Capital City Bank Group Inc: Form 10-Q for the period ended Sep 30, 2025

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

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 third 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

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.

Evaluation of Disclosure Controls and Procedures

At September 30, 2025, the end of the period covered by this Form 10-Q, our management, including our Chief Executive Officer and

Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the

Securities Exchange Act of 1934). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded

that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Our management, including our Chief Executive Officer and Chief Financial Officer, has reviewed our internal control over financial

reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). During the quarter ended September 30, 2025,

there have been no significant changes in our internal control over financial reporting during our most recently completed fiscal

quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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

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

However, other factors besides those listed in our Quarterly Report or in our Annual Report also could adversely affect our results,

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

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 108 ATMs/ITMs located in Florida, Georgia, and Alabama. Through Capital City Home Loans, LLC (“CCHL”), we have 28

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)

Third

Second

First

Fourth

Third

Shareowners' Equity (GAAP)

540,635

526,423

512,575

495,317

476,499

Less: Goodwill and Other Intangibles (GAAP)

89,095

92,693

92,733

92,773

92,813

Tangible Shareowners' Equity (non-GAAP)

A

451,540

433,730

419,842

402,544

383,686

Total Assets (GAAP)

4,323,774

4,391,753

4,461,233

4,324,932

4,225,316

Less: Goodwill and Other Intangibles (GAAP)

89,095

92,693

92,733

92,773

92,813

Tangible Assets (non-GAAP)

B

4,234,679

4,299,060

4,368,500

4,232,159

4,132,503

Tangible Common Equity Ratio (non-GAAP)

A/B

10.66%

10.09%

9.61%

9.51%

9.28%

Actual Diluted Shares Outstanding (GAAP)

C

17,115,336

17,097,986

17,072,330

17,018,122

16,980,686

Tangible Book Value per Diluted Share (non-GAAP)

A/C

26.38

25.37

24.59

23.65

22.60

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

2025

2024

(Dollars in Thousands, Except Per Share Data)

Third

Second

First

Fourth

Third

Summary of Operations

Interest Income

51,431

51,459

49,782

49,743

49,328

Interest Expense

7,874

8,275

8,235

8,640

9,117

Net Interest Income

43,557

43,184

41,547

41,103

40,211

Provision for Credit Losses

1,881

620

768

701

1,206

Net Interest Income After

Provision for Credit Losses

41,676

42,564

40,779

40,402

39,005

Noninterest Income

22,331

20,014

19,907

18,760

19,513

Noninterest Expense

42,916

42,538

38,701

41,782

42,921

Income Before Income Taxes

21,091

20,040

21,985

17,380

15,597

Income Tax Expense

5,141

4,996

5,127

4,219

2,980

(Income) Loss Attributable to NCI

(71)

501

Net Income Attributable to CCBG

15,950

15,044

16,858

13,090

13,118

Net Interest Income (FTE)

(1)

43,602

43,228

41,591

41,150

40,260

Per Common Share

Net Income Basic

0.93

0.88

0.99

0.77

0.77

Net Income Diluted

0.93

0.88

0.99

0.77

0.77

Cash Dividends Declared

0.26

0.24

0.24

0.23

0.23

Diluted Book Value

31.59

30.79

30.02

29.11

28.06

Diluted Tangible Book Value

(2)

26.38

25.37

24.59

23.65

22.60

Market Price:

High

44.69

39.82

38.27

40.86

36.67

Low

38.00

32.38

33.00

33.00

26.72

Close

41.79

39.35

35.96

36.65

35.29

Selected Average Balances

Investment Securities

993,880

1,007,981

982,330

915,202

908,456

Loans Held for Investment

2,606,213

2,652,572

2,665,910

2,677,396

2,693,533

Earning Assets

3,981,530

4,032,008

3,993,914

3,921,900

3,883,414

Total Assets

4,317,951

4,370,261

4,335,033

4,259,669

4,215,862

Deposits

3,612,331

3,680,707

3,665,482

3,600,424

3,572,034

Shareowners’ Equity

542,216

527,583

513,401

491,143

480,137

Common Equivalent Average Shares:

Basic

17,068

17,056

17,027

16,946

16,943

Diluted

17,114

17,088

17,044

16,990

16,979

Performance Ratios:

