CAPITAL CITY BANK GROUP INC

Performance Summary.

Net income of $16.3 million, or $0.95 per diluted share, for the second quarter of

2026 compared to $15.8

million, or $0.92 per diluted share, for the first quarter of 2026, and $15.0 million,

or $0.88 per diluted share, for the second quarter of

2025. For the first six months of 2026, net income totaled $32.1 million, or $1.87

per diluted share, compared to net income of $31.9

million, or $1.87 per diluted share, for the same period of 2025.

Net Interest Income.

Tax-equivalent net

interest income for the second quarter of 2026 totaled $44.2 million, compared

to $42.9

million for the first quarter of 2026, and $43.2 million for the second quarter of 2025.

Compared to the first quarter of 2026, the

increase was attributable to higher investment securities income and lower

deposit interest expense, partially offset by lower loan

interest income and overnight funds income due to lower average balances.

The increase over the second quarter of 2025 was also

driven by the same aforementioned factors. One additional calendar

day also contributed to the increase over the first quarter of 2026.

For the first six months of 2026, tax-equivalent net interest income totaled

$87.1 million compared to $84.8 million for the same period

of 2025, primarily attributable to higher investment securities income and

lower deposit interest expense, partially offset by lower

loan

interest income and overnight funds income.

Provision and Allowance for Credit

Losses.

We recorded

a provision expense for credit losses of $0.9 million for the second quarter of

2026, compared to $0.7 million for the first quarter of 2026 and $0.6 million for the

second quarter of 2025. For the first six months of

2026, we recorded a provision expense for credit losses of $1.6 million

compared to $1.4 million for the first six months of 2025. At

June 30, 2026, the allowance for credit losses for loans HFI totaled $31.0

million (1.24% of loans HFI) compared to $31.0 million

(1.23% of loans HFI) at March 31, 2026

and $31.0 million at December 31, 2025 (1.22% of loans HFI). 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 2026 totaled $20.6 million,

a $0.7 million, or 3.3%, increase over

the first quarter of 2026 and a $0.6 million, or 2.9%, increase over the second quarter

of 2025. The increase over the first quarter of

2026 was primarily attributable to increases in mortgage banking revenues of $0.4

million and bank card fees of $0.2 million. The

increase over the second quarter of 2025 was driven by increases in other income

of $0.7 million, mortgage banking revenues of $0.5

million, and deposit fees of $0.3 million that were partially offset

by a decrease in wealth management fees of $1.0 million. For

the

first six months of 2026, noninterest income totaled $40.5 million, a $0.6

million, or 1.5%, increase over the same period of 2025

primarily attributable to increases in other income of $1.4 million, mortgage

banking revenues of $0.9 million, and deposit fees of

$0.9 million, that were partially offset by a decrease in wealth

management fees of $2.7 million.

Noninterest Expense.

Noninterest expense for the second quarter of 2026 totaled $42.6 million,

a $1.3 million, or 3.1%, increase over

the first quarter of 2026 and a $0.1 million, or 0.2%, increase over the second quarter

of 2025. The increase over the first quarter of

2026 was primarily attributable to increases in other expense of $0.9 million increase

and occupancy expense of $0.3 million. The

increase over the second quarter of 2025 reflected increases in other

expense of $0.5 million and occupancy expense of $0.2 million

that was partially offset by a $0.6 million decrease in compensation

expense.

For the first six months of 2026, noninterest expense

totaled $84.0 million, a $2.8 million, or 3.4%, increase over the same period

of 2025 and reflected increases in other expense of $3.4

million and occupancy expense of $0.6 million that was partially offset

by a

$1.2 million decrease in compensation expense. The

increase in other expense was primarily due to a $4.2 million increase in ORE expense

which reflected a lower level of gains from the

sale of properties, namely a large gain realized from the

sale of our operations center building in the first quarter of 2025.

Financial Condition

Earning Assets.

Average earning

assets totaled $4.069 billion for the second quarter of 2026, a decrease of $21.0

million, or 0.5%

from the first quarter of 2026, and an increase of $32.9 million, or 0.8% over

the fourth quarter of 2025. Compared to the first quarter

of 2026, the change in earning asset mix reflected a $42.6 million decrease

in overnight funds and a $32.4 million decrease in loans

held for investment, partially offset by a $48.2 million

increase in investment securities and a $5.8 million increase in loans held for

sale (“HFS”). Compared to the fourth quarter of 2025, the change reflected

a $161.3 million increase in investment securities and a

$6.2 million increase in loans HFS, partially offset by a $72.4

million decrease in overnight funds and a $62.2 million decrease in

loans held for investment.

Loans.

Average loans HFI decreased

by $32.4 million, or 1.3%, from the first quarter of 2026, and decreased by $62.2

million, or

2.4%, from the fourth quarter of 2025. Loans HFI at June 30, 2026, decreased

by $18.5 million, or 0.7%, from March 31, 2026, and

decreased by $46.2 million, or 1.8%, from December 31, 2025.

Credit Quality

.

