CAPITAL CITY BANK GROUP INC

Performance Summary.

Net income attributable to common shareowners of $16.0 million, or $0.93 per

diluted share, for the third

quarter of 2025 compared to $15.0 million, or $0.88 per diluted share, for

the second quarter of 2025, and $13.1 million, or $0.77 per

diluted share, for the third quarter of 2024.

For the first nine months of 2025, net income attributable to common shareowners totaled

$47.9 million, or $2.80 per diluted share, compared to net income of $39.8

million, or $2.35 per diluted share, for the same period of

Net Interest Income.

Tax-equivalent net

interest income for the third quarter of 2025 totaled $43.6 million compared

to $43.2 million

for the second quarter of 2025 and $40.3 million for the third quarter of 2024.

Compared to the second quarter of 2025, the increase

was driven by a $0.5 million increase in investment securities income, a $0.4

million decrease in interest expense, and a $0.1 million

increase in overnight funds income, partially offset

by a $0.6 million decrease in loan income.

One additional calendar day in the

third quarter of 2025 contributed to the improvement.

Compared to the third quarter of 2024, the increase was primarily due to a $3.0

million increase in investment securities income, a $1.2 million decrease

in interest expense, and a $0.5 million increase in overnight

funds income, partially offset by a $1.4 million decrease in

loan income.

For the first nine months of 2025, tax-equivalent net interest

income totaled $128.4 million compared to $118.0

million for the same period of 2024, with the increase primarily attributable to

a

$7.3 million increase in investment securities income, a $2.3 million increase

in overnight funds income, and a $2.3 million decrease

in deposit interest expense, partially offset by a $1.9 million decrease

in loan income.

Provision and Allowance for Credit

Losses.

We recorded

a provision expense for credit losses of $1.9 million for the third quarter of

2025 compared to $0.6 million for the second quarter of 2025 and $1.2 million for

For the first nine months

of 2025, we recorded a provision expense for credit losses of $3.3 million which

was comparable to the same period of 2024.

At

September 30, 2025, the allowance for credit losses for loans HFI totaled $30.2

million (1.17% of loans HFI) compared to $29.9

million (1.13% of loans HFI) at June 30, 2025 and $29.3 million at December

31, 2024 (1.10% of loans HFI).

. Noninterest income for the third quarter of 2025 totaled $22.3 million compared

to $20.0 million for the second

quarter of 2025 and $19.5 million for the third quarter of 2024.

The $2.3 million, or 11.6%, increase over the second quarter

of 2025

was primarily due to a $1.2 million increase in other income, a $0.6 million increase

in mortgage banking revenues, and a $0.6 million

increase in deposit fees.

The increase in other income was primarily due to a $0.7 million gain from the sale of our

insurance

subsidiary (Capital City Strategic Wealth)

in the third quarter of 2025, and to a lesser extent higher miscellaneous income.

Compared

to the third quarter of 2024, the $2.8 million, or 14.4%, increase was primarily

due to a $1.1 million increase in other income, a $0.8

million increase in mortgage banking revenues, a $0.4 million increase in

wealth management fees, and a $0.4 million increase in

deposit fees.

The increase in other income reflected the aforementioned gain from

the sale of our insurance subsidiary. For

the first

nine months of 2025, noninterest income totaled $62.3 million compared

to $57.2 million for the same period of 2024, primarily

attributable to a $2.2 million increase in wealth management fees, a $1.6 million

increase in mortgage banking revenues, and a $1.1

million increase in other income. The increase in other income reflected

the aforementioned gain from the sale of our insurance

subsidiary and higher miscellaneous income.

Noninterest Expense.

Noninterest expense for the third quarter of 2025 totaled $42.9 million compared

to $42.5 million for the second

quarter of 2025 and $42.9 million for the third quarter of 2024.

The $0.4 million, or 0.9%, increase over the second quarter of 2025

reflected a $0.8 million increase in other expense that was partially offset

by a $0.4 million decrease in compensation expense.

Compared to the third quarter of 2024, a $0.3 million increase in compensation

expense was offset by a $0.2 million decrease in other

expense and a $0.1 million decline in occupancy expense. For the first nine months

of 2025, noninterest expense totaled $124.2

million compared to $123.5 million for the same period of 2024 with

the $0.6 million, or 0.5%, increase primarily due to a $4.2

million increase in compensation expense that was partially offset

by a $3.4 million decrease in other expense and a $0.2 million

decrease in occupancy expense.

Financial Condition

Earning Assets.

Average earning assets totaled

$3.982 billion for the third quarter of 2025, a decrease of $50.5 million, or 1.3%,

from

the second quarter of 2025, and an increase of $59.6 million, or 1.5%, over

the fourth quarter of 2024.

