CAPITAL CITY BANK GROUP INC

For the period ended Sep 30, 2026. Filed Oct 30, 2026.

About this filing

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

Sep 30, 2026 · Filed Oct 30, 2026

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

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Contents

Item 2. results of operations,

financial position,

or cash flows of the

Indemnification

Obligation

is a member of

the Visa U.S.A. network.

Visa U.S.A member banks

are required to

indemnify the

Visa U.S.A. network

for potential future settlement

of certain litigation (the “Covered

Litigation”) that relates

to several

antitrust lawsuits challenging

the practices of

Visa and

MasterCard

International.

In 2008, the

Company,

as a member

of the Visa

U.S.A. network, obtained

Class B shares of

Visa, Inc. upon

its initial public offering.

Since its initial

public offering, Visa,

Inc. has

funded a

litigation reserve for the Covered

Litigation resulting in a reduction

in the Class B shares held

by the Company.

In 2011,

the

Company

sold its remaining Class B shares

Associated with this sale,

entered into a

swap contract

with the purchaser

of the shares

that requires a

payment

to the counterparty

in the event that

Visa, Inc. makes

subsequent

revisions to the conversion

ratio.

Conversion ratio

and ongoing fixed

quarterly charges

are reflected in earnings in the

period incurred.

Fixed charges

included in the swap

liability are payable

quarterly until the litigation reserve is

fully liquidated

and at

which time the aforementioned

swap contract

will be terminated.

Quarterly fixed payments

are approximately

0.1

There was a $

0.1

million counterparty

payment

accrued and

payable

due to a revision to

the share conversion

rate related to

funding by

VISA of the merchant

litigation reserve.

NOTE 9 – FAIR

VALUE

MEASUREMENTS

of an asset

or liability is the price that would be

received to sell that

asset or paid

to transfer

that liability in an

orderly

occurring in the principal market

(or most advantageous

market in the

absence of

a principal market)

for such asset

liability.

In estimating fair value, the

Company

utilizes valuation techniques

that are consistent

with the market

approach,

the income

approach

and/or the

cost approach.

Such valuation

techniques are

consistently applied.

Inputs to

techniques include the

that market

participants

would use in pricing an asset or liability.

Topic 820

establishes a fair

value hierarchy

for valuation

inputs that

gives the highest priority to quoted

prices in active markets

for identical

assets or liabilities

and the

lowest priority to unobservable

inputs.

hierarchy is as follows:

Level 1 Inputs -

Unadjusted

quoted prices in active

markets for

identical assets or liabilities that

the reporting entity has

the

ability to access

at the measurement

date

Level 2 Inputs -

Inputs other than

quoted prices included

in Level 1 that are

observable for

the asset or liability, either directly

or indirectly. These

might include quoted

prices for similar assets

or liabilities in active markets,

quoted prices for

identical

or similar assets or

liabilities in markets that

are not active, inputs other

than quoted

prices that are observable

for the asset

liability (such as

interest rates, volatilities,

speeds, credit risks, etc.) or inputs that

are derived principally

from, or

corroborated,

by market

data

by correlation or other

means

Level 3 Inputs -

Unobservable inputs

for determining the fair

values of

assets or liabilities that

reflect an entity’s

own

about

the assumptions

that market

participants

would use in pricing the assets or liabilities.

Assets and Liabilities

Measured at Fair Value

on a Recurring

Basis

Securities Available for Sale.

U.S. Treasury securities are reported

utilizing Level 1 inputs.

Other securities

classified as

available for sale are

reported at fair value

utilizing Level 2 inputs.

For these securities,

obtains fair value measurements

from an

independent

pricing service.

measurements

consider observable

data

that may

include dealer quotes,

market

spreads, cash

flows, the U.S. Treasury

yield curve, live trading levels,

trade execution

data,

credit information

and the

bond’s terms

and conditions,

among other

things.

In general, the Company

does not purchase

securities that have

a complicated

structure.

entire portfolio consists

traditional investments,

nearly all of which are

U.S. Treasury obligations,

federal agency

bullet or mortgage pass

-through securities, or

general obligation or revenue

-based municipal bonds.

Pricing for such

instruments is easily obtained.

At least annually,

will validate prices

supplied by the independent

pricing service by compari

ng them to prices obtained

from an independent

third-party

source.

Loans Held for Sale

loans held for sale

Level 2 inputs is determined,

when possible,

using either quoted

-market prices or investor

If no such

quoted price exists, the

fair value is determined

using quoted

prices for a similar asset

or assets, adjusted

for the specific attributes

of that

loan, which would be used

by other market

participants.

has elected the

fair value option

for its held for sale loans.

Derivative Instruments.

The fair values

of interest rate

lock commitments

(“IRLCs”) are derived by

models incorporating

market pricing for

instruments with similar characteristics,

commonly

referred to as best

execution pricing, or

investor commitment

prices for best effort

IRLCs which have

unobservable

inputs, such as an

estimate of

the fair value

of the

servicing rights expected

to be recorded upon

sale of the loans,

net estimated

costs to originate the

loans, and

the pull-through rate,

and are

therefore classified as

Level 3 within the fair value

hierarchy.

of forward sale

is based on

observable market

pricing for similar instruments and

are therefore

classified

hierarchy.

Interest Rate Swap.

derivative positions

are classified

hierarchy and

using

models generally

accepted

in the financial

services industry and

that use

actively quoted

or observable market

input values from

external market

data

providers.

derivatives are

determined using discounted

cash flow models.

