CAPITAL CITY BANK GROUP INC

Performance Summary.

Net income attributable to common shareowners totaled $15.0

million, or $0.88 per diluted share, for the

second quarter of 2025 compared to $16.9 million, or $0.99 per diluted

share, for the first quarter of 2025, and $14.2 million, or $0.83

per diluted share, for the second quarter of 2024. For the first six months of

2025, net income attributable to common shareowners

totaled $31.9 million, or $1.87 per diluted share, compared to net income of $26.7

million, or $1.57 per diluted share, for the same

period of 2024.

Net Interest Income.

Tax-equivalent net

interest income for the second quarter of 2025 totaled $43.2 million compared

to $41.6

million for the first quarter 2025 and $39.3 million for the second quarter of

was driven by a $0.9 million increase in investment securities income and

a $0.4 million increase in overnight funds income.

One

additional calendar day in the second quarter of 2025 also contributed

to the increase.

Compared to the second quarter of 2024, the

increase was primarily due to a $2.7 million increase in investment securities income

and a $1.2 million decrease in deposit interest

expense.

For the first six months of 2025, tax-equivalent net interest income totaled $84.8 million

compared to $77.8 million for the

same period of 2024 with the increase primarily attributable to a $4.2 million

increase in investment securities income, a $1.9 million

increase in overnight funds income, and a $1.4 million decrease in deposit

interest expense.

Provision and Allowance for Credit

Losses.

We recorded

a provision expense for credit losses of $0.6 million for the second quarter of

2025 compared to $0.8 million for the first quarter of 2025 and $1.2 million for the

second quarter of 2024.

For the first six months of

2025, we recorded a provision expense for credit losses of $1.4 million

compared to $2.1 million for the first six months of 2024. At

June 30, 2025, the allowance for credit losses for loans HFI totaled $29.9

million (1.13% of loans HFI) compared to $29.7 million

(1.12% of loans HFI) at March 31, 2025 and $29.3 million at December 31,

2024 (1.10% of loans HFI).

.

Noninterest income for the second quarter of 2025 totaled $20.0 million compared

to $19.9 million for the first

quarter of 2025 and $19.6 million for the second quarter of 2024.

The $0.1 million, or 0.5%, increase over the first quarter of 2025

was primarily due to a $0.4 million increase in mortgage banking revenues

and a $0.3 million increase in deposit fees, partially offset

by a $0.6 million decrease in wealth management fees. Compared

to the second quarter of 2024, the $0.4 million, or 2.1%, increase

was primarily due to a $0.8 million increase in wealth management fees, partially

offset by a $0.2 million decrease in mortgage

banking revenues and a $0.1 million decrease in other income.

For the first six months of 2025, noninterest income totaled $39.9

million compared to $37.7 million for the same period of 2024, primarily

attributable to a $1.8 million increase in wealth management

fees and a $0.7 million increase in mortgage banking revenues that was partially offset

by a $0.2 million decrease in deposit fees.

Noninterest Expense.

Noninterest expense for the second quarter of 2025 totaled

$42.5 million compared to $38.7 million for the first

quarter of 2025 and $40.4 million for the second quarter of 2024.

The $3.8 million, or 9.9%, increase over the first quarter of 2025,

reflected a $3.3 million increase in other expense (primarily lower gains

from sale of banking facilities), a $0.3 million increase in

occupancy expense, and a $0.2 million increase in compensation expense.

Compared to the second quarter of 2024, the $2.1 million,

or 5.2%, increase was primarily due to a $2.1 million increase in compensation expense.

For the first six months of 2025, noninterest

expense totaled $81.2 million compared to $80.6 million for the same period

of 2024 with the $0.6 million, or 0.8%, increase due to a

$3.9 million increase in compensation expense that was partially offset

by a $3.2 million decrease in other expense and a $0.1 million

decrease in occupancy expense.

Financial Condition

Earning Assets.

Average earning assets totaled

$4.032 billion for the second quarter of 2025, an increase of $38.1 million, or 1.0%,

over the first quarter of 2025, and an increase of $110.1

million, or 2.8%, over the fourth quarter of 2024.

The increase over both

prior periods was driven by higher average deposit balances.

Compared to the first quarter of 2025, the change in the earning asset

mix reflected a $27.8 million increase in overnight funds and a $25.7

million increase in investment securities that was partially offset

by a $13.3 million decrease in loans held for investment (“HFI”) and a $2.1 million decrease in loans

held for sale (“HFS”).

Compared to the fourth quarter of 2024, the change in the earning asset mix reflected

a $92.8 million increase in investment securities

and a $50.5 million increase in overnight funds sold partially offset

by a $24.8 million decrease in loans HFI and a $8.4 million

decrease in loans HFS.

Loans.

Average loans HFI decreased

$13.3 million, or 0.5%, from the first quarter of 2025 and decreased $24.8

million, or 0.9%,

from the fourth quarter of 2024.

Loans HFI at June 30, 2025 decreased $29.3 million, or 1.1%, from March 31, 2025

and decreased

$20.1 million, or 0.8%, from December 31, 2024.

Credit Quality

.

Nonperforming assets (nonaccrual loans and other real estate) totaled $6.6 million

at June 30, 2025 compared to $4.4

million at March 31, 2025 and $6.7 million at December 31, 2024.