Compared to the second

quarter of 2025, the change in the earning asset mix reflected a $46.4 million

decrease in loans HFI and a $14.1 million decrease in

investment securities, partially offset by a $7.4 million

increase in overnight funds sold and a $2.6 million increase in loans held for

sale (“HFS”).

Compared to the fourth quarter of 2024, the change in earning asset mix reflected a $78.7

million increase in

investment securities and a $57.9 million increase in overnight funds sold, partially

offset by a $71.2 million decrease in loans HFI

and a $5.8 million decrease in loans HFS.

Loans.

Average loans HFI decreased

$46.4 million, or 1.8%, from the second quarter of 2025 and decreased

$71.2 million, or 2.7%,

from the fourth quarter of 2024.

Loans HFI at September 30, 2025, decreased $49.5 million, or 1.9%, from

June 30, 2025, and

decreased $69.5 million, or 2.6%, from December 31, 2024.

Credit Quality

.

Nonperforming assets (nonaccrual loans and other real estate) totaled $10.0

million at September 30, 2025 compared

to $6.6 million at June 30, 2025 and $6.7 million at December 31, 2024.

At September 30, 2025, nonperforming assets as a

percentage of total assets was 0.23%, compared to 0.15% at June 30,

2025 and 0.15% at December 31, 2024.

Nonaccrual loans

totaled $8.2 million at September 30, 2025, a $1.7 million increase over

June 30, 2025 and a $1.9 million increase over December 31,

Further, classified loans totaled $26.5 million

at September 30, 2025, a $2.1 million decrease from June 30, 2025 and a $6.6

million increase over December 31, 2024.

.

Average total

deposits were $3.612 billion for the third quarter of 2025, a decrease of $68.4 million,

or 1.86%, from the

second quarter of 2025 and an increase of $11.9

million, or 0.33%, over the fourth quarter of 2024.

At September 30, 2025, total

deposits were $3.615 billion, a decrease of $89.9 million, or 2.4%,

from June 30, 2025, and a decrease of $57.1 million, or 1.6%, from

Public funds totaled $497.9 million at September 30, 2025, $596.6 million at June

30, 2025, and $660.9 million

at December 31, 2024.

Capital

.

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

with a total risk-based capital ratio of 20.59% and a tangible common

equity ratio (a non-GAAP financial measure) of 10.66% compared

to 19.60% and 10.09%, respectively,

at June 30, 2025, and 18.64%

and 9.51%, respectively,

at December 31, 2024.

At September 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

$

51,431

$

51,459

$

49,328

$

152,672

$

144,914

Taxable Equivalent Adjustments

Total Interest Income (FTE)

51,476

51,503

49,377

152,805

145,108

Interest Expense

7,874

8,275

9,117

24,384

27,079

Net Interest Income (FTE)

43,602

43,228

40,260

128,421

118,029

1,881

1,206

3,269

3,330

Taxable Equivalent Adjustments

Net Interest Income After Provision for Credit Losses

41,676

42,564

39,005

125,019

114,505

22,331

20,014

19,513

62,252

57,216

42,916

42,538

42,921

124,155

123,533

Income Before Income Taxes

21,091

20,040

15,597

63,116

48,188

5,141

4,996

2,980

15,264

9,705

Pre-Tax Loss Attributable to Noncontrolling Interest

1,342

$

15,950

$

15,044

$

13,118

$

47,852

$

39,825

Basic Net Income Per Share

$

0.93

$

0.88

$

0.77

$

2.81

$

2.35

Diluted Net Income Per Share

$

0.93

$

0.88

$

0.77

$

2.80

$

2.35

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 49.

Tax-equivalent net

interest income for the third quarter of 2025 totaled $43.6

million compared to $43.2 million for the second quarter

of 2025 and $40.3

million for the third quarter of 2024.

Compared to the second quarter of 2025, the increase was driven by a $0.5

million increase in investment securities income, a $0.4 million decrease

in interest expense, and a $0.1 million increase in overnight

funds income, partially offset by a $0.6 million decrease in

loan income.

One additional calendar day in the third quarter of 2025

contributed to the improvement.

Compared to the third quarter of 2024, the increase was primarily due to a $3.0 million increase

in

investment securities income, a $1.2 million decrease in interest expense,

and a $0.5 million increase in overnight funds income,

partially offset by a $1.4 million decrease in loan income.

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

both prior periods reflected

the gradual decrease in our deposit rates.

The decrease in loan income compared to both prior periods was due to lower loan

balances

that was partially offset by favorable rate repricing.

For the first nine months of 2025, tax-equivalent net interest income

totaled $128.4 million compared to $118.0

million for the same

period of 2024, with the increase primarily attributable to a $7.3

million increase in investment securities income, a $2.3 million

increase in overnight funds income, and a $2.3 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.

