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CAPITAL CITY BANK GROUP INC

For the period ended Sep 30, 2024. Filed Nov 4, 2024.

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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.

Sep 30, 2024 · Filed Nov 4, 2024

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

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Contents

Item 6. Exhibits

Signatures

INTRODUCTORY NOTE

Caution Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform

Act of 1995. These forward-looking statements include, among others, statements about our beliefs, plans, objectives, goals, expectations,

estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors, many of

which are beyond our control.

The words “may,” “could,” “should,” “would,” “believe,”

“anticipate,” “estimate,” “expect,” “intend,” “plan,”

“target,” “vision,” “goal,” and similar expressions are intended to identify forward-looking statements.

All forward-looking statements, by their nature, are subject to risks and uncertainties.

Our actual future results may differ materially from

those set forth in our forward-looking statements.

Our

ability

to

achieve

our

financial

objectives

could

be

adversely

affected

by

the

factors

discussed

in

detail

in

Part

II,

Item

1A.

“Risk

Factors” in this Quarterly Report on Form 10-Q and in Part I, Item 1A. “Risk Factors” in our Annual Report on

Form 10-K for the year ended

December 31,

2023,

as

amended (the

“2023 Form

10-K”), as

updated

in our

subsequent quarterly

reports

filed

on Form

10-Q,

as

well as,

among other factors:

our ability to successfully manage credit risk, interest rate risk, liquidity risk, and other risks inherent to our industry;

the effects of changes in the level of checking or savings account deposits and the competition for deposits on our funding costs, net

interest margin and ability to replace maturing deposits and advances;

legislative or regulatory changes;

adverse developments in the financial services industry generally;

inflation, interest rate, market and monetary fluctuations;

uncertainty in the pricing of residential mortgage loans that we sell, as well as competition for the mortgage servicing rights related to these

loans;

interest rate risk and price risk resulting from retaining mortgage servicing rights and the effects of higher interest rates on our loan

origination volumes;

changes in monetary and fiscal policies of the U.S. Government;

the cost and effects of cybersecurity incidents or other failures, interruptions, or security breaches of our systems or those of our customers

or third-party providers;

the effects of fraud related to debit card products;

the accuracy of our financial statement estimates and assumptions;

changes in accounting principles, policies, practices or guidelines;

the frequency and magnitude of foreclosure of our loans;

the effects of our lack of a diversified loan portfolio;

the strength of the local economies in which we operate;

our ability to declare and pay dividends;

structural changes in the markets for origination, sale and servicing of residential mortgages;

our ability to retain key personnel;

the effects of natural disasters (including hurricanes), widespread health emergencies (including pandemics), military conflict, terrorism,

civil unrest or other geopolitical events;

our ability to comply with the extensive laws and regulations to which we are subject;

the impact of the restatement of our previously issued consolidated statements of cash flows;

any deficiencies in the processes undertaken to effect these restatements and to identify and correct all errors in our historical financial

statements that may require restatement;

any inability to implement and maintain effective internal control over financial reporting and/or disclosure control or inability to

remediate our existing material weaknesses in our internal controls deemed ineffective;

the willingness of clients to accept third-party products and services rather than our products and services;

technological changes;

the outcomes of litigation or regulatory proceedings;

negative publicity and the impact on our reputation;

changes in consumer spending and saving habits;

growth and profitability of our noninterest income;

the limited trading activity of our common stock;

the concentration of ownership of our common stock;

anti-takeover provisions under federal and state law as well as our Articles of Incorporation and our Bylaws;

other risks described from time to time in our filings with the Securities and Exchange Commission; and

our ability to manage the risks involved in the foregoing.

However, other factors besides those listed in

or discussed in this Form 10-Q also could adversely affect our results,

and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties.

Any forward-looking

statements made by us or on our behalf speak only as of the date they are made.

We do not undertake to update any forward-looking

statement, except as required by applicable law.

PART

I.

FINANCIAL INFORMATION

GROUP,

INC.

OF FINANCIAL CONDITION

December 31,

(Dollars in Thousands, Except Par Value)

ASSETS

Cash and Due From Banks

$

83,431

$

83,118

Federal Funds Sold and Interest Bearing Deposits

261,779

228,949

Total Cash and Cash Equivalents

345,210

312,067

Investment Securities, Available

for Sale, at fair value (amortized cost of $

356,994

and $

367,747

)

336,187

337,902

Investment Securities, Held to Maturity (fair value of $

542,328

and $

591,751

)

561,480

625,022

6,976

3,450

Total Investment

Securities

904,643

966,374

Loans Held For Sale, at fair value

31,251

28,211

(29,836)

(29,941)

Loans Held for Investment, Net

2,653,260

2,703,977

Premises and Equipment, Net

81,876

81,266

Goodwill and Other Intangibles

92,813

92,933

Other Real Estate Owned

115,613

119,648

Total Assets

$

$

LIABILITIES

Deposits:

Noninterest Bearing Deposits

$

1,330,715

$

1,377,934

Interest Bearing Deposits

2,248,362

2,323,888

Total Deposits

3,579,077

3,701,822

37,268

35,341

52,887

52,887

Other Long-Term

Other Liabilities

71,974

66,080

Total Liabilities

3,742,000

3,856,445

Temporary Equity

6,817

7,407

SHAREOWNERS’ EQUITY

Preferred Stock, $

0.01

par value;

3,000,000

shares authorized;

no

shares issued and outstanding

Common Stock, $

0.01

par value;

90,000,000

shares authorized;

and

16,950,222

shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Additional Paid-In Capital

36,070

36,326

Retained Earnings

454,342

426,275

Accumulated Other Comprehensive Loss, net of tax

Total Shareowners’

Equity

476,499

440,625

Total Liabilities, Temporary

Equity, and Shareowners’ Equity

$

$

GROUP,

INC.

OF INCOME

(Dollars in Thousands, Except Per Share

Data)

INTEREST INCOME

Loans, including Fees

$

41,659

$

39,344

$

123,480

$

111,845

Investment Securities:

Taxable

4,149

4,550

12,385

14,265

Tax Exempt

Funds Sold and Interest Bearing Deposits

3,514

1,848

9,031

8,741

Total Interest Income

49,328

45,753

144,914

134,886

INTEREST EXPENSE

8,223

5,214

24,396

11,710

1,542

1,868

1,800

Other Long-Term

Total Interest Expense

9,117

6,473

27,079

15,067

NET INTEREST INCOME

40,211

39,280

117,835

119,819

1,206

2,393

3,330

7,689

Net Interest Income After Provision For Credit Losses

39,005

36,887

114,505

112,130

NONINTEREST INCOME

5,512

5,456

16,139

16,021

3,624

3,684

11,010

11,205

Wealth Management

Fees

4,770

3,984

13,891

12,061

3,966

1,839

11,225

8,072

Other

1,641

1,765

4,951

7,093

Total Noninterest

Income

19,513

16,728

57,216

54,452

NONINTEREST EXPENSE

Compensation

25,800

23,003

74,613

69,965

Occupancy, Net

7,098

6,980

21,089

20,562

Other

10,023

9,122

27,831

26,539

Total Noninterest

Expense

42,921

39,105

123,533

117,066

INCOME BEFORE INCOME TAXES

15,597

14,510

48,188

49,516

2,980

3,004

9,705

10,130

NET INCOME

12,617

11,506

38,483

39,386

Loss Attributable to Noncontrolling Interests

1,149

1,342

1,153

NET INCOME ATTRIBUTABLE

TO COMMON SHAREOWNERS

$

13,118

$

12,655

$

39,825

$

40,539

BASIC NET INCOME PER SHARE

$

0.77

$

0.75

$

2.35

$

2.38

DILUTED NET INCOME PER SHARE

$

0.77

$

0.74

$

2.35

$

2.38

Average Common

Basic Shares Outstanding

16,943

16,985

16,942

17,001

Average Common

Diluted Shares Outstanding

16,979

17,025

16,966

17,031

GROUP,

INC.

OF COMPREHENSIVE INCOME (LOSS)

NET INCOME ATTRIBUTABLE

TO COMMON SHAREOWNERS

$

13,118

$

12,655

$

39,825

$

40,539

Other comprehensive income (loss), before

tax:

Investment Securities:

Change in net unrealized loss on securities available for sale

9,505

(3,405)

9,099

Amortization of unrealized losses on securities transferred from

available for sale to held to maturity

2,521

2,628

Derivative:

Change in net unrealized gain on effective cash flow

derivative

(1,261)

(873)

Benefit Plans:

Pension plan settlement

(217)

Total Benefit Plans

(217)

Other comprehensive income (loss), before

tax

9,029

(1,748)

10,747

3,480

Deferred tax expense (benefit) related to other comprehensive income

2,435

(444)

2,683

Other comprehensive income (loss), net of tax

6,594

(1,304)

8,064

2,553

TOTAL COMPREHENSIVE

INCOME

$

19,712

$

11,351

$

47,889

$

43,092

GROUP,

INC.

OF CHANGES IN SHAREOWNERS’ EQUITY

Accumulated

Other

Additional

Comprehensive

Shares

Common

Paid-In

Retained

(Loss) Income,

(Dollars In Thousands, Except Share Data)

Outstanding

Stock

Capital

Earnings

Net of Taxes

Total

Balance, July 1, 2024

16,941,553

$

$

35,547

$

445,959

$

(20,676)

$

460,999

13,118

13,118

Reclassification to Temporary Equity

(1)

(838)

(838)

6,594

6,594

0.2300

(3,897)

(3,897)

2,817

Balance, September 30, 2024

$

$

36,070

$

454,342

$

$

476,499

Balance, July 1, 2023

16,991,634

$

$

36,853

$

408,771

$

(33,372)

$

412,422

12,655

12,655

Other Comprehensive Loss, net of tax

(1,304)

(1,304)

0.1800

(3,396)

(3,396)

(36,411)

(1,099)

(1,099)

2,530

Balance, September 30, 2023

16,957,753

$

$

36,182

$

418,030

$

$

419,706

Balance, January 1, 2024

16,950,222

$

$

36,326

$

426,275

$

$

440,625

39,825

39,825

Reclassification to Temporary Equity

(1)

(751)

(751)

8,064

8,064

0.6500

(82,540)

(2,330)

(2,330)

1,139

1,139

76,688

(1)

Balance, September 30, 2024

$

$

36,070

$

454,342

$

$

476,499

Balance, January 1, 2023

16,986,785

$

$

37,331

$

387,009

$

(37,229)

$

387,281

40,539

40,539

2,553

2,553

0.3600

(9,518)

(9,518)

(102,147)

(3,121)

(3,121)

1,110

1,110

73,115

Balance, September 30, 2023

16,957,753

$

$

36,182

$

418,030

$

$

419,706

(1)

Adjustments to redemption value for non-controlling

interest in Capital City Home Loans, LLC ("CCHL")

GROUP,

INC.