Swap

entered into a

stand-alone

derivative contract

with the purchaser

of its Visa Class B shares.

The

represents the amount

due and

payable

to the counterparty

the revised share conversion

rate, if any,

during the

period. The Company’s

derivative positions

are classified

hierarchy and

use actively quoted

observable market

input values from external

market data

providers.

There was a $

0.1

0.2

million counterparty

payment

accrued and

payable

December 31, 202

5, respectively.

A summary

of fair values

for assets and

liabilities recorded at fair value

on a recurring basis consisted

of the following:

Level 1

Level 2

Level 3

Total Fair

Inputs

Value

ASSETS:

594,343

Agency

160,311

32,575

44,329

30,539

Sale

23,455

ASSETS:

333,264

Agency

172,114

34,911

52,004

43,532

2,069

Sale

21,695

Mortgage Banking Activities

had Level 3 issuances and

transfers related to

activities of $

5.9

million

and $

12.1

million, respectively, for the

30, 2026, and

6.1

13.0

million, respectively, for

the nine months

30, 2025.

Issuances

the change

in fair value of

the underlying mortgage

loan

from inception

of the IRLC

to the Consolidated

date,

for pull-through rates

and costs

originate.

IRLCs transferred

out of Level 3 represent

IRLCs that

were funded and

moved to

held for sale, at fair

value.

Assets Measured at

Fair Value on

a Non-Recurring

Basis

Certain assets

are measured

on a non

-recurring basis (i.e., the assets are not measured

on an ongoing basis

but are subject

to fair value

in certain circumstances).

An example would

be assets exhibiting evidence

of impairment.

The following is

a description of

methodologies used

for assets measured

on a non

-recurring basis.

Collateral Dependent Loans

Impairment

for collateral dependent

loans is measured

using the fair value

of the collateral

less selling

costs.

of collateral is determined

by an independent

or professional appraisal

in conformance

with banking

regulations.

are estimated

using Level 3 inputs due to the

volatility in the real estate

market, and

the judgment

and

estimation involved

in the real estate

appraisal

process.

Collateral dependent

loans are reviewed and

evaluated

on at least

a quarterly

basis for additional

impairment

and adjusted

accordingly.

Valuation

techniques are

consistent with those

techniques applied

in prior

periods.

Collateral-dependent

loans had

a carrying value

of $

14.7

million with valuation allowance

of $

1.0

30,

a carrying value

of $

6.4

million and a $

0.1

million valuation allowance

Other Real Estate Owned

During the first nine

months of 2026, certain

foreclosed assets, upon

initial recognition, were measured

and

reported at

fair value through

a charge-off

to the allowance

for credit losses based

on the fair value

of the foreclosed

asset less

cost to sell.

of the foreclosed

asset is determined

by an independent

or professional appraisal

conformance

with banking regulations.

On an ongoing basis, we obtain

updated

on foreclosed assets

and realize valuation

as necessary.

of foreclosed assets

is estimated using Level 3 inputs

due to the judgment

and estimation

involved in the

real estate valuation

process.

Mortgage Servicing Rights

loan servicing rights are evaluated

for impairment

at each

reporting period based

upon the fair

value of the

rights as compared

to the carrying amount.

Fair value is determined

by a third party

model using

speeds of the

underlying mortgage loans

serviced and stratifications

the risk characteristics of

the

underlying loans

(predominantly

loan type

and note

interest rate).

is estimated using Level 3 inputs,

including

discount rate,

weighted average prepayment

speed, and

the cost of loan

servicing.

Further detail on the

key inputs utilized are

provided in Note 4

– Mortgage Banking

Activities.

At each

of September

there was

allowance for loan

Assets and Liabilities

Disclosed at Fair Value

is required to disclose the estimated

financial instruments,

both assets

and liabilities, for which it is

practical to estimate

fair value and

the following is a description of valuation

methodologies used

for those assets

and liabilities.

Cash and Short-Term

Investments.

The carrying amount

of cash and

short-term investments

is used to approximate

fair value, given

the short time frame

to maturity

and as

such assets do

not present unanticipated

credit concerns.

Securities Held to Maturity

Securities held to maturity

in accordance

with the methodology

previously noted

in the

caption “Assets and

Liabilities Measured at

Fair Value on

a Recurring Basis – Securities Available

for Sale.”

Loans.

The loan portfolio

is segregated into categories

and the

each loan

category is calculated

using present value

techniques based

upon projected

cash flows and

discount rates.

The values reported

reflect the incorporation

of a liquidity

discount to meet

the objective

of “exit price” valuation.

Deposits.

of Noninterest Bearing Deposits,

NOW Accounts, Money

Market Accounts

and Savings Accounts

are the

amounts

payable

on demand

at the reporting date.

of fixed maturity

certificates of deposit

is estimated using present

value techniques

and rates

currently offered

for deposits of similar remaining

maturities.

Subordinated Notes Payable.

of each

note is calculated

using present value techniques,

projected cash

flows and

discount rates

as well as rates being offered

for similar obligations.

Short-Term

and Long-Term

Borrowings.

of each

note is calculated

using present value techniques,

projected cash

flows and estimated

discount rates

as well as rates being offered

for similar debt.