At June 30, 2025, nonperforming assets as a percentage of total

assets was 0.15%, compared to 0.10% at March 31, 2025 and 0.15% at December 31, 2024.

Nonaccrual loans totaled $6.4 million at

June 30, 2025, a $2.2 million increase over March 31, 2025 and a $0.1 million increase

over December 31, 2024.

Further, classified

loans totaled $28.6 million at June 30, 2025, a $9.4 million increase over

March 31, 2025 and a $8.7 million increase over December

31, 2024. The increase over the prior periods was primarily due to downgrade

of four residential real estate loans totaling $4.2 million

and two commercial real estate loans totaling $4.3 million.

.

Average total

deposits were $3.681 billion for the second quarter of 2025, an increase of $15.2 million,

or 0.4%, over the

first quarter of 2025 and an increase of $80.3 million, or 2.2%, over the fourth quarter

At June 30, 2025, total deposits were

$3.705 billion, a decrease of $79.0 million, or 2.1%, from March 31,

2025, and an increase of $32.9 million, or 0.9%, over December

Public funds totaled $596.6 million at June 30, 2025, $648.0 million at March 31, 2025,

and $660.9 million at December

Capital

.

At June 30, 2025, we were “well-capitalized”

with a total risk-based capital ratio of 19.60% and a tangible common

equity

ratio (a non-GAAP financial measure) of 10.09% compared to 19.20%

and 9.61%, respectively, at March

31, 2025 and 18.64% and

9.51%, respectively,

at December 31, 2024.

At June 30, 2025, 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

$

51,459

$

49,782

$

48,766

$

101,241

$

95,586

Taxable Equivalent Adjustments

Total Interest Income (FTE)

51,503

49,826

48,831

101,329

95,731

Interest Expense

8,275

8,235

9,497

16,510

17,962

Net Interest Income (FTE)

43,228

41,591

39,334

84,819

77,769

1,204

1,388

2,124

Taxable Equivalent Adjustments

Net Interest Income After Provision for Credit Losses

42,564

40,779

38,065

83,343

75,500

20,014

19,907

19,606

39,921

37,703

42,538

38,701

40,441

81,239

80,612

Income Before Income Taxes

20,040

21,985

17,230

42,025

32,591

4,996

5,127

3,189

10,123

6,725

Pre-Tax Loss Attributable to Noncontrolling Interest

$

15,044

$

16,858

$

14,150

$

31,902

$

26,707

Basic Net Income Per Share

$

0.88

$

0.99

$

0.84

$

1.87

$

1.58

Diluted Net Income Per Share

$

0.88

$

0.99

$

0.83

$

1.87

$

1.57

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 second quarter of 2025 totaled $43.2 million compared to $41.6

million for the first quarter

of 2025 and $39.3 million for the second quarter of 2024.

Compared to the first quarter of 2025, the increase was driven by a $0.9

million increase in investment securities income and a $0.4 million increase

in overnight funds income.

One additional calendar day in

the second quarter of 2025 contributed to the increase.

Compared to the second quarter of 2024, the increase was primarily due to a

$2.7 million increase in investment securities income and a $1.2 million decrease

in deposit interest expense.

New investment

purchases at higher yields drove the increase in investment securities income

for both prior period comparisons.

Further, the decrease

in deposit interest expense from the prior year period reflected the gradual

decrease in our deposit rates, as short term rates began

declining in the second half of 2024.

For the first six months of 2025, tax-equivalent net interest income totaled $84.8

million compared to $77.8 million for the same period

of 2024 with the increase primarily attributable to a $4.2 million increase in

investment securities income, a $1.9 million increase in

overnight funds income, and a $1.4 million decrease in deposit interest expense.

New investment purchases at higher yields drove the

increase in investment securities income.

Higher average deposit balances contributed to the increase in overnight funds income.

The

decrease in deposit interest expense reflected the aforementioned decrease in

our deposit rates.

Our net interest margin for the second quarter of 2025 was 4.30%,

an increase of eight basis points over the first quarter of 2025 and an

increase of 28 basis points over the second quarter of 2024.

For the month of June 2025, our net interest margin was 4.36%.

For the

first six months of 2025, our net interest margin increased

by 25 basis points to 4.26% compared to the same period of 2024.

The

increase in net interest margin over all prior periods reflected a higher

yield in the investment portfolio driven by new purchases at

higher yields.

Lower deposit cost also contributed to the improvement over both prior year periods.

For the second quarter of 2025,

our cost of funds was 82 basis points, a decrease of two basis points from the first quarter of

2025 and a 15-basis point decrease from

the second quarter of 2024.

Our cost of deposits (including noninterest bearing accounts) was 81 basis points, 82

basis points, and 95

basis points, respectively,

for the same periods.

We recorded

a provision expense for credit losses of $0.6 million for the second quarter of 2025 compared

to $0.8 million for the first

quarter of 2025 and $1.2 million for the second quarter of 2024.

For the first six months of 2025, we recorded a provision expense for

credit losses of $1.4 million compared to $2.1 million for the first six months of 2024.

For the second quarter of 2025, the provision

reflected an expense of $0.7 million for loans HFI and a benefit of $0.1

million for unfunded loan commitments.

