10-Q - CCBG - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON,

D.C.

20549

FORM

10-Q

☒

QUARTERLY REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended

June 30, 2025

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number:

0-13358

Capital City Bank Group, Inc.

(Exact name of Registrant as specified in its charter)

Florida

59-2273542

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

217 North Monroe Street

Tallahassee

Florida

32301

(Address of principal executive office)

(Zip Code)

(

850

)

402-7821

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, Par value $0.01

CCBG

Nasdaq Stock Market

, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of

1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such

filing requirements for the past 90 days.

Yes

[X] No [

]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405

of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit

such files).

Yes [

] No [

]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company,

an emerging growth company.

See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth

company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any

new or revised financial accounting standards pursuant to Section 13(a) of The Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [

]

[X]

At July 29, 2025,

17,066,511

shares of the Registrant’s Common Stock, $.01 par value, were outstanding.

CAPITAL CITY BANK

GROUP,

INC.

QUARTERLY

REPORT ON FORM 10-Q

FOR THE PERIOD ENDED JUNE 30, 2025

TABLE OF CONTENTS

PART I –

Financial Information

Page

Item 1.

Consolidated Financial Statements (Unaudited)

Consolidated Statements of Financial Condition – June 30, 2025 and December 31, 2024

Consolidated Statements of Income – Three and Six Months Ended June 30, 2025 and 2024

Consolidated Statements of Comprehensive Income (Loss) – Three and Six Months Ended June 30, 2025 and 2024

Consolidated Statements of Changes in Shareowners’ Equity – Three and Six Months Ended June 30, 2025 and 2024

Consolidated Statements of Cash Flows – Six Months Ended June 30, 2025 and 2024

Notes to Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosure About Market Risk

Item 4.

Controls and Procedures

PART II –

Other Information

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosure

Item 5.

Other Information

Item 6.

Exhibits

Signatures

INTRODUCTORY NOTE

Special Cautionary Notice Regarding Forward-Looking Statements

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

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

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

which are beyond our control.

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

“anticipate,” “contemplate,” “estimate,” “expect,”

“intend,” “plan,” “point to,” “project,” “target,” “vision,” “goal,” “continue,” “further,”

and similar expressions are intended to identify

forward-looking statements.

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

Our actual future results may differ materially from

those set forth in our forward-looking statements.

Our

ability

achieve

our

financial

objectives

could

adversely

affected

the

factors

discussed

detail

Part

II,

Item

1A.

“Risk

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

Form 10-K for the year ended

December 31,

2024

(the “2024

Form 10-K”),

as updated

in our

subsequent

quarterly reports

filed on

Form 10-Q,

as well

as,

among other

factors:

●

The effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal

Reserve Board;

●

Inflation, interest rate, market and monetary fluctuations;

●

Local, regional, national, and international economic conditions and the impact they may have on us and our clients and our

assessment of that impact;

●

The costs and effects of legal and regulatory developments, the outcomes of legal proceedings or regulatory or other

governmental inquiries, the results of regulatory examinations or reviews and the ability to obtain required regulatory

approvals;

●

The effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and

insurance) and their application with which we and our subsidiaries must comply;

●

The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as other

accounting standard setters;

●

The accuracy of our financial statement estimates and assumptions;

●

Changes in the financial performance and/or condition of our borrowers;

●

Changes in the mix of loan geographies, sectors and types or the level of non-performing assets and charge-offs;

●

Changes in estimates of future credit loss reserve requirements based upon the periodic review thereof under relevant

regulatory and accounting requirements;

●

Changes in our liquidity position;

●

The timely development and acceptance of new products and services and perceived overall value of these products and

services by users;

●

Changes in consumer spending, borrowing, and saving habits;

●

Greater than expected costs or difficulties related to the integration of new products and lines of business;

●

Technological changes;

●

The cost and effects of cyber incidents or other failures, interruptions, or security breaches of our systems or those of our

customers or third-party providers;

●

Fraud or misconduct by internal or external parties which we may not be able to prevent, detect or mitigate;

●

Acquisitions and integration of acquired businesses;

●

Impairment of our goodwill or other intangible assets;

●

Changes in the reliability of our vendors, internal control systems, or information systems;

●

Our ability to increase market share and control expenses;

●

Our ability to attract and retain qualified employees;

●

Changes in our organization, compensation, and benefit plans;

●

The soundness of other financial institutions;

●

Volatility

and disruption in national and international financial and commodity markets;

●

Changes in the competitive environment in our markets and among banking organizations and other financial service

providers;

●

Government intervention in the U.S. financial system;

●

A deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid

exceeding the debt ceiling, and uncertainties surrounding the federal budget and economic policy;

●

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

terrorism, civil unrest, climate change or other geopolitical events;

●

Our ability to declare and pay dividends;

●

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

●

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

●

Potential claims, damages, penalties, fines, costs and reputational damage resulting from pending or future litigation,

regulatory proceedings and enforcement actions;

●

Negative publicity and the impact on our reputation;

●

The limited trading activity and concentration of ownership of our common stock; and

●

Other factors and risks described under “Risk Factors” herein and in any of the Company’s subsequent

reports filed with the

SEC and available on its website at www.sec.gov.

However, other factors besides those listed in

Item 1A Risk Factors

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

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

Any forward-looking

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

We do not undertake to update any forward-looking

statement, except as required by applicable law.

PART

FINANCIAL INFORMATION

Item 1.

CAPITAL CITY BANK

GROUP,

INC.

CONSOLIDATED STATEMENTS

OF FINANCIAL CONDITION

(Unaudited)

June 30,

December 31,

(Dollars in Thousands, Except Par Value)

2025

2024

ASSETS

Cash and Due From Banks

78,485

70,543

Federal Funds Sold and Interest Bearing Deposits

394,917

321,311

Total Cash and Cash Equivalents

473,402

391,854

Investment Securities, Available

for Sale, at fair value (amortized cost of $

551,404

and $

429,033

)

533,457

403,345

Investment Securities, Held to Maturity (fair value of $

448,911

and $

544,460

)

462,599

567,155

Equity Securities

3,242

2,399

Total Investment

Securities

999,298

972,899

Loans Held For Sale, at fair value

19,181

28,672

Loans Held for Investment

2,631,490

2,651,550

Allowance for Credit Losses

(29,862)

(29,251)

Loans Held for Investment, Net

2,601,628

2,622,299

Premises and Equipment, Net

79,906

81,952

Goodwill and Other Intangibles

92,693

92,773

Other Real Estate Owned

132

367

Other Assets

125,513

134,116

Total Assets

4,391,753

4,324,932

LIABILITIES

Deposits:

Noninterest Bearing Deposits

1,332,080

1,306,254

Interest Bearing Deposits

2,372,773

2,365,723

Total Deposits

3,704,853

3,671,977

Short-Term

Borrowings

34,541

28,304

Subordinated Notes Payable

42,582

52,887

Other Long-Term

Borrowings

680

794

Other Liabilities

82,674

75,653

Total Liabilities

3,865,330

3,829,615

SHAREOWNERS’ EQUITY

Preferred Stock, $

0.01

par value;

3,000,000

shares authorized;

shares issued and outstanding

Common Stock, $

0.01

par value;

90,000,000

shares authorized;

17,066,395

and

16,974,513

shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

171

170

Additional Paid-In Capital

39,527

37,684

Retained Earnings

487,665

463,949

Accumulated Other Comprehensive Loss, net of tax

(940)

(6,486)

Total Shareowners’

Equity

526,423

495,317

Total Liabilities and Shareowners’

Equity

4,391,753

4,324,932

The accompanying Notes to Consolidated Financial Statements are

an integral part of these statements.

CAPITAL CITY BANK

GROUP,

INC.

CONSOLIDATED STATEMENTS

OF INCOME

(Unaudited)

Three Months Ended

June 30,

Six Months Ended

June 30,

(Dollars in Thousands, Except Per Share

Data)

2025

2024

2025

2024

INTEREST INCOME

Loans, including Fees

40,872

41,138

81,350

81,821

Investment Securities:

Taxable

6,666

3,998

12,469

8,236

Tax Exempt

Funds Sold and Interest Bearing Deposits

3,909

3,624

7,405

5,517

Total Interest Income

51,459

48,766

101,241

95,586

INTEREST EXPENSE

Deposits

7,405

8,579

14,788

16,173

Short-Term

Borrowings

335

285

616

525

Subordinated Notes Payable

530

630

1,090

1,258

Other Long-Term

Borrowings

Total Interest Expense

8,275

9,497

16,510

17,962

NET INTEREST INCOME

43,184

39,269

84,731

77,624

Provision for Credit Losses

620

1,204

1,388

2,124

Net Interest Income After Provision For Credit Losses

42,564

38,065

83,343

75,500

NONINTEREST INCOME

Deposit Fees

5,320

5,377

10,381

10,627

Bank Card Fees

3,774

3,766

7,288

7,386

Wealth Management

Fees

5,206

4,439

10,969

9,121

Mortgage Banking Revenues

4,190

4,381

8,010

7,259

Other

1,524

1,643

3,273

3,310

Total Noninterest

Income

20,014

19,606

39,921

37,703

NONINTEREST EXPENSE

Compensation

26,490

24,406

52,738

48,813

Occupancy, Net

7,071

6,997

13,864

13,991

Other

8,977

9,038

14,637

17,808

Total Noninterest

Expense

42,538

40,441

81,239

80,612

INCOME BEFORE INCOME TAXES

20,040

17,230

42,025

32,591

Income Tax Expense

4,996

3,189

10,123

6,725

NET INCOME

15,044

14,041

31,902

25,866

Loss Attributable to Noncontrolling Interests

109

841

NET INCOME ATTRIBUTABLE

TO COMMON SHAREOWNERS

15,044

14,150

31,902

26,707

BASIC NET INCOME PER SHARE

0.88

0.84

1.87

1.58

DILUTED NET INCOME PER SHARE

0.88

0.83

1.87

1.57

Average Common

Basic Shares Outstanding

17,056

16,931

17,042

16,941

Average Common

Diluted Shares Outstanding

17,088

16,960

17,067

16,964

The accompanying Notes to Consolidated Financial Statements are

an integral part of these statements.

CAPITAL CITY BANK

GROUP,

INC.

CONSOLIDATED STATEMENTS

OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

(Dollars in Thousands)

2025

2024

2025

2024

NET INCOME ATTRIBUTABLE

TO COMMON SHAREOWNERS

15,044

14,150

31,902

26,707

Other comprehensive income, before

tax:

Investment Securities:

Change in net unrealized loss on securities available for sale

2,737

769

7,744

(406)

Amortization of unrealized losses on securities transferred from

available for sale to held to maturity

344

845

842

1,736

Derivative:

Change in net unrealized gain on effective cash flow

derivative

(485)

(50)

(1,189)

387

Other comprehensive income, before

tax

2,596

1,564

7,397

1,717

Deferred tax expense related to other comprehensive income

649

160

1,851

247

Other comprehensive income, net of tax

1,947

1,404

5,546

1,470

TOTAL COMPREHENSIVE

INCOME

16,991

15,554

37,448

28,177

The accompanying Notes to Consolidated Financial Statements are

an integral part of these statements.

CAPITAL CITY BANK

GROUP,

INC.

CONSOLIDATED STATEMENTS

OF CHANGES IN SHAREOWNERS’ EQUITY

(Unaudited)

Accumulated

Other

Additional

Comprehensiv

Common

Paid-In

Retained

(Loss) Income,

(Dollars In Thousands, Except Share Data)

Outstanding

Stock

Capital

Earnings

Net of Taxes

Total

Balance, April 1, 2025

17,054,787

171

38,576

476,715

(2,887)

512,575

Net Income Attributable to Common Shareowners

15,044

Other Comprehensive Income, net of tax

1,947

Cash Dividends ($

0.2400

per share)

(4,094)

Stock Based Compensation

526

Stock Compensation Plan Transactions, net

11,608

425

Balance, June 30, 2025

17,066,395

171

39,527

487,665

(940)

526,423

Balance, April 1, 2024

16,928,507

169

34,861

435,364

(22,080)

448,314

Net Income Attributable to Common Shareowners

14,150

Other Comprehensive Income, net of tax

1,404

Cash Dividends ($

0.2100

per share)

(3,555)

Stock Based Compensation

322

Stock Compensation Plan Transactions, net

13,046

364

Balance, June 30, 2024

16,941,553

169

35,547

445,959

(20,676)

460,999

Balance, January 1, 2025

16,974,513

170

37,684

463,949

(6,486)

495,317

Net Income Attributable to Common Shareowners

31,902

Other Comprehensive Income, net of tax

5,546

Cash Dividends ($

0.4800

per share)

(8,186)

Stock Based Compensation

925

Stock Compensation Plan Transactions, net

91,882

918

919

Balance, June 30, 2025

17,066,395

171

39,527

487,665

(940)

526,423

Balance, January 1, 2024

16,950,222

170

36,326

426,275

(22,146)

440,625

Net Income Attributable to Common Shareowners

26,707

Reclassification to Temporary Equity

(1)

Other Comprehensive Income, net of tax

1,470

Cash Dividends ($

0.4200

per share)

(7,110)

Repurchase of Common Stock

(82,540)

(2,330)

Stock Based Compensation

715

Stock Compensation Plan Transactions, net

73,871

(1)

836

835

Balance, June 30, 2024

16,941,553

169

35,547

445,959

(20,676)

460,999

(1)

Adjustments to redemption value for non-controlling

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

The accompanying Notes to Consolidated Financial Statements are

an integral part of these statements.

CAPITAL CITY BANK

GROUP,

INC.