OF CASH FLOWS

CASH FLOWS FROM OPERATING

ACTIVITIES

$

39,825

$

40,539

Adjustments to Reconcile Net Income to

Cash Provided by Operating Activities:

3,330

7,689

Depreciation

5,798

5,920

Amortization of Premiums, Discounts and Fees, net

3,130

3,216

Amortization of Intangible Asset

Pension Plan Settlement Gain

(291)

Originations of Loans Held-for-Sale

(366,700)

(308,263)

Proceeds From Sales of Loans Held-for-Sale

369,063

303,731

(11,225)

(8,072)

Net Additions for Capitalized Mortgage Servicing Rights

(138)

(392)

Stock Compensation

1,139

1,110

Deferred Income Taxes (Benefit)

1,400

(2,464)

Net Change in Operating Leases

(12)

Net Loss (Gain) on Sales and Write-Downs of Other Real Estate

Owned

(1,915)

Net Decrease in Other Assets

1,738

8,207

Net Increase in Other Liabilities

4,645

1,069

Net Cash Provided By Operating Activities

52,334

50,192

CASH FLOWS FROM INVESTING ACTIVITIES

Securities Held to Maturity:

Purchases

(20,287)

Proceeds from Payments, Maturities, and Calls

83,657

28,159

Sale:

Purchases

(49,436)

(9,399)

Proceeds from Sale of Securities

30,420

Proceeds from Payments, Maturities, and Calls

55,229

53,045

Equity Securities:

Net Decrease in Equity Securities

Purchases of Loans Held for Investment

(302)

(2,249)

Proceeds from Sales of Loans

31,462

39,125

Net Decrease (Increase) in Loans Held for Investment

19,779

(194,631)

Proceeds From Sales of Other Real Estate Owned

3,840

Purchases of Premises and Equipment

(6,442)

(5,459)

Net Cash Provided by (Used In) Investing Activities

113,851

(57,149)

CASH FLOWS FROM FINANCING ACTIVITIES

Net Decrease in Deposits

(122,745)

(398,872)

Net Increase (Decrease) in Short-Term

1,729

(15,097)

Net Increase (Decrease) in Other Long-Term

(149)

Dividends Paid

(9,518)

Payments to Repurchase Common Stock

(2,330)

(3,121)

Proceeds from Issuance of Common Stock Under Purchase Plans

Net Cash Used In by Financing Activities

(133,042)

(426,195)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

33,143

(433,152)

Cash and Cash Equivalents at Beginning of Period

312,067

600,650

Cash and Cash Equivalents at End of Period

$

345,210

167,498

Supplemental Cash Flow Disclosures:

Interest Paid

$

26,143

$

15,026

Income Taxes Paid

$

5,741

$

7,395

Noncash Investing Activities:

Loans and Premises Transferred to Other Real Estate Owned

$

$

1,495

Loans Transferred from Held for Investment

to Held for Sale, net

$

25,640

$

33,625

GROUP,

INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

NOTE 1 –

BUSINESS AND BASIS OF PRESENTATION

Nature of Operations

.

Capital City Bank Group, Inc. (“CCBG” or the “Company”) provides a full range of

banking and banking-

related services to individual and corporate clients through its wholly owned

subsidiary, Capital City Bank (“CCB” or the

“Bank”),

with banking offices located in Florida, Georgia,

and Alabama.

The Company is subject to competition from other financial

institutions, is subject to regulation by certain government agencies and undergoes

periodic examinations by those regulatory

authorities.

Basis of Presentation

.

The consolidated financial statements in this Quarterly Report on Form

10-Q include the accounts of CCBG

and CCB.

All material inter-company transactions and accounts have

been eliminated.

Certain previously reported amounts have

been reclassified to conform to the current year’s presentation.

The accompanying unaudited consolidated financial statements have

been prepared in accordance with generally accepted accounting

principles for interim financial information and with the instructions to Form

10-Q and Article 10 of Regulation S-X.

Accordingly,

they do not include all of the information and notes required by generally accepted

accounting principles for complete financial

statements.

In the opinion of management, all adjustments (consisting of normal

recurring accruals) considered necessary for a fair

presentation have been included.

The Consolidated Statement of Financial Condition at December

31, 2023 has been derived from the audited consolidated financial

statements at that date, but does not include all of the information and notes

required by generally accepted accounting principles for

complete financial statements.

For further information, refer to the consolidated financial statements and notes

thereto included in the

Company’s 2023 Form

10-K, as amended.

Accounting Standards Updates

Proposed Accounting Standards

,

ASU 2023-01, “Leases (Topic

:

Common Control Arrangements.” Accounting Standards

Update (“ASU”) 2023-01 requires entities to amortize leasehold

improvements associated with common control leases over the useful

life to the common control group. ASU 2023-01 also provides certain

practical expedients applicable to private companies and not-

for-profit organizations. The standard is effective

for the Company on January 1, 2024. As the Company does not have any such

common control leases, adoption of this standard did not have any immediate

impact on its consolidated financial statements and

related disclosures.

ASU 2023-02, “Investments—Equity Method and Joint Ventures

(Topic

: Accounting for Investments in Tax

Credit Structures

Using the Proportional Amortization Method.” ASU 2023-02 is intended

to improve the accounting and disclosures for investments in

tax credit structures. ASU 2023-02 allows entities to elect to account for qualifying

tax equity investments using the proportional

amortization method, regardless of the program giving rise to the

related income tax credits. Previously,

this method was only

available for qualifying tax equity investments in low-income housing

tax credit structures. The standard was effective for the

Company on January 1, 2024. As the Company does not have any such investments

in tax credit structures that are accounted for

using the proportional amortization method, adoption of this standard did not have

any immediate impact on its consolidated financial

statements or disclosures.

ASU 2023-06, “Disclosure Improvements:

Codification Amendments in Response to the SEC’s

Disclosure Update and Simplification

Initiative.”

ASU 2023-06 is intended to clarify or improve disclosure and presentation

requirements of a variety of topics, which will

allow users to more easily compare entities subject to the SEC's existing disclosures

with those entities that were not previously

subject to the requirements and align the requirements in the FASB

accounting standard codification with the SEC's regulations. The

Company is currently evaluating the provisions of the amendments and

the impact on its future consolidated statements.

ASU 2023-07, “Improvements to Reportable

Segment Disclosures.”

ASU 2023-07 requires disclosure of significant segment expenses

and other segment items on an interim and annual basis. The standard is effective

for fiscal years beginning after December 15, 2023,

and for interim periods beginning after December 15, 2024. The Company

is currently evaluating the provisions of the amendments

and the impact on its future consolidated statements.

ASU 2023-09, ”Income Taxes

(Topic

  1. – Improvements to Income Tax

Disclosures.”

ASU 2023-09 is intended to increase

transparency about income tax information by requiring consistent categories

and greater disaggregation of information in the rate

reconciliation and income taxes paid, disaggregated by jurisdiction. This

guidance will be effective for annual periods beginning after

December 15, 2024. The Company is currently evaluating the provisions

of the amendments and the impact on its future consolidated

statements.

NOTE 2 –

INVESTMENT SECURITIES

Investment Portfolio Composition

. The following table summarizes the amortized cost and related fair value of investment

securities available-for-sale (“AFS”) and securities held-to-maturity (“HTM”)

and the corresponding amounts of gross

unrealized gains and losses.

Sale

Amortized

Allowance for

Fair

Cost

Gains

Losses

Credit Losses

Value

$

51,082

$

$

$

$

50,646

130,176

4,909

125,330

43,258

3,239

(4)

40,017

(1)

68,054

8,274

59,781

56,328

3,932

(79)

52,317

(2)

8,096

8,096

Total

$

356,994

$

$

21,012

$

(83)

$

336,187

$

25,947

$

$

1,269

$

$

24,679

152,983

8,053

145,034

43,951

4,861

(8)

39,083

(1)

73,015

9,714

63,303

63,600

6,031

(17)

57,552

(2)

8,251

8,251

Total

$

367,747

$

$

29,928

$

(25)

$

337,902

Amortized

Fair

Cost

Gains

Losses

Value

$

397,977

$

$

7,424

$

390,553

(1)

163,503

11,884

151,775

Total

$

561,480

$

$

19,308

$

542,328

$

457,681

$

$

16,492

$

441,189

(1)

167,341

16,792

150,562

Total

$

625,022

$

$

33,284

$

591,751

(1)

Comprised of residential mortgage-backed

securities.

(2)

Includes Federal Home Loan Bank and Federal Reserve Bank stock, recorded

at cost of $

3.0

5.1

million,

respectively,

at September 30, 2024 and $

3.2

5.1

million, respectively,

At September 30, 2024 and December 31, 2023, the investment portfolio

had $

7.0

3.5

million, respectively, in equity

securities. These securities do not have a readily determinable fair value

and were not credit impaired.

Securities with an amortized cost of $

413.6

578.5

million at September 30, 2024 and December 31, 2023, respectively,

were pledged to secure public deposits and for other purposes.

The Bank, as a member of the Federal Home Loan Bank of Atlanta (“FHLB”), is required

to own capital stock in the FHLB based

generally upon the balances of residential and commercial real estate loans and FHLB

advances.