Nonperforming assets (nonaccrual loans and other real estate) totaled $13.4

million at June 30, 2026 compared to

$13.0 million at March 31, 2026 and $10.5 million at December 31, 2025. At June

30, 2026, nonperforming assets as a percentage of

total assets was 0.30%, compared to 0.29% at March 31, 2026 and 0.24%

at December 31, 2025. Nonaccrual loans totaled $10.0

million at June 30, 2026, a $1.1 million decrease from March 31, 202

and a $1.4 million increase over December 31, 2025. Other real

estate totaled $3.4 million at June 30, 2026, a $1.6 million increase over

March 31, 2026, and a $1.5 million increase over December

31, 2025. Further, classified loans totaled

$29.8 million at June 30, 2026, a $15.3 million increase over

March 31, 2026, and a $15.5

million increase over December 31, 2025. The increase over both

prior periods reflected the downgrade of four commercial real estate

relationships (two private schools totaling $9.8 million ($6.4 million and

$3.4 million), hotel $2.0 million, funeral home $5.0 million).

.

Average total

deposits were $3.679 billion for the second quarter of 2026, a decrease of $12.2

million, or 0.3%, from the

first quarter of 2026 and an increase of $31.3 million, or 0.9%, over the fourth

quarter of 2025. At June 30, 2026, total deposits were

$3.721 billion, a decrease of $30.6 million, or 0.8%, from March 31, 2026,

and an increase of $58.7 million, or 1.6%, from December

31, 2025. Total

public funds balances were $561.5 million at June 30, 2026, $629.9 million at

March 31, 2026, and $654.7 million at

December 31, 2025.

Capital

.

At June 30, 2026, we were “well-capitalized”

with a total risk-based capital ratio of 22.35% and a tangible common

equity

ratio (a non-GAAP financial measure) of 11.03

%

compared to 21.62% and 10.79%, respectively,

at March 31, 2026, and 21.45% and

10.79%, respectively,

at December 31, 2025. At June 30, 2026, 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

$

51,838

$

51,020

$

51,459

$

102,858

$

101,241

Taxable Equivalent Adjustments

Total Interest Income (FTE)

51,881

51,060

51,503

102,941

101,329

Interest Expense

7,640

8,203

8,275

15,843

16,510

Net Interest Income (FTE)

44,241

42,857

43,228

87,098

84,819

1,631

1,388

Taxable Equivalent Adjustments

Net Interest Income After Provision for Credit Losses

43,279

42,105

42,564

85,384

83,343

20,599

19,933

20,014

40,532

39,921

42,640

41,373

42,538

84,013

81,239

Income Before Income Taxes

21,238

20,665

20,040

41,903

42,025

4,961

4,848

4,996

9,809

10,123

Net Income Attributable to Common Shareowners

$

16,277

$

15,817

$

15,044

$

32,094

$

31,902

Basic Net Income Per Share

$

0.95

$

0.92

$

0.88

$

1.88

$

1.87

Diluted Net Income Per Share

$

0.95

$

0.92

$

0.88

$

1.87

$

1.87

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 2026 totaled $44.2 million, compared

to $42.9 million for the first quarter

of 2026, and $43.2 million for the second quarter of 2025. Compared

to the first quarter of 2026, the increase was attributable to higher

investment securities income and lower deposit interest expense, partially

offset by lower loan interest income and overnight

funds

income due to lower average balances. The increase in investment securities income

reflected new investment purchases at higher rates

and higher balances as we deploy additional liquidity into the investment security

portfolio. The increase over the second quarter of

2025 was also driven by the same aforementioned factors. One additional

calendar day also contributed to the increase over the first

quarter of 2026.

For the first six months of 2026, tax-equivalent net interest income totaled

$87.1 million compared to $84.8 million for the same period

of 2025, primarily attributable to higher investment securities income and

lower deposit interest expense, partially offset by lower

loan

interest income and overnight funds income. New investment purchases

at higher yields and higher balances drove the increase in

investment securities income. The decrease in deposit interest expense reflected

lower public funds deposit balances and lower rates

across our product lines. Lower average loan balances contributed to

the decrease in loan interest income, while the decrease in

overnight funds income reflected the deployment of more liquidity into the

investment portfolio.

Our net interest margin for the second quarter of 2026 was 4.35%,

an increase of 11 basis points over the first quarter of 2026

and an

increase of five basis points over the second quarter of 2025. For the first six

months of 2026, our net interest margin increased by four

basis points to 4.30% compared to the same period of 2025. The increase in

net interest margin over all prior periods was largely

attributable to a higher investment security yield driven by new purchases

at higher rates and lower deposit costs. For the second

quarter of 2026, our cost of funds was 75 basis points, a decrease of six basis points

from the first quarter of 2026, and a decrease of

seven basis points from the second quarter of 2025. Our cost of deposits (including

noninterest bearing accounts) was 76 basis points,

81 basis points, and 81 basis points, respectively,

for the same time periods.

We recorded

a provision expense for credit losses of $0.9 million for the second quarter of 2026, compared

to $0.7 million for the first

quarter of 2026 and $0.6 million for the second quarter of 2025. For the first

six months of 2026, we recorded a provision expense for

credit losses of $1.6 million compared to $1.4 million for the first six months of 2025.