CONSOLIDATED STATEMENTS

OF CASH FLOWS

(Unaudited)

Six Months Ended June 30,

(Dollars in Thousands)

2025

2024

CASH FLOWS FROM OPERATING

ACTIVITIES

Net Income Attributable to Common Shareowners

31,902

26,707

Adjustments to Reconcile Net Income to

Cash Provided by Operating Activities:

Provision for Credit Losses

1,388

2,124

Depreciation

3,676

4,050

Amortization of Premiums, Discounts and Fees, net

2,272

1,842

Amortization of Intangible Asset

Originations of Loans Held-for-Sale

(218,167)

(241,631)

Proceeds From Sales of Loans Held-for-Sale

232,204

249,378

Mortgage Banking Revenues

(8,010)

(7,259)

Net Additions for Capitalized Mortgage Servicing Rights

134

Stock Compensation

925

715

Net Tax Benefit from

Stock-Based Compensation

(154)

Deferred Income Taxes (Benefit)

1,391

(1,346)

Net Change in Operating Leases

(33)

195

Net Gain on Sales and Write-Downs of Other Real Estate Owned

(4,514)

Net Decrease in Other Assets

5,124

1,425

Net Increase in Other Liabilities

6,363

3,170

Net Cash Provided By Operating Activities

54,491

39,584

CASH FLOWS FROM INVESTING ACTIVITIES

Securities Held to Maturity:

Purchases

(47,841)

(3,944)

Proceeds from Payments, Maturities, and Calls

152,124

45,849

Securities Available for

Sale:

Purchases

(155,436)

(5,661)

Proceeds from Payments, Maturities, and Calls

32,471

32,169

Equity Securities:

Purchases

(60)

Net Decrease (Increase) in Equity Securities

(10)

Purchases of Loans Held for Investment

(304)

(302)

Proceeds from Sales of Loans

25,696

19,176

Net (Increase) Decrease in Loans Held for Investment

(4,047)

24,288

Proceeds From Sales of Other Real Estate Owned

7,341

Purchases of Premises and Equipment

(4,222)

(4,198)

Net Cash Provided by Investing Activities

5,816

107,367

CASH FLOWS FROM FINANCING ACTIVITIES

Net Increase (Decrease) in Deposits

32,876

(93,258)

Net Increase (Decrease) in Short-Term

Borrowings

6,237

(9,571)

Redemption of Subordinated Notes

(10,305)

Net Increase (Decrease) in Other Long-Term

Borrowings

694

Dividends Paid

(8,186)

(7,110)

Payments to Repurchase Common Stock

(2,330)

Proceeds from Issuance of Common Stock Under Purchase Plans

619

536

Net Cash Provided By (Used In) Financing Activities

21,241

(111,039)

NET INCREASE IN CASH AND CASH EQUIVALENTS

81,548

35,912

Cash and Cash Equivalents at Beginning of Period

391,854

312,067

Cash and Cash Equivalents at End of Period

473,402

347,979

Supplemental Cash Flow Disclosures:

Interest Paid

16,543

17,153

Income Taxes Paid

3,220

3,005

Supplemental Noncash Items:

Loans and Premises Transferred to Other Real Estate Owned

2,592

649

Loans Transferred from Held for Investment

to Held for Sale, net

22,232

15,475

The accompanying Notes to Consolidated Financial Statements are

an integral part of these statements.

CAPITAL CITY BANK

GROUP,

INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

NOTE 1 –

BUSINESS AND BASIS OF PRESENTATION

Nature of Operations

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

banking and banking-

related services to individual and corporate clients through its wholly owned

subsidiary, Capital City Bank (“CCB” or the

“Bank”),

with banking offices located in Florida, Georgia,

and Alabama.

The Company is subject to competition from other financial

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

periodic examinations by those regulatory

authorities.

Basis of Presentation

The consolidated financial statements in this Quarterly Report on Form

10-Q include the accounts of CCBG

and CCB.

All material inter-company transactions and accounts have

been eliminated.

Certain previously reported amounts have

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

The accompanying unaudited consolidated financial statements have

been prepared in accordance with generally accepted accounting

principles for interim financial information and with the instructions to Form

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

Accordingly,

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

accounting principles for complete financial

statements.

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

recurring accruals) considered necessary for a fair

presentation have been included.

The Consolidated Statement of Financial Condition at December

31, 2024 has been derived from the audited consolidated financial

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

required by generally accepted accounting principles for

complete financial statements.

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

thereto included in the

Company’s 2024 Form

10-K.

Accounting Standards Updates

Proposed Accounting Standards

ASU No. 2023-06, “Disclosure Improvements:

Codification Amendments in Response to the SEC’s

Disclosure Update and Simplification Initiative.”

Accounting Standards Update

(“ASU”) 2023-06 is intended to clarify or improve

disclosure and presentation requirements of a variety of topics, which will allow users to

more easily compare entities subject to the

SEC’s existing disclosures with those

entities that were not previously subject to the requirements and align the requirements

in the

FASB accounting

standard codification with the SEC’s

regulations. ASU 2023-06 is to be applied prospectively,

and early adoption is

prohibited. For reporting entities subject to the SEC’s

existing disclosure requirements, the effective

dates of ASU 2023-06 will be the

date on which the SEC’s removal of

that related disclosure requirement from Regulation S-X or Regulation

S-K becomes effective. If

by June 30, 2027, the SEC has not removed the applicable requirement from

Regulation S-X or Regulation S-K, the pending content

of the related amendment will not become effective for

any entities. The Company is currently evaluating the provisions of the

amendments and the impact on its future consolidated statements.

ASU No. 2023-09, “Income Taxes

(Topic

740): Improvements to Income Tax

Disclosures.”

ASU 2023-09 is intended to enhance

transparency and decision usefulness of income tax disclosures. The ASU addresses

investor requests for more transparency about

income tax information through improvements to income tax disclosures,

primarily related to the rate reconciliation and income taxes

paid information. Retrospective application in all prior periods is permitted.

ASU 2023-09 is effective for the Company as of January

1, 2025. The Company is currently evaluating the impact of the incremental

income taxes information that will be required to be

disclosed within its Annual Report on Form 10-K for the year ended December

31, 2025 and subsequent annual reports.

ASU No. 2023-03, “Income Statement — Reporting Comprehensive

Income — Expense Disaggregation

Disclosures (Subtopic 220-

40): Disaggregation of Income Statement

Expenses.”

ASU 2024-03 introduces new requirements to disclose additional information

about certain types of expenses, including employee compensation, depreciation,

intangible asset amortization, and selling expenses.

ASU 2024-03 is effective for the Company as of January 1, 2026. The

Company is currently evaluating the impact of the incremental

disclosures that will be required under the standard.

NOTE 2 –

INVESTMENT SECURITIES

Investment Portfolio Composition

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

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

and the corresponding amounts of gross

unrealized gains and losses.

Available for

Sale

Amortized

Unrealized

Allowance for

Fair

(Dollars in Thousands)

Cost

Gains

Losses

Credit Losses

Value

June 30, 2025

U.S. Government Treasury

221,568

1,116

363

222,321

U.S. Government Agency

166,665

3,666

163,068

States and Political Subdivisions

40,551

2,708

(1)

37,873

Mortgage-Backed Securities

(1)

62,904

9,277

53,628

Corporate Debt Securities

51,619

3,080

(69)

48,470

Other Securities

(2)

8,097

Total

551,404

1,217

19,094

(70)

533,457

December 31, 2024

U.S. Government Treasury

106,710

934

105,801

U.S. Government Agency

148,666

5,578

143,127

States and Political Subdivisions

43,212

3,827

(3)

39,382

Mortgage-Backed Securities

(1)

66,379

10,902

55,477

Corporate Debt Securities

55,970

4,444

(64)

51,462

Other Securities

(2)

8,096

Total

429,033

25,685

(67)

403,345

Held to Maturity

Amortized

Unrealized

Fair

(Dollars in Thousands)

Cost

Gains

Losses

Value

June 30, 2025

U.S. Government Treasury

235,499

2,748

232,751

Mortgage-Backed Securities

(1)

227,100

236

11,176

216,160

Total

462,599

236

13,924

448,911

December 31, 2024

U.S. Government Treasury

368,005

6,476

361,529

Mortgage-Backed Securities

(1)

199,150

16,235

182,931

Total

567,155

22,711

544,460

(1)

Comprised of residential mortgage-backed

securities.

(2)

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

at cost of $

3.0

million and $

5.1

million,

respectively,

at June 30, 2025 and at December 31, 2024.

At June 30, 2025 and December 31, 2024, the investment portfolio had $

3.2

million and $

2.4

million, respectively, in

equity

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

and were not credit impaired.

Securities with an amortized cost of $

385.5

million and $

489.5

million at June 30, 2025 and December 31, 2024, respectively,

were

pledged to secure public deposits and for other purposes.

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

to own capital stock in the FHLB based

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

FHLB advances. The Bank’s investment

in FHLB

stock, which is included in other securities is pledged to secure FHLB advances.

No ready market exists for this stock, and it has no

quoted fair value; however, redemption

of this stock has historically been at par value.

As a member of the Federal Reserve Bank of

Atlanta, the Bank is required to maintain stock in the Federal Reserve Bank of Atlanta

based on a specified ratio relative to the Bank’s

capital.

Federal Reserve Bank stock is carried at cost.

Investment Sales.

There were

sales of investment securities for the three and six months ended June 30, 2025 and

2024.

Maturity Distribution

At June 30, 2025, the Company’s investment

securities had the following maturity distribution based on

contractual maturity.

Expected maturities may differ from contractual maturities because borrowers

may have the right to call or

prepay obligations.

Mortgage-backed securities, certain amortizing U.S. government agency

securities and other securities are shown

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

Available for

Sale

Held to Maturity

(Dollars in Thousands)

Amortized Cost

Fair Value

Amortized Cost

Fair Value

Due in one year or less

58,288

57,421

227,073

224,454

Due after one year through five years

298,624

294,770

8,426

8,297

Due after five year through ten years

16,353

14,603

Mortgage-Backed Securities

62,904

53,628

227,100

216,160

U.S. Government Agency

107,138

104,938

Other Securities

8,097

Total

551,404

533,457

462,599

448,911

Unrealized Losses on Investment Securities.

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

securities with unrealized losses aggregated by major security type and length

of time in a continuous unrealized loss position:

Less Than

Greater Than

12 Months

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

(Dollars in Thousands)

Value

Losses

Value

Losses

Value

Losses

June 30, 2025

Available for

Sale

U.S. Government Treasury

28,929

11,742

349

40,671

363

U.S. Government Agency

41,132

264

93,868

3,402

135,000

3,666

States and Political Subdivisions

1,622

34,125

2,642

35,747

2,708

Mortgage-Backed Securities

53,545

9,277

53,584

9,277

Corporate Debt Securities

1,077

47,393

3,012

48,470

3,080

Total

72,799

412

240,673

18,682

313,472

19,094

Held to Maturity

U.S. Government Treasury

232,751

2,748

232,751

2,748

Mortgage-Backed Securities

50,264

204

110,114

10,972

160,378

11,176

Total

50,264

204

342,865

13,720

393,129

13,924

December 31, 2024

Available for

Sale

U.S. Government Treasury

81,363

318

14,510

616

95,873

934

U.S. Government Agency

33,155

184

100,844

5,394

133,999

5,578

States and Political Subdivisions

2,728

164

36,654

3,663

39,382

3,827

Mortgage-Backed Securities

55,409

10,902

55,463

10,902

Corporate Debt Securities

3,093

249

48,369

4,195

51,462

4,444

Total

120,393

915

255,786

24,770

376,179

25,685

Held to Maturity

U.S. Government Treasury

361,529

6,476

361,529

6,476

Mortgage-Backed Securities

58,230

1,000

119,353

15,235

177,583

16,235

Total

58,230

1,000

480,882

21,711

539,112

22,711

At June 30, 2025, there were

788

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

33.0

million.

these positions are U.S. Treasury bonds

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

650

are U.S. government agency

securities issued by U.S. government sponsored entities.

We believe

the long history of no credit losses on government securities

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

zero.

At June 30, 2025, all collateralized

mortgage obligation securities, mortgage-backed securities, Small Business

Administration securities, U.S. Agency,

and U.S. Treasury

bonds held were AAA rated.

The remaining

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

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

69,000

and municipal securities had an allowance of

less than $

1,000

. None of the securities held by the Company were past due or in nonaccrual status at June 30,

2025.

Credit Quality Indicators

The Company monitors the credit quality of its investment securities through

various risk management procedures, including the

monitoring of credit ratings.

A majority of the debt securities in the Company’s

investment portfolio were issued by a U.S.

government entity or agency and are either explicitly or implicitly guaranteed

by the U.S. government.

The Company believes the

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

of nonpayment of the amortized cost basis is

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

to technically default.

Further, certain municipal securities held by the Company

have been pre-refunded and secured by government guaranteed

treasuries.

Therefore, for the aforementioned securities, the Company

does

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

The Company monitors the credit quality of its

municipal and corporate securities portfolio via credit ratings

which are updated on a quarterly basis.

On a quarterly basis, municipal

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

if the loss is attributable to credit related factors and

if an allowance for credit loss is needed.

NOTE 3 – LOANS HELD FOR INVESTMENT AND ALLOWANCE

FOR CREDIT LOSSES

Loan Portfolio Composition

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

(Dollars in Thousands)

June 30, 2025

December 31, 2024

Commercial, Financial and Agricultural

180,008

189,208

Real Estate – Construction

174,115

219,994

Real Estate – Commercial Mortgage

802,504

779,095

Real Estate – Residential

(1)

1,047,920

1,042,504

Real Estate – Home Equity

228,201

220,064

Consumer

(2)

198,742

200,685

Loans Held For Investment, Net of Unearned Income

2,631,490

2,651,550

(1)

Includes loans in process balances of $

1.6

million and $

13.6

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

(2)

Includes overdraft balances of $

1.3

million and $

1.2

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

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

included in loans were $

8.5

million at June 30, 2025 and $

8.3

million at December 31, 2024.

Accrued interest receivable on loans which is excluded from amortized

cost totaled $

8.1

million at June 30, 2025 and $

10.3

million at

December 31, 2024, and is reported separately in Other Assets.

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

loans, commercial real estate mortgage loans,

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

Atlanta and has pledged a blanket floating lien on all

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

borrowing capacity at the Federal Reserve Bank of

Atlanta.

Allowance for Credit Losses

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

allowance for credit losses

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

involving loans that do not share risk characteristics and the

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

a pooled component for expected credit losses for pools

of loans that share similar risk characteristics.

This allowance methodology is discussed further in Note 1 – Significant

Accounting

Policies in the Company’s 2024 Form

10-K.

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

portfolio segment.

Allocation of a portion of the

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

absorb losses in other categories.

Commercial,

Real Estate

Financial,

Real Estate

Commercial

Real Estate

(Dollars in Thousands)

Agricultural

Construction

Mortgage

Residential

Home Equity

Consumer

Total

Three Months Ended

June 30, 2025

Beginning Balance

1,468

2,233

6,061

14,885

2,029

3,058

29,734

Provision for Credit Losses

(86)

(422)

189

363

(33)

707

718

Charge-Offs

(74)

(49)

(24)

(1,351)

(1,498)

Recoveries

117

678

908

Net (Charge-Offs) Recoveries

(673)

(590)

Ending Balance

1,425

1,811

6,256

15,264

2,014

3,092

29,862

Six Months Ended

June 30, 2025

Beginning Balance

1,514

2,384

5,867

14,568

1,952

2,966

29,251

Provision for Credit Losses

(39)

(573)

380

569

1,429

1,801

Charge-Offs

(242)

(57)

(24)

(2,786)

(3,109)

Recoveries

192

184

1,483

1,919

Net (Charge-Offs) Recoveries

(50)

127

(1,303)

(1,190)

Ending Balance

1,425

1,811

6,256

15,264

2,014

3,092

29,862

Three Months Ended

June 30, 2024

Beginning Balance

1,525

1,869

5,947

14,828

1,896

3,264

29,329

Provision for Credit Losses

391

(118)

110

(63)

(68)

877

1,129

Charge-Offs

(400)

(1,632)

(2,032)

Recoveries

655

793

Net (Charge-Offs) Recoveries

(341)

(977)

(1,239)

Ending Balance

1,575

1,751

6,076

14,788

1,865

3,164

29,219

Six Months Ended

June 30, 2024

Beginning Balance

1,482

2,502

5,782

15,056

1,818

3,301

29,941

Provision for Credit Losses

675

(751)

(311)

2,265

2,011

Charge-Offs

(682)

(17)

(76)

(3,820)

(4,595)

Recoveries

100

223

1,418

1,862

Net (Charge-Offs) Recoveries

(582)

223

(15)

(2,402)

(2,733)

Ending Balance

1,575

1,751

6,076

14,788

1,865

3,164

29,219

For the six months ended June 30, 2025, the allowance for loans HFI increased by $

0.6

million and reflected a provision expense of

1.8

million and net loan charge-offs of $

1.2

million.