The decrease in loan

income was due to lower loan balances that was partially offset by favorable

rate repricing.

Our net interest margin for the third quarter of 2025 was 4.34%, an

increase of four basis points over the second quarter of 2025 and an

increase of 22 basis points over the third quarter of 2024.

For the month of September 2025, our net interest margin was 4.41%.

For

the first nine months of 2025, our net interest margin of

4.28% reflected a 23-basis point increase over the same period of 2024.

The

improvement in net interest margin over all prior periods reflected

a higher yield in the investment portfolio,

driven by new purchases

at higher yields,

and lower deposit costs.

For the third quarter of 2025, our cost of funds was 78 basis points, a decrease of

four basis

points from the second quarter of 2025 and a 15-basis point decrease from the

third quarter of 2024.

Our cost of deposits (including

noninterest bearing accounts) was 80 basis points, 81 basis points, and

92 basis points, respectively, for

the same periods.

We recorded

a provision expense for credit losses of $1.9 million for the third quarter of 2025

compared to $0.6 million for the second

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

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

credit losses of $3.3 million which was comparable to the same period of 2024.

For the third quarter of 2025, the provision reflected

an expense of $1.5 million for loans HFI and a $0.4

million expense for unfunded loan commitments.

This compares to a $0.7 million

expense for loans HFI, and a benefit of $0.1

million for unfunded loan commitments in the second quarter of 2025,

and a $1.9

million

expense for loans HFI, $0.6 million benefit for unfunded loan commitments,

and a $0.1 million expense for debt securities in the third

quarter of 2024.

For the first nine months of 2025, the provision reflected a $3.4 million expense

for loans HFI and a $0.1

million

benefit for unfunded loan commitments compared to a $3.9 million

expense for loans HFI, a $0.7

million benefit for unfunded loan

commitments,

and a $0.1 million benefit for debt securities for the first nine 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 third quarter of 2025 totaled $22.3 million compared

to $20.0 million for the second quarter of 2025 and

$19.5 million for the third quarter of 2024.

The $2.3 million, or 11.6%, increase over the second quarter

of 2025 was primarily due to

a $1.2 million increase in other income, a $0.6 million increase in mortgage banking

revenues, and a $0.6 million increase in deposit

fees.

The increase in other income was primarily due to a $0.7 million gain from the sale of our

insurance subsidiary (Capital City

Strategic Wealth)

in the third quarter of 2025, and to a lesser extent higher miscellaneous income.

The increase in mortgage revenues

was driven by an increase in the gain on sale margin for loan sales.

Fee adjustments made late in the second quarter of 2025

contributed to the increase in deposit fees and miscellaneous income.

Compared to the third quarter of 2024, the $2.8 million, or

14.4%, increase was primarily due to a $1.1 million increase in other income,

a $0.8 million increase in mortgage banking revenues, a

$0.4 million increase in wealth management fees, and a $0.4 million increase in deposit

fees.

The increase in other income reflected

the aforementioned gain from the sale of our insurance subsidiary

and higher miscellaneous income.

Higher production volume and

gain on sale margin drove the improvement in mortgage banking

revenues.

The increase in wealth management fees was primarily

due to higher retail brokerage fees.

The aforementioned fee adjustments drove the improvement in deposit fees.

For the first nine months of 2025, noninterest income totaled $62.3 million

compared to $57.2 million for the same period of 2024,

primarily attributable to a $2.2 million increase in wealth management

fees, a $1.6 million increase in mortgage banking revenues, and

a $1.1 million increase in other income.

The increase in wealth management fees reflected increases in trust fees of $1.1 million

and

retail brokerage fees of $1.0 million attributable to a combination of new

business and higher account valuations.

A fee increase

implemented in early 2025 also contributed to the increase in trust fees.

Higher production volume and gain on sale margin drove

the

improvement in mortgage banking revenues.

The increase in other income reflected the aforementioned gain from the sale of our

insurance subsidiary and higher miscellaneous income.

Noninterest income represented 33.9% of operating revenues (net

interest income plus noninterest income) in the third quarter of 2025

compared to 31.7% in the second quarter of 2025 and 32.7% in the third quarter

For the first nine months of 2025,

noninterest income represented 32.7% of operating revenues comparable

to the same period of 2024.

The table below reflects the major components of noninterest income.

$

5,877

$

5,320

$

5,512

$

16,258

$

16,139

3,733

3,774

3,624

11,021

11,010

Wealth Management

Fees

5,173

5,206

4,770

16,142

13,891

4,794

4,190

3,966

12,804

11,225

Other

2,754

1,524

1,641

6,027

4,951

Total

$

22,331

$

20,014

$

19,513

$

62,252

$

57,216

Significant components of noninterest income are discussed in more

detail below.