For the first six months of 2026, the provision

reflected a $1.5 million expense for loans HFI and a $0.1 million expense for

unfunded loan commitments compared to a $1.8 million

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

for the first six months of 2025. 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 2026 totaled $20.6 million, a $0.7

million, or 3.3%, increase over the first quarter of

2026 and a $0.6 million, or 2.9%, increase over the second quarter of 2025. The

increase over the first quarter of 2026 was primarily

attributable to increases in mortgage banking revenues of $0.4 million and bank

card fees of $0.2 million. The increase in mortgage

banking revenues was primarily due to higher production volume and the increase

in bank card fees reflected higher

card volume.

The increase over the second quarter of 2025 was driven by increases in other

income of $0.7 million, mortgage banking revenues of

$0.5 million, and deposit fees of $0.3 million that were partially offset

by a decrease in wealth management fees of $1.0 million.

The

increase in other income was primarily due to a higher level of other fees/commissions,

bank owned life insurance income, and

miscellaneous income. The increase in mortgage banking revenues was due

to a higher gain on sale margin. The decrease in wealth

management fees was attributable to lower retail brokerage fees, which

reflects a decline in assets under management (discussed in

more detail below under

Fees

).

For the first six months of 2026, noninterest income totaled $40.5 million,

a $0.6 million, or 1.5%, increase over the same period of

2025 primarily attributable to increases in other income of $1.4 million, mortgage

banking revenues of $0.9 million, and deposit fees

of $0.9 million, that were partially offset by a decrease in wealth management

fees of $2.7 million. The increase in other income was

primarily attributable to a $0.5 million miscellaneous recovery and increases

in other fees/commissions of $0.3 million, miscellaneous

income of $0.2 million, and bank owned life insurance income of $0.1 million.

The increase in mortgage banking revenues reflected a

higher gain on sale margin. Higher service charge

fees and commercial account analysis fees drove the increase in deposit fees.

We

expect deposit fee income to decline beginning in the third quarter of 2026 due to updates

of our deposit product offerings.

The

decrease in wealth management fees was attributable to the aforementioned

decrease in retail brokerage assets under management and

lower insurance commissions.

Noninterest income represented 31.8% of operating revenues (net

interest income plus noninterest income) in the second quarter of

compared to 31.8% in the first quarter of 2026 and 31.7% in the second quarter of

2025. For the first six months of 2026,

noninterest income represented 31.8% of operating revenues compared

to 32.0% for the same period of 2025.

The table below reflects the major components of noninterest income.

$

5,656

$

5,598

$

5,320

$

11,254

$

10,381

3,858

3,630

3,774

7,488

7,288

Fees

4,185

4,051

5,206

8,236

10,969

4,660

4,252

4,190

8,912

8,010

Other

2,240

2,402

1,524

4,642

3,273

Total

$

20,599

$

19,933

$

20,014

$

40,532

$

39,921

Significant components of noninterest income are discussed in more

detail below.

.

Deposit fees for the second quarter of 2026

totaled $5.7

million, an increase of $0.1 million, or 1.0%, over the first

quarter of 2026, and an increase of $0.3

million, or 6.3%, over the second quarter of 2025. For the first six months of

2026, deposit

fees totaled $11.3 million, a $0.9 million, or 8.4%,

increase over the same period of 2025. Compared to all prior periods

the increases

were primarily due to higher service charge fees and commercial

account analysis fees. We

are currently in the process of reviewing

and updating our deposit product offerings against peer and

industry best practices and we expect modifications will reduce related

fee

revenues beginning in the third quarter of 2026.

.

Bank card fees for the second quarter of 2026 totaled $3.9

million, an increase of $0.3 million over the first quarter

of 2026, and an increase of $0.1 million, or 2.2%, over the second quarter

of 2025. For the first six months of 2026, bank card fees

totaled $7.5 million, a $0.2 million, or 2.7% increase over the same period

of 2025. The increase over all prior periods reflected higher

card volume.

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).

Wealth management fees

for the second quarter of 2026 totaled $4.2 million, an increase of $0.1

million, or 3.3%, over the

first quarter of 2026 and a $1.0 million, or 19.6%, decrease from

the second quarter of 2025. For the first six months of 2026, wealth

management fees totaled $8.2 million, a decrease of $2.7 million,

or 24.9%, from the same period of 2025. The decrease compared to

all prior periods was primarily attributable to a decrease in retail brokerage

assets under management.

Further, to a lesser extent, lower

insurance commissions contributed to the decrease for the

six month period comparison and reflected the sale of our insurance

subsidiary in the third quarter of 2025. At June 30, 2026, total assets under management

were approximately $2.839 billion compared

to $2.691 billion at March 31, 2026 and $3.192 billion at June 30, 2025.

The increase over March 31, 2026 reflected higher account

valuations.

Compared to June 30, 2025, the decline was due to lower retail brokerage assets partially attributable

to the sale of our

insurance subsidiary in the third quarter of 2025.

Mortgage Banking Revenues.