The increase in the allowance over December 31, 2024 was primarily

attributable to qualitative factor adjustments that were partially offset

by lower loan balances.

For the six months ended June 30,

2024, the allowance for loans HFI decreased by $

0.7

million and reflected a provision expense of $

2.0

million and net loan charge-

offs of $

2.7

million.

The decrease in the allowance was primarily due to lower loan balances.

Four unemployment forecast scenarios

were utilized to estimate probability of default and are weighted based on management’s

estimate of probability.

See Note 8 –

Commitments and Contingencies for information on the

allowance for off-balance sheet credit commitments.

Loan Portfolio Aging.

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

is over 30 days

past due (“DPD”).

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

past due loans by class of loans.

30-59

60-89

90 +

Total

Nonaccrual

Total

(Dollars in Thousands)

DPD

Past Due

Current

Loans

June 30, 2025

Commercial, Financial and Agricultural

278

362

179,327

319

180,008

Real Estate – Construction

174,115

Real Estate – Commercial Mortgage

765

800,335

1,404

802,504

Real Estate – Residential

303

1,319

1,622

1,044,753

1,545

1,047,920

Real Estate – Home Equity

248

267

225,343

2,591

228,201

Consumer

1,269

238

1,507

196,645

590

198,742

Total

2,863

1,660

4,523

2,620,518

6,449

2,631,490

December 31, 2024

Commercial, Financial and Agricultural

340

390

188,781

189,208

Real Estate – Construction

219,994

Real Estate – Commercial Mortgage

719

100

819

777,710

566

779,095

Real Estate – Residential

185

498

683

1,038,694

3,127

1,042,504

Real Estate – Home Equity

122

218,160

1,782

220,064

Consumer

2,154

143

2,297

197,598

790

200,685

Total

3,520

791

4,311

2,640,937

6,302

2,651,550

Nonaccrual Loans

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

become 90 days past due and/or

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

be doubtful.

Loans are returned to accrual status when the

principal and interest amounts contractually due are brought current

or when future payments are reasonably assured.

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

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

by class of loans.

June 30, 2025

December 31, 2024

Nonaccrual

With No

With

90 + Days

With No

With

90 + Days

(Dollars in Thousands)

ACL

Still Accruing

ACL

Still Accruing

Commercial, Financial and Agricultural

319

Real Estate – Construction

Real Estate – Commercial Mortgage

1,403

427

139

Real Estate – Residential

968

577

2,046

1,081

Real Estate – Home Equity

2,440

151

509

1,273

Consumer

590

790

Total Nonaccrual

Loans

4,811

1,638

2,982

3,320

Collateral Dependent Loans.

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

loans.

June 30, 2025

December 31, 2024

Real Estate

Non Real Estate

Real Estate

Non Real Estate

(Dollars in Thousands)

Secured

Commercial, Financial and Agricultural

1,210

Real Estate – Construction

Real Estate – Commercial Mortgage

2,192

427

Real Estate – Residential

2,694

2,476

Real Estate – Home Equity

1,166

651

Consumer

Total Collateral Dependent

Loans

6,052

1,210

3,554

A loan is collateral dependent when the borrower is experiencing financial

difficulty and repayment of the loan is dependent on

the

sale or operation of the underlying collateral.

The Bank’s collateral dependent

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

by either residential

or commercial collateral types.

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

either independent appraisals

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

when estimating expected net sales proceeds.

Residential Real Estate Loans In Process of Foreclosure

At June 30, 2025, the Company had $

0.2

million of 1-4 family residential

real estate loans for which formal foreclosure proceedings were in process, compared

to $

0.5

million at December 31, 2024.

Modifications to Borrowers Experiencing

Financial Difficulty.

Occasionally, the Company may

modify loans to borrowers who are

experiencing financial difficulty.

Loan modifications to borrowers in financial difficulty are loans in

which the Company has granted

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

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

Company will make concessions including the extension of the loan

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

combination thereof.

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

losses on a loan-by-loan

basis.

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

discounted cash flow analysis or the underlying

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

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

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

the loan has not had any forgiveness of

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

at market terms and qualifies as a new loan.

At June 30, 2025 and December 31, 2024, the Company maintained

one

modified commercial mortgage loan due to a borrower

experiencing financial difficulty.

The Company reduced the interest rate on the loan by

% in addition to extending the term of the

loan from

years.

The balance of the nonaccrual loan at June 30, 2025 and December 31, 2024 was $

0.3

million and did not

have a payment delay.

new modifications to borrowers experiencing financial difficulty

were made during the six months ended

June 30, 2025 and 2024.

Credit Risk Management

The Company has adopted comprehensive lending policies, underwriting standards and

loan review

procedures designed to maximize loan income within an acceptable

level of risk.

Management and the Board of Directors review and

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

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

concentrations of credit, loan delinquencies and nonperforming

loans and potential problem loans.

Management and the Credit Risk Oversight Committee periodically

review the Company’s lines

of business to monitor asset quality trends and the appropriateness of credit policies.

In addition, total borrower exposure limits are

established and concentration risk is monitored.

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

diversification of risk, client concentrations, industry group, loan

type, geographic area, or other relevant classifications of loans.

Specific segments of the loan portfolio are monitored and reported

to the Board on a quarterly basis and have strategic plans in place

to supplement Board approved credit policies governing exposure

limits and underwriting standards.

Detailed below are the types of

loans within the Company’s

loan portfolio and risk characteristics unique to each.

Commercial, Financial, and Agricultural – Loans in this category

are primarily made based on identified cash flows of the borrower

with consideration given to underlying collateral and personal or

other guarantees.

Lending policy establishes debt service coverage

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

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

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

assets such as accounts receivable, inventory,

equipment.

Collateral values are determined based upon third party appraisals and evaluations.

Loan to value ratios at origination are

governed by established policy guidelines.

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

construction loans, revolving and non-revolving credit lines

and construction/permanent loans made to individuals and investors to

finance the acquisition, development, construction or

rehabilitation of real property.

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

or project and generally

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

properties and commercial properties that are either owner-

occupied or investment in nature.

These properties may include either vacant or improved property.

Construction loans are generally

based upon estimates of costs and value associated with the completed

project.

Collateral values are determined based upon third

party appraisals and evaluations.

Loan to value ratios at origination are governed by established policy

guidelines.

The disbursement

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

and as such these loans are closely monitored by on-

site inspections.

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

mortgage loans secured by property that is either

owner-occupied or investment in nature.

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

project

with consideration given to underlying real estate collateral and

personal guarantees.

Lending policy establishes debt service

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

Collateral values are determined based upon third party

appraisals and evaluations.

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

loan portfolio are made to borrowers that demonstrate the

ability to make scheduled payments with full consideration to underwriting

factors such as current income, employment status, current

assets, and other financial resources, credit history,

and the value of the collateral.

Collateral consists of mortgage liens on 1-4 family

residential properties.

Collateral values are determined based upon third party appraisals and evaluations.

The Company does not

originate sub-prime loans.

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

individuals for legitimate purposes generally secured

by senior or junior mortgage liens on owner-occupied

1-4 family homes or vacation homes.

Borrower qualifications include

favorable credit history combined with supportive income and debt ratio

requirements and combined loan to value ratios within

established policy guidelines.

Collateral values are determined based upon third party appraisals and evaluations.

Consumer Loans – This loan portfolio includes personal installment loans,

direct and indirect automobile financing, and overdraft

lines of credit.

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

loans.

Lending policy

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

includes guidelines for verification of applicants’ income and

receipt of credit reports.

Credit Quality Indicators

As part of the ongoing monitoring of the Company’s

loan portfolio quality, management

categorizes loans

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

to service their debt such as: current financial

information, historical payment performance, credit documentation,

and current economic and market trends, among other

factors.

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

procedures for individual loan

relationships over a predetermined amount and review of smaller balance homogenous

loan pools.

The Company uses the definitions

noted below for categorizing and managing its criticized loans.

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

and are not considered criticized.

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

weaknesses are apparent which, if not corrected, could

cause future problems.

Loans in this category may not meet required underwriting criteria and

have no mitigating factors.

More than

the ordinary amount of attention is warranted for these loans.

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

typically bring normal repayment into jeopardy.

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

weaknesses that affect the repayment capacity of the

borrower.

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

for these loans.

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

as Substandard, with the characteristic that

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

currently existing facts, conditions, and values, highly

questionable and improbable.

Performing/Nonperforming – Loans within certain homogenous

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

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

activity.

The performing or nonperforming status

is updated on an on-going basis dependent upon improvement

and deterioration in credit quality.

The following tables summarize gross loans held for investment at June

30, 2025 and December 31, 2024 and current period gross

write-offs for the six months ended June 30, 2025 and 12 months ended

December 31, 2024 by years of origination and internally

assigned credit risk ratings (refer to Credit Risk Management section for detail

on risk rating system).

(Dollars in Thousands)

Term

Loans by Origination Year

Revolving

As of June 30, 2025

2025

2024

2023

2022

2021

Prior

Loans

Total

Commercial, Financial,

Agriculture:

Pass

21,285

29,681

28,473

29,399

15,176

10,549

40,078

174,641

Special Mention

289

3,151

116

3,619

Substandard

135

167

111

1,269

1,748

Total

21,285

30,105

31,669

29,682

15,210

10,660

41,397

180,008

Current-Period Gross

Writeoffs

188

242

Real Estate - Construction:

Pass

29,488

87,990

26,659

12,267

193

13,306

169,956

Special Mention

583

3,576

4,159

Total

29,488

87,990

27,242

15,843

193

13,306

174,115

Real Estate - Commercial

Mortgage:

Pass

39,009

97,387

113,036

198,192

102,760

178,711

33,667

762,762

Special Mention

3,922

164

18,373

1,120

2,871

1,065

27,567

Substandard

390

1,402

100

3,658

863

5,762

12,175

Total

43,321

98,953

113,188

220,223

104,743

187,344

34,732

802,504

Real Estate - Residential:

Pass

85,110

141,045

299,506

340,188

63,490

95,076

10,416

1,034,831

Special Mention

290

1,060

315

453

2,118

Substandard

2,543

454

1,690

1,421

4,695

168

10,971

Total

85,110

143,588

300,250

341,878

65,971

100,086

11,037

1,047,920

Current-Period Gross

Writeoffs

Real Estate - Home Equity:

Performing

1,292

412

114

607

223,155

225,610

Nonperforming

2,591

Total

1,292

412

114

607

225,746

228,201

Current-Period Gross

Writeoffs

Consumer:

Performing

42,832

28,000

35,926

42,138

30,933

9,127

9,196

198,152

Nonperforming

152

214

114

590

Total

42,984

28,000

35,963

42,352

31,047

9,200

9,196

198,742

Current-Period Gross

Writeoffs

1,029

636

707

204

2,786

(Dollars in Thousands)

Term

Loans by Origination Year

Revolving

As of December 31, 2024

2024

2023

2022

2021

2020

Prior

Loans

Total

Commercial, Financial,

Agriculture:

Pass

35,596

36,435

37,506

18,433

4,610

9,743

41,720

184,043

Special Mention

435

3,979

261

4,760

Substandard

193

405

Total

36,031

40,414

37,960

18,454

4,668

9,814

41,867

189,208

Current-Period Gross

Writeoffs

548

500

111

160

183

1,512

Real Estate - Construction:

Pass

105,148

73,615

29,821

185

8,288

217,110

Special Mention

1,555

1,329

2,884

Total

106,703

73,615

31,150

185

8,288

219,994

Current-Period Gross

Writeoffs

Real Estate - Commercial

Mortgage:

Pass

77,561

110,183

207,574

109,863

87,369

122,272

26,324

741,146

Special Mention

171

2,913

17,031

2,253

4,402

530

27,300

Substandard

2,463

3,403

869

2,508

1,305

101

10,649

Total

77,732

115,559

228,008

110,732

92,130

127,979

26,955

779,095

Current-Period Gross

Writeoffs

Real Estate - Residential:

Pass

165,050

316,521

358,851

71,423

31,169

76,921

11,872

1,031,807

Special Mention

265

1,104

468

534

521

2,892

Substandard

528

1,450

1,446

1,295

2,918

168

7,805

Total

165,050

317,314

360,301

73,973

32,932

80,373

12,561

1,042,504

Current-Period Gross

Writeoffs

Real Estate - Home Equity:

Performing

801

521

119

821

215,981

218,282

Nonperforming

1,782

Total

801

521

119

821

217,763

220,064

Current-Period Gross

Writeoffs

132

Consumer:

Performing

32,293

44,995

55,942

42,002

10,899

4,116

9,648

199,895

Nonperforming

174

321

156

790

Total

32,303

45,169

56,263

42,158

10,957

4,187

9,648

200,685

Current-Period Gross

Writeoffs

2,562

1,605

2,088

897

237

162

7,627

NOTE 4 – MORTGAGE BANKING ACTIVITIES

The Company’s mortgage

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

to manage residential

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

market residential loan closings, and residential mortgage

servicing.

Residential Mortgage Loan Production

The Company originates, markets, and services conventional and

government-sponsored residential mortgage loans.

Generally,

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

secondary market and non-conforming and adjustable-rate

residential mortgage loans may be held for investment.

The volume of residential mortgage loans originated for sale and secondary

market prices are the primary drivers of origination revenue.

Residential mortgage loan commitments are generally outstanding for 30

to 90 days, which represents the typical period from

commitment to originate a residential mortgage loan to when the closed

loan is sold to an investor.

Residential mortgage loan

commitments are subject to both credit and price risk.

Credit risk is managed through underwriting policies and procedures, including

collateral requirements, which are generally accepted by the secondary

loan markets.

Price risk is primarily related to interest rate

fluctuations and is partially managed through forward sales of residential

mortgage-backed securities (primarily to-be announced

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

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

notional amounts of derivative contracts related to residential

mortgage loan commitments,

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

and forward contract sales and their related fair

values are set forth below.

June 30, 2025

December 31, 2024

Unpaid Principal

(Dollars in Thousands)

Balance/Notional

Fair Value

Balance/Notional

Fair Value

Residential Mortgage Loans Held for Sale

18,391

19,181

28,117

28,672

Residential Mortgage Loan Commitments ("IRLCs")

(1)

24,479

652

15,000

248

Forward Sales Contracts

(2)

22,500

189

16,000

(1)

Recorded in other assets at fair value.