This compares to a

$1.1 million expense for loans HFI, and $0.3 million benefit for the first quarter of 2025,

and a $1.1 million expense for loans HFI and

$0.1 million expense for debt securities in the second quarter of 2024.

For the first six months of 2025, the provision reflected a $1.8

million expense for loans HFI and a $0.4 million benefit for unfunded

loan commitments compared to a $2.1 million expense for loans

HFI, $0.1 million for debt securities, and a $0.1 million benefit for

unfunded loan commitments for the first six months of 2024.

We

discuss the various factors that impacted our provision expense in further detail

below under the heading Allowance for Credit Losses.

Noninterest income for the second quarter of 2025 totaled $20.0 million

compared to $19.9 million for the first quarter of 2025 and

$19.6 million for the second quarter of 2024.

The $0.1 million, or 0.5%, increase over the first quarter of 2025 was primarily

due to a

$0.4 million increase in mortgage banking revenues and a $0.3 million increase

in deposit fees, partially offset by a $0.6 million

decrease in wealth management fees.

The decrease in wealth management fees reflected lower insurance

commission revenues.

Compared to the second quarter of 2024, the $0.4 million, or 2.1%,

increase was primarily due to a $0.8 million increase in wealth

management fees, partially offset by a $0.2 million decrease in mortgage

banking revenues and a $0.1 million decrease in other

income.

The increase in wealth management fees reflected increases in trust fees of $0.5 million

and retail brokerage fees of $0.4

For the first six months of 2025, noninterest income totaled $39.9 million compared

to $37.7 million for the same period of 2024,

primarily attributable to a $1.8 million increase in wealth management

fees and a $0.7 million increase in mortgage banking revenues

that was partially offset by a $0.2 million decrease in deposit fees.

The increase in wealth management fees reflected increases in

retail brokerage fees of $1.0 million, trust fees of $0.7 million, and

insurance commission revenue of $0.1 million.

The increases in

retail brokerage and trust fees were attributable to a combination of new business,

higher account valuations, and fee increases

implemented in early 2025.

The increase in mortgage banking revenues was due to a higher gain on sale margin.

Noninterest income represented 31.7% of operating revenues (net

interest income plus noninterest income) in the second quarter of

2025 compared to 32.4% in the first quarter of 2025 and 33.3% in the second

quarter of 2024.

For the first six months of 2025,

noninterest income represented 32.0% of operating revenues compared

to 32.7% for the same period of 2024.

The table below reflects the major components of noninterest income.

$

5,320

$

5,061

$

5,377

$

10,381

$

10,627

3,774

3,514

3,766

7,288

7,386

Wealth Management

Fees

5,206

5,763

4,439

10,969

9,121

4,190

3,820

4,381

8,010

7,259

Other

1,524

1,749

1,643

3,273

3,310

Total

$

20,014

$

19,907

$

19,606

$

39,921

$

37,703

Significant components of noninterest income are discussed in more

detail below.

.

Deposit fees for the second quarter of 2025

totaled $5.3

million, an increase of $0.3 million, or 5.1%, over the first

quarter of 2025, and a decrease of $0.1 million from the second quarter of

For the first six months of 2025, deposit fees totaled

$10.4 million, a decrease of $0.2 million, or 2.3%, from the same period of

was driven by higher account maintenance and overdraft fees.

The decrease from both prior year periods reflected lower overdraft

fees and commercial account analysis fee income that was partially offset

by higher account maintenance fees.

.

Bank card fees for the second quarter of 2025 totaled $3.8

million, an increase of $0.3 million, or 7.4%, over the

first quarter of 2025, and comparable to the second quarter of 2024.

For the first six months of 2025, bank card fees totaled $7.3

million, a decrease of $0.1 million, or 1.3%, from the same period of 2024.

reflected growth in new checking accounts.

The decrease from the prior year periods reflected lower debit card utilization

as

consumer spending patterns normalize.

Wealth

Management Fees

.

Wealth management fees

include trust fees through Capital City Trust (i.e., managed

accounts and

trusts/estates), retail brokerage fees through Capital City Investments (i.e.,

investment, insurance products, and retirement accounts),

and financial advisory fees through Capital City Strategic Wealth

(i.e., including the sale of life insurance, risk management and asset

protection services).

Wealth management

fees for the second quarter of 2025 totaled $5.2 million, a decrease of $0.6 million,

or 9.7%,

from the first quarter of 2025, and an increase of $0.8

million, or 17.3%, over the second quarter of 2024.

Compared to the first

quarter of 2025, the decrease reflected lower insurance commission revenue.

For the first six months of 2025, wealth management

fees totaled $11.0 million, an increase of

$1.8 million, or 20.3%, over the same period of 2024, and reflected a $1.0 million increase

in

retail brokerage fees, a $0.7

million increase in trust fees, and a $0.1 million increase insurance commission

revenue.

At June 30,

2025, total assets under management were approximately $3.192 billion

compared to $3.068 billion at March 31, 2025

and $3.049

billion at December 31, 2024.

Compared to the prior periods, the growth in assets under management

was primarily due to new retail

brokerage accounts and to a lesser extent new managed trust accounts.

Mortgage Banking Revenues.