Mortgage banking revenues totaled $4.7 million for the second quarter

of 2026, an increase of $0.4

million, or 9.6%, over the first quarter of 2026 and an increase of $0.5

million, or 11.2%, over the second quarter of 2025.

For the first

six months of 2026, mortgage banking revenues totaled $8.9

million, an increase of $0.9 million, or 11.3%

over the same period of

2025. The increase compared to the first quarter of 2026 was primarily due

to higher production volume. The increase compared to the

second quarter of 2025 and the first six months of 2025 was attributable

to a higher gain on sale margin for loan sales. We

provide a

detailed overview of our mortgage banking operation, including

a detailed break-down of mortgage banking revenues, mortgage

servicing activity,

and warehouse funding within Note 4 – Mortgage Banking Activities in the Notes

to Consolidated Financial

Statements.

Other

.

Other income totaled $2.2 million for the second quarter of 2026,

a decrease of $0.2 million, or 6.7%, from the first quarter of

2026, and an increase of $0.7 million, or 47.0%, over the second

quarter of 2025. For the first six months of 2026, other income

totaled $4.6 million, a $1.4

million, or 41.8%, increase over the same period of 2025. The decrease compared

to the first quarter of

2026 was primarily attributable to a $0.5 million miscellaneous recovery

in the first quarter of 2026. The increase compared to the

second quarter of 2025 was primarily due to a higher level of other fees/commissions,

bank owned life insurance income, and other

miscellaneous income. The increase compared to the first six months of 2025

was primarily attributable to the aforementioned $0.5

million miscellaneous recovery and increases in other fees/commissions of

$0.3 million, miscellaneous income of $0.2 million, and

bank owned life insurance income of $0.1 million.

Noninterest expense for the second quarter of 2026 totaled $42.6 million,

a $1.3 million, or 3.1%, increase over the first quarter of

2026 and a $0.1 million, or 0.2%, increase over the second quarter of 2025. The

increase over the first quarter of 2026 was primarily

attributable to increases in other expense of $0.9 million and occupancy expense

of $0.2

million. Increases in other real estate (ORE)

expense of $0.4 million, travel/entertainment expense of $0.2 million,

professional fees of $0.1 million, and miscellaneous expenses of

$0.1 million drove the increase in other expense. The increase in occupancy

expense was primarily attributable to higher FF&E

maintenance agreement expense. The increase over the second quarter

of 2025 reflected increases in other expense of $0.5 million and

occupancy expense of $0.2 million that was partially offset by a

$0.6 million decrease in compensation expense, including a $0.3

million decline in salary expense and $0.3 million decrease in associate benefits.

For the first six months of 2026, noninterest expense totaled $84.0 million,

a $2.8 million, or 3.4%, increase over the same period of

2025 and reflected increases in other expense of $3.4 million and occupancy

expense of $0.6 million that was partially offset by a

$1.2 million decrease in compensation expense. The increase in other

expense was primarily due to a $4.2 million increase in ORE

expense which reflected a lower level of gains from the sale of properties, namely

a large gain realized from the sale of our operations

center building in the first quarter of 2025. Higher expense for charitable

contributions of $0.6 million was partially offsetting. The

increase in occupancy expense reflected higher expense for FF&E maintenance

agreements and software licenses. The decrease in

compensation expense reflected lower salary expense of $0.9 million and

associate benefit expense of $0.3 million. Lower

commission expense drove the decline in salary expense and the decrease

in associate benefit expense was attributable to lower stock

based compensation.

The table below reflects the major components of noninterest expense.

Salaries

$

21,668

$

21,372

$

22,013

$

43,040

$

43,896

Associate Benefits

4,168

4,331

4,477

8,499

8,842

Total Compensation

25,836

25,703

26,490

51,539

52,738

Premises

3,096

3,179

3,272

6,275

6,444

Equipment

4,223

3,904

3,799

8,127

7,420

Total Occupancy

7,319

7,083

7,071

14,402

13,864

Legal Fees

1,037

Professional Fees

1,400

1,305

1,518

2,705

3,140

Processing Services

2,440

2,433

2,491

4,873

4,960

Advertising

1,724

1,639

Telephone

1,665

1,433

Insurance – Other

1,470

1,489

Other Real Estate Owned, net

(321)

(204)

(4,449)

Pension - Other

(744)

(745)

(872)

(1,489)

(1,745)

Miscellaneous

3,298

2,993

3,067

6,291

7,186

Total Other

9,485

8,587

8,977

18,072

14,637

Total

$

42,640

$

41,373

$

42,538

$

84,013

$

81,239

Significant components of noninterest expense are discussed in more detail

below.

Compensation.

Compensation expense totaled $25.8

million for the second quarter of 2026, an increase of $0.1 million, or 0.5%, over

the first quarter of 2026

and a decrease of $0.7 million, or 2.5%, from the second quarter of 2025. Compared

to the first quarter of

2026, the increase reflected a $0.3 million increase in salary expense (incentive

compensation) and $0.2 million decrease in associate

benefit expense (stock-based compensation).

Compared to the second quarter of 2025, the decrease was driven by a $0.4

million

decrease in salary expense (primarily commissions), and lower associate benefit

expense of $0.3 million (stock-based compensation).