.

Deposit fees for the third quarter of 2025

totaled $5.9

million, an increase of $0.6

million, or 10.5%, over the second

quarter of 2025, and an increase of $0.4

million, or 6.6%, over the third quarter of 2024.

For the first nine months of 2025, deposit

fees totaled $16.3 million, a $0.1 million, or 0.7%, increase over

the same period of 2024.

Compared to all prior periods the increases

were primarily due to service charge fee adjustments made

late in the second quarter of 2025.

.

Bank card fees for the third quarter of 2025 totaled $3.7 million, comparable to the

second quarter of 2025, and $0.1

million, or 3.0%, increase over the third quarter of 2024.

For the first nine months of 2025, bank card fees totaled $11.0

comparable to the same period of 2024.

Wealth

Management Fees

.

Wealth management fees

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

accounts and

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

investment, insurance products, and retirement

accounts).

In September 2025, we sold our subsidiary,

Capital City Strategic Wealth,

which provided the sale of life insurance, risk

management and asset protection services.

Wealth management

fees for the third quarter of 2025 totaled $5.2 million, comparable to

the second quarter of 2025 and a $0.4 million, or 8.4%, increase over

For the first nine months of 2025,

wealth management fees totaled $16.1 million, an increase of $2.2

million, or 16.2%, over the same period of 2024, and reflected a

$1.1 million increase in trust fees, a $1.0 million increase in retail brokerage

fees, and a $0.1 million increase in insurance commission

revenue.

At September 30, 2025, total assets under management were approximately

$3.244 billion compared to $3.192 billion at

June 30, 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.

A fee increase in first quarter of

2025 also contributed to the increase in trust fees compared to the prior year periods

.

Mortgage Banking Revenues.

Mortgage banking revenues totaled $4.8 million for the third quarter of

2025, an increase of $0.6

million, or 14.4%, over the second quarter of 2025 and an increase of

$0.8 million, or 20.9%, over the third quarter of 2024.

For the

first nine months of 2025, mortgage banking revenues totaled $12.8

million compared to $11.2 million for the same period

The increase compared to the second quarter of 2025 was attributable

to a higher gain on sale margin for loan sales.

Higher

production volume and gain on sale margin drove the improvement

over both prior year periods.

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 $2.8 million for the third quarter of 2025, an

increase of $1.2 million, or 80.7%, over the second quarter

of 2025, and an increase of $1.1 million, or 67.8%, over the third

quarter of 2024.

For the first nine months of 2025, other income

totaled $6.0 million, a $1.1 million, or 21.7%, increase over the same period

Compared to all prior periods, the increase was

primarily due to a $0.7 million gain from the sale of our insurance subsidiary (Capital

City Strategic Wealth)

in the third quarter of

2025 and to a lesser extent higher miscellaneous income.

Noninterest expense for the third quarter of 2025 totaled $42.9 million compared

to $42.5 million for the second quarter of 2025 and

$42.9 million for the third quarter of 2024.

The $0.4 million, or 0.9%, increase over the second quarter of 2025 reflected a $0.8

million increase in other expense that was partially offset by a $0.4 million

decrease in compensation expense.

The increase in other

expense was driven by higher miscellaneous expenses of $0.7 million and professional

fees of $0.1 million.

The decrease in

compensation was primarily due to lower performance-based compensation

(cash and stock incentives).

Compared to the third quarter

of 2024, a $0.3 million increase in compensation expense was offset

by a $0.2 million decrease in other expense and a $0.1 million

decline in occupancy expense.

For the first nine months of 2025, noninterest expense totaled $124.2

million compared to $123.5 million for the same period of 2024

with the $0.6 million, or 0.5%, increase primarily due to a $4.2 million

increase in compensation expense that was partially offset by

a

$3.4 million decrease in other expense and a $0.2 million decrease in occupancy

The increase in compensation was due to a

$2.6 million increase in salary expense and a $1.6 million increase in associate benefit

The increase in salary expense was

primarily due to increases in incentive plan expense of $1.3 million, base

salaries of $0.6 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.

The decrease in other expense was primarily due to a $4.5 million decrease in other real estate

expense due to higher gains

from the sale of banking facilities, and a $1.4 million decrease in miscellaneous expense

(non-service component of pension expense),

partially offset by increases in processing expense of $1.4 million (outsource

of core processing system), charitable contribution

expense of $0.8 million, and professional fees of $0.3 million.

The table below reflects the major components of noninterest expense.