Mortgage banking revenues totaled $4.2 million for the second quarter

of 2025, an increase of $0.4

million, or 9.7%, over the first quarter of 2025 and a decrease of $0.2

million, or 4.4%, from the second quarter of 2024.

For the first

six months of 2025, mortgage banking revenues totaled $8.0

million compared to $7.3 million for the same period of 2024.

The

increase compared to the first quarter of 2025 was attributable to higher

loan sale volume.

A higher gain on sale margin drove the

favorable variance for the six month period comparison.

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 $1.5 million for the second quarter of 202

5, a decrease of $0.2 million, or 12.9%, from the first quarter of

2025, and a decrease of $0.1 million, or 7.2%, from the second quarter

For the first six months of 2025, other income totaled

$3.3 million, comparable to the same period of 2024.

The decrease from the first quarter of 2025 was primarily attributable to

decreases in loan servicing income and miscellaneous income.

Noninterest expense for the second quarter of 2025 totaled $42.5 million

compared to $38.7 million for the first quarter of 2025 and

$40.4 million for the second quarter of 2024.

The $3.8 million, or 9.9%, increase over the first quarter of 2025, reflected

a $3.3

million increase in other expense, a $0.3 million increase in occupancy expense, and

a $0.2 million increase in compensation expense.

The increase in other expense was driven by a $4.5 million increase in other real

estate expense which reflected lower gains from the

sale of banking facilities, primarily the sale of our operations center building

in the first quarter of 2025, partially offset by a $0.5

million decrease in charitable contribution expense and a $0.6 million decrease

in miscellaneous expense.

Compared to the second

quarter of 2024, the $2.1 million, or 5.2%, increase was primarily due to a $2.1 million increase

in compensation expense which

reflected a $1.3 million increase in salary expense and a $0.8 million increase

in associate benefit expense.

For the first six months of 2025, noninterest expense totaled $81.2 million compared

to $80.6 million for the same period of 2024 with

the $0.6 million, or 0.8%, increase due to a $3.9 million increase in compensation

expense that was partially offset by a $3.2 million

decrease in other expense and a $0.1 million decrease in occupancy expense.

The increase in compensation was due to a $2.5 million

increase in salary expense and a $1.4 million increase in associate benefit expense.

The decrease in other expense was primarily due

to a $4.5 million decrease in other real estate expense due to lower gains from

the sale of banking facilities, and a $1.0 million

decrease in miscellaneous expense (non-service component of pension

expense), partially offset by increases in processing expense

of

$1.1 million (outsource of core processing system), charitable contribution

expense of $0.7 million, and professional fees of $0.5

The table below reflects the major components of noninterest expense.

Salaries

$

22,013

$

21,883

$

20,754

$

43,896

$

41,358

Associate Benefits

4,477

4,365

3,652

8,842

7,455

Total Compensation

26,490

26,248

24,406

52,738

48,813

Premises

3,272

3,172

3,043

6,444

6,216

Equipment

3,799

3,621

3,954

7,420

7,775

Total Occupancy

7,071

6,793

6,997

13,864

13,991

Legal Fees

Professional Fees

1,518

1,622

1,340

3,140

2,598

Processing Services

2,491

2,469

1,938

4,960

3,771

Advertising

1,639

1,666

Telephone

1,433

1,427

Insurance – Other

1,489

1,664

Other Real Estate Owned, net

(4,470)

(4,449)

Pension - Other

(872)

(873)

(419)

(1,745)

(838)

Miscellaneous

3,067

4,119

3,412

7,186

6,618

Total Other

8,977

5,660

9,038

14,637

17,808

Total

$

42,538

$

38,701

$

40,441

$

81,239

$

80,612

Significant components of noninterest expense are discussed in more detail

below.

Compensation.

Compensation expense totaled $26.5 million for the second quarter of 2025,

a $0.2 million, or 0.9%, increase over the

first quarter of 2025 and a $2.1

million, or 8.5%, increase over the second quarter of 2024.

The increase over the first quarter of 2025

reflected a $0.1 million increase in salary expense and a $0.1 million increase

in associate benefit expense.

Compared to the second

quarter of 2024, the $2.1 million, or 8.5%, increase reflected a $1.3 million

increase in salary expense and a $0.8 million increase in

associate benefit expense.

The increase in salary expense was primarily due to increases in incentive plan expense of $0.9

million and

base salaries of $0.4 million (merit-based).

The increase in associate benefit expense was attributable to a $0.6 million

increase in

associate insurance expense and a $0.2 million increase in stock compensation

expense.

For the first six months of 2025,

compensation expense totaled $52.7 million compared to $48.8

million for the same period of 2024

with the $3.9 million increase

attributable to a $2.5 million increase in salary expense and a $1.4 million

increase in associate benefit expense.

The increase in

salary expense was primarily due to increases in incentive plan expense of $1.2

million, base salaries of $0.9 million (merit-based),

and commissions of $0.7 million (retail brokerage and mortgage).

The increase in associate benefit expense was attributable to a

higher cost for associate insurance.

Occupancy

.

Occupancy expense totaled $7.1 million for the second quarter of 2025, a $0.3

million, or 4.1%, increase over the first

quarter of 2025 and a $0.1 million, or 1.1%, increase over the second quarter

For the first six months of 2025, occupancy

expense totaled $13.9 million compared to $14.0 million for the same period

Compared to the first quarter of 2025, the

increase was primarily due to higher expense for maintenance agreements

and banking office leases.