For the first six months of 2026, compensation expense totaled $51.5

million compared to $52.7 million for the same period of 2025

with the $1.2 million decrease reflective of a $0.9 million decrease in salary

expense (commissions in the wealth division) and a $0.3

million decrease in associate benefit expense (stock-based compensation).

Occupancy

. Occupancy expense totaled $7.3 million for the second quarter of 2026, a $0.

million, or 3.3%, increase over the first

quarter of 2026 and a $0.2

million, or 3.5%, increase over the second quarter of 2025. For the first six months of 2026,

occupancy

expense totaled $14.4 million, a $0.5 million, or 3.9%, increase over

the same period of 2025. The increase compared to all prior

periods was primarily attributable to higher FF&E maintenance agreement

expense.

Other

. Other expense totaled $9.5 million for the second quarter of 202

compared to $8.6 million for the first quarter of 2026

and

$9.0 million for the second quarter of 2025. For the first six months

of 2026, other expense totaled $18.1 million compared to $14.6

million for the same period of 2025. Compared to the first quarter of 2026, the $0.9

million, or 10.5%, increase was primarily

attributable to increases in other real estate (ORE) expense of $0.4 million,

travel/entertainment expense of $0.2 million, professional

fees of $0.1 million, and miscellaneous expenses of $0.1 million. Higher

miscellaneous expenses drove the $0.5 million, or 5.6%,

increase over the second quarter of 2025. The $3.4 million, or 23.4%,

increase for the six month period was primarily due to a $4.2

million increase in ORE expense which reflected a lower level of gains from the sale of

properties, namely a large gain realized from

the sale of our operations center building in the first quarter of 2025. Higher

expense for charitable contributions of $0.6 million was

partially offsetting.

Our operating efficiency ratio (expressed as noninterest

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

plus noninterest income) was 65.76% for the second quarter of 2026

compared to 65.89% for the first quarter of 2026

and 67.26% for

the second quarter of 2025. For the first six months of 2026, this ratio was 65.83%

compared to 65.13% for the same period of 2025.

Income Taxes

We realized income

tax expense of $5.0 million (effective rate of 23.4%) for the second

quarter of 2026, compared to $4.8 million

(effective rate of 23.5%) for the first quarter of 2026 and $5.0

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

For the

first six months of 2026, we realized income tax expense of $9.8 million (effective

rate of 23.4%) compared to $10.1 million

(effective rate of 24.1%) for the same period of 2025. The

effective rate for the second quarter of 2026 reflected a tax benefit related

to

an investment in a solar tax equity fund during the quarter and the effective

rate for the first quarter of 2026 included a discrete item

related to stock-based compensation. Absent discrete items or new tax

credit investments, we expect our annual effective tax rate to

approximate 23.5% for 2026.

FINANCIAL CONDITION

Average earning

assets totaled $4.069 billion for the second quarter of 2026, a decrease of $21.0 million, or

0.5% from the first

quarter of 2026, and an increase of $32.9 million, or 0.8% over the fourth

quarter of 2025. Compared to the first quarter of 2026, the

change in earning asset mix reflected a $42.6 million decrease in overnight funds

and a $32.4 million decrease in loans held for

investment, partially offset by a $48.2 million increase in

investment securities and a $5.8 million increase in loans held for sale

(“HFS”). Compared to the fourth quarter of 2025, the change reflected a $161.3 million

increase in investment securities and a $6.2

million increase in loans HFS, partially offset by a $72.4 million decrease

in overnight funds and a $62.2 million decrease in loans

held for investment.

Investment Securities

Average investments

totaled $1.167 billion in the second quarter of 2026, a $48.2 million, or 4.31%,

increase over the first quarter of

and a $161.3 million, or 16.0%

increase over the fourth quarter of 2026. Our investment portfolio represented 28.7% of

our

average earning assets for the second quarter of 2026 compared

to 27.4% for the first quarter of 2026 and 24.9% for the fourth quarter

of 2025.

For the remainder of 2026, 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 utilized

to support loan growth.

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, 2026, $853.6 million, or 73.6%, of the investment portfolio was classified as AFS and

$304.5

million, or 26.3%, was classified as HTM. The average maturity of our total portfolio at June

30, 2026 was 2.95 years

compared to 2.98 years at March 31, 2026

and 2.57 years at December 31, 2025.

The duration of our investment portfolio at June 30,

was 2.60 years compared to 2.64 years at March 31, 2026 and 2.12 years at December 31,

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, 2026, there were 816 positions (combined AFS and HTM)

with unrealized pre-tax losses totaling $29.4 million. 69 of

these positions are U.S. Treasury bonds

and carry the full faith and credit of the U.S. Government. 675 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, 2026, 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 72 positions (municipal securities and corporate bonds) have

a credit

component.

At June 30, 2026, municipal securities and corporate debt securities had an

immaterial allowance for credit losses.

None

of the securities held by the Company were past due or in nonaccrual status at June

30, 2026.