A summary

of estimated

fair values of

significant financial

instruments not

recorded at fair

value consisted

of the following:

Carrying

Level 1

Level 2

Level 3

Value

Inputs

ASSETS:

Cash

71,617

Fed Funds Sold and

340,015

Securities, Held to Maturity

315,142

293,832

Mortgage Servicing

Rights

1,534

Loans, Net of Allowance

for Credit Losses

2,459,355

2,321,370

3,666,568

3,665,513

38,881

33,303

31,339

Long-Term

Carrying

Level 1

Level 2

Level 3

Value

Inputs

ASSETS:

Cash

62,189

Fed Funds Sold and

467,782

Securities, Held to Maturity

377,446

129,268

240,052

Other Equity Securities

2,848

Mortgage Servicing

Rights

1,359

Loans, Net of Allowance

for Credit Losses

2,515,117

2,416,937

3,662,312

3,662,466

50,092

42,582

40,116

Long-Term

All non-financial

instruments are

excluded from

the above

table.

The disclosures also do not

include goodwill.

Accordingly, the

aggregate fair value

amounts

presented do

not represent the

underlying value of

the Company.

NOTE 10 – ACCUMULATED

OTHER COMPREHENSIVE

INCOME (LOSS)

The amounts

allocated

to accumulated

income (loss) are presented

in the table below.

Other

Interest Rate

Retirement

Swap

Plans

Income (Loss)

January 1, 2026

(9,530)

2,676

9,441

2,587

loss during the period

(13,575)

(448)

(23,105)

2,228

9,441

January 1, 2025

(20,179)

3,971

9,722

(6,486)

income (loss) during the

period

8,783

(1,076)

7,707

(11,396)

2,895

9,722

1,221

NOTE 11 -

SEGMENT REPORTING

operates a

single reportable business segment

that is comprised

of commercial

banking within the states

of Florida,

Georgia, and

Alabama.

chief executive

officer is deemed

the Chief Operating Decision Maker

(“CODM”). The

CODM evaluates

the financial performance

of the Company

by evaluating revenue streams,

significant expenses, and

budget to actual

results in assessing

single reporting segment and

in the determination

of allocating resources.

The CODM uses

net income to

benchmark

against peers and

to evaluate

performance

and allocate

resources.

Significant

revenue and expense

categories evaluated

by the CODM are consistent with the

presentation of the

Consolidated Statement

of Income

and components

of other noninterest

expense.

MANAGEMENT'S

DISCUSSION AND

ANALYSIS

OF FINANCIAL

CONDITION AND

RESULTS

OPERATIONS

discussion and analysis

(“MD&A”) provides supplemental

which sets forth the major

factors that

have

affected

condition and

results of operations

and should

be read in conjunction

with the Consolidated

Financial

and related

notes.

The following information

should provide a

better understanding

of the major

factors and

trends that

affect

our earnings performance

and financial

condition, and

how our performance

during the third quarter

of 2026

compares

with

prior periods.

Throughout this section,

Group, Inc., and

subsidiaries, collectively, is referred

to as “CCBG,”

“Company,”

“we,” “us,” or “our.”

CAUTION CONCERNING

FORWARD-LOOKING

This Quarterly Report

on Form 10-Q, including

this MD&A section,

contains “forward

-looking statements

”

within the meaning of

the

Private Securities Litigation

Reform Act of

These forward-looking statements

include, among others,

about

our

beliefs, plans, objectives,

goals, expectations,

intentions that

to significant risks and

uncertainties

and are

subject to change

various factors,

many

of which are beyond

our control.

The words “may,”

“could,” “should,” “would,”

“believe,” “anticipate,”

“contemplate,”

“estimate,” “expect,”

“intend,” “plan,”

“point to,” “project,”

“target,” “vision,” “goal,”

“continue,” “further,”

and similar expressions

are intended

to identify forward

All forward-looking statements,

by their nature,

to risks and uncertainties.

Our actual future

results may differ

materially

from those

set forth in our forward

Please see the Introductory

Note of this quarterly

report on Form 10-Q as well

as the Introductory

Note and

of our 2025

Form 10-K, as updated

in our subsequent

quarterly reports filed on

Form 10-Q, and

in our other filings made

from time to

time with the SEC after

the date

of this report.

However, other

factors besides

those listed in our Quarterly

Report or in our Annual

Report also could

adversely affect

our results,

and you

should not consider

any such

list of factors to

be a complete

set of all potential

risks or uncertainties.

Any forward-looking

made by us or on our behalf

speak only as of the

date they

are made.

We do not undertake

to update

any forward

-looking

statement,

except as

required by applicable

law.

BUSINESS OVERVIEW

We are a

financial holding company

headquartered

in Tallahassee,

Florida, and we are the

parent of

our wholly owned subsidiary,

(the “Bank

”

or “CCB”).

We offer a

broad array

of products

and services through

a total

of 62 full-service offices

and 107

ATMs/ITMs

located in Florida, Georgia,

and Alabama.

Through Capital

City Home Loans,

LLC (“CCHL”), we have 27

offices in the Southeast

for our mortgage

banking business.

We provide a

full range of banking

services, including

traditional deposit

and credit services, mortgage

banking, asset

management,

trust, merchant

services, bankcards,

securities brokerage

services and

financial advisory

services, including life insurance

products,

risk management

and asset

protection services.

Our profitability,

like most

financial institutions,

is dependent to

a large extent

upon net interest

income, which is the difference

between the interest

and fees

received on interest earning

assets, such as

securities, and the interest

paid on interest-bearing

liabilities, principally deposits

and borrowings.

Results of operations

are also affected

by the provision for

credit losses, operating

expenses such

as salaries and

employee benefits,

occupancy

operating expenses

including income taxes,

and noninterest

income such as

revenues,

wealth management

fees, deposit fees, and

bank card

fees.