(2)

Recorded in other liabilities and other assets at fair value,

respectively.

At June 30, 2025, the Company had

residential mortgage loans held for sale 30-89 days past due or on nonaccrual status. At

December 31, 2024, the Company had

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

status.

Mortgage banking revenue was as follows:

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in Thousands)

2025

2024

2025

2024

Net realized gains on sales of mortgage loans

3,605

3,159

6,485

4,835

Net change in unrealized

(loss) gain on mortgage loans held

for sale

(62)

171

169

Net change in the fair value of IRLC's

(91)

(37)

405

167

Net change in the fair value of forward sales contracts

(109)

132

(285)

264

Pair-Offs on net settlement of forward sales contracts

152

(169)

210

Mortgage servicing rights additions

242

Net origination fees

807

1,359

1,372

Total mortgage banking

revenues

4,190

4,381

8,010

7,259

Residential Mortgage Servicing

The Company may retain the right to service residential mortgage loans

sold.

The unpaid principal balance of loans serviced for

others is the primary driver of servicing revenue.

The following represents a summary of mortgage servicing rights.

(Dollars in Thousands)

June 30, 2025

December 31, 2024

Number of residential mortgage loans serviced for others

465

504

Outstanding principal balance of residential mortgage loans serviced

for others

123,895

135,416

Weighted average

interest rate

5.71%

5.86%

Remaining contractual term (in months)

353

348

Conforming conventional loans serviced by the Company are sold to Federal

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

recourse basis, whereby foreclosure losses are generally the responsibility

of FNMA and not the Company.

The government loans

serviced by the Company are secured through the Government National

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

insured against loss by the Federal Housing Administration or partially

guaranteed against loss by the Veterans

Administration.

June 30, 2025, the servicing portfolio balance consisted of the following

loan types: FNMA (

59.6

.%), GNMA (

4.3

%), and private

investor (

36.1

%).

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

At June 30, 2025 and December 31, 2024, the Company did

t have delinquent residential mortgage loans in GNMA pools serviced

by the Company.

The right to repurchase these loans and the corresponding liability has been recorded

in other assets and other

liabilities, respectively, in

the Consolidated Statements of Financial Condition.

The Company had

repurchases for the three months

ended June 30, 2025 and 2024, and $

0.3

million and

repurchases in the six months ended June 30, 2025 and June 30, 2024,

respectively, of

GNMA delinquent or defaulted mortgage loans with the intention to modify their terms

and include the loans in new

GNMA pools.

Activity in the capitalized mortgage servicing rights was as follows:

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in Thousands)

2025

2024

2025

2024

Beginning balance

908

919

933

831

Additions due to loans sold with servicing retained

242

Deletions and amortization

(43)

(46)

(88)

(108)

Ending balance

889

965

889

965

The Company did

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

three or six months ended June 30,

2025 or 2024.

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

mortgage servicing rights were as follows:

June 30, 2025

December 31, 2024

Minimum

Maximum

Minimum

Maximum

Discount rates

9.50%

12.00%

9.50%

12.00%

Annual prepayment speeds

9.59%

18.60%

9.14%

18.88%

Cost of servicing (per loan)

Changes in residential mortgage interest rates directly affect

the prepayment speeds used in valuing the Company’s

mortgage

servicing rights.

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

turnover rates,

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

The weighted average annual prepayment speed was

13.01

.% at June 30, 2025 and

13.44

% at December 31, 2024.

Warehouse

Line Borrowings

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

agreements with various financial institutions at June

30, 2025.

Amounts

(Dollars in Thousands)

Outstanding

million master repurchase agreement without defined expiration.

Interest is at the SOFR rate plus

2.25%

3.25%

, with a floor rate of

3.25%

4.25%

A cash pledge deposit of $

0.1

million is required by the lender.

12,446

million warehouse line of credit agreement expiring in

June 2026

Interest is at the SOFR plus

2.50%

3.00%

279

Total Warehouse

Borrowings

12,725

Warehouse

line borrowings are classified as short-term borrowings.

At December 31, 2024, warehouse line borrowings totaled $

1.9

million. At June 30, 2025, the Company had residential mortgage loans

held for sale pledged as collateral under the above warehouse

lines of credit and master repurchase agreements.

The above agreements also contain covenants which include certain financial

requirements, including maintenance of minimum tangible net worth, minimum

liquid assets, and maximum debt to net worth ratio, as

defined in the agreements. The Company was in compliance with all significant

debt covenants at June 30, 2025.

NOTE 5 – DERIVATIVES

The Company enters into derivative financial instruments to manage exposures

that arise from business activities that result in the

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

which are determined by interest rates.

The Company’s

derivative financial instruments are used to manage differences in

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

known or

expected cash receipts and its known or expected cash payments principally

related to the Company’s subordinated

debt.

Cash Flow Hedges of Interest Rate Risk

Interest rate swaps with notional amounts totaling $

million at June 30, 2025 were designed as a cash flow hedge for subordinated

debt.

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

2.50

% and receive a variable interest rate based on

three-month CME Term

SOFR (secured overnight financing rate).

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

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

accumulated other comprehensive income (“AOCI”) and subsequently

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

which the hedged transaction affects earnings. Amounts reported

in accumulated other comprehensive income related to derivatives

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

Company’s variable-rate subordinated

debt.

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

statements of financial condition

Statement of Financial

Notional

Fair

Weighted Average

(Dollars in Thousands)

Condition Location

Amount

Value

Maturity (Years)

June 30, 2025

Interest rate swaps related to subordinated debt

Other Assets

30,000

4,130

5.0

December 31, 2024

Interest rate swaps related to subordinated debt

Other Assets

30,000

5,319

5.5

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

the consolidated statements of income related to

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

debt).

Change in Gain

Amount of Gain

(Loss) Recognized

(Loss) Reclassified

(Dollars in Thousands)

Category

in AOCI

from AOCI to Income

Three months ended June 30, 2025

Interest expense

(363)

299

Three months ended June 30, 2024

Interest expense

(37)

376

Six months ended June 30, 2025

Interest expense

(888)

596

Six months ended June 30, 2024

Interest expense

289

751

The Company estimates there will be approximately $

1.0

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

months.

The Company had a collateral liability of $

4.3

million and $

5.5

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

NOTE 6 – LEASES

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

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

liabilities, included in other assets and liabilities, respectively,

on its Consolidated Statements of Financial Condition.

The Company’s operating

leases primarily relate to banking offices with remaining lease terms

from

less than one

years.

The

Company’s leases are not complex

and do not contain residual value guarantees, variable lease payments, or

significant assumptions

or judgments made in applying the requirements of Topic

842.

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

recorded on the Consolidated Statements of Financial Condition and the related lease expense is recognized on a straight-line basis

over the lease term.

At June 30, 2025, the operating lease ROU assets and liabilities were $

27.6

million and $

28.2

million,

respectively. At December

31, 2024, ROU assets and liabilities were $

24.9

million and $

25.5

million, respectively.

The Company

recognized $

0.1

million of rental income during the six months ended June 30, 2025 for a lease that terminated

in February 2025.

The

Company does not have any finance leases.

The table below summarizes our lease expense and other information related

to the Company’s operating leases.

Three Months Ended

Six Months Ended

June 30,

(Dollars in Thousands)

2025

2024

2025

2024

Operating lease expense

897

828

1,761

1,668

Short-term lease expense

240

195

551

389

Total lease expense

1,137

1,023

2,312

2,057

Other information:

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

Operating cash flows from operating leases

882

784

1,794

1,494

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

1,117

3,997

Weighted average

remaining lease term — operating leases (in years)

15.8

16.7

15.8

16.7

Weighted average

discount rate — operating leases

3.7%

3.5%

3.7%

3.5%

The table below summarizes the maturity of remaining lease liabilities:

(Dollars in Thousands)

June 30, 2025

2025

1,797

2026

3,601

2027

3,374

2028

3,102

2029

2,880

2030 and thereafter

21,293

Total

36,047

Less: Interest

(7,860)

Present Value

of Lease liability

28,187

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

The payments under the lease agreement provide for annual lease

payments of approximately $

0.1

million annually through December 2033, and thereafter,

increase by

% every

years until 2053 at

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

value.

The Company then has

four

successive options

to extend the lease for

five years

each with rental increases of 5% at each extension.

The aggregate remaining obligation of the lease

totaled $

2.1

million at June 30, 2025.

NOTE 7 - EMPLOYEE BENEFIT PLANS

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

and eligible part-time associates and a

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

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

executive officers.

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

for new associates hired after

December 31, 2019.

The SERP II was adopted by the Company’s

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

were not covered by the SERP.

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

qualified benefit pension plan were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in Thousands)

2025

2024

2025

2024

Service Cost

860

929

1,720

1,857

Interest Cost

1,676

1,524

3,353

3,048

Expected Return on Plan Assets

(2,264)

(2,029)

(4,529)

(4,058)

Net Loss Amortization

(414)

(827)

Net Periodic Benefit Cost

(142)

465

(283)

929

Discount Rate

5.82%

5.29%

5.82%

5.29%

Long-term Rate of Return on Assets

6.75%

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

SERP and SERP II were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in Thousands)

2025

2024

2025

2024

Service Cost

Interest Cost

131

114

264

227

Prior Service Cost Amortization

Net Loss Amortization

(29)

(71)

(58)

(140)

Net Periodic Benefit Cost

140

280

105

Discount Rate

5.57%

5.11%

5.57%

5.11%

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

compensation expense in the accompanying statements of

income.

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

expense category in the

Consolidated Statements of Income.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Lending Commitments

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

sheet risks in the normal course of business

to meet the financing needs of its clients.

These financial instruments consist of commitments to extend credit and standby

letters of

credit.

The Company’s maximum exposure

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

the contractual amount of those instruments.

The Company uses the same credit policies in establishing commitments

and issuing

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

The amounts associated with the Company’s

off-balance sheet

obligations were as follows:

June 30, 2025

December 31, 2024

(Dollars in Thousands)

Fixed

Variable

Total

Fixed

Variable

Total

Commitments to Extend Credit

(1)

178,568

493,686

672,254

184,223

479,191

663,414

Standby Letters of Credit

7,402

7,287

Total

185,970

493,686

679,656

191,510

479,191

670,701

(1)

Commitments include unfunded loans, revolving

lines of credit, and off-balance sheet residential

loan commitments.

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

any condition established in the

contract.

Commitments generally have fixed expiration dates or other termination

clauses and may require payment of a fee.

Since

many of the commitments are expected to expire without being drawn

upon, the total commitment amounts do not necessarily

represent future cash requirements.

Standby letters of credit are conditional commitments issued by

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

party.

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

in extending loan facilities. In

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

of participating in these types of transactions.

However, any

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

as management reserves for its other credit

facilities.

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

requires collateral to support such instruments when it is

deemed necessary.

The Company evaluates each client’s

creditworthiness on a case-by-case basis.

The amount of collateral

obtained upon extension of credit is based on management’s

credit evaluation of the counterparty.

Collateral held varies, but may

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

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

property, plant and

equipment; and inventory.

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

that are not unconditionally cancellable by the bank is

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

The following table shows the activity in the

allowance.

Three Months Ended June 30,

Six Months Ended June 30,

(Dollars in Thousands)

2025

2024

2025

2024

Beginning Balance

1,832

3,121

2,155

3,191

Provision for Credit Losses

(94)

(417)

(52)

Ending Balance

1,738

3,139

1,738

3,139

Other Commitments.

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

which are classified as operating

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

Company’s operating lease commitments.

The Company has an outstanding commitment of up to $

1.0

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

funding technology solutions for community banks.

At June 30, 2025, the amount remaining to be funded for the bank tech venture

capital commitment was $

0.3

million.

Contingencies

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

In management's opinion,

there are

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

the aggregate, have a material effect

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

of the Company.

Indemnification Obligation

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

Visa U.S.A member banks are

required to

indemnify the Visa U.S.A.

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

that relates to several

antitrust lawsuits challenging the practices of Visa

and MasterCard International.

In 2008, the Company, as a member

of the Visa

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

Inc. upon its initial public offering.

Since its initial public offering, Visa,

Inc. has

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

in the Class B shares held by the Company.

In 2011, the

Company sold its remaining Class B shares.

Associated with this sale, the Company entered into a swap contract with the purchaser

of the shares that requires a payment to the counterparty in the event that Visa,

Inc. makes subsequent revisions to the conversion

ratio.

Conversion ratio payments and ongoing fixed quarterly charges are reflected

in earnings in the period incurred.

Fixed charges

included in the swap liability are payable quarterly until the litigation reserve

is fully liquidated and at which time the aforementioned

swap contract will be terminated.

Quarterly fixed payments are approximately $

0.2

million.

NOTE 9 – FAIR VALUE

MEASUREMENTS

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

to transfer that liability in an orderly

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

the absence of a principal market) for such asset or

liability.

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

the market approach, the income

approach and/or the cost approach.

Such valuation techniques are consistently applied.

Inputs to valuation techniques include the

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

Accounting Standards Codification Topic

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.

The fair value hierarchy is as follows:

●

Level 1 Inputs -

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

entity has the

ability to access at the measurement date

●

Level 2 Inputs -

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

either directly

or indirectly. These might

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

for identical

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

than quoted prices that are observable for the asset or

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

or inputs that are derived principally from, or

corroborated, by market data by correlation or other means

●

Level 3 Inputs -

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

an entity’s own

assumptions about the assumptions that market participants would

use in pricing the assets or liabilities.

Assets and Liabilities Measured at Fair Value

on a Recurring Basis

Securities Available for Sale.

U.S. Treasury securities are reported at fair value

utilizing Level 1 inputs.

Other securities classified as

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

For these securities, the Company obtains fair value measurements

from an independent pricing service.

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

market

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

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

terms

and conditions, among other things.

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

The Company’s entire portfolio consists

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

obligations, federal agency bullet or mortgage pass-through

securities, or

general obligation or revenue-based municipal bonds.

Pricing for such instruments is easily obtained.

At least annually, the Company

will validate prices supplied by the independent pricing service by compari

ng them to prices obtained from an independent third-party

source.

Equity Securities.

Investment securities classified as equity securities are carried at cost and

the share of earnings or losses is reported

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

readily marketable and therefore are classified

as a Level 3 input within the fair value hierarchy.

Loans Held for Sale

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

when possible,

using either quoted secondary-market prices or investor commitments.

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

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

that loan, which would be used by other market

participants.

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

Mortgage Banking Derivative Instruments.

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

models incorporating market pricing for instruments with similar characteristics,

commonly referred to as best execution pricing, or

investor commitment prices for best effort IRLCs which have

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

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

the loans, and the pull-through rate,

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

The fair value of forward sale commitments is based on

observable market pricing for similar instruments and are therefore

classified as Level 2 within the fair value hierarchy.

Interest Rate Swap.

The Company’s derivative positions

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

using

models generally accepted in the financial services industry and

that use actively quoted or observable market input values from

external market data providers.