Other

.

Other expense totaled $9.0 million for the second quarter of 2025

compared to $5.7 million for the first quarter of 2025

and

$9.0

million for the second quarter of 2024.

For the first six months of 2025, other expense totaled $14.6 million compared

to $17.8

million for the same period of 2024.

Compared to the first quarter of 2025, the $3.3 million increase was driven by

a $4.5 million

increase in other real estate expense which reflected lower gains from the

sale of banking facilities, primarily the sale of our operations

center building in the first quarter of 2025, partially offset

by a $0.5 million decrease in charitable contribution expense and a $0.6

million decrease in miscellaneous expense.

Our operating efficiency ratio (expressed as noninterest

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

plus noninterest income) was 67.26%

for the second quarter of 2025 compared to 62.93% for the first quarter of 202

and 68.61% for

the second quarter of 2024.

For the first six months of 2025, this ratio was 65.13% compared to 69.81% for

the same period of 2024.

Income Taxes

We realized income

tax expense of $5.0 million (effective rate of 24.9%) for the second

quarter of 2025 compared to $5.1 million

(effective rate of 23.3%) for the first quarter of 2025 and $3.2

million (effective rate of 18.5%) for the second quarter of 2024.

For the

first six months of 2025, we realized income tax expense of $10.1 million

(effective rate of 24.1%) compared to $6.7 million

(effective rate of 20.6%) for the same period of 2024.

A lower level of tax benefit accrued from a solar tax credit equity fund drove

the increase in our effective tax rate for all prior period comparisons.

Absent discrete items or new tax credit investments, we expect

our annual effective tax rate to approximate 24% for 2025.

FINANCIAL CONDITION

Average earning

assets totaled $4.032 billion for the second quarter of 2025, an increase of $38.1 million, or

1.0%, over the first

quarter of 2025, and an increase of $110.1 million,

or 2.8%, over the fourth quarter of 2024.

The increase over both prior periods was

driven by higher average deposit balances (see below –

).

Compared to the first quarter of 2025, the change in the earning

asset mix reflected a $27.8 million increase in overnight funds and a $25.7 million

increase in investment securities that was partially

offset by a $13.3 million decrease in loans held for investment (“HFI”)

and a $2.1 million decrease in loans held for sale (“HFS”).

Compared to the fourth quarter of 2024, the change in the earning asset mix reflected

a $92.8 million increase in investment securities

and a $50.5 million increase in overnight funds sold partially offset

by a $24.8 million decrease in loans HFI and a $8.4 million

decrease in loans HFS.

Investment Securities

Average investments

totaled $1.008 billion, a $25.7 million, or 2.6%, increase over the first quarter of 2025

and $92.8 million, or

10.1%, increase over the fourth quarter of 2024. Our investment portfolio

represented 25.0% of our average earning assets for the

second quarter of 2025 compared to 24.6% for the first quarter of 2025 and

23.3% for the fourth quarter of 2024.

For the remainder of

2025, 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 flow 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 June 30, 2025, $462.6 million, or 46.3%, of the investment portfolio was classified as HTM

and

$533.5 million, or 53.4%, was classified as AFS.

The average maturity of our total portfolio at June 30, 2025 was 2.66

years

compared to 2.64 years at March 31, 2025 and 2.54 years at December

The duration of our investment portfolio at June 30,

2025 was 2.14 years compared to 2.10 years at March 31, 2025 and 2.19

years at December 31, 2024.

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 June 30, 2025, there were 788 positions (combined AFS and HTM)

with unrealized losses pre-tax totaling $33.0 million.

48 of

these positions are U.S. Treasury bonds

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

650 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 June 30, 2025, 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 90 positions (municipal securities and corporate bonds)

have a credit component.

At

June 30, 2025, corporate debt securities had an allowance for credit losses of

$69,000 and municipal securities had an allowance of

less than $1,000. None of the securities held by the Company were past due or

in nonaccrual status at June 30, 2025.

Loans HFI

Average loans

HFI decreased by $13.3 million, or 0.5%, from the first quarter of 2025 and decreased by $24.8

million, or 0.9%, from

the fourth quarter of 2024.

Compared to the first quarter of 2025, the decrease was due to decreases in construction

loans of $24.6

million, consumer loans (primarily indirect auto) of $1.9 million, and commercial

loans of $3.4 million, partially offset by increases to

residential real estate loans of $10.2 million, commercial real estate loans of $2.1

million, and home equity loans of $4.1 million.

Compared to the fourth quarter of 2024, the decline was primarily attributable

to decreases in construction loans of $33.2 million,

commercial loans of $9.2 million, and consumer loans (primarily indirect

auto) of $4.0 million, partially offset by increases in home

equity loans of $10.8 million, residential real estate loans of $9.9 million,

and commercial real estate loans of $1.9 million.