Salaries

$

21,740

$

22,013

$

21,637

$

65,636

$

62,995

Associate Benefits

4,316

4,477

4,163

13,158

11,618

Total Compensation

26,056

26,490

25,800

78,794

74,613

Premises

3,176

3,272

3,245

9,620

9,461

Equipment

3,861

3,799

3,853

11,281

11,628

Total Occupancy

7,037

7,071

7,098

20,901

21,089

Legal Fees

1,474

1,272

Professional Fees

1,621

1,518

1,869

4,761

4,467

Processing Services

2,475

2,491

2,260

7,434

6,030

Advertising

2,350

2,320

Telephone

2,195

2,119

Insurance – Other

2,239

2,401

Other Real Estate Owned, net

(4,431)

Pension - Other

(871)

(872)

(419)

(2,616)

(1,256)

Miscellaneous

3,866

3,067

3,777

11,054

10,395

Total Other

9,823

8,977

10,023

24,460

27,831

Total

$

42,916

$

42,538

$

42,921

$

124,155

$

123,533

Significant components of noninterest expense are discussed in more detail

below.

Compensation.

Compensation expense totaled $26.1 million for the third quarter of 2025, a $0.4 million,

or 1.6%, decrease from the

second quarter of 2025 and a $0.3 million, or 1.0%, increase over

The decrease from the second quarter of

reflected a $0.3

million decrease in salary expense and a $0.1

million decrease in associate benefit expense, both due to lower

performance-based compensation (cash incentives and stock compensation)

.

Compared to the third quarter of 2024, the increase

reflected a $0.1 million increase in salary expense and a $0.2 million increase

in associate benefit expense.

The increase in salary

expense was primarily attributable to a $0.2 million increase in cash incentive

s, a $0.2 million increase in commissions, and a $0.1

million increase in 401K matching expense, that was partially offset

by a $0.3 million decrease in base salaries.

The increase in

associate benefit expense was primarily due to an increase in stock

compensation expense.

For the first nine months of 2025, compensation expense totaled $78.8

million compared to $74.6 million for the same period of 2024

with the $4.2 million increase attributable to a $2.6 million increase in salary

expense and a $1.6 million increase in associate benefit

The increase in salary expense was primarily due to increases in incentive plan expense of $1.

million, commissions of

$0.7 million (retail brokerage and mortgage),

and base salaries of $0.6

million (merit-based).

The increase in associate benefit

expense was primarily due to higher cost for associate insurance.

Occupancy

.

Occupancy expense totaled $7.0 million for the third quarter of 2025, a $0.1 million,

or 0.5%, decrease from the second

quarter of 2025 and a $0.1 million, or 0.9%, decrease from the third quarter of 202

For the first nine months of 2025, occupancy

expense totaled $20.9 million compared to $21.1 million for the same period

Lower property expenses related to our

operations center that was sold in 2024 was partially offset by

higher banking office lease expense drove the variance for the prior

period comparisons.

Other

.

Other expense totaled $9.8 million for the third quarter of 2025 compared to $9.0 million

for the second quarter of 2025 and

$10.0 million for the third quarter of 2024.

For the first nine months of 2025, other expense totaled $24.5 million compared

to $27.8

million for the same period of 2024.

Compared to the second quarter of 2025, the $0.8 million increase was an increase

in

miscellaneous expense which reflected a non-routine expense related

to our VISA share swap due to additional funding of VISA’s

litigation reserve, a higher level of other losses, and an increase in expense for our

residential mortgage sale indemnification reserve.

The $3.3 million increase for the nine-month comparison was primarily due to

a $4.5 million decrease in other real estate expense and

a $1.4

million decrease in pension-other expense, that was partially offset

by $1.4 million increase in processing expense, a $0.8

million increase in charitable contribution expense, and a $0.3 million increase

in professional fees.

The decrease in other real estate

expense was attributable to a gain from the sale of our operations center building

in the first quarter of 2025.

The decrease in other-

pension expense reflected lower expense for the non-service component

of pension expense which reflected strong asset returns in the

plan.

The outsourcing of our core processing system in mid-2024 drove the increase

in processing expense.

Our operating efficiency ratio (expressed as noninterest

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

plus noninterest income) improved to 65.09% for the third quarter of 2025

compared to 67.26% for the second quarter of 2025

and

71.81%

for the third quarter of 2024.

For the first nine months of 2025, this ratio was 65.11%

compared to 70.49% for the same

period of 2024.

Income Taxes

We realized income

tax expense of $5.1 million (effective rate of 24.4%) for the third quarter of

2025 compared to $5.0 million

(effective rate of 24.9%) for the second quarter of 2025

and $3.0 million (effective rate of 19.1%) for the third quarter of 2024.

For

the first nine months of 2025, we realized income tax expense of $15.3 million

(effective rate of 24.2%) compared to $9.7 million

(effective rate of 20.1%) 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 compared to the prior year periods.