The Bank’s investment in FHLB

stock is a restricted investment carried at par value ($

per share), which approximates its fair value.

No ready market exists for the

FHLB stock, and it has no quoted market value; however,

the Bank may request redemption at par value of any stock in excess of the

amount the Bank is required to hold.

Stock redemptions are made at the discretion of the FHLB.

Investment Sales.

There were

no

sales of investment securities for the three and nine months ended September 30,

2024 and $

30.4

million in sales for the three and nine months ended September 30, 2023.

Maturity Distribution

.

At September 30, 2024, the Company’s

investment securities had the following maturity distribution based on

contractual maturity.

Expected maturities may differ from contractual maturities because borrowers

may have the right to call or

prepay obligations.

Mortgage-backed securities (“MBS”) and certain amortizing U.S. government

agency securities are shown

separately because they are not due at a certain maturity date.

Sale

Amortized Cost

Amortized Cost

Due in one year or less

$

32,570

$

31,822

$

227,491

$

224,457

Due after one year through five years

152,256

145,849

170,486

166,096

Due after five year through ten years

26,898

23,813

68,054

59,781

163,503

151,775

69,120

66,826

8,096

8,096

Total

$

356,994

$

336,187

$

561,480

$

542,328

Unrealized Losses on Investment Securities.

The following table summarizes the available for sale and held to maturity investment

securities with unrealized losses aggregated by major security type and length

of time in a continuous unrealized loss position:

Less Than

Greater Than

12 Months

12 Months

Total

Fair

Fair

Fair

Value

Losses

Value

Losses

Value

Losses

Sale

$

$

$

17,490

$

$

17,490

$

10,677

106,912

4,877

117,589

4,909

1,904

37,262

3,099

39,166

3,239

59,709

8,274

59,709

8,274

51,417

3,820

52,396

3,932

Total

$

13,560

$

$

272,790

$

20,728

$

286,350

$

21,012

117,561

1,063

272,992

6,361

390,553

7,424

2,954

130,035

11,880

132,989

11,884

Total

$

120,515

$

1,067

$

403,027

$

18,241

$

523,542

$

19,308

Sale

$

$

$

19,751

$

1,269

$

19,751

$

1,269

12,890

121,220

7,979

134,110

8,053

1,149

37,785

4,830

38,934

4,861

63,195

9,714

63,218

9,714

57,568

6,031

57,568

6,031

Total

$

14,062

$

$

299,519

$

29,823

$

313,581

$

29,928

153,880

3,178

287,310

13,314

441,190

16,492

148,282

16,778

149,068

16,792

Total

$

154,666

$

3,192

$

435,592

$

30,092

$

590,258

$

33,284

At September 30, 2024, there were

positions (combined AFS and HTM) with unrealized losses totaling $

40.3

of these

positions are U.S. Treasury bonds and

carry the full faith and credit of the U.S. Government.

are U.S. government agency

securities issued by U.S. government sponsored entities.

We believe

the long history of no credit losses on government securities

indicates that the expectation of nonpayment of the amortized cost basis is effectively

zero.

At September 30, 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.

The remaining

positions (municipal securities and corporate bonds) have a credit component.

At

September 30, 2024, corporate debt securities had an allowance for credit

losses of $

79,000

and municipal securities had an allowance

of $

4,000

.

Credit Quality Indicators

The Company monitors the credit quality of its investment securities through

various risk management procedures, including the

monitoring of credit ratings.

A majority of the debt securities in the Company’s

investment portfolio were issued by a U.S.

government entity or agency and are either explicitly or implicitly guaranteed

by the U.S. government.

The Company believes the

long history of no credit losses on these securities indicates that the expectation

of nonpayment of the amortized cost basis is

effectively zero, even if the U.S. government were

to technically default.

Further, certain municipal securities held by the Company

have been pre-refunded and secured by government guaranteed

treasuries.

Therefore, for the aforementioned securities, the Company

does

no

t assess or record expected credit losses due to the zero loss assumption.

The Company monitors the credit quality of its

municipal and corporate securities portfolio via credit ratings

which are updated on a quarterly basis.

On a quarterly basis, municipal

and corporate securities in an unrealized loss position are evaluated to determine

if the loss is attributable to credit related factors and

if an allowance for credit loss is needed.

NOTE 3 – LOANS HELD FOR INVESTMENT AND ALLOWANCE

FOR CREDIT LOSSES

Loan Portfolio Composition

.

The composition of the held for investment (“HFI”) loan portfolio was as follows:

$

194,625

$

225,190

218,899

196,091

819,955

825,456

(1)

210,988

210,920

(2)

214,683

272,042

Loans Held For Investment, Net of Unearned Income

$

$

(1)

Includes loans in process balances of $

2.7

3.2

(2)

Includes overdraft balances of $

1.4

1.0

Net deferred loan costs, which include premiums on purchased loans,

included in loans were $

7.9

million at September 30, 2024 and

$

7.8

million at December 31, 2023.

Accrued interest receivable on loans which is excluded from amortized

cost totaled $

10.6

million at September 30, 2024 and $

10.1

million at December 31, 2023, and is reported separately in Other Assets.

The Company has pledged a blanket floating lien on all 1-4 family residential mortgage

loans, commercial real estate mortgage loans,

and home equity loans to support available borrowing capacity at the FHLB of

Atlanta and has pledged a blanket floating lien on all

consumer loans, commercial loans, and construction loans to support available

borrowing capacity at the Federal Reserve Bank of

Atlanta.

Loan Purchase and Sales

.

The Company will periodically purchase newly originated 1-4 family real

estate secured adjustable-rate

loans from CCHL, a related party.

Residential loan purchases from CCHL totaled $

111.1

293.1

million for the nine

months ended September 30, 2024 and September 30, 2023, respectively,

and were not credit impaired.

.

The methodology for estimating the amount of credit losses reported in the

allowance for credit losses

(“ACL”) has two basic components: first, an asset-specific component

involving loans that do not share risk characteristics and the

measurement of expected credit losses for such individual loans; and second,

a pooled component for expected credit losses for pools

of loans that share similar risk characteristics.

This allowance methodology is discussed further in Note 1 – Significant

Accounting

Policies in the Company’s 2023 Form

10-K, as amended.

The following table details the activity in the allowance for credit losses by

portfolio segment.

Allocation of a portion of the

allowance to one category of loans does not preclude its availability to

absorb losses in other categories.

Commercial,

Financial,

Commercial

Agricultural

Construction

Mortgage

Residential

Home Equity

Total

$

1,575

$

1,751

$

6,076

$

14,788

$

1,865

$

3,164

$

29,219

(240)

(49)

1,045

1,879

(331)

(3)

(23)

(1,926)

(2,283)

1,021

Net (Charge-Offs) Recoveries

(155)

(1,233)

(1,262)

$

1,554

$

2,193

$

6,625

$

14,636

$

1,852

$

2,976

$

29,836

$

1,482

$

2,502

$

5,782

$

15,056

$

1,818

$

3,301

$

29,941

(309)

(551)

3,310

3,890

(1,013)

(3)

(17)

(99)

(5,746)

(6,878)

2,111

2,883

Net (Charge-Offs) Recoveries

(737)

(3,635)

(3,995)

$

1,554

$

2,193

$

6,625

$

14,636

$

1,852

$

2,976

$

29,836

September 30, 2023

$

1,446

$

2,848

$

5,453

$

13,388

$

1,783

$

3,325

$

28,243

(59)

(536)

1,356

(71)

1,219

1,993

(76)

(1,999)

(2,075)

Net Charge-Offs

(48)

(1,205)

(1,153)

$

1,339

$

2,312

$

5,554

$

14,774

$

1,765

$

3,339

$

29,083

September 30, 2023

$

1,506

$

2,654

$

4,815

$

10,741

$

1,864

$

3,488

$

25,068

(67)

(344)

3,814

(269)

3,218

7,175

(294)

(120)

(39)

(6,252)

(6,705)

2,885

3,545

Net Charge-Offs

(100)

(84)

(3,367)

(3,160)

$

1,339

$

2,312

$

5,554

$

14,774

$

1,765

$

3,339

$

29,083

For the nine months ended September 30, 2024, the allowance for

loans HFI decreased by $

0.1

million and reflected a provision

expense of $

3.9

million and net loan charge-offs of $

4.0

The decrease in the allowance was primarily due to lower loan

balances offset by higher loss rates and loan grade migration

.

For the nine months ended September 30, 2023, the allowance for loans

HFI increased by $

4.0

million and reflected a provision expense of $

7.2

million and net loan charge-offs of $

3.2

The increase

was primarily driven by incremental reserves needed for loan growth and

a higher loss rate for the residential real estate portfolio due

to slower prepayment speeds.

Unemployment forecast scenarios were utilized to estimate probability

of default and are weighted

based on management’s estimate

of probability.

See Note 8 – Commitments and Contingencies for information on the allowance for

off-balance sheet credit commitments.

Loan Portfolio Aging.

A loan is defined as a past due loan when one full payment is past due or a contractual maturity

is over 30 days

past due (“DPD”).

The following table presents the aging of the amortized cost basis in accruing

past due loans by class of loans.

30-59

60-89

90 +

Total

Total

Total

DPD

DPD

DPD

Past Due

Current

Loans

Loans

$

$

$

$

$

193,816

$

$

194,625

2,025

2,025

216,552

218,899

818,870

819,955

1,070

1,459

1,018,892

3,595

209,478

210,988

3,697

3,893

209,508

1,282

214,683

Total

$

8,793

$

$

$

9,388

$

2,667,116

$

6,592

$

$

$

$

$

$

224,463

$

$

225,190

195,563

196,091

823,753

825,456

1,000,525

2,990

209,653

210,920

3,693

4,467

266,864

272,042

Total

$

5,942

$

$

$

6,855

$

2,720,821

$

6,242

$

Nonaccrual Loans

.

Loans are generally placed on nonaccrual status if principal or interest payments

become 90 days past due and/or

management deems the collectability of the principal and/or interest to

be doubtful.

Loans are returned to accrual status when the

principal and interest amounts contractually due are brought current

or when future payments are reasonably assured.