Loans HFI at June 30, 2025 decreased by $29.3 million, or 1.1%, from March

31, 2025 and decreased by $20.1 million, or 0.8%, from

Compared to the first quarter of 2025, the decline was primarily due to decreases in construction

loans of $18.2

million, consumer loans (primarily indirect auto) of $8.7 million, commercial

loans of $4.4 million, and commercial real estate loans

of $4.4 million, partially offset by increases in residential

real estate loans of $5.8 million and home equity loans of $2.2 million.

Compared to December 31, 2024, the decrease was primarily attributable

to decreases in construction loans of $45.9 million,

commercial loans of $9.2 million, and consumer loans (primarily indirect

auto) of $2.0 million, partially offset by increases in

commercial real estate loans of $23.4 million, residential real estate loans of $17.9

million, and home equity loans of $8.1 million.

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

Nonperforming assets (nonaccrual loans and other real estate) totaled $6.6

million at June 30, 2025 compared to $4.4 million at March

31, 2025 and $6.7 million at December 31, 2024.

At June 30, 2025, nonperforming assets as a percentage of total assets was 0.15%,

compared to 0.10% at March 31, 2025 and 0.15% at December 31, 2024.

Nonaccrual loans totaled $6.4 million at June 30, 2025, a

$2.2 million increase over March 31, 2025 and a $0.1 million increase over

December 31, 2024 with the increase over the first quarter

of 2025 primarily attributable to two home equity loans totaling $1.8

Classified loans totaled $28.6 million at June 30, 2025,

a $9.4 million increase over March 31, 2025 and a $8.7 million increase over

The increase over the prior periods

was primarily due to the downgrade of four residential real estate loans totaling $4.2

million and two commercial real estate loans

totaling $4.3 million.

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 June 30, 2025, the allowance for credit losses for loans HFI totaled $29.9

million compared to $29.7 million at March 31, 2025 and

$29.3 million at December 31, 2024. Activity within the allowance is provided

in Note 3 – Loans Held for Investment and Allowance

for Credit Losses in the Notes to Consolidated Financial Statements. The

slight increase in the allowance over March 31, 2025 and

December 31, 2024 was primarily attributable to qualitative factor

adjustments that were partially offset by lower loan balances.

Net

loan charge-offs for both the second quarter

of 2025 and the first quarter of 2025 were comparable at nine basis points of average

loans.

At June 30, 2025, the allowance represented 1.13% of loans HFI compared to 1.12% at March

31, 2025, and 1.10% at

At June 30, 2025, the allowance for credit losses for unfunded commitments

totaled $1.7 million compared to $1.8 million and $2.2

million at March 31, 2025 and December 31, 2024, respectively.

The decline in the allowance for unfunded commitments from March

31, 2025 and December 31, 2024 reflected a lower level of unfunded

loan commitments. The allowance for unfunded commitments is

recorded in other liabilities.

Average total

deposits were $3.681 billion for the second quarter of 2025, an increase of $15.2 million, or 0.4%,

over the first quarter

of 2025 and an increase of $80.3 million, or 2.2%, over the fourth quarter

was attributable to higher core deposit balances (primarily noninterest

bearing checking and money market), partially offset by

a

decline in public funds balances (primarily NOW accounts) due to the seasonal

reduction in those balances.

The increase over the

fourth quarter of 2024 reflected strong growth in core deposit balances and

a seasonal increase in public funds balances (primarily

NOW) which are received/deposited by those clients starting in December

and peak on average in the first quarter.

At June 30, 2025, total deposits were $3.705 billion, a decrease of $79.0

million, or 2.1%, from March 31, 2025, and an increase of

$32.9 million, or 0.9%, over December 31, 2024.

The decrease from March 31, 2025 was primarily due to a seasonal decline in

public

funds balances, (primarily money market and noninterest bearing).

The increase over December 31, 2024 reflected higher core

deposit balances, primarily noninterest bearing accounts. Public funds

totaled $596.6 million at June 30, 2025, $648.0 million at

March 31, 2025, and $660.9 million at December 31, 2024.

Business deposit transaction accounts classified as repurchase agreements

averaged $22.6 million for the second quarter of 2025, a

decrease of $7.3 million from the first quarter of 2025 and a decrease of

$5.5 million from the fourth quarter of 2024. At June 30,

2025,

repurchase agreement balances were $21.8 million compared to $22.8

million at March 31, 2025 and $26.2 million at December

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

embedded 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

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%

19.2%

14.4%

9.6%

5.0%

-5.3%

-11.1%

-17.5%

-23.3%

17.3%

13.0%

8.7%

4.5%

-4.7%

-9.8%

-15.3%

-20.9%

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%

39.3%

31.0%

22.5%

14.4%

-3.8%

-14.4%

-26.2%

-37.0%

39.1%

31.1%

23.0%

15.2%

-1.9%

-11.7%

-22.5%

-32.8%

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 first quarter of 2025, these metrics generally

became more favorable in the rising rate scenarios and less favorable

in the falling rate scenarios primarily due to the increase in loan

prepayment speed assumptions.

The instantaneous parallel rate shock results over the next 12-month

and 24-month periods are

outside of policy in the rates down 200 bps, 300 bps,

and 400 bps scenarios

largely due to the limited ability to decrease deposit rates

the full extent of this rate change, and to a lesser extent the increase in variable

rate overnight funds.