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

Fair Value

Swap

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

its Visa Class B shares.

The

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

the revised share conversion rate, if any,

during the

period. The Company’s

derivative positions are classified as Level 2 within the fair value hierarchy and use

actively quoted or

observable market input values from external market data providers.

At June 30, 2025 and December 31, 2024, there were

amounts payable.

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

(Dollars in Thousands)

Inputs

Value

June 30, 2025

ASSETS:

Securities Available for

Sale:

U.S. Government Treasury

222,321

U.S. Government Agency

163,068

States and Political Subdivisions

37,873

Mortgage-Backed Securities

53,628

Corporate Debt Securities

48,470

Equity Securities

3,242

Loans Held for Sale

19,181

Residential Mortgage Loan Commitments ("IRLCs")

652

Interest Rate Swap Derivative

4,130

LIABILITIES:

Forward Sales Contracts

189

December 31, 2024

ASSETS:

Securities Available for

Sale:

U.S. Government Treasury

105,801

U.S. Government Agency

143,127

States and Political Subdivisions

39,382

Mortgage-Backed Securities

55,477

Corporate Debt Securities

51,462

Equity Securities

2,399

Loans Held for Sale

28,672

Interest Rate Swap Derivative

5,319

Forward Sales Contracts

Residential Mortgage Loan Commitments ("IRLCs")

248

Mortgage Banking Activities

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

activities of $

4.3

million

and $

8.4

million, respectively, for the six months

ended June 30, 2025, and $

4.1

million and $

7.1

million, respectively,

for the six

months ended June 30, 2024.

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

mortgage loan from inception

of the IRLC to the Consolidated Statement of Financial Condition date,

adjusted for pull-through rates and costs to originate.

IRLCs

transferred out of Level 3 represent IRLCs that were funded and moved

to mortgage loans held for sale, at fair value.

Assets Measured at Fair Value

on a Non-Recurring Basis

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

assets are not measured at fair value on an ongoing basis

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

An example would be assets exhibiting evidence of impairment.

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

on a non-recurring basis.

Collateral Dependent Loans

Impairment for collateral dependent loans is measured using the fair

value of the collateral less selling

costs.

The fair value of collateral is determined by an independent valuation

or professional appraisal in conformance with banking

regulations.

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

and the judgment and

estimation involved in the real estate appraisal process.

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

basis for additional impairment and adjusted accordingly.

Valuation

techniques are consistent with those techniques applied in prior

periods.

Collateral-dependent loans had a carrying value of $

7.3

million with

valuation allowance at June 30, 2025 and a carrying

value of $

3.6

million and a $

0.1

million valuation allowance at December 31, 2024.

Other Real Estate Owned

During the first six months of 2025, certain foreclosed assets, upon initial recognition,

were measured and

reported at fair value through a charge-off

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

estimated cost to sell.

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

professional appraisal in

conformance with banking regulations.

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

adjustments as necessary.

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

and estimation

involved in the real estate valuation process.

Mortgage Servicing Rights

Residential mortgage loan servicing rights are evaluated for impairment

at each reporting period based

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

Fair value is determined by a third party valuation model using

estimated prepayment speeds of the underlying mortgage loans serviced and

stratifications based on the risk characteristics of the

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

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

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

servicing.

Further detail on the key inputs utilized are

provided in Note 4 – Mortgage Banking Activities.

At each of June 30, 2025 and December 31, 2024, there was

valuation

allowance for loan servicing rights.

Assets and Liabilities Disclosed at Fair Value

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

both assets and liabilities, for which it is

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

methodologies used for those assets and liabilities.

Cash and Short-Term

Investments.

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

fair value, given

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

credit concerns.

Securities Held to Maturity

Securities held to maturity are valued in accordance with the methodology previously

noted in the

caption “Assets and Liabilities Measured at Fair Value

on a Recurring Basis – Securities Available

for Sale.”

Other Equity Securities.

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

323) and recorded at cost.

These

securities are not readily marketable securities and are reflected in Other

Assets on the Statement of Financial Condition.

Loans.

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

using present value

techniques based upon projected cash flows and estimated discount

rates.

The values reported reflect the incorporation of a liquidity

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

Deposits.

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

Accounts and Savings Accounts are the

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

certificates of deposit is estimated using present

value techniques and rates currently offered for deposits of

similar remaining maturities.

Subordinated Notes Payable.

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

based upon projected cash

flows and estimated discount rates as well as rates being offered

for similar obligations.

Short-Term

and Long-Term

Borrowings.

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

based upon

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

for similar debt.

A summary of estimated fair values of significant financial instruments not

recorded at fair value consisted of the following:

June 30, 2025

Carrying

Level 1

Level 2

Level 3

(Dollars in Thousands)

Value

Inputs

ASSETS:

Cash

78,485

Fed Funds Sold and Interest Bearing Deposits

394,917

Investment Securities, Held to Maturity

462,599

232,751

216,160

Other Equity Securities

(1)

3,242

Mortgage Servicing Rights

889

1,465

Loans, Net of Allowance for Credit Losses

2,601,628

2,468,513

LIABILITIES:

Deposits

3,704,853

3,077,764

Short-Term

Borrowings

34,541

34,092

Subordinated Notes Payable

42,582

39,537

Long-Term Borrowings

680

December 31, 2024

Carrying

Level 1

Level 2

Level 3

(Dollars in Thousands)

Value

Inputs

ASSETS:

Cash

70,543

Fed Funds Sold and Interest Bearing Deposits

321,311

Investment Securities, Held to Maturity

567,155

361,529

182,931

Other Equity Securities

(1)

2,848

Mortgage Servicing Rights

933

1,616

Loans, Net of Allowance for Credit Losses

2,622,299

2,457,883

LIABILITIES:

Deposits

3,671,977

3,046,926

Short-Term

Borrowings

28,304

Subordinated Notes Payable

52,887

42,530

Long-Term Borrowings

794

(1)

Accounted for under the equity method – not readily

marketable securities – reflected in other assets.

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

The disclosures also do not include goodwill.

Accordingly, the

aggregate fair value amounts presented do not represent the underlying

value of the Company.

NOTE 10 – ACCUMULATED

OTHER COMPREHENSIVE INCOME (LOSS)

The amounts allocated to accumulated other comprehensive income

(loss) are presented in the table below.

Accumulated

Securities

Other

Available

Interest Rate

Retirement

Comprehensive

(Dollars in Thousands)

for Sale

Swap

Plans

(Loss) Income

Balance as of January 1, 2025

(20,179)

3,971

9,722

(6,486)

Other comprehensive income (loss) during the period

6,434

(888)

5,546

Balance as of June 30, 2025

(13,745)

3,083

9,722

(940)

Balance as of January 1, 2024

(25,691)

3,970

(425)

(22,146)

Other comprehensive income during the period

1,181

289

1,470

Balance as of June 30, 2024

(24,510)

4,259

(425)

(20,676)

Note 11 - SEGMENT REPORTING

The Company operates a single reportable business segment that is comprised

of commercial banking within the states of Florida,

Georgia, and Alabama.

The Company’s 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 the Company’s

single reporting segment and in the determination of allocating resources. The

CODM uses

consolidated net income to benchmark the Company 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.

Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS

OPERATIONS

Management’s discussion

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

the major factors that have

affected our financial condition and results of operations

and should be read in conjunction with the Consolidated Financial

Statements and related notes.

The following information should provide a better understanding of

the major factors and trends that

affect our earnings performance and financial condition,

and how our performance during the second quarter of 2025 compares with

prior periods.

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

is referred to as “CCBG,”

“Company,”

“we,” “us,” or “our.”

CAUTION CONCERNING FORWARD

-LOOKING STATEMENTS

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

“forward-looking statements”

within the meaning of the

Private Securities Litigation Reform Act of 1995.

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

our

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

subject to significant risks and uncertainties and are

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

our control.

The words “may,”

“could,” “should,” “would,”

“believe,” “anticipate,” “contemplate,”

“estimate,” “expect,” “intend,” “plan,” “point to,” “project,” “target,”

“vision,” “goal,”

“continue,” “further,” and similar expressions

are intended to identify forward-looking statements.

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

Our actual future results may differ materially

from those set forth in our forward-looking statements.

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

as well

as the Introductory Note and

Item 1A. Risk Factors

of our 2024 Form 10-K, as updated in our subsequent quarterly reports filed

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

of this report.

However, other factors besides those listed in our

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

results,

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

uncertainties.

Any forward-looking

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

We do not undertake to

update any forward-looking

statement, except as required by applicable law.

BUSINESS OVERVIEW

We are a financial

holding company headquartered in Tallahassee,

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

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

We offer

a broad array of products and services through a total of 62 full-service offices

and 107 ATMs/ITMs

located in Florida, Georgia, and Alabama.

Through Capital City Home Loans, LLC (“CCHL”), we have 27

additional offices in the Southeast for our mortgage banking business.

We provide

a full range of banking services, including

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

trust, merchant services, bankcards, securities brokerage

services and financial advisory services, including life insurance products

risk management and asset protection services.

Our profitability, like

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

interest income, which is the difference

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

securities, and the interest paid on interest-bearing

liabilities, principally deposits and borrowings.

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

expenses such as salaries and employee benefits, occupancy and other

operating expenses including income taxes, and noninterest

income such as mortgage banking revenues, wealth management fees,

deposit fees, and bank card fees.

We have included

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

of our 2024 Form 10-K.

NON-GAAP FINANCIAL MEASURES (UNAUDITED)

We present a tangible

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

effect of

goodwill and other intangibles that resulted from merger

and acquisition activity. We

believe these measures are useful to investors

because 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

accounting 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.

2025

2024

(Dollars in Thousands, except per share data)

Second

First

Fourth

Third

Second

Shareowners' Equity (GAAP)

526,423

512,575

495,317

476,499

460,999

Less: Goodwill and Other Intangibles (GAAP)

92,693

92,733

92,773

92,813

92,853

Tangible Shareowners' Equity (non-GAAP)

433,730

419,842

402,544

383,686

368,146

Total Assets (GAAP)

4,391,753

4,461,233

4,324,932

4,225,316

4,225,695

Less: Goodwill and Other Intangibles (GAAP)

92,693

92,733

92,773

92,813

92,853

Tangible Assets (non-GAAP)

4,299,060

4,368,500

4,232,159

4,132,503

4,132,842

Tangible Common Equity Ratio (non-GAAP)

A/B

10.09%

9.61%

9.51%

9.28%

8.91%

Actual Diluted Shares Outstanding (GAAP)

17,097,986

17,072,330

17,018,122

16,980,686

16,970,228

Tangible Book Value

per Diluted Share (non-GAAP)

A/C

25.37

24.59

23.65

22.60

21.69

SELECTED QUARTERLY

FINANCIAL DATA

(UNAUDITED)

2025

2024

(Dollars in Thousands, Except Per Share Data)

Second

First

Fourth

Third

Second

Summary of Operations

Interest Income

51,459

49,782

49,743

49,328

48,766

Interest Expense

8,275

8,235

8,640

9,117

9,497

Net Interest Income

43,184

41,547

41,103

40,211

39,269

Provision for Credit Losses

620

768

701

1,206

1,204

Net Interest Income After

Provision for Credit Losses

42,564

40,779

40,402

39,005

38,065

Noninterest Income

20,014

19,907

18,760

19,513

19,606

Noninterest Expense

42,538

38,701

41,782

42,921

40,441

Income Before Income Taxes

20,040

21,985

17,380

15,597

17,230

Income Tax Expense

4,996

5,127

4,219

2,980

3,189

(Income) Loss Attributable to NCI

(71)

501

109

Net Income Attributable to CCBG

15,044

16,858

13,090

13,118

14,150

Net Interest Income (FTE)

(1)

43,228

41,591

41,150

40,260

39,334

Per Common Share

Net Income Basic

0.88

0.99

0.77

0.84

Net Income Diluted

0.88

0.99

0.77

0.83

Cash Dividends Declared

0.24

0.23

0.21

Diluted Book Value

30.79

30.02

29.11

28.06

27.17

Diluted Tangible Book Value

(2)

25.37

24.59

23.65

22.60

21.69

Market Price:

High

39.82

38.27

40.86

36.67

28.58

Low

32.38

33.00

26.72

25.45

39.35

35.96

36.65

35.29

28.44

Selected Average Balances

Investment Securities

1,007,981

982,330

915,202

908,456

919,832

Loans Held for Investment

2,652,572

2,665,910

2,677,396

2,693,533

2,726,748

Earning Assets

4,032,008

3,993,914

3,921,900

3,883,414

3,935,280

Total Assets

4,370,261

4,335,033

4,259,669

4,215,862

4,272,188

Deposits

3,680,707

3,665,482

3,600,424

3,572,034

3,641,028

Shareowners’ Equity

527,583

513,401

491,143

480,137

465,297

Common Equivalent Average Shares:

Basic

17,056

17,027

16,946

16,943

16,931

Diluted

17,088

17,044

16,990

16,979

16,960

Performance Ratios:

Return on Average Assets (annualized)

1.38

1.58

1.22

1.24

1.33

Return on Average Equity (annualized)

11.44

13.32

10.60

10.87

12.23

Net Interest Margin (FTE)

4.30

4.22

4.17

4.12

4.02

Noninterest Income as % of Operating Revenue

31.67

32.39

31.34

32.67

33.30

Efficiency Ratio

67.26

62.93

69.74

71.81

68.61

Asset Quality:

Allowance for Credit Losses (“ACL”)

29,862

29,734

29,251

29,836

29,219

Nonperforming Assets (“NPAs”)

6,581

4,428

6,669

7,242

6,165

ACL to Loans HFI

1.13

1.12

1.10

1.11

1.09

NPAs to Total

Assets

0.15

0.10

0.15

0.17

0.15

NPAs to Loans HFI plus OREO

0.25

0.17

0.25

0.27

0.23

ACL to Non-Performing Loans

463.01

692.10

464.14

452.64

529.79

Net Charge-Offs to Average Loans HFI

0.09

0.25

0.19

0.18

Capital Ratios:

Tier 1 Capital

18.38

18.01

17.46

16.77

16.31

Total Capital

19.60

19.20

18.64

17.97

17.50

Common Equity Tier 1

16.81

16.08

15.54

14.88

14.44

Leverage

11.14

11.17

11.05

10.89

10.51

Tangible Common Equity

(2)

10.09

9.61

9.51

9.28

8.91

(1)

Fully Tax Equivalent.

(2)

Non-GAAP financial measure.

See non-GAAP reconciliation on page 33.

FINANCIAL OVERVIEW

Results of Operations

Performance Summary.

Net income attributable to common shareowners totaled $15.0

million, or $0.88 per diluted share, for the

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

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

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

2025, net income attributable to common shareowners

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

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

period of 2024.

Net Interest Income.

Tax-equivalent net

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

to $41.6

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

2024.

Compared to the first quarter of 2025, the increase

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

a $0.4 million increase in overnight funds income.

One

additional calendar day in the second quarter of 2025 also contributed

to the increase.