We have

included a detailed

discussion

our long-term strategic objectives

as part of

the MD&A section of our 2025

NON-GAAP FINANCIAL

MEASURES (UNAUDITED)

We present

a tangible common

equity ratio and

a tangible book

value per diluted share

that, in each

case, removes

the effect

goodwill and

other intangibles that

resulted from merger and

acquisition activity.

We believe these measures

are useful to investors

because

they allow investors to

more easily compare

our capital adequacy

to other companies

in the industry.

Non-GAAP financial

measures should

not be considered

alternatives

to generally accepted

principles (“GAAP”)-basis financial statements

and

other bank

holding companies

may define

or calculate these

non-GAAP measures or similar measures

differently.

The GAAP to non

-GAAP reconciliation for each

quarter presented

is provided below.

(Dollars in Thousands, except per share data)

Third

Second

First

Fourth

Third

Shareowners' Equity (GAAP)

573,862

570,095

559,912

552,851

540,635

Less: Goodwill and Other Intangibles (GAAP)

89,095

Tangible Shareowners' Equity (non-GAAP)

484,767

481,000

470,817

463,756

451,540

Total Assets (GAAP)

4,450,483

4,453,734

4,323,774

Less: Goodwill and Other Intangibles (GAAP)

89,095

Tangible Assets (non-GAAP)

4,307,657

4,361,388

4,364,639

4,296,670

4,234,679

Tangible Common Equity Ratio (non-GAAP)

A/B

11.25%

11.03%

10.79%

10.66%

Actual Diluted Shares Outstanding (GAAP)

17,152,603

17,135,824

17,114,954

17,154,586

17,115,336

Tangible Book Value per Diluted Share (non-GAAP)

A/C

28.26

28.07

27.51

27.03

26.38

SELECTED QUARTERLY

FINANCIAL DATA

(UNAUDITED)

(Dollars in Thousands, Except Per Share Data)

Third

Second

First

Fourth

Third

Summary of Operations

Interest Income

52,486

51,838

51,020

51,715

51,431

Interest Expense

7,476

7,640

8,203

8,355

7,874

45,010

44,198

42,817

43,360

43,557

(80)

1,995

1,881

Net Interest Income After

45,090

43,279

42,105

41,365

41,676

19,384

20,599

19,933

20,103

22,331

42,295

42,640

41,373

42,867

42,916

Income Before Income Taxes

22,179

21,238

20,665

18,601

21,091

Income Tax Expense

5,239

4,961

4,848

4,896

5,141

16,940

16,277

15,817

13,705

15,950

Net Interest Income (FTE)

(1)

45,059

44,241

42,857

43,404

43,602

Per Common Share

Net Income Basic

0.99

0.95

0.92

0.80

0.93

Net Income Diluted

0.99

0.95

0.92

0.80

0.93

Cash Dividends Declared

0.27

0.26

Diluted Book Value

33.46

33.27

32.71

32.23

31.59

Diluted Tangible Book Value

(2)

28.26

28.07

27.51

27.03

26.38

Market Price:

High

53.60

51.04

46.83

45.63

44.69

Low

47.63

42.79

39.26

38.27

38.00

48.33

49.42

43.46

42.57

41.79

Selected Average Balances

Investment Securities

1,177,883

1,167,321

1,119,125

1,006,040

993,880

Loans Held for Investment

2,495,535

2,505,875

2,538,318

2,568,073

2,606,213

Earning Assets

4,038,273

4,068,827

4,089,838

4,035,910

3,981,530

Total Assets

4,407,371

4,418,904

4,367,036

3,647,526

3,678,776

3,691,016

3,647,510

3,612,331

Shareowners’ Equity

575,766

573,839

567,663

556,100

542,216

Common Equivalent Average Shares:

Basic

17,113

17,101

17,129

17,070

17,068

Diluted

17,152

17,126

17,146

17,140

17,114

Performance Ratios:

Return on Average Assets (annualized)

1.53

1.48

1.45

1.25

1.47

Return on Average Equity (annualized)

11.67

11.38

11.30

9.78

11.67

Net Interest Margin (FTE)

4.42

4.35

4.24

4.26

4.34

Noninterest Income as % of Operating Revenue

30.10

31.79

31.77

31.68

33.89

Efficiency Ratio

65.63

65.76

65.89

67.50

65.09

Asset Quality:

Allowance for Credit Losses (“ACL”)

30,369

31,007

30,999

31,001

30,202

Nonperforming Assets (“NPAs”)

9,708

13,435

12,965

10,531

10,026

ACL to Loans HFI

1.22

1.24

1.23

1.22

1.17

NPAs to Total Assets

0.22

0.30

0.29

0.24

0.23

NPAs to Loans HFI plus OREO

0.39

0.54

0.51

0.41

0.39

ACL to Non-Performing Loans

412.92

309.72

278.19

360.69

368.54

Net Charge-Offs to Average Loans HFI

0.08

0.14

0.10

0.18

Capital Ratios:

Tier 1 Capital

21.74

21.10

20.37

20.20

19.33

Total Capital

22.99

22.35

21.62

21.45

20.59

Common Equity Tier 1

20.43

19.80

19.08

18.56

17.73

Leverage

12.31

11.96

11.65

11.77

11.64

Tangible Common Equity

(2)

11.25

11.03

10.79

10.66

(1)

Fully Tax

Equivalent.

(2)

Non-GAAP financial measure.

See non-GAAP reconciliation on page 37.