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

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%

29.4%

23.9%

17.1%

9.2%

-11.5%

-23.9%

-34.8%

-40.8%

29.0%

23.7%

17.1%

9.3%

-11.2%

-23.1%

-33.7%

-40.3%

EVE Ratio (policy minimum 5.0%)

31.6%

29.7%

27.6%

25.4%

19.9%

16.8%

14.2%

12.8%

At June 30, 2025, the economic value of equity was favorable in all rising

rate environments and unfavorable in the falling rate

environments.

Compared to March 31, 2025, EVE metrics remained stable.

EVE is currently in compliance with policy in all rate

scenarios as the EVE ratio exceeds the policy minimum of 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 June 30, 2025, we had the ability to generate approximately $1.603 billion

(excludes overnight funds position of $395 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.

We believe the liquidity

available to us at June 30, 2025 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. Our portfolio consists of

debt issued by the U.S. Treasury,

U.S. governmental

agencies, municipal governments, and corporate entities. Additional

information on our investment portfolio is provided within Note 2

– Investment Securities.

The Bank maintained an average net overnight funds (i.e., deposits with banks

plus FED funds sold less FED funds purchased) sold

position of $348.8 million in the second quarter of 2025 compared

to $320.9 million in the first quarter of 2025 and $298.3 million in

the fourth quarter of 2024.

Compared to both prior periods, the increase reflected higher average deposits and

lower average loans.

We expect our

capital expenditures will be approximately $10.0 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 $33.1 million for the second quarter of 2025 compared

to $37.3 million for the first quarter of

2025 and $34.5 million for the fourth quarter of 2024.

The decrease from both prior periods reflected lower repurchase agreement

balances,

partially offset by an increase in mortgage warehouse borrowings.

Additional detail on 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.

In the second

quarter of 2025, we made a principal payment of $5.1 million on this note.

The second note for $32.0 million was issued to CCBG

Capital Trust II in May 2005.

In the second quarter of 2025, we made a principal payment of $5.1

million on this note.

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.

In 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 34.

At June 30, 2025, our regulatory capital

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

under the Basel III capital standards.

Shareowners’ equity was $526.4 million at June 30, 2025 compared to

$512.6 million at March 31, 2025 and $495.3 million at

For the first six months of 2025, shareowners’ equity was positively impacted by net income

attributable to

shareowners of $31.9 million, a net $5.5 million decrease in the accumulated

other comprehensive loss, the issuance of common stock

of $2.8 million, and stock compensation accretion of $0.9 million.

The net favorable change in accumulated other comprehensive loss

reflected a $6.4 million decrease in the investment securities loss that was partially offset

by a $0.9 million decrease in the fair value

of the interest rate swap related to subordinated debt.

Shareowners’ equity was reduced by common stock dividends of $8.2 million

($0.48 per share) and net adjustments totaling $1.8 million related to transactions

under our stock compensation plans.

At June 30, 2025, our total risk-based capital ratio was 19.60% compared to 19.20% at March

31, 2025 and 18.64% at December 31,

Our common equity tier 1 capital ratio was 16.81%, 16.08%, and 15.54%, respectively,

on these dates.

Our leverage ratio was

11.14%, 11.17%,

and 11.05%, respectively,

on these dates.

At June 30, 2025, 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 10.09% at June 30, 2025 compared to 9.61%

and 9.51% at March 31, 2025 and December 31, 2024,

respectively.

If the unrealized loss for held-to-maturity securities of $9.9 million (after-tax) was recognized

in accumulated other

comprehensive loss, our adjusted tangible capital ratio would be 9.86%.

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

liability through other comprehensive income in

accordance with Accounting Standards Codification

Topic 715. At June 30, 2025,

the net pension asset reflected in other

comprehensive loss was $9.7 million comparable to March 31, 2025

and December 31, 2024. 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 2024 Form 10-K.

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 June 30, 2025, we had $672.3 million in commitments to extend credit

and $7.4 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 $1.7 million at June 30, 2025.

CRITICAL ACCOUNTING POLICIES

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

Financial Statements included in our 2024 Form 10-K.

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 2024 Form 10-K.

TABLE I

AVERAGE BALANCES & INTEREST RATES (UNAUDITED)

Average

Average

Average

Average

Average

Average

Average

Average

Rate

Rate

Rate

Rate

Assets:

$

22,668

$

8.40

%

$

26,281

$

5.26

%

$

23,692

$

8.21

%

$

26,797

$

1,080

5.62

%

(1)(2)

2,652,572

40,436

6.11

2,726,748

40,683

6.03

2,659,204

80,465

6.10

2,727,688

80,879

5.99

Taxable Securities

1,006,514

6,666

2.65

918,989

3,998

1.74

994,068

12,468

2.52

935,658

8,237

1.76

Tax-Exempt Securities

(2)

1,467

4.50

4.36

1,158

4.43

4.35

Federal Funds Sold and Interest Bearing

348,787

3,909

4.49

262,419

3,624

5.56

334,944

7,405

4.46

201,454

5,517

5.51

Total Earning Assets

4,032,008

51,503

5.12

%

3,935,280

48,831

4.99

%

4,013,066

101,329

5.09

%

3,892,447

95,731

4.94

%

Cash & Due From Banks

65,761

74,803

69,593

75,283

Allowance For Credit Losses

(30,492)

(29,564)