The following table presents the amortized cost basis of loans in nonaccrual

status and loans past due over 90 days and still on accrual

by class of loans.

With No

With

90 + Days

With No

With

90 + Days

ACL

ACL

Still Accruing

ACL

ACL

Still Accruing

$

$

$

$

$

$

2,293

1,302

1,705

1,285

1,282

Total Nonaccrual

Loans

$

2,797

$

3,795

$

$

2,486

$

3,756

$

Collateral Dependent Loans.

The following table presents the amortized cost basis of collateral-dependent

loans.

Non Real Estate

Non Real Estate

Secured

Secured

Secured

Secured

$

$

$

$

1,296

2,999

1,706

Total Collateral Dependent

Loans

$

3,503

$

$

3,277

$

A loan is collateral dependent when the borrower is experiencing financial

difficulty and repayment of the loan is dependent on

the

sale or operation of the underlying collateral.

The Bank’s collateral dependent

loan portfolio is comprised primarily of real estate secured loans, collateralized

by either residential

or commercial collateral types.

The loans are carried at fair value based on current values determined by

either independent appraisals

or internal evaluations, adjusted for selling costs or other amounts to be deducted

when estimating expected net sales proceeds.

Residential Real Estate Loans In Process of Foreclosure

.

At September 30, 2024 and December 31, 2023, the Company had $

0.7

0.5

million, respectively, in

1-4 family residential real estate loans for which formal foreclosure proceedings were

in

process.

Modifications to Borrowers Experiencing

Financial Difficulty.

Occasionally, the Company may

modify loans to borrowers who are

experiencing financial difficulty.

Loan modifications to borrowers in financial difficulty are loans in

which the Company has granted

an economic concession to the borrower that it would not otherwise consider.

In these instances, as part of a work-out alternative, the

Company will make concessions including the extension of the loan

term, a principal moratorium, a reduction in the interest rate, or a

combination thereof.

The impact of the modifications and defaults are factored into the allowance for credit

losses on a loan-by-loan

basis.

Thus, specific reserves are established based upon the results of either a

discounted cash flow analysis or the underlying

collateral value, if the loan is deemed to be collateral dependent.

A modified loan classification can be removed if the borrower’s

financial condition improves such that the borrower is no longer in financial difficulty,

the loan has not had any forgiveness of

principal or interest, and the loan is subsequently refinanced or restructured

at market terms and qualifies as a new loan.

At September 30, 2024, and December 31, 2023, the Company did

no

t have any modified loans made to borrowers due to the

borrower experiencing financial difficulty.

Credit Risk Management

.

The Company has adopted comprehensive lending policies, underwriting standards and

loan review

procedures designed to maximize loan income within an acceptable

level of risk.

Management and the Board of Directors review and

approve these policies and procedures on a regular basis (at least annually).

Reporting systems are used to monitor loan originations, loan quality,

concentrations of credit, loan delinquencies and nonperforming

loans and potential problem loans.

Management and the Credit Risk Oversight Committee periodically

review our lines of business to

monitor asset quality trends and the appropriateness of credit policies.

In addition, total borrower exposure limits are established and

concentration risk is monitored.

As part of this process, the overall composition of the portfolio is reviewed to gauge

diversification

of risk, client concentrations, industry group, loan type, geographic

area, or other relevant classifications of loans.

Specific segments

of the loan portfolio are monitored and reported to the Board on a quarterly

basis and have strategic plans in place to supplement

Board approved credit policies governing exposure limits and underwriting

standards.

Detailed below are the types of loans within

the Company’s loan portfolio

and risk characteristics unique to each.

Commercial, Financial, and Agricultural – Loans in this category

are primarily made based on identified cash flows of the borrower

with consideration given to underlying collateral and personal or

other guarantees.

Lending policy establishes debt service coverage

ratio limits that require a borrower’s cash flow to be sufficient

to cover principal and interest payments on all new and existing debt.

The majority of these loans are secured by the assets being financed or other business

assets such as accounts receivable, inventory,

or

equipment.

Loan to value ratios at origination are

governed by established policy guidelines.

Real Estate Construction – Loans in this category consist of short-term

construction loans, revolving and non-revolving credit lines

and construction/permanent loans made to individuals and investors to

finance the acquisition, development, construction or

rehabilitation of real property.

These loans are primarily made based on identified cash flows of the borrower

or project and generally

secured by the property being financed, including 1-4 family residential

properties and commercial properties that are either owner-

occupied or investment in nature.

These properties may include either vacant or improved property.

Construction loans are generally

based upon estimates of costs and value associated with the completed

project.

Collateral values are determined based upon third

party appraisals and evaluations.

Loan to value ratios at origination are governed by established policy

guidelines.

The disbursement

of funds for construction loans is made in relation to the progress of the project

and as such these loans are closely monitored by on-

site inspections.

Real Estate Commercial Mortgage – Loans in this category consists of commercial

mortgage loans secured by property that is either

owner-occupied or investment in nature.

These loans are primarily made based on identified cash flows of the borrower or

project

with consideration given to underlying real estate collateral and

personal guarantees.

Lending policy establishes debt service

coverage ratios and loan to value ratios specific to the property type.

Collateral values are determined based upon third party

appraisals and evaluations.

Real Estate Residential – Residential mortgage loans held in the Company’s

loan portfolio are made to borrowers that demonstrate the

ability to make scheduled payments with full consideration to underwriting

factors such as current income, employment status, current

assets, and other financial resources, credit history,

and the value of the collateral.

Collateral consists of mortgage liens on 1-4 family

residential properties.

The Company does not

originate sub-prime loans.

Real Estate Home Equity – Home equity loans and lines are made to qualified

individuals for legitimate purposes generally secured

by senior or junior mortgage liens on owner-occupied

1-4 family homes or vacation homes.

Borrower qualifications include

favorable credit history combined with supportive income and debt ratio

requirements and combined loan to value ratios within

established policy guidelines.

Consumer Loans – This loan portfolio includes personal installment loans,

direct and indirect automobile financing, and overdraft

lines of credit.

The majority of the consumer loan category consists of direct and indirect automobile

loans.

Lending policy

establishes maximum debt to income ratios, minimum credit scores, and

includes guidelines for verification of applicants’ income and

receipt of credit reports.

Credit Quality Indicators

.

As part of the ongoing monitoring of the Company’s

loan portfolio quality, management

categorizes loans

into risk categories based on relevant information about the ability of borrowers

to service their debt such as: current financial

information, historical payment performance, credit documentation,

and current economic and market trends, among other

factors.

Risk ratings are assigned to each loan and revised as needed through established monitoring

procedures for individual loan

relationships over a predetermined amount and review of smaller balance homogenous

loan pools.

The Company uses the definitions

noted below for categorizing and managing its criticized loans.

Loans categorized as “Pass” do not meet the criteria set forth below

and are not considered criticized.

Special Mention – Loans in this category are presently protected from loss, but

weaknesses are apparent which, if not corrected, could

cause future problems.

Loans in this category may not meet required underwriting criteria and

have no mitigating factors.

More than

the ordinary amount of attention is warranted for these loans.

Substandard – Loans in this category exhibit well-defined weaknesses that would

typically bring normal repayment into jeopardy.

These loans are no longer adequately protected due to well-defined

weaknesses that affect the repayment capacity of the

borrower.

The possibility of loss is much more evident and above average supervision is required

for these loans.

Doubtful – Loans in this category have all the weaknesses inherent in a loan categorized

as Substandard, with the characteristic that

the weaknesses make collection or liquidation in full, on the basis of

currently existing facts, conditions, and values, highly

questionable and improbable.

Performing/Nonperforming – Loans within certain homogenous

loan pools (home equity and consumer) are not individually reviewed,

but are monitored for credit quality via the aging status of the loan and by payment

activity.

The performing or nonperforming status

is updated on an on-going basis dependent upon improvement

and deterioration in credit quality.

The following tables summarize gross loans held for investment at September

30, 2024 and December 31, 2023 and current period

gross write-offs for the nine months ended September 30, 2024

and twelve months ended December 31, 2023 by years of origination

and internally assigned credit risk ratings (refer to Credit Risk Management

section for detail on risk rating system).

Term

Loans by Origination Year

Revolving

As of September 30, 2024

Prior

Loans

Total

Commercial, Financial,

Agriculture:

Pass

$

28,841

$

45,675

$

41,999

$

20,867

$

6,012

$

10,488

$

39,124

$

193,006

1,001

Total

$

29,041

$

46,009

$

42,613

$

20,973

$

6,114

$

10,574

$

39,301

$

194,625

$

$

$

$

$

$

$

$

1,013

Real Estate - Construction:

Pass

$

72,961

$

101,277

$

34,631

$

4,129

$

$

$

$

213,850

3,472

1,255

4,727

Total

$

76,433

$

101,277

$

35,933

$

4,404

$

$

$

$

218,899

Real Estate - Commercial

Mortgage:

Pass

$

60,755

$

117,689

$

234,557

$

124,203

$

90,813

$

128,123

$

23,897

$

780,037

2,947

14,385

5,349

24,019

5,162

2,330

3,477

2,526

1,649

15,899

Total

$

66,090

$

122,966

$

252,419

$

124,958

$

93,857

$

135,121

$

24,544

$

819,955

$

$

$

$

$

$

$

$

Real Estate - Residential:

Pass

$

117,374

$

330,178

$

367,873

$

72,716

$

31,994

$

80,541

$

11,118

$

1,011,794

1,176

2,607

2,091

2,568

1,173

3,596

9,545

Total

$

117,374

$

330,561

$

369,964

$

76,460

$

33,778

$

84,691

$

11,118

$

$

$

$

$

$

$

$

$

Real Estate - Home Equity:

$

$

$

$

$

$

$

208,073

$

210,107

Total

$

$

$

$

$

$

$

208,954

$

210,988

$

$

$

$

$

$

$

$

Consumer:

$

24,067

$

49,898

$

63,085

$

48,338

$

13,116

$

5,851

$

9,045

$

213,400

1,283

Total

$

24,247

$

50,274

$

63,436

$

48,579

$

13,226

$

5,863

$

9,058

$

214,683

$

1,871

$

1,142

$

1,690

$

$

$

$

$

5,746

Term

Loans by Origination Year

Revolving

As of December 31, 2023

Prior

Loans

Total

Commercial, Financial,

Agriculture:

Pass

$

57,320

$

66,671

$

28,933

$

10,610

$

7,758

$

7,502

$

44,350

$

223,144

1,227

Total

$

57,652

$

67,456

$

29,387

$

10,697

$

7,787

$

7,624

$

44,587

$

225,190

$

$

$

$

$

$

$

$

Real Estate - Construction:

Pass

$

101,684

$

68,265

$

18,181

$

$

$

$

4,617

$

192,935

1,882

1,274

Total

$

102,315

$

68,812

$

19,296

$

$

$

$

4,617

$

196,091

Real Estate - Commercial

Mortgage:

Pass

$

117,840

$

275,079

$

135,663

$

101,210

$

43,878

$

109,878

$

18,367

$

801,915

3,266

5,684

1,358

11,110

1,226

6,695

1,637

1,574

12,431

Total

$

121,106

$

281,989

$

142,358

$

103,076

$

45,841

$

112,025

$

19,061

$

825,456

$

$

$

$

$

$

$

$

Real Estate - Residential:

Pass

$

372,394

$

400,437

$

83,108

$

35,879

$

24,848

$

68,685

$

8,252

$

993,603

1,255

1,110

1,906

1,626

1,007

3,142

9,361

Total

$

373,232

$

401,636

$

85,097

$

38,007

$

25,855

$

72,140

$

8,252

$

$

$

$

$

$

$

$

$

Real Estate - Home Equity:

$

$

$

$

$

$

$

207,509

$

209,921

Total

$

$

$

$

$

$

$

208,508

$

210,920

$

$

$

$

$

$

$

$

Consumer:

$

68,496

$

90,031

$

70,882

$

21,314

$

10,210

$

4,258

$

5,431

$

270,622

1,420

Total

$

68,789

$

90,386

$

70,940

$

21,318

$

10,210

$

4,258

$

6,141

$

272,042

$

3,137

$

3,224

$

1,362

$

$

$

$

$

8,543

NOTE 4 – MORTGAGE BANKING ACTIVITIES

The Company’s mortgage

banking activities include mandatory delivery loan sales, forward sales contracts used

to manage residential

loan pipeline price risk, utilization of warehouse lines to fund secondary

market residential loan closings, and residential mortgage

servicing.

Residential Mortgage Loan Production

The Company originates, markets, and services conventional and

government-sponsored residential mortgage loans.

Generally,

conforming fixed rate residential mortgage loans are held for sale in the

secondary market and non-conforming and adjustable-rate

residential mortgage loans may be held for investment.

The volume of residential mortgage loans originated for sale and secondary

market prices are the primary drivers of origination revenue.

Residential mortgage loan commitments are generally outstanding for 30

to 90 days, which represents the typical period from

commitment to originate a residential mortgage loan to when the closed

loan is sold to an investor.

Residential mortgage loan

commitments are subject to both credit and price risk.

Credit risk is managed through underwriting policies and procedures, including

collateral requirements, which are generally accepted by the secondary

loan markets.

Price risk is primarily related to interest rate

fluctuations and is partially managed through forward sales of residential

mortgage-backed securities (primarily to-be announced

securities, or TBAs) or mandatory delivery commitments with investors.

The unpaid principal balance of residential mortgage loans held for sale,

notional amounts of derivative contracts related to residential

mortgage loan commitments,

such as interest rate lock commitments (“IRLC’s”)

and forward contract sales and their related fair

values are set- forth below.

Unpaid Principal

Unpaid Principal

Balance/Notional

Balance/Notional

Residential Mortgage Loans Held for Sale

$

30,186

$

31,251

$

27,944

$

28,211

(1)

29,734

23,545

(2)

31,500

24,500

(1)

Recorded in other assets at fair value

(2)

Recorded in other assets and other liabilities at

fair value, respectively

At September 30, 2024, the Company had

no

residential mortgage loans held for sale 30-89 days past due and $

0.7

million of loans

were on nonaccrual status. At December 31, 2023, the Company had

no

residential mortgage loans held for sale 30-89 days past due

and $

0.7

million of loans were on nonaccrual status.

Mortgage banking revenue was as follows:

Net realized gains on sales of mortgage loans

$

3,664

$

1,350

$

8,499

$

4,843

Net change in unrealized gain on mortgage loans held for sale

(1,223)

(1,700)

Net change in the fair value of IRLC's

(135)

(412)

Net change in the fair value of forward sales contracts

(52)

(5)

Pair-Offs on net settlement of forward sales contracts

(383)

(173)

Mortgage servicing rights additions

Net origination fees

1,501

2,051

3,970

Total mortgage banking

revenues

$

3,966

$

1,839

$

11,225

$

8,072

Residential Mortgage Servicing

The Company may retain the right to service residential mortgage loans

sold.

The unpaid principal balance of loans serviced for

others is the primary driver of servicing revenue.

The following represents a summary of mortgage servicing rights.

Number of residential mortgage loans serviced for others

Outstanding principal balance of residential mortgage loans serviced

for others

$

130,292

$

108,897

interest rate

5.74%

5.37%

Remaining contractual term (in months)

Conforming conventional loans serviced by the Company are sold to Federal

National Mortgage Association (“FNMA”) on a non-

recourse basis, whereby foreclosure losses are generally the responsibility

of FNMA and not the Company.

The government loans

serviced by the Company are secured through the Government National

Mortgage Association (“GNMA”), whereby the Company is

insured against loss by the Federal Housing Administration or partially

guaranteed against loss by the Veterans

Administration.

At

September 30, 2024, the servicing portfolio balance consisted of

the following loan types: FNMA (

%), GNMA (

%), and private

investor (

%).

FNMA and private investor loans are structured as actual/actual payment remittance.

The Company had

no

delinquent residential mortgage loans in GNMA pools serviced by the Company

at September 30, 2024 and

December 31, 2023, respectively.

The Company had

no

repurchases for the three and nine months ended September 30, 2024, and

$

0.8

2.2

million for the three and nine months ended September 30, 2023, in delinquent

residential loans from the

GNMA pools.

When delinquent residential loans are repurchased, the Company

has the intention to modify their terms and include the

loans in new GNMA pools.

Activity in the capitalized mortgage servicing rights was as follows:

Beginning balance

$

$

$

$

2,599

Additions due to loans sold with servicing retained

Deletions and amortization

(46)

(45)

(154)

(79)

Sale of servicing rights

(2,287)

Ending balance

$

$

$

$

The Company did

no

t record any permanent impairment losses on mortgage servicing rights for the

three months ended September 30,

2024 or 2023.

The key unobservable inputs used in determining the fair value of the Company’s

mortgage servicing rights were as follows:

Minimum

Maximum

Minimum

Maximum

Discount rates

9.50%

12.00%

9.50%

12.00%

Annual prepayment speeds

9.79%

20.51%

11.23%

17.79%

Cost of servicing (per loan)

$

$

$

$

Changes in residential mortgage interest rates directly affect

the prepayment speeds used in valuing the Company’s

mortgage

servicing rights.

A separate third party model is used to estimate prepayment speeds based on interest rates, housing

turnover rates,

estimated loan curtailment, anticipated defaults, and other relevant factors.

The weighted average annual prepayment speed was

14.16

% at September 30, 2024 and

14.22

% at December 31, 2023.

Warehouse

Line Borrowings

The Company has the following warehouse lines of credit and master repurchase

agreements with various financial institutions at

September 30, 2024.

Amounts

Outstanding

$

million master repurchase agreement without defined expiration.

Interest is at the SOFR rate plus

2.00%

to

3.00%

, with a floor rate of

3.25%

to

4.25%

.

A cash pledge deposit of $

0.1

million is required by the lender.

$

1,954

$

million warehouse line of credit agreement expiring in

December 2024

.

Interest is at the SOFR plus

2.75%

,

to

3.25%

.

5,810

Total Warehouse

$

7,764

Warehouse

line borrowings are classified as short-term borrowings.

At December 31, 2023, warehouse line borrowings totaled $

8.4

million. At September 30, 2024, the Company had residential mortgage

loans held for sale pledged as collateral under the above

warehouse lines of credit and master repurchase agreements.

The above agreements also contain covenants which include certain

financial requirements, including maintenance of minimum tangible

net worth, minimum liquid assets, and maximum debt to net

worth ratio, as defined in the agreements.

The Company was in compliance with all significant debt covenants at September 30,

The Company has extended a $

million warehouse line of credit to CCHL, a

% owned subsidiary entity.

Balances and

transactions under this line of credit are eliminated in the Company’s

consolidated financial statements and thus not included in the

total short term borrowings noted on the Consolidated Statement of

Financial Condition.

The balance of this line of credit was $

35.9

31.4

NOTE 5 – DERIVATIVES

The Company enters into derivative financial instruments to manage exposures

that arise from business activities that result in the

receipt or payment of future known and uncertain cash amounts, the value of

which are determined by interest rates.

The Company’s

derivative financial instruments are used to manage differences in

the amount, timing, and duration of the Company’s

known or

expected cash receipts and its known or expected cash payments principally

related to the Company’s subordinated

debt.

Cash Flow Hedges of Interest Rate Risk

Interest rate swaps with notional amounts totaling $

million at September 30, 2024 were designed as a cash flow hedge for

subordinated debt.

Under the swap arrangement, the Company will pay a fixed interest rate of

2.50

% and receive a variable interest

rate based on three-month CME Term

SOFR (secured overnight financing rate).

For derivatives designated and that qualify as cash flow hedges of interest rate

risk, the gain or loss on the derivative is recorded in

accumulated other comprehensive income (“AOCI”) and subsequently

reclassified into interest expense in the same period(s) during

which the hedged transaction affects earnings. Amounts reported

in accumulated other comprehensive income related to derivatives

will be reclassified to interest expense as interest payments are made on the

Company’s variable-rate subordinated

debt.

