noted above in item 5 during the first quarter of 2024.

The material weakness cannot be considered remediated until the applicable

controls have operated for a sufficient period of time and

management has concluded, through testing, that these controls are designed

and operating effectively.

Accordingly, management

will

continue to monitor and evaluate the effectiveness of our

internal control over financial reporting and the disclosure controls and

procedures.

Change in Internal Control

Except as identified above with respect to remediation of the material weakness,

there have been no significant changes in our internal

control over financial reporting during our most recently completed fiscal

quarter that have materially affected, or are reasonably

likely to materially affect, our internal control over financial reporting.

PART

II.

OTHER INFORMATION

Legal Proceedings

We are party

to lawsuits arising out of the normal course of business.

In management's opinion, there is no known pending litigation,

the outcome of which would, individually or in the aggregate, have a material effect

on our consolidated results of operations,

financial position, or cash flows.

Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider

the factors discussed in Part I,

quarterly reports. The risks described in our 2023

Form 10-K/A and our subsequent quarterly reports are not the only risks facing

us. Additional risks and uncertainties not currently

known to us or that we currently deem to be immaterial also may materially adversely

affect our business, financial condition and/or

operating results.

Unregistered Sales of Equity Securities and Use of

Proceeds

Purchases of Equity Securities by the Issuer and

Affiliated Purchasers

The following table contains information about all purchases made by,

or on behalf of, us and any affiliated purchaser (as defined

in

Rule 10b-18(a)(3) under the Exchange Act) of shares or other units of any class of

our equity securities that is registered pursuant to

Section 12 of the Exchange Act.

Total

number

Average

Total

number of shares

Maximum Number of shares

of shares

price paid

purchased under our

remaining for purchase under

Period

purchased

per share

share repurchase program

our share repurchase program

January 1, 2024 to

January 31, 2024

(1)

9,101

$29.49

9,101

441,409

February 1, 2024 to

February 29, 2024

(2)

63,162

28.01

63,162

686,838

March 1, 2024 to

(2)

10,277

28.21

10,277

676,561

Total

82,540

$28.19

82,540

(1)

The information reported in this row relates to shares that were repurchased

during the first quarter of 2024 through the

Company’s predecessor share

repurchase program that was approved on January 31, 2019 and was set to expire

in 2024, under

which we were authorized to repurchase up to 750,000 shares of our common

stock.

The predecessor share repurchase program

was terminated in January 2024.

(2)

The information reported in this row relates to shares that were repurchased

during the first quarter of 2024 through the Capital

City Bank Group, Inc. Share Repurchase Program (“the Program”),

effective February 1, 2024, that was publicly announced on

February 2, 2024 and that expires on February 1, 2029, under which

we were authorized to repurchase up to 750,000 shares of

our common stock.

Under the Program, shares may be repurchased by the Company from time to time in the open

market or

through private transactions, as market conditions warrant.

The program does not obligate the Company to repurchase any

specified number of shares of its common stock.

No shares are repurchased outside of the Program.

Defaults Upon Senior Securities

None.

Mine Safety Disclosure

Not Applicable.

Other Information

(c) Rule 10b5-1 Trading Plans

During the three months ended March 31, 2024, none of our directors or officers

(as defined in Rule 16a-1(f) under the Exchange Act)

adopted

or

terminated

any contract, instruction or written plan for the purchase or sale of our securities that was intended

to satisfy the

affirmative defense conditions of Rule 10b5-1(c) under

the Exchange Act or any “

non-Rule

10b5-1

trading arrangement” as defined in

ContentsView on SEC.gov

The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.