Loans HFI

Average loans

HFI decreased by $32.4 million, or 1.3% from the first quarter of 2026, and decreased by $62.2

million, or 2.4% from

the fourth quarter of 2025. Compared to the first quarter of 2026, the decline

was primarily attributable to decreases in residential real

estate loans of $14.4 million, commercial real estate loans of $14.4 million, and

commercial loans of $5.2 million, partially offset by

increases in home equity loans of $1.9 million. Compared to the fourth quarter

of 2025, the decline was primarily attributable to

decreases in residential real estate loans of $30.6 million, commercial real

estate loans of $24.5 million, commercial loans of $6.6

million, construction loans of $4.1 million, consumer loans (primarily indirect

auto) of $2.9 million, partially offset by an increase in

home equity loans of $5.9 million.

Loans HFI at June 30, 2026, decreased by $18.5 million, or 0.7% from March

31, 2026, and decreased by $46.2 million, or 1.8%,

from December 31, 2025. Compared to March 31, 2026, the decline was primarily

due to decreases in other loans of $9.7 million,

construction loans of $7.5 million, and commercial real estate loans of

$5.2 million, partially offset by increases in commercial loans

of $2.3 million, and consumer loans (primarily indirect auto) of $1.3

million. Compared to December 31, 2025, the decline was

primarily attributable to decreases in residential real estate loans of $22.8 million,

commercial real estate loans of $18.1 million,

commercial loans of $7.8 million, other loans of $2.1 million, consumer loans

(primarily indirect auto) of $1.5 million, partially offset

by increases in home equity loans of $3.6 million, and construction loans of $2.2

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 $13.4

million at June 30, 2026 compared to $13.0 million at

March 31, 2026 and $10.5 million at December 31, 2025. At June 30, 2026, nonperforming

assets as a percentage of total assets was

0.30%, compared to 0.29% at March 31, 2026 and 0.24% at December 31, 2025.

Nonaccrual loans totaled $10.0 million at June 30,

2026, a $1.1 million decrease from March 31, 2026 and a $1.4 million increase over

December 31, 2025. Other real estate totaled $3.4

million at June 30, 2026, a $1.6 million increase over March 31, 2026 and $1.5 million

increase over December 31, 2025. Further,

classified loans totaled $29.8 million at June 30, 2026, a $15.3 million increase

over March 31, 2026 and a $15.5 million increase over

December 31, 2025. The increase over both prior periods reflected the

downgrade of four commercial real estate relationships (two

private schools $9.8 million ($6.4 million and $3.4 million), hotel $2.0

million, funeral home $5.0 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, 2026, the allowance for credit losses for loans HFI totaled $31.0

million comparable to March 31, 2026 and December 31,

2025. 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. Net loan charge

-offs were 14 basis points of average loans for the second quarter of 2026 versus

10 basis points for the first quarter of 2026 and 18 basis points for the fourth

quarter of 2025. At June 30, 2026, the allowance

represented 1.24% of loans HFI compared to 1.23% at March 31, 2026,

and 1.22% at December 31, 2025.

At June 30, 2026, the allowance for credit losses for unfunded commitments

totaled $2.2

million compared to $2.2 million and $2.1

million at March 31, 2026 and December 31, 2025, respectively.

The slight change in the allowance for unfunded commitments from

December 31, 2025 reflected a variance in the level of unfunded loan commitments.

The allowance for unfunded commitments is

recorded in other liabilities.

Average total

deposits were $3.679 billion for the second quarter of 2026, a decrease of $12.2 million, or 0.3%

from the first quarter

of 2026, and an increase of $31.3 million, or 0.9%, over the fourth quarter

of 2025. Compared to the first quarter of 2026, the decrease

was primarily attributable to lower public funds balances of $43.5

million (primarily NOW account balances) as those balances begin

to seasonally decline in the second quarter, partially

offset by higher core account balances of $31.3 million (primarily MMA and

noninterest bearing checking). The increase over the fourth quarter of 2025

was primarily due to higher public funds balances of $56.1

million, partially offset by lower core deposit balances

of $24.8 million.

At June 30, 2026, total deposits were $3.721 billion, a decrease of $30.6

million, or 0.8% from March 31, 2026, and an increase of

$58.7 million, or 1.6% over December 31, 2025. The decrease from March

31, 2026, was driven by lower public funds balances of

$68.4 million (primarily NOW accounts), partially offset by an

increase in core deposit balances of $37.8 million (primarily

noninterest bearing accounts). The increase over December 31,

2025, was primarily due to core deposit growth of $151.9 million,

partially offset by lower public funds balances of $93.2 million.

Total public funds balances were

$561.5 million at June 30, 2026,

$629.9 million at March 31, 2026, and $654.7 million at December 31,

2025, respectively.

Business deposit transaction accounts classified as repurchase agreements

averaged $10.9 million for the second quarter of 2026, a

decrease of $4.9 million from the first quarter of 2026

and a decrease of $9.8 million from the fourth quarter of 2025. At June 30,

2026, repurchase agreement balances were $7.4 million compared

to $4.6 million at March 31, 2026 and $22.0 million at December

31, 2025.