Return on Average Assets (annualized)

1.47

1.38

1.58

1.22

1.24

Return on Average Equity (annualized)

11.67

11.44

13.32

10.60

10.87

Net Interest Margin (FTE)

4.34

4.30

4.22

4.17

4.12

Noninterest Income as % of Operating Revenue

33.89

31.67

32.39

31.34

32.67

Efficiency Ratio

65.09

67.26

62.93

69.74

71.81

Asset Quality:

Allowance for Credit Losses (“ACL”)

30,202

29,862

29,734

29,251

29,836

Nonperforming Assets (“NPAs”)

10,026

6,581

4,428

6,669

7,242

ACL to Loans HFI

1.17

1.13

1.12

1.10

1.11

NPAs to Total Assets

0.23

0.15

0.10

0.15

0.17

NPAs to Loans HFI plus OREO

0.39

0.25

0.17

0.25

0.27

ACL to Non-Performing Loans

368.54

463.01

692.10

464.14

452.64

Net Charge-Offs to Average Loans HFI

0.18

0.09

0.09

0.25

0.19

Capital Ratios:

Tier 1 Capital

19.33

18.38

18.01

17.46

16.77

Total Capital

20.59

19.60

19.20

18.64

17.97

Common Equity Tier 1

17.73

16.81

16.08

15.54

14.88

Leverage

11.64

11.14

11.17

11.05

10.89

Tangible Common Equity

(2)

10.66

10.09

9.61

9.51

9.28

(1)

Fully Tax Equivalent.

(2)

Non-GAAP financial measure. See non-GAAP reconciliation on page 34.

FINANCIAL OVERVIEW

Results of Operations

Performance Summary.

Net income attributable to common shareowners of $16.0 million, or $0.93 per diluted share, for the third

quarter of 2025 compared to $15.0 million, or $0.88 per diluted share, for the second quarter of 2025, and $13.1 million, or $0.77 per

diluted share, for the third quarter of 2024. For the first nine months of 2025, net income attributable to common shareowners totaled

$47.9 million, or $2.80 per diluted share, compared to net income of $39.8 million, or $2.35 per diluted share, for the same period of

Net Interest Income.

Tax-equivalent net interest income for the third quarter of 2025 totaled $43.6 million compared to $43.2 million

for the second quarter of 2025 and $40.3 million for the third quarter of 2024. Compared to the second quarter of 2025, the increase

was driven by a $0.5 million increase in investment securities income, a $0.4 million decrease in interest expense, and a $0.1 million

increase in overnight funds income, partially offset by a $0.6 million decrease in loan income. One additional calendar day in the

third quarter of 2025 contributed to the improvement. Compared to the third quarter of 2024, the increase was primarily due to a $3.0

million increase in investment securities income, a $1.2 million decrease in interest expense, and a $0.5 million increase in overnight

funds income, partially offset by a $1.4 million decrease in loan income. For the first nine months of 2025, tax-equivalent net interest

income totaled $128.4 million compared to $118.0 million for the same period of 2024, with the increase primarily attributable to a

$7.3 million increase in investment securities income, a $2.3 million increase in overnight funds income, and a $2.3 million decrease

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

Provision and Allowance for Credit Losses.

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

2025 compared to $0.6 million for the second quarter of 2025 and $1.2 million for the third quarter of 2024. For the first nine months

of 2025, we recorded a provision expense for credit losses of $3.3 million which was comparable to the same period of 2024. At

September 30, 2025, the allowance for credit losses for loans HFI totaled $30.2 million (1.17% of loans HFI) compared to $29.9

million (1.13% of loans HFI) at June 30, 2025 and $29.3 million at December 31, 2024 (1.10% of loans HFI).