FINANCIAL OVERVIEW

Results of Operations

Performance Summary.

Net income of

$16.9

million, or $0.99

per diluted share, for the

2026 compared

to $16.3

million, or $0.

95 per diluted share, for the

$16.0 million, or $0.93 per diluted share,

For the first

of 2026, net

$49.0 million, or $2.86 per diluted

share, compared

to net income

of $47.9

million, or $2.80

per diluted share, for the

Net Interest Income.

Tax

interest income for

of 2026

totaled $45.1

million, compared to

$44.2 million

$43.6 million for the third quarter

2026, the increase

to higher income from

securities and loan

interest, in addition to

lower deposit interest expense,

by lower overnight funds

income due to

lower average balances.

2025 was also

driven by the same

aforementioned

factors. One additional

calendar

day also

the increase over

of 2026, tax

interest income totaled

$132.2

to $128.4 million for the

2025,

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 benefit for

credit losses of $0.1 million for the

2026, compared

to a provision expense

of $0.9 million for the second

$1.9 million for the third quarter

2026, we recorded a

provision expense for

credit losses of $1.6 million compared

to $3.3 million for the

losses for loans HFI totaled

$30.4 million (1.22% of

loans HFI)

to $31.0 million (1.24% of

loans HFI) at

and $31.0

million at December 31, 202

(1.22% of loans

HFI).

discuss the various factors

that impacted

our provision expense

in further detail below under

the heading

Allowance for Credit Losses.

Noninterest

Income

. Noninterest income for

of 2026

totaled $19.4

million, a $1.2 million, or 5.9%, decrease from

the

second quarter of 2026

and a $2.9 million,

or 13.2%, decrease

from the third quarter of 2025.

2026 was primarily attributable

to decreases in mortgage

of $1.0 million, deposit fees

of $0.5 million and

other

income of $0.2

million partially offset

by a $0.5

million increase in wealth management

from the third quarter

2025 was driven

by decreases

revenues of $1.1

million, deposit fees of $0.7

million, other income of $0.7

million

and wealth management

fees of $0.5 million, partially offset

in bank card

fees of $0.1

million. For the first nine months

of 2026, noninterest

$59.9 million, a $2.3 million, or 3.8%, decrease

from the same

period of 2025,

primarily

to decreases in wealth

fees of $3.3

by increases in other income

of $0.7 million and

bank card

fees of $0.3

Noninterest Expense.

Noninterest expense

of 2026

totaled $42.3

million, a $0.3 million, or 0.8%, decrease from

the second quarter of

2026 and a

$0.6 million, or 1.4%, decrease from

of 2025. The

the second

quarter

of 2026

to decreases in compensation

$0.2 million and other

$0.1 million. The

decrease from the third

quarter of 2025 reflected

decreases in compensation

$0.4 million and other

$0.4 million

a $0.3

million increase in occupancy

expense. For the first nine months

of 2026, noninterest

$126.3 million,

a $2.2 million, or

1.7%, increase over the

same period of 2025

and reflected

increases in other expense

of $3.0 million and

occupancy

$0.8 million partially offset

by a decrease

in compensation

$1.6 million. The increase in other

expense was

primarily due to

a $3.9 million increase in

ORE expense,

reflecting lower gains on

property sales compared

to the prior year period,

which included a

significant gain from

the sale of our

operations center

building in the first quarter

Earning Assets.

Average

earning assets totaled

$4.038 billion for the third quarter

$30.6 million, or 0.8%, from

$2.4 million, or 0.1% over the fourth

quarter

of 2026, the

change in earning asset

mix reflected a

$27.2 million decrease

in overnight funds

a $

10.3 million decrease in loans

held

for investment

and a

$3.5 million decrease in loans

held for sale (“HFS”),

by a $10.5

securities. Compared

2025, the change

reflected a $171.8

securities and a $2.7

million increase in

loans HFS, partially offset

by a $99.7

million decrease in overnight funds

and a

$72.5 million decrease

in loans

held for investment.

Loans.

Average

loans HFI decreased

by $10.3 million, or 0.4%, from

decreased by

$72.5 million, or

2.8%, from the

fourth quarter

of 2025. Loans

HFI at September

30, 2026, decreased

by $10.1 million, or 0.4%, from

and decreased

by $56.4 million, or 2.2%, from

. Nonperforming assets

(nonaccrual loans

and other real estate) totaled

$9.7 million at September

30, 2026 compared

$13.4 million at June

and $10.5 million

at December 31, 2025.

nonperforming assets

as a percentage

of total assets

was 0.22%, compared

to 0.30% at

and 0.24%

31, 2025. Nonaccrual

loans totaled

$7.4

$2.7 million decrease from

and a

$1.2 million decrease from

Other real estate

totaled $2.4

a $1.1

million decrease from

and a

$0.4 million increase

over December 31, 2025.

Further, classified loans

totaled $20.8

$9.0 million decrease from

a $6.5 million increase over

. Average total

deposits were $3.648 billion for the

2026, a decrease

of $31.2 million, or 0.9%, from

the

comparable

30, 2026, total

deposits were $3.667

billion, a

$54.4 million, or 1.5%, from

June 30, 2026, and

an increase

of $4.3 million, or 0.1%, over December

31, 2025. Total

public funds

were $503.2 million at September

30, 2026, $561.5

million at June 30, 202

6, and $654.7

Capital

. At September 30, 2026,

we were “well-capitalized”

with a total

risk-based capital

ratio of 22.99%

and a

tangible common

equity ratio (a non-GAAP

financial measure) of

11.25% compared

to 22.35%

and 11.03%,

respectively,

and 21.45

and 10.79

%, respectively,

all of our regulatory capital

ratios exceeded

the threshold to

be “well-capitalized”

under the Basel

III capital

standards.