Compared to the second quarter of 2024, the

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

and a $1.2 million decrease in deposit interest

expense.

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

compared to $77.8 million for the

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

increase in investment securities income, a $1.9 million

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

interest expense.

Provision and Allowance for Credit

Losses.

We recorded

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

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

second quarter of 2024.

For the first six months of

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

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

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

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

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

2024 (1.10% of loans HFI).

Noninterest Income

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

to $19.9 million for the first

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

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

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

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

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

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

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

offset by a $0.2 million decrease in mortgage

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

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

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

attributable to a $1.8 million increase in wealth management

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

by a $0.2 million decrease in deposit fees.

Noninterest Expense.

Noninterest expense for the second quarter of 2025 totaled

$42.5 million compared to $38.7 million for the first

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

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

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

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

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

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

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

For the first six months of 2025, noninterest

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

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

$3.9 million increase in compensation expense that was partially offset

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

decrease in occupancy expense.

Financial Condition

Earning Assets.

Average earning assets totaled

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

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

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

The increase over both

prior periods was driven by higher average deposit balances.

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

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

million increase in investment securities that was partially offset

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

held for sale (“HFS”).

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

a $92.8 million increase in investment securities

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

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

decrease in loans HFS.

Loans.

Average loans HFI decreased

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

million, or 0.9%,

from the fourth quarter of 2024.

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

and decreased

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

Credit Quality

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

at June 30, 2025 compared to $4.4

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

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

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

Nonaccrual loans totaled $6.4 million at

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

over December 31, 2024.

Further, classified

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

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

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

of four residential real estate loans totaling $4.2 million

and two commercial real estate loans totaling $4.3 million.

Deposits

Average total

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

or 0.4%, over the

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

of 2024.

At June 30, 2025, total deposits were

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

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

31, 2024.

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

and $660.9 million at December

31, 2024.

Capital

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

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

equity

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

and 9.61%, respectively, at March

31, 2025 and 18.64% and

9.51%, respectively,

at December 31, 2024.

At June 30, 2025, all of our regulatory capital ratios exceeded the threshold to

be “well-

capitalized”

under the Basel III capital standards.

RESULTS

OF OPERATIONS

The following table provides a condensed summary of our results of operations

a discussion of the various components are discussed

in further detail below.

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

(Dollars in Thousands, except per share data)

2025

2024

2025

2024

Interest Income

51,459

49,782

48,766

101,241

95,586

Taxable Equivalent Adjustments

145

Total Interest Income (FTE)

51,503

49,826

48,831

101,329

95,731

Interest Expense

8,275

8,235

9,497

16,510

17,962

Net Interest Income (FTE)

43,228

41,591

39,334

84,819

77,769

Provision for Credit Losses

620

768

1,204

1,388

2,124

Taxable Equivalent Adjustments

145

Net Interest Income After Provision for Credit Losses

42,564

40,779

38,065

83,343

75,500

Noninterest Income

20,014

19,907

19,606

39,921

37,703

Noninterest Expense

42,538

38,701

40,441

81,239

80,612

Income Before Income Taxes

20,040

21,985

17,230

42,025

32,591

Income Tax Expense

4,996

5,127

3,189

10,123

6,725

Pre-Tax Loss Attributable to Noncontrolling Interest

109

841

Net Income Attributable to Common Shareowners

15,044

16,858

14,150

31,902

26,707

Basic Net Income Per Share

0.88

0.99

0.84

1.87

1.58

Diluted Net Income Per Share

0.88

0.99

0.83

1.87

1.57

Net Interest Income

Net interest income represents our single largest source of earnings

and is equal to interest income and fees generated by earning assets

less interest expense paid on interest bearing liabilities.

This information is provided on a “taxable equivalent” basis to reflect the tax-

exempt status of income earned on certain loans and state and local government

debt obligations.

We provide an

analysis of our net

interest income including average yields and rates in Table

I, “Average Balances &

Interest Rates,” on page 47.

Tax-equivalent net

interest income for the second quarter of 2025 totaled $43.2 million compared to $41.6

million for the first quarter

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

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

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

in overnight funds income.

One additional calendar day in

the second quarter of 2025 contributed to the increase.

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

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

in deposit interest expense.

New investment

purchases at higher yields drove the increase in investment securities income

for both prior period comparisons.

Further, the decrease

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

decrease in our deposit rates, as short term rates began

declining in the second half of 2024.

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

million compared to $77.8 million for the same period

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

investment securities income, a $1.9 million increase in

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

New investment purchases at higher yields drove the

increase in investment securities income.

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

The

decrease in deposit interest expense reflected the aforementioned decrease in

our deposit rates.

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

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

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

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

For the

first six months of 2025, our net interest margin increased

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

The

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

yield in the investment portfolio driven by new purchases at

higher yields.

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

For the second quarter of 2025,

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

2025 and a 15-basis point decrease from

the second quarter of 2024.

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

basis points, and 95

basis points, respectively,

for the same periods.

Provision for Credit Losses

We recorded

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

to $0.8 million for the first

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

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

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

For the second quarter of 2025, the provision

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

million for unfunded loan commitments.

This compares to a

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

and a $1.1 million expense for loans HFI and

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

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

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

loan commitments compared to a $2.1 million expense for loans

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

unfunded loan commitments for the first six months of 2024.

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 the second quarter of 2025 totaled $20.0 million

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

$19.6 million for the second quarter of 2024.

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

due to a

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

in deposit fees, partially offset by a $0.6 million

decrease in wealth management fees.

The decrease in wealth management fees reflected lower insurance

commission revenues.

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

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

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

banking revenues and a $0.1 million decrease in other

income.

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

and retail brokerage fees of $0.4

million.

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

to $37.7 million for the same period of 2024,

primarily attributable to a $1.8 million increase in wealth management

fees and a $0.7 million increase in mortgage banking revenues

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

The increase in wealth management fees reflected increases in

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

insurance commission revenue of $0.1 million.

The increases in

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

higher account valuations, and fee increases

implemented in early 2025.

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

Noninterest income represented 31.7% of operating revenues (net

interest income plus noninterest income) in the second quarter of

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

quarter of 2024.

For the first six months of 2025,

noninterest income represented 32.0% of operating revenues compared

to 32.7% for the same period of 2024.

The table below reflects the major components of noninterest income.

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

(Dollars in Thousands)

2025

2024

2025

2024

Deposit Fees

5,320

5,061

5,377

10,381

10,627

Bank Card Fees

3,774

3,514

3,766

7,288

7,386

Wealth Management

Fees

5,206

5,763

4,439

10,969

9,121

Mortgage Banking Revenues

4,190

3,820

4,381

8,010

7,259

Other

1,524

1,749

1,643

3,273

3,310

Total

Noninterest Income

20,014

19,907

19,606

39,921

37,703

Significant components of noninterest income are discussed in more

detail below.

Deposit Fees

Deposit fees for the second quarter of 2025

totaled $5.3

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

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

2024.

For the first six months of 2025, deposit fees totaled

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

2024.

Compared to the first quarter of 2025, the increase

was driven by higher account maintenance and overdraft fees.

The decrease from both prior year periods reflected lower overdraft

fees and commercial account analysis fee income that was partially offset

by higher account maintenance fees.

Bank Card Fees

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

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

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

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

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

Compared to the first quarter of 2025, the increase

reflected growth in new checking accounts.

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

consumer spending patterns normalize.

Wealth

Management Fees

Wealth management fees

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

accounts and

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

investment, insurance products, and retirement accounts),

and financial advisory fees through Capital City Strategic Wealth

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

protection services).

Wealth management

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

or 9.7%,

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

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

Compared to the first

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

For the first six months of 2025, wealth management

fees totaled $11.0 million, an increase of

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

retail brokerage fees, a $0.7

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

revenue.

At June 30,

2025, total assets under management were approximately $3.192 billion

compared to $3.068 billion at March 31, 2025

and $3.049

billion at December 31, 2024.

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

was primarily due to new retail

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

Mortgage Banking Revenues.

Mortgage banking revenues totaled $4.2 million for the second quarter

of 2025, an increase of $0.4

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

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

For the first

six months of 2025, mortgage banking revenues totaled $8.0

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

The

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

loan sale volume.

A higher gain on sale margin drove the

favorable variance for the six month period comparison.

We provide a detailed

overview of our mortgage banking operation,

including a detailed break-down of mortgage banking revenues, mortgage

servicing activity, and

warehouse funding within Note 4 –

Mortgage Banking Activities in the Notes to Consolidated Financial Statements.

Other

Other income totaled $1.5 million for the second quarter of 202

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

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

of 2024.

For the first six months of 2025, other income totaled

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

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

decreases in loan servicing income and miscellaneous income.

Noninterest Expense

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

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

$40.4 million for the second quarter of 2024.

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

a $3.3

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

a $0.2 million increase in compensation expense.

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

estate expense which reflected lower gains from the

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

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

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

in miscellaneous expense.

Compared to the second

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

in compensation expense which

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

in associate benefit expense.

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

to $80.6 million for the same period of 2024 with

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

expense that was partially offset by a $3.2 million

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

The increase in compensation was due to a $2.5 million

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

The decrease in other expense was primarily due

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

the sale of banking facilities, and a $1.0 million

decrease in miscellaneous expense (non-service component of pension

expense), partially offset by increases in processing expense

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

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

million.

The table below reflects the major components of noninterest expense.

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

(Dollars in Thousands)

2025

2024

2025

2024

Salaries

22,013

21,883

20,754

43,896

41,358

Associate Benefits

4,477

4,365

3,652

8,842

7,455

Total Compensation

26,490

26,248

24,406

52,738

48,813

Premises

3,272

3,172

3,043

6,444

6,216

Equipment

3,799

3,621

3,954

7,420

7,775

Total Occupancy

7,071

6,793

6,997

13,864

13,991

Legal Fees

480

504

430

984

865

Professional Fees

1,518

1,622

1,340

3,140

2,598

Processing Services

2,491

2,469

1,938

4,960

3,771

Advertising

801

838

851

1,639

1,666

Telephone

714

719

718

1,433

1,427

Insurance – Other

757

732

749

1,489

1,664

Other Real Estate Owned, net

(4,470)

(4,449)

Pension - Other

(872)

(873)

(419)

(1,745)

(838)

Miscellaneous

3,067

4,119

3,412

7,186

6,618

Total Other

8,977

5,660

9,038

14,637

17,808

Total

Noninterest Expense

42,538

38,701

40,441

81,239

80,612

Significant components of noninterest expense are discussed in more detail

below.

Compensation.

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

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

first quarter of 2025 and a $2.1

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

The increase over the first quarter of 2025

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

in associate benefit expense.

Compared to the second

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

increase in salary expense and a $0.8 million increase in

associate benefit expense.

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

million and

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

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

increase in

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

expense.

For the first six months of 2025,

compensation expense totaled $52.7 million compared to $48.8

million for the same period of 2024

with the $3.9 million increase

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

increase in associate benefit expense.

The increase in

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

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

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

The increase in associate benefit expense was attributable to a

higher cost for associate insurance.

Occupancy

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

million, or 4.1%, increase over the first

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

of 2024.

For the first six months of 2025, occupancy

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

of 2024.

Compared to the first quarter of 2025, the

increase was primarily due to higher expense for maintenance agreements

and banking office leases.

Other

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

compared to $5.7 million for the first quarter of 2025

and

$9.0

million for the second quarter of 2024.

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

to $17.8

million for the same period of 2024.

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

a $4.5 million

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

sale of banking facilities, primarily the sale of our operations

center building in the first quarter of 2025, partially offset

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

million decrease in miscellaneous expense.

Our operating efficiency ratio (expressed as noninterest

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

plus noninterest income) was 67.26%

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

and 68.61% for

the second quarter of 2024.

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

the same period of 2024.

Income Taxes

We realized income

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

quarter of 2025 compared to $5.1 million

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

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

For the

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

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

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

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

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

Absent discrete items or new tax credit investments, we expect

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

FINANCIAL CONDITION

Average earning

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

1.0%, over the first

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

or 2.8%, over the fourth quarter of 2024.

The increase over both prior periods was

driven by higher average deposit balances (see below –

Deposits

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

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

increase in investment securities that was partially

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

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

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

a $92.8 million increase in investment securities

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

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

decrease in loans HFS.

Investment Securities

Average investments

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

and $92.8 million, or

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

represented 25.0% of our average earning assets for the

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

23.3% for the fourth quarter of 2024.

For the remainder of

2025, we will continue to monitor our overall liquidity position and market conditions

to determine if cash flow from the investment

portfolio should be reinvested or allowed to flow into overnight

funds.

The investment portfolio is a significant component of our operations and, as such,

it functions as a key element of liquidity and

asset/liability management.

Two types of classifications are approved

for investment securities which are Available

-for-Sale (“AFS”)

and Held-to-Maturity (“HTM”).

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

and

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

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

years

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

31, 2024.

The duration of our investment portfolio at June 30,

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

years at December 31, 2024.

Additional information on

unrealized gains/losses in the AFS and HTM portfolios is provided

in Note 2 – Investment Securities.

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.

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.

do not trade, nor do we presently intend to begin trading investment

securities for the purpose of recognizing gains and therefore we do not

maintain a trading portfolio.

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

with unrealized losses pre-tax totaling $33.0 million.

48 of

these positions are U.S. Treasury bonds

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

650 are U.S. government agency

securities issued by U.S. government sponsored entities.

We believe

the long history of no credit losses on government securities

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

zero.

At June 30, 2025, all collateralized

mortgage obligation securities, mortgage-backed securities, Small Business

Administration securities, U.S. Agency,

and U.S. Treasury

bonds held were AAA rated.

The remaining 90 positions (municipal securities and corporate bonds)

have a credit component.

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

$69,000 and municipal securities had an allowance of

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

in nonaccrual status at June 30, 2025.

Loans HFI

Average loans

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

million, or 0.9%, from

the fourth quarter of 2024.

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

loans of $24.6

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

loans of $3.4 million, partially offset by increases to

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

million, and home equity loans of $4.1 million.

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

to decreases in construction loans of $33.2 million,

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

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

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

and commercial real estate loans of $1.9 million.

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

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

December 31, 2024.

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

loans of $18.2

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

loans of $4.4 million, and commercial real estate loans

of $4.4 million, partially offset by increases in residential

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

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

to decreases in construction loans of $45.9 million,

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

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

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

million, and home equity loans of $8.1 million.

Without compromising our credit standards

changing our underwriting standards, or taking on inordinate interest rate risk,

continue to closely monitor our markets and make minor adjustments as necessary.

Credit Quality

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

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

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

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

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

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

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

December 31, 2024 with the increase over the first quarter

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

million.

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

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

December 31, 2024.

The increase over the prior periods

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

million and two commercial real estate loans

totaling $4.3 million.

Allowance for Credit Losses

The allowance for credit losses is a valuation account that is deducted from

the loans’ amortized cost basis to present the net amount

expected to be collected on the loans.