Noninterest Income

. Noninterest income for the third quarter of 2025 totaled $22.3 million compared to $20.0 million for the second

quarter of 2025 and $19.5 million for the third quarter of 2024. The $2.3 million, or 11.6%, increase over the second quarter of 2025

was primarily due to a $1.2 million increase in other income, a $0.6 million increase in mortgage banking revenues, and a $0.6 million

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

subsidiary (Capital City Strategic Wealth) in the third quarter of 2025, and to a lesser extent higher miscellaneous income. Compared

to the third quarter of 2024, the $2.8 million, or 14.4%, increase was primarily due to a $1.1 million increase in other income, a $0.8

million increase in mortgage banking revenues, a $0.4 million increase in wealth management fees, and a $0.4 million increase in

deposit fees. The increase in other income reflected the aforementioned gain from the sale of our insurance subsidiary. For the first

nine months of 2025, noninterest income totaled $62.3 million compared to $57.2 million for the same period of 2024, primarily

attributable to a $2.2 million increase in wealth management fees, a $1.6 million increase in mortgage banking revenues, and a $1.1

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

subsidiary and higher miscellaneous income.

Noninterest Expense.

Noninterest expense for the third quarter of 2025 totaled $42.9 million compared to $42.5 million for the second

quarter of 2025 and $42.9 million for the third quarter of 2024. The $0.4 million, or 0.9%, increase over the second quarter of 2025

reflected a $0.8 million increase in other expense that was partially offset by a $0.4 million decrease in compensation expense.

Compared to the third quarter of 2024, a $0.3 million increase in compensation expense was offset by a $0.2 million decrease in other

expense and a $0.1 million decline in occupancy expense. For the first nine months of 2025, noninterest expense totaled $124.2

million compared to $123.5 million for the same period of 2024 with the $0.6 million, or 0.5%, increase primarily due to a $4.2

million increase in compensation expense that was partially offset by a $3.4 million decrease in other expense and a $0.2 million

decrease in occupancy expense.

Financial Condition

Earning Assets.

Average earning assets totaled $3.982 billion for the third quarter of 2025, a decrease of $50.5 million, or 1.3%, from

the second quarter of 2025, and an increase of $59.6 million, or 1.5%, over the fourth quarter of 2024. Compared to the second

quarter of 2025, the change in the earning asset mix reflected a $46.4 million decrease in loans HFI and a $14.1 million decrease in

investment securities, partially offset by a $7.4 million increase in overnight funds sold and a $2.6 million increase in loans held for

sale (“HFS”). Compared to the fourth quarter of 2024, the change in earning asset mix reflected a $78.7 million increase in

investment securities and a $57.9 million increase in overnight funds sold, partially offset by a $71.2 million decrease in loans HFI

and a $5.8 million decrease in loans HFS.

Loans.

Average loans HFI decreased $46.4 million, or 1.8%, from the second quarter of 2025 and decreased $71.2 million, or 2.7%,

from the fourth quarter of 2024. Loans HFI at September 30, 2025, decreased $49.5 million, or 1.9%, from June 30, 2025, and

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

Credit Quality

. Nonperforming assets (nonaccrual loans and other real estate) totaled $10.0 million at September 30, 2025 compared

to $6.6 million at June 30, 2025 and $6.7 million at December 31, 2024. At September 30, 2025, nonperforming assets as a

percentage of total assets was 0.23%, compared to 0.15% at June 30, 2025 and 0.15% at December 31, 2024. Nonaccrual loans

totaled $8.2 million at September 30, 2025, a $1.7 million increase over June 30, 2025 and a $1.9 million increase over December 31,

2024. Further, classified loans totaled $26.5 million at September 30, 2025, a $2.1 million decrease from June 30, 2025 and a $6.6

million increase over December 31, 2024.

Deposits

. Average total deposits were $3.612 billion for the third quarter of 2025, a decrease of $68.4 million, or 1.86%, from the

second quarter of 2025 and an increase of $11.9 million, or 0.33%, over the fourth quarter of 2024. At September 30, 2025, total

deposits were $3.615 billion, a decrease of $89.9 million, or 2.4%, from June 30, 2025, and a decrease of $57.1 million, or 1.6%, from

December 31, 2024. Public funds totaled $497.9 million at September 30, 2025, $596.6 million at June 30, 2025, and $660.9 million

at December 31, 2024.

Capital

. At September 30, 2025, we were “well-capitalized” with a total risk-based capital ratio of 20.59% and a tangible common

equity ratio (a non-GAAP financial measure) of 10.66% compared to 19.60% and 10.09%, respectively, at June 30, 2025, and 18.64%

and 9.51%, respectively, at December 31, 2024. At September 30, 2025, all of our regulatory capital ratios exceeded the threshold to

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

RESULTS OF OPERATIONS

The following table provides a condensed summary of our results of operations - a discussion of the various components are discussed

in further detail below.