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 $3.982 billion for the third quarter of 2025, a decrease of $50.5

million, or 1.3%, from the second

quarter of 2025, and an increase of $59.6 million, or 1.5%, over the

fourth quarter of 2024.

The change for both prior periods was

driven by variances in deposit balances (see below –

).

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

asset mix reflected a $46.4 million decrease in loans HFI and a $14.1 million decrease

in investment securities, partially offset by a

$7.4 million increase in overnight funds sold and a $2.6 million increase in

loans held for sale.

Compared to the fourth quarter of

2024, the change in the earning asset mix reflected a $78.7 million increase in investment

securities and a $57.9 million increase in

overnight funds sold, partially offset by a $71.2 million

decrease in loans HFI and a $5.8 million decrease in loans HFS.

Investment Securities

Average investments

totaled $993.9 million in the third quarter of 2025, a $14.1 million, or 1.4%,

decrease from the second quarter of

and a $78.7 million, or 8.6% increase over the fourth quarter of 2024. Our investment portfolio

represented 25.0% of our average

earning assets for the third quarter of 2025 compared to 25.0% for the second

quarter of 2025 and 23.3% for the fourth quarter of

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 September 30, 2025, $577.3 million, or 58.7%, of the investment portfolio was classified

as AFS

and $404.7 million, or 41.1%, was classified as HTM. The average

maturity of our total portfolio at September 30, 2025 was 2.70

years compared to 2.66 years at June 30, 2025 and 2.54 years at December

31, 2024.

The duration of our investment portfolio at

September 30, 2025 was 2.15 years compared to 2.14 years at June 30,

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 September 30, 2025, there were 750 positions (combined AFS and HTM)

with unrealized pre-tax losses totaling $27.8 million.

of these positions are U.S. Treasury bonds and carry

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

634 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, 2025, all

collateralized mortgage obligation securities, mortgage

-backed securities, Small Business Administration securities, U.S. Agency,

and

U.S. Treasury bonds held were rated AA+ or higher.

The remaining 83 positions (municipal securities and corporate bonds) have

a

credit component.

At September 30, 2025, corporate debt securities had an allowance for credit

losses of $43,000 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

September 30, 2025.

Loans HFI

Average loans

HFI decreased by $46.4 million, or 1.8%, from the second quarter of 2025 and decreased

by $71.2 million, or 2.7%,

from the fourth quarter of 2024.

Compared to the second quarter of 2025, the decline reflected decreases in construction

loans of

$22.4 million, consumer loans (primarily indirect auto) of $10.4

million, commercial real estate loans of $8.7 million, residential real

estate loans of $2.9 million, and commercial loans of $2.7 million, partially

offset by a $2.0 million increase in home equity loans.

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

to decreases in construction loans of $55.6 million,

consumer loans (primarily auto indirect loans) of $14.4 million, commercial

loans of $11.9 million and commercial real estate loans

of

$6.8 million, partially offset by increases in home equity

loans of $12.8 million and residential real estate loans of $7.0 million.

Loans HFI at September 30, 2025, decreased by $49.5 million, or 1.9%,

from June 30, 2025, and decreased by $69.5 million, or 2.6%,

from December 31, 2024.

Compared to June 30, 2025, the decline was primarily due to decreases in construction

loans of $17.4

million, commercial real estate loans of $17.2 million, consumer loans (primarily

indirect auto) of $11.6 million, and residential real

estate loans of $9.0 million, partially offset by a $5.9 million increase

in home equity loans.

Compared to December 31, 2024, the

decrease was primarily attributable to decreases in construction loans

of $63.2 million, consumer loans (primarily indirect auto) of

$13.6 million, and commercial loans of $10.2 million, partially offset

by increases in home equity loans of $14.0 million, residential

real estate loans of $8.8 million, and commercial real estate loans of $6.2 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 $10.0

million at September 30, 2025, compared to $6.6 million

at June 30, 2025, and $6.7 million at December 31, 2024.

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

assets

was 0.23%, compared to 0.15% at June 30, 2025 and 0.15% at December 31, 2024.

Nonaccrual loans totaled $8.2 million at

September 30, 2025, a $1.7 million increase over June 30, 2025 and a $1.9 million increase over

December 31, 2024 with the increase

over both periods primarily attributable to two home equity loans totaling

$1.8 million.

Classified loans totaled $26.5 million at

September 30, 2025, a $2.1 million decrease from June 30, 2025, and a $6.6 million

increase over December 31, 2024.