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 both parallel and

upward and downward shifts in interest rates (assuming

no balance sheet growth) to indicate the inherent interest rate risk. We

prepare a base case (assumes a static rate environment) and

several alternative interest rate simulations for various ranges of upward and downward

interest rate changes. This analysis is prepared

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

Risk Oversight Committee (“ROC”) and the

Board of Directors. We

will periodically augment our interest rate simulations with alternative interest

rate scenarios that may include

various non-parallel shifts in interest rates, including a flattening or steepening

of the yield curve.

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.

The following table presents our net interest income

simulation results for gradual 12-month and 24-month “ramp” scenarios

applied to the base scenario. The “ramp” scenario is a parallel

shift applied gradually over a 12-month period for the projected 12-month

and 24-month period on a pro rata basis.

ESTIMATED CHANGES

IN NET INTEREST INCOME

As of June 30, 2026

% Change in NII

Change in Interest Rates

24 Months

+200 bp Ramp

4.8%

18.0%

+100 bp Ramp

2.4%

11.0%

-100 bp Ramp

-2.3%

-3.6%

-200 bp Ramp

-4.8%

-11.5%

As of March 31, 2026

% Change in NII

Change in Interest Rates

24 Months

+200 bp Ramp

5.0%

17.7%

+100 bp Ramp

2.5%

10.7%

-100 bp Ramp

-2.5%

-4.2%

-200 bp Ramp

-5.1%

-12.3%

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 2026, these metrics became

more favorable in the declining rate scenarios due to the deployment of variable

rate overnight funds into the investment securities

portfolio.

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

% Change in EVE

EVE Ratio

Changes in Interest

Rates

March 31, 2026

March 31, 2026

+200 bp Shock

10.6%

9.5%

27.2%

26.5%

+100 bp Shock

7.0%

6.2%

25.9%

25.3%

-100 bp Shock

-9.0%

-9.5%

21.4%

20.9%

-200 bp Shock

-20.7%

-20.8%

18.3%

18.0%

At June 30, 2026, the economic value of equity was favorable in

all rising rate environments and unfavorable in the falling rate

environments.

EVE was within prescribed tolerance levels as the EVE ratio (EVE/EVA)

in all rate scenarios is greater than 5.0%.

Factors that can impact EVE values include the absolute level of rates, the overall

structure of the balance sheet (including liquidity

levels), pre-payment speeds, loan floors, and the change of model assumptions.

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, 2026, we had the ability to generate approximately $1.721

billion (excludes overnight funds position of $413 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

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, 2026

was sufficient to meet our ongoing 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 $365.1 million in the second quarter of 2026

compared to $407.7 million in the first quarter of 2026 and $437.5

million in

the fourth quarter of 2025. Compared to the first quarter of 2026, the variance

reflected lower average deposits and the deployment of

excess liquidity into the investment security portfolio. Compared to the fourth

quarter of 2025, the variance was driven by the

deployment of excess liquidity into the investment security portfolio.

During the first six months of 2026, excess liquidity was

partially deployed into investment securities as loan demand remained selective

and management continued its disciplined

underwriting approach. Management believes the repositioning enhances

earnings while maintaining appropriate liquidity levels.

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 ongoing obligations.

Average short

-term borrowings totaled $44.5 million for the second quarter of 2026 compared

to $43.6 million for the first quarter of

and $41.6 million for the fourth quarter of 2025.

The increase from both prior periods reflected higher mortgage warehouse

borrowing activity,

partially offset by lower repurchase agreement balances

.

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.

We made

principal payments on this note of $4.1 million and $5.1 million in the first quarter

of 2026 and the second quarter of 2025,

respectively.

The second note for $32.0 million was issued to CCBG Capital Trust

II in May 2005. We

made principal payments on

this note of $5.1 million each in the first quarter of 2026 and the second quarter

of 2025. 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.

The Company previously maintained 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).

In October 2025, the interest rate swaps were terminated.

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 39.

At June 30, 2026, our regulatory capital

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

under the Basel III capital standards.

Shareowners’ equity was $570.1 million at June 30, 2026 compared

to $559.9 million at March 31, 2026 and $552.9 million at

December 31, 2025. For the first six months of 2026, shareowners’

equity was positively impacted by net income attributable to

shareowners of $32.1 million, the issuance of stock of $3.4 million, and

stock compensation accretion of $0.9

million. Shareowners’

equity was reduced by a common stock dividends

of $9.2 million ($0.54 per share), repurchases of our common stock of

$2.6 million

(63,088 shares), net adjustments totaling $2.6 million related to transactions

under our stock-based compensation plans, and an

unfavorable net change of $4.8 million in accumulated other comprehensive

loss due to an unfavorable fair value mark on the

investment securities portfolio driven by higher bond rates in the second

quarter of 2026.

At June 30, 2026, our total risk-based capital ratio was 22.35% compared to

21.62% at March 31, 2026 and 21.45% at December 31,

2025. Our common equity tier 1 capital ratio was 19.80%, 19.08%, and 18.56%,

respectively, on

these dates. Our leverage ratio was

11.96%, 11.