RESULTS

OF OPERATIONS

provides a condensed

summary of our results

of operations -

a discussion of the various

are discussed

in further detail

below.

except per share

data)

Interest Income

52,486

51,838

51,431

155,344

152,672

Taxable

Equivalent Adjustments

Income

(FTE)

52,535

51,881

51,476

155,476

152,805

Interest Expense

7,476

7,640

7,874

23,319

24,384

(FTE)

45,059

44,241

43,602

132,157

128,421

(80)

1,881

1,551

3,269

Taxable

Equivalent Adjustments

After Provision for Credit Losses

45,090

43,279

41,676

130,474

125,019

19,384

20,599

22,331

59,916

62,252

42,295

42,640

42,916

126,308

124,155

Income

Before Income

Taxes

22,179

21,238

21,091

64,082

63,116

Income

Tax Expense

5,239

4,961

5,141

15,048

15,264

Attributable to Common

Shareowners

16,940

16,277

15,950

49,034

47,852

Basic Net Income

Per Share

0.99

0.95

0.93

2.87

2.81

Diluted Net Income Per Share

0.99

0.95

0.93

2.86

2.80

Net interest income

represents our single

largest source of earnings

and is equal to interest

income and fees

generated by

earning assets

less interest expense

paid on interest bearing

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

& Interest Rates,”

on page 51.

Tax

-equivalent net interest income

for the third quarter of

2026 totaled $45.1

million, compared to

$44.2 million for the second

quarter

$43.6 million for the third quarter

2026, the increase

was primarily

to higher income from

securities and loan

interest income, in addition

to lower deposit interest expense,

by lower 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 decrease in deposit

interest expense was

primarily driven by lower

average balances

on seasonal

public funds accounts

and

lower

rates on time deposits.

One additional calendar

day also

the increase over

of 2026. The

increase over

of 2025

was also driven by the

same aforementioned

2026, tax

interest income totaled

$132.2 million compared

to $128.4 million for the

same

The increase was primarily attributable

securities income and

lower deposit interest expense,

by lower loan interest income

and overnight

funds income.

New investment purchases

at higher yields and higher

drove the increase

in investment securities income.

The decrease in deposit

interest expense was

lower rates across

several product

lines. Lower average loan

in loan interest income,

while the

decrease in overnight funds

income reflected

the deployment

of more liquidity into the

portfolio as well as a lower average

overnight funds

rate.

Our net interest margin

of 2026

was 4.42%, an

increase of seven

basis points over the

of 2026

and

eight basis points over the

of 2026, our

net interest margin

increased by

six basis points to

4.34% compared

to the same

The increase in net interest

margin over all prior periods was

largely

security yield driven by new purchases

at higher rates and

lower deposit costs. For the

2026, our cost

of funds

was 73 basis points,

of two basis points

five basis points

from

of 2025. Our cost

of deposits (including noninterest

bearing accounts)

was 74 basis points,

76 basis points,

and 80

basis points, respectively,

periods.

Provision for

We recorded

a provision benefit for

credit losses of $0.1

million for the third

quarter of 2026, compared

to a provision expense

of $0.9

million for the second

$1.9 million for the third quarter

of 2025. For the

first nine months of

2026, we recorded

provision expense

for credit losses of $1.

to $3.3 million for the same

2026, the provision

reflected a $1.4

million expense for loans

HFI and

a $0.1

million expense for unfunded

to a $3.4

million expense for loans

HFI and

$0.1 million benefit for unfunded

period

We discuss

the various factors

that impacted

our provision expense

in further detail below under

the heading Allowance

for

Credit Losses.

Noninterest income

of 2026

totaled $19.4

million, a $1.2 million, or 5.9%, decrease from

a $2.9 million, or 13.2%, decrease

from the third quarter

of 2025. The

of 2026

was

to decreases in mortgage

of $1.0 million, deposit fees

of $0.5 million and

other income of

$0.2 million

by a $0.5

million increase in wealth management

revenues was primarily

due

to lower production

in deposit fees reflected

lower overdraft fees

to processing changes

that

better align with industry

practices. The increase

in wealth management

fees was primarily due

to higher retail brokerage fee

of 2025

was driven by decreases

revenues of $1.1

million, deposit fees of

$0.7 million, other

income of $0.7

million and wealth management

fees of $0.5

in bank

card

fees of $0.1

million. The decrease in mortgage

was due to lower production

gain on sale margin. The

decrease in deposit

fees reflected lower overdraft

in other income reflected

a $0.7 million gain from

the sale of

our

insurance subsidiary

in the third quarter of

2025 – the

advisors at

this subsidiary also serviced retail brokerage

clients which drove the

decline in wealth

fees.

2026, noninterest

$59.9 million, a $2.3 million, or 3.8%, decrease

from the same

2025, attributable

to decreases in wealth

fees of $3.3

million partially offset

by increases in other income

of $0.7

million

and bank card

fees of $0.3 million. The decrease

in wealth management

fees was attributable

to decreases in retail brokerage

fees (due

to lower assets under

management)

and lower insurance

commissions (attributable

to the aforementioned

sale of our insurance

subsidiary). The increase

in other income

to increases in other fees/commissions

of $0.3 million and

bank

owned life insurance

income of $0.2

million. The increase in bank

card fees reflected

higher card volume.