The increase

over December 31, 2024 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 September 30, 2025, the allowance for credit losses for loans HFI totaled

$30.2 million compared to $29.9 million at June 30, 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 increase in the allowance over June 30, 2025 and

December 31, 2024 was primarily attributable to qualitative factor

adjustments that were partially offset by lower loan balances.

At

September 30, 2025, the allowance represented 1.17% of loans HFI compared

to 1.13% at June 30, 2025, and 1.10% at December 31,

At September 30, 2025, the allowance for credit losses for unfunded

commitments totaled $2.1 million compared to $1.7 million and

$2.2 million at June 30, 2025 and December 31, 2024, respectively.

The change in the allowance for unfunded commitments from

both prior periods reflected variances in the level of unfunded loan commitments.

The allowance for unfunded commitments is

recorded in other liabilities.

Average total

deposits were $3.612 billion for the third quarter of 2025, a decrease of $68.4 million,

or 1.86%, from the second quarter

of 2025 and an increase of $11.9 million, or 0.33%,

over the fourth quarter of 2024.

Compared to the second quarter of 2025, the

decrease was attributable to lower public funds balances (primarily NOW accounts)

due to the seasonal reduction in those balances,

partially offset by higher core deposit balances (primarily

noninterest bearing checking, money market accounts, and certificates of

deposit).

The increase over the fourth quarter of 2024 reflected strong growth in core deposit balances,

partially offset by the seasonal

decline in public fund balances.

At September 30, 2025, total deposits were $3.615 billion, a decrease of $89.9

million, or 2.4%, from June 30, 2025, and a decrease of

$57.1 million, or 1.6%, from December 31, 2024.

The decrease compared to both prior periods was due to a decline in public fund

deposits, partially offset by growth in our core deposits.

Public funds totaled $497.9 million at September 30, 2025, $596.6

million at

June 30, 2025, and $660.9 million at December 31, 2024.

Business deposit transaction accounts classified as repurchase agreements

averaged $22.0 million for the third quarter of 2025, a

decrease of $0.6 million from the second quarter of 2025 and a decrease

of $6.1 million from the fourth quarter of 2024. At September

30, 2025, repurchase agreement balances were $25.6 million compared

to $21.8 million at June 30, 2025 and $26.2 million at

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%

18.9%

14.2%

9.5%

4.9%

-5.3%

-11.3%

-17.9%

-23.8%

19.2%

14.4%

9.6%

5.0%

-5.3%

-11.1%

-17.5%

-23.3%

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%

37.7%

29.5%

21.1%

13.1%

-5.1%

-15.9%

-28.1%

-39.1%

39.3%

31.0%

22.5%

14.4%

-3.8%

-14.4%

-26.2%

-37.0%

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 second quarter of 2025, these metrics became

slightly less favorable primarily due to a change in asset mix favoring

variable rate overnight funds, making us more asset sensitive

with slightly more exposure to falling rates.

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.

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%

34.2%

27.6%

19.6%

10.5%

-12.0%

-24.7%

-36.2%

-40.7%

29.4%

23.9%

17.1%

9.2%

-11.5%

-23.9%

-34.8%

-40.8%

EVE Ratio (policy minimum 5.0%)

32.1%

30.0%

27.7%

25.2%

19.4%

16.3%

13.6%

12.5%

At September 30, 2025, the economic value of equity was favorable

in all rising rate environments and unfavorable in the falling rate

environments.

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 September 30, 2025, we had the ability to generate approximately $1.625 billion

(excludes overnight funds position of $398

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 September 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 $356.2 million in the third quarter of 2025 compared to

$348.8 million in the second quarter of 2025 and $298.3 million in

the fourth quarter of 2024.

Compared to the second quarter of 2025, the slight increase reflected lower average

loan and investment

security balances,

partially offset by lower average deposit balances.

The increase over the fourth quarter of 2024 was primarily due

to lower average loan balances.

We expect our

capital expenditures will be approximately $10.0 million over the next 12 months,

which will primarily consist of

construction of a new office, 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 $34.7 million for the third quarter of 2025 compared

to $33.1 million for the second quarter of

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

The variances compared to both prior periods were primarily due to mortgage

warehouse borrowing activity.

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 35.

At September 30, 2025, our regulatory

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

under the Basel III capital standards.

Shareowners’ equity was $540.6 million at September 30, 2025,

compared to $526.4 million at June 30, 2025, and $495.3 million at

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

income attributable to

shareowners of $47.9 million, a net $7.7 million decrease in the accumulated

other comprehensive loss, the issuance of common stock

of $2.9 million, and stock compensation accretion of $1.4 million.

The net favorable change in accumulated other comprehensive loss

reflected a $8.8 million decrease in the investment securities loss that was partially offset

by a $1.1 million decrease in the fair value

of the interest rate swap related to subordinated debt.