65%, and 11.77%, respectively,

on these dates. At June 30, 2026, 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 11.03% at June 30,

2026, compared to 10.79% at both March 31, 2026, and December 31, 2025. If

our

unrealized held-to-maturity securities loss of $7.8

million (after-tax) were recognized in accumulated

other comprehensive loss, our

adjusted tangible capital ratio would be 10.85%.

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, 2026,

March 31, 2026 and December 31, 2025, the net

pension asset reflected in other comprehensive income was $9.4

million. 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 2025

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, 2026, we had $637.5 million in commitments to extend credit

and $7.3 million in standby letters of credit.

Commitments

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

condition established in the contract.

Commitments generally have fixed expiration dates or other termination

clauses and may require payment of a fee.

Since many of the

commitments are expected to expire without being drawn upon,

the total commitment amounts do not necessarily represent future

cash requirements.

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

the performance of a client to a

third party.

We use the same credit policies

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

sheet

instruments.

If commitments arising from these financial instruments continue to require

funding at historical levels, management does not

anticipate that such funding will adversely impact our ability to meet our ongoing

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 $2.2 million at June 30, 2026.

CRITICAL ACCOUNTING POLICIES

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

Financial Statements included in our 2025 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 2025 Form 10-K.

TABLE I

AVERAGE BALANCES & INTEREST RATES (UNAUDITED)

Average

Average

Average

Average

Average

Average

Average

Average

Rate

Rate

Rate

Rate

Assets:

$

30,505

$

6.57

%

$

22,668

$

8.40

%

$

27,626

$

6.60

%

$

23,692

$

8.21

%

(1)(2)

2,505,875

37,751

6.04

2,652,572

40,436

6.11

2,522,007

75,637

6.05

2,659,204

80,465

6.10

Taxable Securities

1,165,965

10,249

3.52

1,006,514

6,666

2.65

1,141,869

19,291

3.39

994,068

12,468

2.52

Tax-Exempt Securities

(2)

1,356

4.41

1,467

4.50

1,487

4.32

1,158

4.43

Federal Funds Sold and Interest Bearing

365,126

3,366

3.70

348,787

3,909

4.49

386,285

7,077

3.69

334,944

7,405

4.46

Total Earning Assets

4,068,827

51,881

5.11

%

4,032,008

51,503

5.12

%

4,079,274

102,941

5.08

%

4,013,066

101,329

5.09

%

Cash & Due From Banks

64,337

65,761

63,712

69,593

Allowance For Credit Losses

(31,602)

(30,492)

(31,574)

(30,251)

Other Assets

305,809

302,984

301,694

300,336

TOTAL ASSETS

$

$

$

4,413,106

$

4,352,744

Liabilities:

Noninterest Bearing Deposits

1,308,276

1,342,304

1,295,703

1,329,933

NOW Accounts

$

1,263,616

$

3,938

1.25

%

$

1,225,697

$

3,750

1.23

%

$

1,283,146

$

8,159

1.28

%

$

1,237,759

$

7,604

1.24

%

Money Market Accounts

419,983

1,857

1.77

431,774

2,340

2.17

411,708

3,609

1.77

425,949

4,527

2.14

Savings Accounts

513,815

0.08

507,950

0.14

511,595

0.09

507,813

0.14

Other Time Deposits

173,086

1,038

2.41

172,982

1,141

2.65

182,711

2,328

2.57

171,682

2,307

2.71

Total Interest Bearing Deposits

2,370,500

6,933

1.17

2,338,403

7,405

1.27

2,389,160

14,328

1.21

2,343,203

14,788

1.27

Total Deposits

3,678,776

6,933

0.76

3,680,707

7,405

0.81

3,684,863

14,328

0.78

3,673,136

14,788

0.81

Repurchase Agreements

10,917

2.24

22,557

2.78

13,340

2.03

26,169

2.47

Other Short-Term Borrowings

33,545

4.17

10,503

6.82

30,706

4.44

8,978

6.64

33,303

3.42

51,981

4.03

37,438

3.64

52,432

1,090

4.13

Other Long-Term Borrowings

5.78

2.41

5.73

4.04

Total Interest Bearing Liabilities

2,448,925

7,640

1.25

%

2,424,236

8,275

1.37

%

2,471,314

15,843

1.29

%

2,431,575

16,510

1.37

%

Other Liabilities

76,331

76,138

75,321

70,705

TOTAL LIABILITIES

3,833,532

3,842,678

3,842,338

3,832,213

TOTAL SHAREOWNERS’ EQUITY

573,839

527,583

570,768

520,531

TOTAL LIABILITIES, TEMPORARY

AND SHAREOWNERS’ EQUITY

$

$

$

4,413,106

$

4,352,744

Interest Rate Spread

3.86

%

3.75

%

3.79

%

3.72

%

$

44,241

$

43,228

$

87,098

$

84,819

Net Interest Margin

(3)

4.35

%

4.30

%

4.30

%

4.26

%

(1)

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

Interest income includes loan costs of $0.5 million and

$0.9 million for the three and six months ended June

30, 2026,

and loan cost of $0.3 and $0.7 million for the three and six

month periods ended June 30, 2025.

(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, 2025.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

At June 30, 2026, 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, 2026, 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 2025 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, 2026, 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: July 29, 2026