(30,251)

(29,797)

302,984

291,669

300,336

293,473

TOTAL ASSETS

$

$

$

4,352,744

$

4,231,406

Liabilities:

Noninterest Bearing Deposits

1,342,304

1,346,546

1,329,933

1,345,367

NOW Accounts

$

1,225,697

$

3,750

1.23

%

$

1,207,643

$

4,425

1.47

%

$

1,237,759

$

7,604

1.24

%

$

1,204,337

$

8,922

1.49

%

Money Market Accounts

431,774

2,340

2.17

407,387

2,752

2.72

425,949

4,527

2.14

380,489

4,737

2.50

Savings Accounts

507,950

0.14

519,374

0.14

507,813

0.14

529,374

0.14

Other Time Deposits

172,982

1,141

2.65

160,078

1,226

3.08

171,682

2,307

2.71

149,203

2,150

2.90

Total Interest Bearing Deposits

2,338,403

7,405

1.27

2,294,482

8,579

1.50

2,343,203

14,788

1.27

2,263,403

16,173

1.44

Total Deposits

3,680,707

7,405

0.81

3,641,028

8,579

0.95

3,673,136

14,788

0.81

3,608,770

16,173

0.90

Repurchase Agreements

22,557

2.78

26,999

3.24

26,169

2.47

26,362

3.19

Other Short-Term Borrowings

10,503

6.82

6,592

4.16

8,978

6.64

5,176

4.16

51,981

4.03

52,887

4.71

52,432

1,090

4.13

52,887

1,258

4.70

Other Long-Term Borrowings

2.41

4.31

4.04

4.56

Total Interest Bearing Liabilities

2,424,236

8,275

1.37

%

2,381,218

9,497

1.60

%

2,431,575

16,510

1.37

%

2,348,098

17,962

1.54

%

Other Liabilities

76,138

72,634

70,705

70,464

TOTAL LIABILITIES

3,842,678

3,800,398

3,832,213

3,763,929

Temporary Equity

6,493

6,821

TOTAL SHAREOWNERS’ EQUITY

527,583

465,297

520,531

460,656

TOTAL LIABILITIES, TEMPORARY

AND SHAREOWNERS’ EQUITY

$

$

$

4,352,744

$

4,231,406

Interest Rate Spread

3.75

%

3.38

%

3.72

%

3.40

%

$

43,228

$

39,334

$

84,819

$

77,769

Net Interest Margin

(3)

4.30

%

4.02

%

4.26

%

4.01

%

(1)

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

Interest income includes loan costs of $0.3 million and

$0.7 million for the three and six months ended June

30, 2025,

and net loan fees of $0.2 and $0.3 million for the three and six

month periods ended June 30, 2024.

(2)

Interest income includes the effects of taxable equivalent adjustments

using a 21% Federal tax rate.

(3)

Taxable equivalent net interest income divided by average earning 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, 2024.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

At June 30, 2025, 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 effective.

Our management, including our Chief Executive Officer

and Chief Financial Officer, has reviewed

our internal control over financial

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

Act of 1934). During the quarter ended June 30, 2025, 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 2024 Form

10-K, 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

None.

Defaults Upon Senior Securities

None.

Mine Safety Disclosure

Not Applicable.

Other Information

(c) Rule 10b5-1 Trading Plans

During the three months ended June 30, 2025, none of our directors or

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

adopted

, modified 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 Item 408(c) of Regulation S-K.

Exhibits

(A)

Exhibits

3.1

Amended and Restated Articles of Incorporation - incorporated herein by reference to Exhibit 3.1 of

the Registrant’s

Form 8-K (filed 5/3/21) (No. 0-13358).

3.2

Amended and Restated Bylaws - incorporated herein by reference to Exhibit 3.1 of the Registrant’s

Form 8-K (filed

12/20/2024) (No. 0-13358).

31.1

Certification of William G Smith, Jr., Chairman and Chief Executive Officer of Capital City Bank Group, Inc., Pursuant

to Rule 13a-14(a) of the Securities Exchange Act of 1934.

31.2

Certification of Jeptha E. Larkin, Executive Vice President and Chief Financial Officer of Capital City Bank Group, Inc.,

Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.

32.1

Certification of William G. Smith, Jr., Chairman and Chief Executive Officer of Capital City Bank Group, Inc., Pursuant

to 18 U.S.C. Section 1350.

32.2

Certification of Jeptha E. Larkin, Executive Vice President and Chief Financial Officer of Capital City Bank Group, Inc.,

Pursuant to 18 U.S.C. Section 1350.

101.SCH

Extension Schema Document

101.CAL

Extension Calculation Linkbase Document

101.LAB

Extension Label Linkbase Document

101.PRE

Extension Presentation Linkbase Document

101.DEF

Extension Definition Linkbase Document

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has

duly caused this Report to be signed on its

behalf by the undersigned Chief Financial Officer hereunto duly

authorized.

CAPITAL CITY

BANK GROUP,

INC.

(Registrant)

/s/ Jeptha E. Larkin

Jeptha E. Larkin

Executive Vice President

and Chief Financial Officer

(Mr. Larkin is the Principal Financial

Officer and has

been duly authorized to sign on behalf of the Registrant)

Date: July 31, 2025