The following table reflects the cash flow hedges included in the consolidated

statements of financial condition

.

Statement of Financial

Notional

Fair

Weighted Average

Condition Location

Amount

Value

Maturity (Years)

Interest rate swaps related to subordinated debt

$

30,000

$

4,444

5.8

Interest rate swaps related to subordinated debt

$

30,000

$

5,317

6.5

The following table presents the change in net gains (losses) recorded

in AOCI and the consolidated statements of income related to

the cash flow derivative instruments (interest rate swaps related to subordinated

debt) for the three and nine months ended September

30, 2024.

Change in Gain

Amount of Gain

(Loss) Recognized

(Loss) Reclassified

Category

in AOCI

from AOCI to Income

Three months ended September 30, 2024

$

(941)

$

Three months ended September 30, 2023

Nine months ended September 30, 2024

$

(652)

$

1,128

Nine months ended September 30, 2023

1,016

The Company estimates there will be approximately $

1.0

million reclassified as a decrease to interest expense within the next 12

months.

The Company had a collateral liability of $

4.4

5.5

NOTE 6 – LEASES

Operating leases in which the Company is the lessee are recorded as operating

lease right of use (“ROU”) assets and operating

liabilities, included in other assets and liabilities, respectively,

on its Consolidated Statement of Financial Condition.

The Company’s operating

leases primarily relate to banking offices with remaining lease terms

from one to

years.

The Company’s

leases are not complex and do not contain residual value guarantees, variable

lease payments, or significant assumptions or judgments

made in applying the requirements of Topic

Operating leases with an initial term of 12 months or less are not recorded on the

Consolidated Statement of Financial Condition and the related lease expense is recognized on a straight-line basis over the lease term.

At September 30, 2024, the operating lease ROU assets and liabilities were $

25.2

25.8

million, respectively. At

December 31, 2023, ROU assets and liabilities were $

27.0

27.4

million, respectively.

The Company does not have any

finance leases and has recognized $

0.5

million of income for a short-term operating lease agreement in which the

Company is a lessor.

The table below summarizes our lease expense and other information related

to the Company’s operating leases.

Operating lease expense

$

$

$

2,509

$

2,114

Short-term lease expense

Total lease expense

$

1,070

$

$

3,127

$

2,552

Other information:

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

$

1,095

$

$

2,315

$

2,131

Right-of-use assets obtained in exchange for new operating lease liabilities

3,048

remaining lease term — operating leases (in years)

16.7

18.4

16.7

18.4

discount rate — operating leases

3.5%

3.3%

3.5%

3.3%

The table below summarizes the maturity of remaining lease liabilities:

$

1,098

3,093

2,957

2,888

2,633

2029 and thereafter

20,690

Total

$

33,359

Less: Interest

(7,541)

Present Value

of Lease liability

$

25,818

At September 30, 2024, the Company had

one

additional operating lease obligation for a banking office (to be constructed)

that has

not yet commenced.

The lease has payments totaling $

3.8

million based on an initial contract term of

years.

Payments for the

banking office are expected to commence after the construction

period ends, which is expected to occur during the fourth quarter of

A related party is the lessor in a land lease with the Company.

The payments under the lease agreement provide for annual lease

payments of approximately $

0.1

million annually through December 2033, and thereafter,

increase by

% every

years until 2053 at

which time the rent amount will adjust based on reappraisal of the parcel rental

value.

The Company then has

four

successive options

to extend the lease for

five years

each with rental increases of 5% at each extension.

The aggregate remaining obligation of the lease

totaled $

2.2

million at September 30, 2024.

NOTE 7 - EMPLOYEE BENEFIT PLANS

The Company has a defined benefit pension plan covering substantially all full-time

and eligible part-time associates and a

Supplemental Executive Retirement Plan (“SERP”) and a Supplemental

Executive Retirement Plan II (“SERP II”) covering its

executive officers.

The defined benefit plan was amended in December 2019 to remove plan eligibility

for new associates hired after

December 31, 2019.

The SERP II was adopted by the Company’s

Board on May 21, 2020 and covers certain executive officers that

were not covered by the SERP.

The components of the net periodic benefit cost for the Company’s

qualified benefit pension plan were as follows:

Service Cost

$

$

$

2,786

$

2,616

Interest Cost

1,524

1,458

4,572

4,374

Expected Return on Plan Assets

(2,029)

(1,701)

(6,087)

(5,104)

Prior Service Cost Amortization

Net Loss Amortization

Net Periodic Benefit Cost

$

$

$

1,394

$

2,591

Discount Rate

5.29%

5.63%

5.29%

5.63%

Long-term Rate of Return on Assets

6.75%

6.75%

6.75%

6.75%

The components of the net periodic benefit cost for the Company’s

SERP and SERP II were as follows:

Service Cost

$

$

$

$

Interest Cost

Prior Service Cost Amortization

Net Loss Amortization

(71)

(111)

(210)

(420)

Pension Settlement Gain

(291)

Net Periodic Benefit Cost

$

$

$

$

(203)

Discount Rate

5.11%

5.33%

5.11%

5.41%

During the month of June 2023, lump sum payments made under the SERP triggered

settlement accounting and remeasurement of the

plan at June 30, 2023.

In accordance with applicable accounting guidance for retirement benefit plans, the

Company recorded a

settlement gain of $

0.3

million in June 2023.

The service cost component of net periodic benefit cost is reflected in

compensation expense in the accompanying statements of

income.

The other components of net periodic cost are included in “other” within the noninterest

expense category in the statements

of income.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Lending Commitments

.

The Company is a party to financial instruments with off-balance

sheet risks in the normal course of business

to meet the financing needs of its clients.

These financial instruments consist of commitments to extend credit and standby

letters of

credit.

The Company’s maximum exposure

to credit loss under standby letters of credit and commitments to extend credit is represented

by

the contractual amount of those instruments.

The Company uses the same credit policies in establishing commitments

and issuing

letters of credit as it does for on-balance sheet instruments.

The amounts associated with the Company’s

off-balance sheet

obligations were as follows:

Fixed

Variable

Total

Fixed

Variable

Total

Commitments to Extend Credit

(1)

$

214,353

$

499,853

$

714,206

$

207,605

$

534,745

$

742,350

Standby Letters of Credit

6,126

6,126

6,094

6,094

Total

$

220,479

$

499,853

$

720,332

$

213,699

$

534,745

$

748,444

(1)

Commitments include unfunded loans, revolving

lines of credit, and off-balance sheet residential

loan commitments.

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

the Company to guarantee the performance of a client to a third

party.

The credit risk involved in issuing letters of credit is essentially the same as that involved

in extending loan facilities. In

general, management does not anticipate any material losses as a result

of participating in these types of transactions.

However, any

potential losses arising from such transactions are reserved for in the same manner

as management reserves for its other credit

facilities.

For both on- and off-balance sheet financial instruments, the Company

requires collateral to support such instruments when it is

deemed necessary.

The Company evaluates each client’s

creditworthiness on a case-by-case basis.

The amount of collateral

obtained upon extension of credit is based on management’s

credit evaluation of the counterparty.

Collateral held varies, but may

include deposits held in financial institutions; U.S. Treasury

securities; other marketable securities; real estate; accounts receivable;

property, plant and

equipment; and inventory.

The allowance for credit losses for off-balance sheet credit commitments

that are not unconditionally cancellable by the bank is

adjusted as a provision for credit loss expense and is recorded in other liabilities.

The following table shows the activity in the

allowance.

$

3,139

$

3,120

$

3,191

$

2,989

(617)

(669)

$

2,522

$

3,502

$

2,522

$

3,502

Other Commitments.

In the normal course of business, the Company enters into lease commitments

which are classified as operating

leases. See Note 6 – Leases for additional information on the maturity of the

Company’s operating lease commitments.

The Company has an outstanding commitment of up to $

1.0

million in a bank tech venture capital fund focused on finding and

funding technology solutions for community banks and commitments

of up to $

8.9

million for a solar tax credit equity fund

investment.

At September 30, 2024, the amount remaining to be funded for the bank tech venture

capital and solar tax credit equity

investment fund commitments was $

0.4

1.2

million, respectively.

Contingencies

.

The Company is a party to lawsuits and claims arising out of the normal course of business.

In management's opinion,

there are

no

known pending claims or litigation, the outcome of which would, individually or in

the aggregate, have a material effect

on the consolidated results of operations, financial position, or cash flows

of the Company.

Indemnification Obligation

.

The Company is a member of the Visa U.S.A. network.

Visa U.S.A member banks are

required to

indemnify the Visa U.S.A.

network for potential future settlement of certain litigation (the “Covered Litigation”)

that relates to several

antitrust lawsuits challenging the practices of Visa

and MasterCard International.

In 2008, the Company, as a member

of the Visa

U.S.A. network, obtained Class B shares of Visa,

Inc. upon its initial public offering.

Since its initial public offering, Visa,

Inc. has

funded a litigation reserve for the Covered Litigation resulting in a reduction

in the Class B shares held by the Company.

During the

first quarter of 2011, the Company sold its remaining

Class B shares.

Associated with this sale, the Company entered into a swap

contract with the purchaser of the shares that requires a payment to the

counterparty in the event that Visa, Inc. makes

subsequent

revisions to the conversion ratio for its Class B shares.

Conversion ratio payments and ongoing fixed quarterly charges

are reflected in

earnings in the period incurred.

Fixed charges included in the swap liability are payable quarterly

until the litigation reserve is fully

liquidated and at which time the aforementioned swap contract will be terminated.

Quarterly fixed payments approximate $

0.2

There was a $

0.5

million counterparty payment accrued and payable at September 30, 2024

due to a revision to the share

conversion rate related to additional funding by VISA of the merchant

litigation reserve.

NOTE 9 – FAIR VALUE

MEASUREMENTS

The fair value of an asset or liability is the price that would be received to sell that asset or paid

to transfer that liability in an orderly

transaction occurring in the principal market (or most advantageous market in

the absence of a principal market) for such asset or

liability.