Noninterest income

represented 30.1%

of operating revenues

(net interest income plus

noninterest income)

2026 compared

to 31.8% for the

of 2026

and 33.9%

of 2025. For the

of 2026,

noninterest income

represented 31.2%

of operating revenues

to 32.7%

The table below reflects

the major

income.

Three Months

Ended

5,168

5,656

5,877

16,422

16,258

Bank Card

Fees

3,830

3,858

3,733

11,318

11,021

Wealth Management

Fees

4,640

4,185

5,173

12,876

16,142

3,673

4,660

4,794

12,585

12,804

Other

2,073

2,240

2,754

6,715

6,027

Income

19,384

20,599

22,331

59,916

62,252

Significant components

income are discussed

in more detail below.

. Deposit fees for

of 2026

totaled $5.

million, a decrease of

$0.5 million, or 8.6%, from the second

of $0.7 million,

or 12.1%, from the

of 2026, deposit

fees totaled $16.4

million, a $0.2 million,

or 1.0%, increase over

the same period of 202

Compared to the second

quarter of 2026 and

third quarter

decreases reflected

lower overdraft fees

to processing changes

that better

align with industry

practices. Compared

to the first nine months

increase was primarily due

to higher service charge fees and

commercial

account

analysis fees.

Bank Card Fees

. Bank card fees for the third

quarter of 202

totaled $3.8

$0.1 million,

or 0.7%, from the

second

$0.1 million, or 2.6%, over the third quarter

of 2025. For the first nine

2026, bank

card

fees totaled

$11.3 million, a $0.

million, or 2.7% increase

over the same

period of 2025. The

first nine months of

2025 reflected

higher card volume.

Wealth

Fees

. Wealth management

fees include trust fees

through Capital

City Trust (i.e., managed

and

trusts/estates),

and retail brokerage

fees through Capital

City Investments

(i.e., investment, insurance

products, and

retirement

accounts)

Wealth management

fees for the third

totaled $4.6

million, an increase of $0.

million, or 10.9%, over the

second quarter of 202

and a $0.5 million,

or 10.3%, decrease from

the third quarter of 2025.

of 2026, wealth

fees totaled $12.9 million, a

decrease of $3.3 million,

or 20.2%, from the

same period of 2025. The

increase compared

of 2026

was driven by higher retail brokerage

to the prior year periods

was primarily

to a decrease

in retail brokerage assets

under management.

Further, to a lesser extent,

lower insurance commissions

and reflected

the sale of our

insurance subsidiary

in the third quarter of

total assets

under management

were approximately

$2.892 billion compared

to $2.839

billion at June 30, 2026

and $3.

244 billion at

The increase

over June 30, 2026

reflected higher account

valuations

to September

30, 2025, the

decline was due

to lower retail brokerage

assets partially

to the sale of

our insurance subsidiary

in the third quarter

Mortgage Banking Revenues.

Mortgage banking revenues

totaled $3.7 million

$1.0 million,

or 21.2%, from

of 2026

and a

$1.1 million, or 23.4%, from the

For the first nine

months of 2026,

revenues totaled

$12.6 million,

of $0.2 million, or 1.7%, from the

was attributable

to lower production volume.

The decrease compared

to the

prior year periods was

due to lower production

gain on sale margin.

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

Other

. Other income totaled

$2.1 million for the third quarter

$0.2 million, or 7.5%, from the second

2026, and a decrease

of $0.7 million, or 24.7%, from

the third quarter of

of 2026, other

$6.7 million,

an increase of $0.7

million, or 11.4

%, over the same period

to the third quarter

of 2025,

was due to the

aforementioned

$0.7 million gain from the

sale of our insurance

subsidiary in the third quarter

The increase

over the first nine

2025 was primarily

to increases in other fees/commissions

of $0.3 million and

bank owned

life insurance income

of $0.2 million.

Noninterest expense

of 2026

totaled $42.3

million, a $0.3 million, or 0.8%, decrease from

2026 and a $0.6

million, or 1.4%, decrease

from the third quarter of

The decrease

from the second quarter

of 2026 was primarily

to decreases in compensation

$0.2 million (commission expense)

$0.1 million. A $0.5

million decrease

in other real estate

expense that

was partially offset

by a $0.3

million increase in telephone expense

drove the

variance

in other expense. The

of 2025

was also driven by the

same aforementioned

months of 2026, noninterest

$126.3 million, a $2.2

million, or 1.7%, increase over

the same

2025 and

reflected increases in other

$3.0 million and occupancy

$0.8 million partially offset

by a $1.6

million

decrease in compensation

expense. The increase

in other expense

was primarily due to a

$3.9 million increase in ORE expense,

reflecting lower gains

on property sales

to the prior year period, which included

a significant gain from

the sale of

our

operations center

building in the first quarter

of 2025. Lower charitable

contribution expense

of $0.6 million and

professional

fee

$0.6 million partially offset

the increase. 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 $1.1 million

and associate

of $0.5 million. Lower commission expense

drove the decline in salary

expense and

associate

to lower stock based

compensation.

The table below reflects

the major

expense.