The allowance for credit losses is adjusted by a credit loss provision which is reported in

earnings and reduced by the charge-off

of loan amounts (net of recoveries).

Loans are charged off against the allowance when

management believes the uncollectability of a loan balance is confirmed.

Expected recoveries do not exceed the aggregate of amounts

previously charged-off and expected to be charged

-off.

Expected credit loss inherent in non-cancellable off-balance sheet credit

exposures is provided through the credit loss provision but recorded

as a separate liability included in other liabilities.

Management estimates the allowance balance using relevant available

information, from internal and external sources relating to past

events, current conditions, and reasonable and supportable forecasts.

Historical loan default and loss experience provides the basis for

the estimation of expected credit losses.

Adjustments to historical loss information incorporate management’s

view of current

conditions and forecasts.

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

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

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

in Note 3 – Loans Held for Investment and Allowance

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

slight increase in the allowance over March 31, 2025 and

December 31, 2024 was primarily attributable to qualitative factor

adjustments that were partially offset by lower loan balances.

Net

loan charge-offs for both the second quarter

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

loans.

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

31, 2025, and 1.10% at

December 31, 2024.

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

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

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

The decline in the allowance for unfunded commitments from March

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

loan commitments. The allowance for unfunded commitments is

recorded in other liabilities.

Deposits

Average total

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

over the first quarter

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

of 2024.

Compared to the first quarter of 2025, the increase

was attributable to higher core deposit balances (primarily noninterest

bearing checking and money market), partially offset by

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

reduction in those balances.

The increase over the

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

a seasonal increase in public funds balances (primarily

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

and peak on average in the first quarter.

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

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

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

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

public

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

The increase over December 31, 2024 reflected higher core

deposit balances, primarily noninterest bearing accounts. Public funds

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

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

Business deposit transaction accounts classified as repurchase agreements

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

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

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

2025,

repurchase agreement balances were $21.8 million compared to $22.8

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

31, 2024.

We continue

to closely monitor our cost of deposits and deposit mix as we manage through the current rate

environment.

MARKET RISK AND INTEREST RATE

SENSITIVITY

Market Risk and Interest Rate Sensitivity

Overview.

Market risk arises from changes in interest rates, exchange rates,

commodity prices, and equity prices.

We have risk

management policies designed to monitor and limit exposure to market

risk and we do not participate in activities that give rise to

significant market risk involving exchange rates, commodity prices, or

equity prices.

In asset and liability management activities, our

policies are designed to minimize structural interest rate risk.

Interest Rate Risk Management.

Our net income is largely dependent on net interest income.

Net interest income is susceptible to

interest rate risk to the degree that interest-bearing liabilities mature

or reprice on a different basis than interest-earning assets.

When

interest-bearing liabilities mature or reprice more quickly

than interest-earning assets in a given period, a significant increase in

market rates of interest could adversely affect net interest

income.

Similarly, when interest-earning

assets mature or reprice more

quickly than interest-bearing liabilities, falling market interest rates could

result in a decrease in net interest income.

Net interest

income is also affected by changes in the portion of interest-earning

assets that are funded by interest-bearing liabilities rather than by

other sources of funds, such as noninterest-bearing deposits and shareowners’

equity.

We have established

what we believe to be a comprehensive interest rate risk management policy,

which is administered by

management’s Asset Liability Management

Committee (“ALCO”).

The policy establishes limits of risk, which are quantitative

measures of the percentage change in net interest income (a measure of net

interest income at risk) and the fair value of equity capital

(a measure of economic value of equity (“EVE”) at risk) resulting from a hypothetical change

in interest rates for maturities from one

day to 30 years.

We measure the potential

adverse impacts that changing interest rates may have on our short-term

earnings, long-

term value, and liquidity by employing simulation analysis through the use of

computer modeling.

The simulation model captures

optionality factors such as call features and interest rate caps and floors

embedded in investment and loan portfolio contracts.

As with

any method of gauging interest rate risk, there are certain shortcomings

inherent in the interest rate modeling methodology used by

us.

When interest rates change, actual movements in different categories

of interest-earning assets and interest-bearing liabilities, loan

prepayments, and withdrawals of time and other deposits, may deviate significantly

from assumptions used in the model.

Finally, the

methodology does not measure or reflect the impact that higher rates may have

on adjustable-rate loan clients’ ability to service their

debts, or the impact of rate changes on demand for loan and deposit products.

The statement of financial condition is subject to testing for interest rate shock

possibilities to indicate the inherent interest rate risk.

We apply instantaneous,

parallel rate shocks to the base case in 100 basis point (bp) increments ranging from down

400bp to up

400bps at least once per quarter, with the

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

our

Enterprise Risk Oversight Committee (“EROC”) and the Board of Directors.

We augment our interest rate

shock analysis with

alternative interest rate scenarios on a quarterly basis that may include ramps,

and a flattening or steepening of the yield curve (non-

parallel shift).

In addition, more frequent forecasts may be produced when interest rates are particularly

uncertain or when other

business conditions so dictate.

Our goal is to structure the statement of financial condition so that net interest earnings at risk over

12-month and 24-month periods

and the economic value of equity at risk do not exceed policy guidelines

at the various interest rate shock levels. We

attempt to

achieve this goal by balancing, within policy limits, the volume of floating-rate

liabilities with a similar volume of floating-rate assets,

by keeping the average maturity of fixed-rate asset and liability contracts

reasonably matched, by managing the mix of our core

deposits, and by adjusting our rates to market conditions on a continuing

basis.

Analysis.

Measures

of net interest income at risk produced by simulation analysis are indicators of

an institution’s short-term

performance in alternative rate environments.

These measures are typically based upon a relatively brief period, and do not

necessarily indicate the long-term prospects or economic value of the institution.

ESTIMATED CHANGES

IN NET INTEREST INCOME

Percentage Change (12-month shock)

+400 bp

+300 bp

+200 bp

+100 bp

-100 bp

-200 bp

-300 bp

-400 bp

Policy Limit

-15.0%

-12.5%

-10.0%

-7.5%

-10.0%

-12.5%

-15.0%

June 30, 2025

19.2%

14.4%

9.6%

5.0%

-5.3%

-11.1%

-17.5%

-23.3%

March 31, 2025

17.3%

13.0%

8.7%

4.5%

-4.7%

-9.8%

-15.3%

-20.9%

Percentage Change (24-month shock)

+400 bp

+300 bp

+200 bp

+100 bp

-100 bp

-200 bp

-300 bp

-400 bp

Policy Limit

-17.5%

-15.0%

-12.5%

-10.0%

-12.5%

-15.0%

-17.5%

June 30, 2025

39.3%

31.0%

22.5%

14.4%

-3.8%

-14.4%

-26.2%

-37.0%

March 31, 2025

39.1%

31.1%

23.0%

15.2%

-1.9%

-11.7%

-22.5%

-32.8%

The Net Interest Income (“NII”) at Risk position of an instantaneous,

parallel rate shock indicates that in the short-term (over the next

12 months), all rising rate environments will positively impact the net interest

margin of the Company,

while declining rate

environments

will have a negative impact on the net interest margin.

Compared to the first quarter of 2025, these metrics generally

became more favorable in the rising rate scenarios and less favorable

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

prepayment speed assumptions.

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

and 24-month periods are

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

and 400 bps scenarios

largely due to the limited ability to decrease deposit rates

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

rate overnight funds.

The measures of equity value at risk indicate our ongoing economic value

by considering the effects of changes in interest rates on all

of our cash flows by discounting the cash flows to estimate the present value of

assets and liabilities. The difference between these

discounted values of the assets and liabilities is the economic value of equity,

which in theory approximates the fair value of our net

assets.

ESTIMATED CHANGES

IN ECONOMIC VALUE

OF EQUITY

Changes in Interest Rates

+400 bp

+300 bp

+200 bp

+100 bp

-100 bp

-200 bp

-300 bp

-400 bp

Policy Limit

-30.0%

-25.0%

-20.0%

-15.0%

-20.0%

-25.0%

-30.0%

June 30, 2025

29.4%

23.9%

17.1%

9.2%

-11.5%

-23.9%

-34.8%

-40.8%

March 31, 2025

29.0%

23.7%

17.1%

9.3%

-11.2%

-23.1%

-33.7%

-40.3%

EVE Ratio (policy minimum 5.0%)

31.6%

29.7%

27.6%

25.4%

19.9%

16.8%

14.2%

12.8%

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

rate environments and unfavorable in the falling rate

environments.

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

EVE is currently in compliance with policy in all rate

scenarios as the EVE ratio exceeds the policy minimum of 5.0% in each shock

scenario.

As the interest rate environment and the dynamics of the economy continue to change,

additional simulations will be analyzed to

address not only the changing rate environment, but also the change

in mix of our financial assets and liabilities measured over

multiple years, to help assess the risk to the Company.

LIQUIDITY AND CAPITAL

RESOURCES

Liquidity

In general terms, liquidity is a measurement of our ability to meet our

cash needs.

Our objective in managing our liquidity is to

maintain our ability to meet loan commitments, purchase securities or repay deposits and

other liabilities in accordance with their

terms, without an adverse impact on our current or future earnings.

Our liquidity strategy is guided by policies that are formulated and

monitored by our ALCO and senior management, which take into account

the marketability of assets, the sources and stability of

funding and the level of unfunded commitments.

We regularly evaluate

all of our various funding sources with an emphasis on

accessibility, stability,

reliability and cost-effectiveness.

Our principal source of funding has been our client deposits, supplemented

by our short-term and long-term borrowings, primarily from securities sold under

repurchase agreements, federal funds purchased and

FHLB borrowings.

We believe that the cash

generated from operations, our borrowing capacity and our access to capital resources

are

sufficient to meet our future operating capital and funding requirements.

At June 30, 2025, we had the ability to generate approximately $1.603 billion

(excludes overnight funds position of $395 million) in

additional liquidity through various sources including various federal funds

purchased lines, Federal Home Loan Bank borrowings, the

Federal Reserve Discount Window,

and brokered deposits. We

recognize the importance of maintaining liquidity and have developed

a Contingent Liquidity Plan, which addresses various liquidity stress levels and

our response and action based on the level of severity.

We periodically

test our credit facilities for access to the funds, but also understand that as the severity

of the liquidity level increases

that certain credit facilities may no longer be available.

We conduct

a liquidity stress test on a quarterly basis based on events that

could potentially occur at the Bank and report results to our ALCO, MROC

EROC, and Board of Directors.

We believe the liquidity

available to us at June 30, 2025 was sufficient to meet our

on-going needs and execute our business strategy.

We also view our

investment portfolio as a liquidity source and have the option to pledge securities in our

portfolio as collateral for

borrowings or deposits, and/or to sell selected securities. Our portfolio consists of

debt issued by the U.S. Treasury,

U.S. governmental

agencies, municipal governments, and corporate entities. Additional

information on our investment portfolio is provided within Note 2

– Investment Securities.

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

plus FED funds sold less FED funds purchased) sold

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

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

the fourth quarter of 2024.

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

lower average loans.

We expect our

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

which will primarily consist of

construction of new offices, office remodeling,

office equipment/furniture, and technology purchases.

Management expects that these

capital expenditures will be funded with existing resources without impairing

our ability to meet our on-going obligations.

Borrowings

Average short

-term borrowings totaled $33.1 million for the second quarter of 2025 compared

to $37.3 million for the first quarter of

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

The decrease from both prior periods reflected lower repurchase agreement

balances,

partially offset by an increase in mortgage warehouse borrowings.

Additional detail on warehouse borrowings is provided in

Note 4 – Mortgage Banking Activities in the Consolidated Financial Statements.

We have issued two

junior subordinated deferrable interest notes to our wholly owned

Delaware statutory trusts.

The first note for

$30.9 million was issued to CCBG Capital Trust I in

November 2004, of which $10 million was retired in April 2016.

In the second

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

The second note for $32.0 million was issued to CCBG

Capital Trust II in May 2005.

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

million on this note.

The interest

payment for the CCBG Capital Trust I borrowing

is due quarterly and adjusts quarterly to a variable rate of three-month CME Term

SOFR (secured overnight financing rate) plus a margin of

1.90%. This note matures on December 31, 2034. The interest payment for

the CCBG Capital Trust II borrowing is due quarterly

and adjusts quarterly to a variable interest rate based on three-month CME Term

SOFR plus a margin of 1.80%.

This note matures on June 15, 2035.

The proceeds from these borrowings were used to partially fund

acquisitions.

Under the terms of each junior subordinated deferrable interest note, in the event of

default or if we elect to defer interest

on the note, we may not, with certain exceptions, declare or pay dividends or make distributions

on our capital stock or purchase or

acquire any of our capital stock.

In the second quarter of 2020, we entered into a derivative cash flow hedge

of our interest rate risk related to our subordinated debt.

The notional amount of the derivative is $30 million ($10 million of

the CCBG Capital Trust I borrowing and $20 million of

the

CCBG Capital Trust II borrowing).

The interest rate swap agreement requires CCBG to pay fixed and receive variable (three-month

CME Term SOFR plus spread)

and has an average all-in fixed rate of 2.50% for 10 years. Additional detail on the

interest rate swap

agreement is provided in Note 5 – Derivatives in the Consolidated Financial

Statements.

Capital

Our capital ratios are presented in the Selected Quarterly Financial Data

table on page 34.

At June 30, 2025, our regulatory capital

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

under the Basel III capital standards.

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

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

December 31, 2024.

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

attributable to

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

other comprehensive loss, the issuance of common stock

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

The net favorable change in accumulated other comprehensive loss

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

by a $0.9 million decrease in the fair value

of the interest rate swap related to subordinated debt.

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

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

under our stock compensation plans.

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

31, 2025 and 18.64% at December 31,

2024.

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

on these dates.

Our leverage ratio was

11.14%, 11.17%,

and 11.05%, respectively,

on these dates.

At June 30, 2025, all our regulatory capital ratios exceeded the thresholds

to be designated as “well-capitalized” under the Basel III capital standards.

Further, our tangible common equity

ratio (non-GAAP

financial measure) was 10.09% at June 30, 2025 compared to 9.61%

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

respectively.

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

in accumulated other

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

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

liability through other comprehensive income in

accordance with Accounting Standards Codification

Topic 715. At June 30, 2025,

the net pension asset reflected in other

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

and December 31, 2024. This liability is re-measured annually on

December 31

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

. These assumptions and sensitivities are discussed in the section entitled “Critical Accounting

Policies and Estimates”

in Part II, Item7. Management’s Discussion

and Analysis of Financial Condition and Results of Operations, of

our 2024 Form 10-K.

OFF-BALANCE SHEET ARRANGEMENTS

We are a party

to financial instruments with off-balance sheet risks in the normal

course of business to meet the financing needs of our

clients.

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

and $7.4 million in standby letters of credit.

Commitments

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

condition established in the contract.

Commitments generally have fixed expiration dates or other termination

clauses and may require payment of a fee.

Since many of the

commitments are expected to expire without being drawn upon,

the total commitment amounts do not necessarily represent future

cash requirements.