In estimating fair value, the Company utilizes valuation techniques that are consistent with

the market approach, the income

approach and/or the cost approach.

Such valuation techniques are consistently applied.

Inputs to valuation techniques include the

assumptions that market participants would use in pricing an asset or liability.

Accounting Standards Codification Topic

establishes a fair value hierarchy for valuation inputs that gives the highest priority

to quoted prices in active markets for identical

assets or liabilities and the lowest priority to unobservable inputs.

The fair value hierarchy is as follows:

Level 1 Inputs -

Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting

entity has the

ability to access at the measurement date

.

Level 2 Inputs -

Inputs other than quoted prices included in Level 1 that are observable for the asset or liability,

either directly

or indirectly. These might

include quoted prices for similar assets or liabilities in active markets, quoted prices

for identical

or similar assets or liabilities in markets that are not active, inputs other

than quoted prices that are observable for the asset or

liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.)

or inputs that are derived principally from, or

corroborated, by market data by correlation or other means

.

Level 3 Inputs -

Unobservable inputs for determining the fair values of assets or liabilities that reflect

an entity’s own

assumptions about the assumptions that market participants would

use in pricing the assets or liabilities.

Assets and Liabilities Measured at Fair Value

on a Recurring Basis

Securities Available for Sale.

U.S. Treasury securities are reported at fair value

utilizing Level 1 inputs.

Other securities classified as

available for sale are reported at fair value utilizing Level 2 inputs.

For these securities, the Company obtains fair value measurements

from an independent pricing service.

The fair value measurements consider observable data that may include dealer quotes,

market

spreads, cash flows, the U.S. Treasury yield curve,

live trading levels, trade execution data, credit information and the bond’s

terms

and conditions, among other things.

In general, the Company does not purchase securities that have a complicated structure.

The Company’s entire portfolio consists of

traditional investments, nearly all of which are U.S. Treasury

obligations, federal agency bullet or mortgage pass-through

securities, or

general obligation or revenue-based municipal bonds.

Pricing for such instruments is easily obtained.

At least annually, the Company

will validate prices supplied by the independent pricing service by compari

ng them to prices obtained from an independent third-party

source.

Equity Securities.

Investment securities classified as equity securities are carried at cost and

the share of earnings or losses is reported

through net income as an adjustment to the investment balance. These securities are not

readily marketable and therefore are classified

as a Level 3 input within the fair value hierarchy.

.

The fair value of residential mortgage loans held for sale based on Level 2 inputs is determined,

when possible,

using either quoted secondary-market prices or investor commitments.

If no such quoted price exists, the fair value is determined

using quoted prices for a similar asset or assets, adjusted for the specific attributes of

that loan, which would be used by other market

participants.

The Company has elected the fair value option accounting for its held for sale loans.

Mortgage Banking Derivative Instruments.

The fair values of interest rate lock commitments (“IRLCs”) are derived by valuation

models incorporating market pricing for instruments with similar characteristics,

commonly referred to as best execution pricing, or

investor commitment prices for best effort IRLCs which have

unobservable inputs, such as an estimate of the fair value of the

servicing rights expected to be recorded upon sale of the loans, net estimated costs to originate

the loans, and the pull-through rate,

and are therefore classified as Level 3 within the fair value hierarchy.

The fair value of forward sale commitments is based on

observable market pricing for similar instruments and are therefore

classified as Level 2 within the fair value hierarchy.

Interest Rate Swap.

The Company’s derivative positions

are classified as Level 2 within the fair value hierarchy and are valued

using

models generally accepted in the financial services industry and

that use actively quoted or observable market input values from

external market data providers.

The fair value derivatives are determined using discounted cash flow models.

Swap

.

The Company entered into a stand-alone derivative contract with the purchaser of

its Visa Class B shares.

The

valuation represents the amount due and payable to the counterparty based upon

the revised share conversion rate, if any,

during the

period. There was $

0.5

million counterparty payment accrued and payable at September 30, 2024,

and

no

amounts payable at

A summary of fair values for assets and liabilities recorded at fair

value on a recurring basis consisted of the following:

Level 1

Level 2

Level 3

Total

Fair

Inputs

Inputs

Inputs

Value

ASSETS:

Sale:

$

50,646

$

$

$

50,646

125,330

125,330

40,017

40,017

59,781

59,781

52,317

52,317

6,976

6,976

31,251

31,251

Interest Rate Swap Derivative

4,444

4,444

Swap

ASSETS:

Sale:

$

24,679

$

$

$

24,679

145,034

145,034

39,083

39,083

63,303

63,303

57,552

57,552

3,450

3,450

28,211

28,211

Interest Rate Swap Derivative

5,317

5,317

Mortgage Banking Activities

.

The Company had Level 3 issuances and transfers related to mortgage banking

activities of $

5.9

million

and $

11.0

million, respectively, for the

nine months ended September 30, 2024, and $

11.1

16.3

million, respectively,

for

the nine months ended September 30, 2023.

Issuances are valued based on the change in fair value of the underlying mortgage loan

from inception of the IRLC to the Consolidated Statement of Financial Condition

date, adjusted for pull-through rates and costs to

originate.

IRLCs transferred out of Level 3 represent IRLCs that were funded

and moved to mortgage loans held for sale, at fair

value.

Assets Measured at Fair Value

on a Non-Recurring Basis

Certain assets are measured at fair value on a non-recurring basis (i.e., the

assets are not measured at fair value on an ongoing basis

but are subject to fair value adjustments in certain circumstances).

An example would be assets exhibiting evidence of impairment.

The following is a description of valuation methodologies used for assets measured

on a non-recurring basis.

Collateral Dependent Loans

.

Impairment for collateral dependent loans is measured using the fair

value of the collateral less selling

costs.

The fair value of collateral is determined by an independent valuation

or professional appraisal in conformance with banking

regulations.

Collateral values are estimated using Level 3 inputs due to the volatility in the real estate market,

and the judgment and

estimation involved in the real estate appraisal process.

Collateral dependent loans are reviewed and evaluated on at least a quarterly

basis for additional impairment and adjusted accordingly.

Valuation

techniques are consistent with those techniques applied in prior

periods.

Collateral-dependent loans had a carrying value of $

3.6

million with a valuation allowance of $

0.1

million at September 30,

2024 and a carrying value of $

3.3

million and a $

0.1

million valuation allowance at December 31, 2023.

Other Real Estate Owned

.

During the first nine months of 2024, certain foreclosed assets, upon initial recognition,

were measured and

reported at fair value through a charge-off

to the allowance for credit losses based on the fair value of the foreclosed asset less

estimated cost to sell.

The fair value of the foreclosed asset is determined by an independent valuation or

professional appraisal in

conformance with banking regulations.

On an ongoing basis, we obtain updated appraisals on foreclosed assets and realize valuation

adjustments as necessary.

The fair value of foreclosed assets is estimated using Level 3 inputs due to the judgment

and estimation

involved in the real estate valuation process.

.

Residential mortgage loan servicing rights are evaluated for impairment

at each reporting period based

upon the fair value of the rights as compared to the carrying amount.

Fair value is determined by a third party valuation model using

estimated prepayment speeds of the underlying mortgage loans serviced and

stratifications based on the risk characteristics of the

underlying loans (predominantly loan type and note interest rate).

The fair value is estimated using Level 3 inputs, including a

discount rate, weighted average prepayment speed, and the cost of loan

servicing.

Further detail on the key inputs utilized are

provided in Note 4 – Mortgage Banking Activities.

At each of September 30, 2024 and December 31, 2023, there was

no

valuation

allowance for loan servicing rights.

Assets and Liabilities Disclosed at Fair Value

The Company is required to disclose the estimated fair value of financial instruments,

both assets and liabilities, for which it is

practical to estimate fair value and the following is a description of valuation

methodologies used for those assets and liabilities.

Cash and Short-Term

Investments.

The carrying amount of cash and short-term investments is used to approximate

fair value, given

the short time frame to maturity and as such assets do not present unanticipated

credit concerns.

Securities Held to Maturity

.

Securities held to maturity are valued in accordance with the methodology

previously noted in the

caption “Assets and Liabilities Measured at Fair Value

on a Recurring Basis – Securities Available

for Sale.”

Other Equity Securities.

Other equity securities are accounted for under the equity method (Topic

  1. and recorded at cost.

These

securities are not readily marketable securities and are reflected in Other

Assets on the Statement of Financial Condition.

Loans.

The loan portfolio is segregated into categories and the fair value of each loan category is calculated

using present value

techniques based upon projected cash flows and estimated discount

rates.

The values reported reflect the incorporation of a liquidity

discount to meet the objective of “exit price” valuation.

Deposits.

The fair value of Noninterest Bearing Deposits, NOW Accounts, Money Market

Accounts and Savings Accounts are the

amounts payable on demand at the reporting date. The fair value of fixed maturity

certificates of deposit is estimated using present

value techniques and rates currently offered for deposits of

similar remaining maturities.

Subordinated Notes Payable.

The fair value of each note is calculated using present value techniques,

based upon projected cash

flows and estimated discount rates as well as rates being offered

for similar obligations.

and Long-Term

Borrowings.

The fair value of each note is calculated using present value techniques,

based upon

projected cash flows and estimated discount rates as well as rates being offered

for similar debt.

A summary of estimated fair values of significant financial instruments not

recorded at fair value consisted of the following:

Carrying

Level 1

Level 2

Level 3

Value

Inputs

Inputs

Inputs

ASSETS:

Cash

$

83,431

$

83,431

$

$

Fed Funds Sold and Interest Bearing Deposits

261,779

261,779

Investment Securities, Held to Maturity

561,480

390,553

151,775

Other Equity Securities

2,848

2,848

1,484

Loans, Net of Allowance for Credit Losses

2,653,260

2,529,755

$

3,579,077

$

$

3,140,058

$

37,268

37,268

52,887

42,259

Long-Term Borrowings

Carrying

Level 1

Level 2

Level 3

Value

Inputs

Inputs

Inputs

ASSETS:

Cash

$

83,118

$

83,118

$

$

Fed Funds Sold and Interest Bearing Deposits

228,949

228,949

Investment Securities, Held to Maturity

625,022

441,189

150,562

Other Equity Securities

2,848

2,848

1,280

Loans, Net of Allowance for Credit Losses

2,703,977

2,510,529

$

3,701,822

$

$

3,243,896

$

35,341

35,341

52,887

44,323

Long-Term Borrowings

All non-financial instruments are excluded from the above table.