Three Months

Ended

Salaries

21,502

21,668

21,740

64,542

65,636

Associate Benefits

4,118

4,168

4,316

12,617

13,158

Total Compensation

25,620

25,836

26,056

77,159

78,794

Premises

3,132

3,096

3,176

9,407

9,620

Equipment

4,162

4,223

3,861

12,289

11,281

Total Occupancy

7,294

7,319

7,037

21,696

20,901

Legal Fees

1,529

1,474

Professional Fees

1,460

1,400

1,621

4,165

4,761

Processing Services

2,513

2,440

2,475

7,386

7,434

Advertising

2,511

2,350

Telephone

1,148

2,813

2,195

Insurance

– Other

2,205

2,239

Owned, net

(352)

(556)

(4,431)

Pension - Other

(747)

(744)

(871)

(2,236)

(2,616)

Miscellaneous

3,345

3,298

3,866

9,636

11,054

Total Other

9,381

9,485

9,823

27,453

24,460

Expense

42,295

42,640

42,916

126,308

124,155

Significant components

expense are

discussed in more detail below.

Compensation.

$25.6

million for the third quarter

$0.2 million, or 0.8%, from

the second quarter of

2026 and a decrease

of $0.4

million, or 1.7%, from the third quarter

reflected a $0.2

million decrease in salary expense

(primarily commission expense

). Compared

to the third quarter

decrease reflected

lower salary

$0.2 million (primarily commission expense)

and lower associate

benefits of

$0.2 million (primarily

lower health

insurance costs).

months of 2026, compensation

$77.2 million compared

to $78.8 million for the

with the $1.6 million

decrease reflective

of lower salary

$1.1 million and associate

of $0.5 million. Lower

commission expense

drove the decline in salary

expense and

in associate benefit

expense was primarily

lower health

care insurance

costs.

Occupancy

. Occupancy

$7.3 million for the third quarter

of 2026, comparable

$0.3 million, or 3.7%,

of 2026, occupancy

$21.7

a $0.8 million,

or 3.8%, increase

over the same

period of 2025. The

increase compared

to all prior periods was primarily

to higher FF&E maintenance

agreements and

software license expense.

Other

. Other expense totaled

$9.4 million for the third quarter

$0.1 million, or 1.1% decrease

a $0.4 million, or 4.5%, decrease

from the third

of 2026, other

$27.5 million,

a $3.0 million, or 12.2%,

and the

third

2025,

decrease in other

real estate expense

(ORE) that was partially

higher telephone

expense. The increase

over the first nine months

of 2025

was primarily due to a

$3.9 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. Lower expense

for charitable

contributions of

$0.6 million and professional

fees of $0.6

million were partially

offsetting.

Our operating efficiency

ratio (expressed as

noninterest expense

as a percentage

of the sum

of taxable

interest income

plus noninterest income)

was 65.63% for

the third quarter of 2026 compared

to 65.76% for the second quarter

of 2026

and 65.09

for

of 2026, this ratio

was 65.76% compared

to 65.11%

Income Taxes

We realized income

tax expense

of $5.2 million (effective

rate of 23.6%)

of 2026, compared

to $5.0 million

(effective rate of 23.4%)

for the second quarter

of 2026 and $5.1 million

(effective rate of 24.4%)

For the

of 2026, we realized income

tax expense

of $15.0 million (effective

rate of 23.5%)

to $15.3 million

(effective rate

of 24.2%) for the

benefits accrued

from a solar

tax credit investment

in 2026 drove

the

decrease in our effective

tax rate

to the prior year periods. Absent

discrete items or new tax

credit investments, we

expect

our annual

effective tax

rate to approximate

23-24% for 2026.

FINANCIAL CONDITION

Average

earning assets totaled

$4.038 billion for the third quarter

$30.6 million, or 0.8%,

quarter of 2026, and

an increase of $2.4 million,

or 0.1% over the fourth

quarter of 2025. Compared

to the second quarter

of 2026,

the

change in earning asset

mix reflected a

$27.2 million decrease

in overnight funds, a

$10.3 million decrease

in loans held for

investment, and

a $3.5 million decrease

in loans held for sale (“HFS”), partially

a $10.5

securities. Compared

2025, the change

reflected a $171.8

securities and a

$2.7

million increase in

loans HFS, partially offset

by a $99.7

million decrease in overnight funds

and a

$72.5 million decrease

in loans

held for investment.

Investment Securities

Average

investments

totaled $1.178

billion for the third quarter of

2026, a $10.6

million, or 0.9%,

$171.8 million,

or 17.1%, increase over

the fourth quarter of

Average

investments

represented 29.2%

of our average

earning assets for

of 2026

to 28.7%

and 24.9%

for the fourth

For the remainder

of 2026, we will continue

to monitor our

overall liquidity position and

market conditions

to determine if cash

flow from the

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 September 30,

2026, $862.1

million, or 73.0%, of the investment

portfolio was classified as

AFS

and $315.1

million, or 26.7%, was classified as

HTM.

The average

of our total

portfolio

was 2.98 years

to 2.95 years

and 2.57

years

The duration

of our total

portfolio

2026 was 2.63

years compared

to 2.60 years

and 2.12

years

Additional information

on unrealized gains/

losses in the AFS and HTM

portfolios is provided in Note 2 –

Securities.

We determine

the classification of a

security

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

fair value with unrealized

gains and losses associated

with these securities recorded

net of tax,

in the accumulated

other

loss component

of shareowners’ equity.

HTM securities are acquired

or owned with the intent

of holding them

maturity.

HTM investments

are measured

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.

30, 2026, there

were 848 positions (combined

AFS and HTM) with unrealized

pre-tax losses totaling $52.3

million. 91

of these positions

are U.S. Treasury

bonds and carry

the full faith and

credit of the U.S. Government.

688 are U.S. government

agency

securities issued by

U.S. government