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

of a client to a

third party.

We use the same credit policies

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

sheet

instruments.

If commitments arising from these financial instruments continue to require

funding at historical levels, management does not

anticipate that such funding will adversely impact our ability to meet our on-going

obligations.

In the event these commitments

require funding in excess of historical levels, management believes current

liquidity, advances available from the

FHLB and the

Federal Reserve, and investment security maturities provide a sufficient

source of funds to meet these commitments.

Certain agreements provide that the commitments are unconditionally

cancellable by the bank and for those agreements no allowance

for credit losses has been recorded.

have recorded an allowance for credit losses on loan commitments that are not

unconditionally cancellable by the Bank, which is included in other

liabilities on the Consolidated Statements of Financial Condition

and totaled $1.7 million at June 30, 2025.

CRITICAL ACCOUNTING POLICIES

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

Financial Statements included in our 2024 Form 10-K.

The preparation of our Consolidated Financial Statements

in accordance with GAAP and reporting practices applicable to the banking

industry requires us to make estimates and assumptions that affect

the reported amounts of assets, liabilities, revenues and expenses,

and to disclose contingent assets and liabilities.

Actual results could differ from those estimates.

We have identified

accounting for (i) the allowance for credit losses, (ii) goodwill,

(iii) pension assumptions, and (iv) income taxes as

our most critical accounting policies and estimates in that they are important

to the portrayal of our financial condition and results, and

they require our subjective and complex judgment as a result of the need to make estimates about

the effects of matters that are

inherently uncertain.

These accounting policies, including the nature of the estimates and types of assumptions

used, are described

throughout this Item 2, Management’s

Discussion and Analysis of Financial Condition and Results of Operations, and

Part II, Item 7,

Management’s Discussion and Analysis

of Financial Condition and Results of Operations included

in our 2024 Form 10-K.

TABLE I

AVERAGE BALANCES & INTEREST RATES (UNAUDITED)

Three Months Ended June 30,

Six Months Ended June 30,

2025

2024

2025

2024

Average

(Dollars in Thousands)

Balances

Interest

Rate

Balances

Interest

Rate

Balances

Interest

Rate

Balances

Interest

Rate

Assets:

Loans Held for Sale

22,668

475

8.40

26,281

517

5.26

23,692

965

8.21

26,797

1,080

5.62

Loans Held for Investment

(1)(2)

2,652,572

40,436

6.11

2,726,748

40,683

6.03

2,659,204

80,465

6.10

2,727,688

80,879

5.99

Taxable Securities

1,006,514

6,666

2.65

918,989

3,998

1.74

994,068

12,468

2.52

935,658

8,237

1.76

Tax-Exempt Securities

(2)

1,467

4.50

843

4.36

1,158

4.43

850

4.35

Federal Funds Sold and Interest Bearing

Deposits

348,787

3,909

4.49

262,419

3,624

5.56

334,944

7,405

4.46

201,454

5,517

5.51

Total Earning Assets

4,032,008

51,503

5.12

3,935,280

48,831

4.99

4,013,066

101,329

5.09

3,892,447

95,731

4.94

Cash & Due From Banks

65,761

74,803

69,593

75,283

Allowance For Credit Losses

(30,492)

(29,564)

(30,251)

(29,797)

Other Assets

302,984

291,669

300,336

293,473

TOTAL ASSETS

4,370,261

4,272,188

4,352,744

4,231,406

Liabilities:

Noninterest Bearing Deposits

1,342,304

1,346,546

1,329,933

1,345,367

NOW Accounts

1,225,697

3,750

1.23

1,207,643

4,425

1.47

1,237,759

7,604

1.24

1,204,337

8,922

1.49

Money Market Accounts

431,774

2,340

2.17

407,387

2,752

2.72

425,949

4,527

2.14

380,489

4,737

2.50

Savings Accounts

507,950

174

0.14

519,374

176

0.14

507,813

350

0.14

529,374

364

0.14

Other Time Deposits

172,982

1,141

2.65

160,078

1,226

3.08

171,682

2,307

2.71

149,203

2,150

2.90

Total Interest Bearing Deposits

2,338,403

7,405

1.27

2,294,482

8,579

1.50

2,343,203

14,788

1.27

2,263,403

16,173

1.44

Total Deposits

3,680,707

7,405

0.81

3,641,028

8,579

0.95

3,673,136

14,788

0.81

3,608,770

16,173

0.90

Repurchase Agreements

22,557

156

2.78

26,999

217

3.24

26,169

320

2.47

26,362

418

3.19

Other Short-Term Borrowings

10,503

179

6.82

6,592

4.16

8,978

296

6.64

5,176

107

4.16

Subordinated Notes Payable

51,981

530

4.03

52,887

630

4.71

52,432

1,090

4.13

52,887

1,258

4.70

Other Long-Term Borrowings

792

2.41

258

4.31

793

4.04

270

4.56

Total Interest Bearing Liabilities

2,424,236

8,275

1.37

2,381,218

9,497

1.60

2,431,575

16,510

1.37

2,348,098

17,962

1.54

Other Liabilities

76,138

72,634

70,705

70,464

TOTAL LIABILITIES

3,842,678

3,800,398

3,832,213

3,763,929

Temporary Equity

6,493

6,821

TOTAL SHAREOWNERS’ EQUITY

527,583

465,297

520,531

460,656

TOTAL LIABILITIES, TEMPORARY

AND SHAREOWNERS’ EQUITY

4,370,261

4,272,188

4,352,744

4,231,406

Interest Rate Spread

3.75

3.38

3.72

3.40

Net Interest Income

43,228

39,334

84,819

77,769

Net Interest Margin

(3)

4.30

4.02

4.26

4.01

(1)

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

Interest income includes loan costs of $0.3 million and

$0.7 million for the three and six months ended June

30, 2025,

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

month periods ended June 30, 2024.

(2)

Interest income includes the effects of taxable equivalent adjustments

using a 21% Federal tax rate.

(3)

Taxable equivalent net interest income divided by average earning assets.

Item 3.

QUANTITATIVE

AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

See “Market Risk and Interest Rate Sensitivity” in Management’s

Discussion and Analysis of Financial Condition and Results of

Operations, above, which is incorporated herein by reference.

Management has determined that no additional disclosures are

necessary to assess changes in information about market risk that have occurred

since December 31, 2024.

Item 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

At June 30, 2025, the end of the period covered by this Form 10-Q, our management,

including our Chief Executive Officer and Chief

Financial Officer, evaluated

the effectiveness of our disclosure controls and procedures (as defined

in Rule 13a-15(e) under the

Securities Exchange Act of 1934).

Based upon that evaluation, our Chief Executive Officer and Chief

Financial Officer concluded

that, as of the end of the period covered by this report,

our disclosure controls and procedures were effective.

Our management, including our Chief Executive Officer

and Chief Financial Officer, has reviewed

our internal control over financial

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

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

have been no significant changes in our internal control over financial reporting

during our most recently completed fiscal quarter that

have materially affected, or are reasonably likely to materially

affect, our internal control over financial reporting.

PART

II.

OTHER INFORMATION

Item 1.

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.

Item 1A.

Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider

the factors discussed in Part I,

Item 1A. “Risk Factors” in our 2024 Form 10-K, as updated in our subsequent

quarterly reports. The risks described in our 2024 Form

10-K, and our subsequent quarterly reports are not the only risks facing us.

Additional risks and uncertainties not currently known to

us or that we currently deem to be immaterial also may materially adversely affect

our business, financial condition and/or operating

results.

Item 2.

Unregistered Sales of Equity Securities and Use of

Proceeds

None.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosure

Not Applicable.

Item 5.

Other Information

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

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

adopted

, modified or

terminated

any contract, instruction or written plan for the purchase or sale of our securities that was intended

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.

Item 6.

Exhibits

(A)

Exhibits

3.1

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

the Registrant’s

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

3.2

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

Form 8-K (filed

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

31.1

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

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

31.2

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

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

32.1

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

to 18 U.S.C. Section 1350.

32.2

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

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

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104

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

SIGNATURES

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

duly caused this Report to be signed on its

behalf by the undersigned Chief Financial Officer hereunto duly

authorized.

CAPITAL CITY

BANK GROUP,

INC.

(Registrant)

/s/ Jeptha E. Larkin

Jeptha E. Larkin

Executive Vice President

and Chief Financial Officer

(Mr. Larkin is the Principal Financial

Officer and has

been duly authorized to sign on behalf of the Registrant)

Date: July 31, 2025

exhibit311

Exhibit 31.1

Certification of CEO Pursuant to Securities Exchange Act

Rule 13a-14(a) / 15d-14(a) as Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, William G. Smith, Jr.,

certify that:

I have reviewed this quarterly report on Form 10-Q of Capital City Bank Group,

Inc.;

Based on my knowledge, this report does not contain any untrue statement of

a material fact or omit to state a material fact

necessary to make the statements made, in light of the circumstances under

which such statements were made, not misleading

with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information

included in this report, fairly present in all

material respects the financial condition, results of operations and cash flows

of the registrant as of, and for, the periods

presented in this report;

The registrant’s other certifying

officer and I are responsible for establishing and maintaining

disclosure controls and

procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))

and internal control over financial reporting (as

defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls

and procedures to be designed

under our supervision, to ensure that material information relating to the

registrant, including its consolidated

subsidiaries, is made known to us by others within those entities, particularly

during the period in which this report

is being prepared;

(b)

Designed such internal control over financial reporting, or caused such

internal control over financial reporting to be

designed under our supervision, to provide reasonable assurance regarding

the reliability of financial reporting and

the preparation of financial statements for external purposes in accordance with

generally accepted accounting

principles;

(c)

Evaluated the effectiveness of the registrant’s

disclosure controls and procedures and presented in this report our

conclusions about the effectiveness of the disclosure controls and procedures,

as of the end of the period covered by

this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s

internal control over financial reporting that occurred during

the registrant’s most recent fiscal quarter

that has materially affected, or is reasonably likely to materially

affect, the

registrant’s internal control

over financial reporting; and

The registrant’s other certifying

officer and I have disclosed, based on our most recent evaluation

of internal control over

financial reporting, to the registrant’s auditors

and the audit committee of the registrant’s

board of directors (or persons

performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of

internal control over financial

reporting which are reasonably likely to adversely affect the registrant’s

ability to record, process, summarize and

report financial information; and

(b)

Any fraud, whether or not material, that involves management or other

employees who have a significant role in the

registrant’s internal control

over financial reporting.

/s/ William G. Smith, Jr.

William G. Smith, Jr.

Chairman and Chief Executive Officer

Date: July 31, 2025

exhibit312

Exhibit 31.2

Certification of CFO Pursuant to Securities Exchange Act

Rule 13a-14(a) / 15d-14(a) as Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Jeptha E. Larkin, certify that:

I have reviewed this quarterly report on Form 10-Q of Capital City Bank Group,

Inc.;

Based on my knowledge, this report does not contain any untrue statement of

a material fact or omit to state a material fact

necessary to make the statements made, in light of the circumstances under

which such statements were made, not misleading

with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information

included in this report, fairly present in all

material respects the financial condition, results of operations and cash flows

of the registrant as of, and for, the periods

presented in this report;

The registrant’s other certifying

officer and I are responsible for establishing and maintaining

disclosure controls and

procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))

and internal control over financial reporting (as

defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls

and procedures to be designed

under our supervision, to ensure that material information relating to the

registrant, including its consolidated

subsidiaries, is made known to us by others within those entities, particularly

during the period in which this report

is being prepared;

(b)

Designed such internal control over financial reporting, or caused such

internal control over financial reporting to be

designed under our supervision, to provide reasonable assurance regarding

the reliability of financial reporting and

the preparation of financial statements for external purposes in accordance with

generally accepted accounting

principles;

(c)

Evaluated the effectiveness of the registrant’s

disclosure controls and procedures and presented in this report our

conclusions about the effectiveness of the disclosure controls and procedures,

as of the end of the period covered by

this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s

internal control over financial reporting that occurred during

the registrant’s most recent fiscal quarter

that has materially affected, or is reasonably likely to materially

affect, the

registrant’s internal control

over financial reporting; and

The registrant’s other certifying

officer and I have disclosed, based on our most recent evaluation

of internal control over

financial reporting, to the registrant’s auditors

and the audit committee of the registrant’s

board of directors (or persons

performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of

internal control over financial

reporting which are reasonably likely to adversely affect the registrant’s

ability to record, process, summarize and

report financial information; and

(b)

Any fraud, whether or not material, that involves management or other

employees who have a significant role in the

registrant’s internal control

over financial reporting.

/s/ Jeptha E. Larkin

Jeptha E. Larkin

Executive Vice President

and

Chief Financial Officer

Date: July 31, 2025

exhibit321

Exhibit 32.1

Certification of CEO Pursuant to 18 U.S.C. Section 1350

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of

the Sarbanes-Oxley Act of 2002, I, William G. Smith,

Jr.,

Chairman and Chief Executive Officer of Capital City Bank Group,

Inc., hereby certify that to my knowledge (1) this Quarterly

Report of the Company on Form 10-Q for the period ended June 30, 2025,

as filed with the Securities and Exchange Commission on

the date hereof (this "Report"), fully complies with the requirements of

Section 13(a) of the Securities Exchange Act of 1934, as

amended, and (2) the information contained in this Report fairly presents, in all material

respects, the financial condition of the

Company and its results of operations as of and for the periods covered therein.

/s/ William G. Smith, Jr.

William G. Smith, Jr.

Chairman and Chief Executive Officer

Date: July 31, 2025

A signed original of this written statement required by Section 906, or other document

authenticating, acknowledging or otherwise

adopting the signature that appears in typed form within the electronic version

of this written statement required by Section 906, has

been provided to the Company and will be retained by the Company and

furnished to the Securities and Exchange Commission or its

staff upon request.

exhibit322

Exhibit 32.2

Certification of CFO Pursuant to 18 U.S.C. Section 1350

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of

the Sarbanes-Oxley Act of 2002, I, Jeptha E. Larkin,

Executive Vice President

and Chief Financial Officer of Capital City Bank Group, Inc., hereby certify that

to my knowledge (1) this

Quarterly Report of the Company on Form 10-Q for the period ended June 30,

2025, as filed with the Securities and Exchange

Commission on the date hereof (this "Report"), fully complies with the requirements

of Section 13(a) of the Securities Exchange Act

of 1934, as amended, and (2) the information contained in this Report fairly presents,

in all material respects, the financial condition

of the Company and its results of operations as of and for the periods covered

therein.

/s/ Jeptha E. Larkin

Jeptha E. Larkin

Executive Vice President

and

Chief Financial Officer

Date: July 31, 2025

A signed original of this written statement required by Section 906, or other document

authenticating, acknowledging or otherwise

adopting the signature that appears in typed form within the electronic version

of this written statement required by Section 906, has

been provided to the Company and will be retained by the Company and

furnished to the Securities and Exchange Commission or its

staff upon request.