The disclosures also do not include goodwill.

Accordingly, the

aggregate fair value amounts presented do not represent the underlying

value of the Company.

NOTE 10 – ACCUMULATED

OTHER COMPREHENSIVE INCOME (LOSS)

The amounts allocated to accumulated other comprehensive income

(loss) are presented in the table below.

Accumulated

Securities

Other

Available

Interest Rate

Retirement

Comprehensive

for Sale

Swap

Plans

(Loss) Income

Balance as of January 1, 2024

$

(25,691)

$

3,970

$

(425)

$

Other comprehensive income (loss) during the period

8,716

(652)

8,064

Balance as of September 30, 2024

$

(16,975)

$

3,318

$

(425)

$

Balance as of January 1, 2023

$

(37,349)

$

4,625

$

(4,505)

$

(37,229)

Other comprehensive income (loss) during the period

2,357

(217)

2,553

Balance as of September 30, 2023

$

(34,992)

$

5,038

$

(4,722)

$

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS

OF

OPERATIONS

Management’s discussion

and analysis (“MD&A”) provides supplemental information, which sets forth

the major factors that have

affected our financial condition and results of operations

and should be read in conjunction with the Consolidated Financial

Statements and related notes.

The following information should provide a better understanding of

the major factors and trends that

affect our earnings performance and financial condition,

and how our performance during the third quarter of 2024 compares with

prior periods.

Throughout this section, Capital City Bank Group, Inc., and subsidiaries, collectively,

is referred to as “CCBG,”

“Company,”

“we,” “us,” or “our.”

CAUTION CONCERNING FORWARD

-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including this MD&A section, contains

“forward-looking statements”

within the meaning of the

Private Securities Litigation Reform Act of 1995.

These forward-looking statements include, among others, statements about

our

beliefs, plans, objectives, goals, expectations, estimates and intentions that are

subject to significant risks and uncertainties and are

subject to change based on various factors, many of which are beyond

our control.

The words “may,”

“could,” “should,” “would,”

“believe,” “anticipate,”

“estimate,” “expect,”

“intend,” “plan,”

“target,”

“vision,” “goal,”

and similar expressions are intended to

identify forward-looking statements.

All forward-looking statements, by their nature, are subject to risks and uncertainties.

Our actual future results may differ materially

from those set forth in our forward-looking statements.

Please see the Introductory Note of this quarterly report on Form 10-Q

as well

as the Introductory Note and

of our 2023 Form 10-K, as amended, as updated in our subsequent quarterly

reports filed on Form 10-Q, and in our other filings made from time to time with the SEC after

the date of this report.

However, other factors besides those listed in our

Quarterly Report or in our Annual Report also could adversely affect our

results,

and you should not consider any such list of factors to be a complete set of all potential risks or

uncertainties.

Any forward-looking

statements made by us or on our behalf speak only as of the date they are made.

We do not undertake to

update any forward-looking

statement, except as required by applicable law.

BUSINESS OVERVIEW

We are a financial

holding company headquartered in Tallahassee,

Florida, and we are the parent of our wholly owned subsidiary,

Capital City Bank (the “Bank” or “CCB”).

We offer

a broad array of products and services through a total of 63 full-service offices

and 105 ATMs/ITMs

located in Florida, Georgia, and Alabama.

Through Capital City Home Loans, LLC (“CCHL”), we have 29

additional offices in the Southeast for our mortgage banking business.

We provide

a full range of banking services, including

traditional deposit and credit services, mortgage banking, asset management,

trust, merchant services, bankcards, securities brokerage

services and financial advisory services, including life insurance products

,

risk management and asset protection services.

Our profitability, like

most financial institutions, is dependent to a large extent upon net

interest income, which is the difference

between the interest and fees received on interest earning assets, such as loans and

securities, and the interest paid on interest-bearing

liabilities, principally deposits and borrowings.

Results of operations are also affected by the provision for credit losses, operating

expenses such as salaries and employee benefits, occupancy and other

operating expenses including income taxes, and noninterest

income such as mortgage banking revenues, wealth management fees,

deposit fees, and bank card fees.

We have included

a detailed discussion of our long-term strategic objectives as part of the MD&A section

of our 2023 Form 10-K, as

amended.

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

We present a tangible

common equity ratio and a tangible book value per diluted share that, in each case, removes the

effect of

goodwill and other intangibles that resulted from merger

and acquisition activity. We

believe these measures are useful to investors

because it allows investors to more easily compare our capital adequacy to

other companies in the industry.

The generally accepted

accounting principles (“GAAP”) to non-GAAP reconciliation for

each quarter presented is provided below.

(Dollars in Thousands, except per share data)

Third

Second

First

Fourth

Third

Shareowners' Equity (GAAP)

$

476,499

$

460,999

$

448,314

$

440,625

$

419,706

Less: Goodwill and Other Intangibles (GAAP)

92,813

92,853

92,893

92,933

92,973

Tangible Shareowners' Equity (non-GAAP)

A

383,686

368,146

355,421

347,692

326,733

Total Assets (GAAP)

4,225,695

4,259,922

4,138,287

Less: Goodwill and Other Intangibles (GAAP)

92,813

92,853

92,893

92,933

92,973

Tangible Assets (non-GAAP)

B

$

4,132,503

$

4,132,842

$

4,167,029

$

4,211,544

$

4,045,314

Tangible Common Equity Ratio (non-GAAP)

A/B

9.28%

8.91%

8.53%

8.26%

8.08%

Actual Diluted Shares Outstanding (GAAP)

C

16,980,686

16,970,228

16,947,204

17,000,758

16,997,886

Tangible Book Value

per Diluted Share (non-GAAP)

A/C

22.60

21.69

20.97

20.45

19.22

SELECTED QUARTERLY

FINANCIAL DATA

(UNAUDITED)

(Dollars in Thousands, Except Per Share Data)

Third

Second

First

Fourth

Third

Summary of Operations

:

Interest Income

$

49,328

$

48,766

$

46,820

$

46,184

$

45,753

Interest Expense

9,117

9,497

8,465

7,013

6,473

40,211

39,269

38,355

39,171

39,280

1,206

1,204

2,025

2,393

Net Interest Income After

39,005

38,065

37,435

37,146

36,887

19,513

19,606

18,097

17,157

16,728

42,921

40,441

40,171

39,958

39,105

Income Before Income Taxes

15,597

17,230

15,361

14,345

14,510

2,980

3,189

3,536

2,909

3,004

Loss Attributable to NCI

1,149

Net Income Attributable to CCBG

13,118

14,150

12,557

11,720

12,655

Net Interest Income (FTE)

(1)

40,260

39,334

38,435

39,264

39,367

Per Common Share

:

Net Income Basic

$

0.77

$

0.84

$

0.74

$

0.69

$

0.75

Net Income Diluted

0.77

0.83

0.74

0.70

0.74

Cash Dividends Declared

0.23

0.21

0.21

0.20

0.20

Diluted Book Value

28.06

27.17

26.45

25.92

24.69

Diluted Tangible Book Value

(2)

22.60

21.69

20.97

20.45

19.22

Market Price:

High

36.67

28.58

31.34

32.56

33.44

Low

26.72

25.45

26.59

26.12

28.64

Close

35.29

28.44

27.70

29.43

29.83

Selected Average Balances

:

Investment Securities

$

908,456

$

919,832

$

953,184

$

963,184

$

1,005,003

2,693,533

2,726,748

2,728,629

2,711,243

2,672,653

Earning Assets

3,883,414

3,935,280

3,849,615

3,823,980

3,876,980

Total Assets

4,272,188

4,190,623

4,166,777

3,572,034

3,641,028

3,576,513

3,548,506

3,596,816

Shareowners’ Equity

480,137

465,297

456,014

435,116

427,580

Common Equivalent Average Shares:

Basic

16,943

16,931

16,951

16,947

16,985

Diluted

16,979

16,960

16,969

16,997

17,025

Performance Ratios:

Return on Average Assets (annualized)

1.24

%

1.33

%

1.21

%

1.12

%

1.19

%

Return on Average Equity (annualized)

10.87

12.23

11.07

10.69

11.74

Net Interest Margin (FTE)

4.12

4.02

4.01

4.07

4.03

Noninterest Income as % of Operating Revenue

32.67

33.30

32.06

30.46

29.87

Efficiency Ratio

71.81

68.61

71.06

70.82

69.88

Asset Quality:

Allowance for Credit Losses (“ACL”)

$

29,836

$

29,219

$

29,329

$

29,941

$

29,083

Nonperforming Assets (“NPAs”)

7,242

6,165

6,799

6,243

4,695

ACL to Loans HFI

1.11

%

1.09

%

1.07

%

1.10

%

1.08

%

NPAs to Total

Assets

0.17

0.15

0.16

0.15

0.11

NPAs to Loans HFI plus OREO

0.27

0.23

0.25

0.23

0.17

ACL to Non-Performing Loans

452.64

529.79

431.46

479.70

619.58

Net Charge-Offs to Average Loans HFI

0.19

0.18

0.22

0.23

0.17

Capital Ratios:

Tier 1 Capital

16.77

%

16.31

%

15.67

%

15.37

%

15.11

%

Total Capital

17.97

17.50

16.84

16.57

16.30

Common Equity Tier 1

14.88

14.44

13.82

13.52

13.26

Leverage

10.89

10.51

10.45

10.30

9.98

Tangible Common Equity

(2)

9.28

8.91

8.53

8.26

8.08

(1)

Fully Tax Equivalent

(2)

Non-GAAP financial measure.

See non-GAAP reconciliation on page 33.

FINANCIAL OVERVIEW

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.