Shareowners’ equity was reduced by common stock dividends of $12.6 million

($0.74 per share) and net adjustments totaling $2.0 million related to transactions

under our stock compensation plans.

At September 30, 2025, our total risk-based capital ratio was 20.59%

compared to 19.60% at June 30, 2025, and 18.64% at December

31, 2024.

Our common equity tier 1 capital ratio was 17.73%, 16.81%, and 15.54%, respectively,

on these dates.

Our leverage ratio

was 11.64%, 11.14%,

and 11.05%, respectively,

on these dates.

At September 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 10.66% at September 30, 2025, compared to 10.09%

and 9.51% at June 30, 2025, and December

31, 2024, respectively.

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 September 30, 2025,

the net pension asset reflected in other

comprehensive income was $9.7 million comparable to

June 30, 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 September 30, 2025, we had $705.3 million in commitments to extend

credit and $7.1 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 $2.1 million at September 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:

$

25,276

$

6.68

%

$

24,570

$

7.49

%

$

24,226

$

1,390

7.67

%

$

26,050

$

1,800

6.22

%

(1)(2)

2,606,213

39,894

6.07

2,693,533

40,985

6.09

2,641,346

120,359

6.09

2,716,220

121,864

6.02

Taxable Securities

992,260

7,175

2.88

907,610

4,148

1.82

993,460

19,644

2.64

926,241

12,385

1.78

Tax-Exempt Securities

(2)

1,620

4.44

4.33

1,313

4.43

4.34

Federal Funds Sold and Interest Bearing

356,161

3,964

4.42

256,855

3,514

5.44

342,094

11,369

4.44

220,056

9,031

5.48

Total Earning Assets

3,981,530

51,476

5.12

%

3,883,414

49,377

5.06

%

4,002,439

152,805

5.10

%

3,889,415

145,108

4.98

%

Cash & Due From Banks

65,085

70,994

68,074

73,843

Allowance For Credit Losses

(30,342)

(29,905)

(30,282)

(29,833)

301,678

291,359

300,788

292,762

TOTAL ASSETS

$

$

$

4,341,019

$

4,226,187

Liabilities:

Noninterest Bearing Deposits

1,314,560

1,332,305

1,324,753

1,340,981

NOW Accounts

$

1,198,124

$

3,782

1.25

%

$

1,145,544

$

4,087

1.42

%

$

1,224,402

$

11,386

1.24

%

$

1,184,596

$

13,009

1.47

%

Money Market Accounts

416,656

2,090

1.99

418,625

2,694

2.56

422,817

6,617

2.09

393,294

7,431

2.52

Savings Accounts

503,189

0.13

512,098

0.14

506,255

0.13

523,573

0.14

Other Time Deposits

179,802

1,234

2.72

163,462

1,262

3.07

174,418

3,541

2.71

153,991

3,412

2.96

Total Interest Bearing Deposits

2,297,771

7,265

1.25

2,239,729

8,223

1.46

2,327,892

22,053

1.27

2,255,454

24,396

1.44

Total Deposits

3,612,331

7,265

0.80

3,572,034

8,223

0.92

3,652,645

22,053

0.81

3,596,435

24,396

0.91

Repurchase Agreements

21,966

2.86

27,126

3.24

24,752

2.58

26,619

3.21

Other Short-Term Borrowings

12,753

1.82

2,673

7.63

10,251

4.62

4,334

4.88

42,582

3.52

52,887

4.52

49,113

1,473

3.95

52,887

1,868

4.64

Other Long-Term Borrowings

5.55

5.55

4.50

5.16

Total Interest Bearing Liabilities

2,375,753

7,874

1.32

%

2,323,210

9,117

1.56

%

2,412,763

24,384

1.35

%

2,339,741

27,079

1.55

%

Other Liabilities

85,422

73,767

75,664

71,574

TOTAL LIABILITIES

3,775,735

3,729,282

3,813,180

3,752,296

Temporary Equity

6,443

6,694

TOTAL SHAREOWNERS’ EQUITY

542,216

480,137

527,839

467,197

TOTAL LIABILITIES, TEMPORARY

AND SHAREOWNERS’ EQUITY

$

$

$

4,341,019

$

4,226,187

Interest Rate Spread

3.81

%

3.49

%

3.75

%

3.43

%

$

43,602

$

40,260

$

128,421

$

118,029

Net Interest Margin

(3)

4.34

%

4.12

%

4.28

%

4.05

%

(1)

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

Interest income includes loan costs of $0.4 million and

$1.1 million for the three and nine months ended September

30, 2025,

and loan cost of $0.2 and $0.5 million for the three and nine

month periods ended September 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 September 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 September 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 September 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. 000-13358).

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. 000-13358).

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: October 31, 2025