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

(Dollars in Thousands, except per share data)

2025

2025

2024

2025

2024

Interest Income

51,431

51,459

49,328

152,672

144,914

Taxable Equivalent Adjustments

45

44

49

133

194

Total Interest Income (FTE)

51,476

51,503

49,377

152,805

145,108

Interest Expense

7,874

8,275

9,117

24,384

27,079

Net Interest Income (FTE)

43,602

43,228

40,260

128,421

118,029

Provision for Credit Losses

1,881

620

1,206

3,269

3,330

Taxable Equivalent Adjustments

45

44

49

133

194

Net Interest Income After Provision for Credit Losses

41,676

42,564

39,005

125,019

114,505

Noninterest Income

22,331

20,014

19,513

62,252

57,216

Noninterest Expense

42,916

42,538

42,921

124,155

123,533

Income Before Income Taxes

21,091

20,040

15,597

63,116

48,188

Income Tax Expense

5,141

4,996

2,980

15,264

9,705

Pre-Tax Loss Attributable to Noncontrolling Interest

501

1,342

Net Income Attributable to Common Shareowners

15,950

15,044

13,118

47,852

39,825

Basic Net Income Per Share

0.93

0.88

0.77

2.81

2.35

Diluted Net Income Per Share

0.93

0.88

0.77

2.80

2.35

Net Interest Income

Net interest income represents our single largest source of earnings and is equal to interest income and fees generated by earning assets

less interest expense paid on interest bearing liabilities. This information is provided on a “taxable equivalent” basis to reflect the tax-

exempt status of income earned on certain loans and state and local government debt obligations. We provide an analysis of our net

interest income including average yields and rates in Table I, “Average Balances & Interest Rates,” on page 49.

Tax-equivalent net interest income for the third quarter of 2025 totaled $43.6 million compared to $43.2 million for the second quarter

of 2025 and $40.3 million for the third quarter of 2024. Compared to the second quarter of 2025, the increase was driven by a $0.5

million increase in investment securities income, a $0.4 million decrease in interest expense, and a $0.1 million increase in overnight

funds income, partially offset by a $0.6 million decrease in loan income. One additional calendar day in the third quarter of 2025

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

investment securities income, a $1.2 million decrease in interest expense, and a $0.5 million increase in overnight funds income,

partially offset by a $1.4 million decrease in loan income. New investment purchases at higher yields drove the increase in investment

securities income for both prior period comparisons. Further, the decrease in deposit interest expense from both prior periods reflected

the gradual decrease in our deposit rates. The decrease in loan income compared to both prior periods was due to lower loan balances

that was partially offset by favorable rate repricing.

For the first nine months of 2025, tax-equivalent net interest income totaled $128.4 million compared to $118.0 million for the same

period of 2024, with the increase primarily attributable to a $7.3 million increase in investment securities income, a $2.3 million

increase in overnight funds income, and a $2.3 million decrease in deposit interest expense. New investment purchases at higher yields

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

income. The decrease in deposit interest expense reflected the aforementioned decrease in our deposit rates. The decrease in loan

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

Our net interest margin for the third quarter of 2025 was 4.34%, an increase of four basis points over the second quarter of 2025 and an

increase of 22 basis points over the third quarter of 2024. For the month of September 2025, our net interest margin was 4.41%. For

the first nine months of 2025, our net interest margin of 4.28% reflected a 23-basis point increase over the same period of 2024. The

improvement in net interest margin over all prior periods reflected a higher yield in the investment portfolio, driven by new purchases

at higher yields, and lower deposit costs. For the third quarter of 2025, our cost of funds was 78 basis points, a decrease of four basis

points from the second quarter of 2025 and a 15-basis point decrease from the third quarter of 2024. Our cost of deposits (including

noninterest bearing accounts) was 80 basis points, 81 basis points, and 92 basis points, respectively, for the same periods.

Provision for Credit Losses

We recorded a provision expense for credit losses of $1.9 million for the third quarter of 2025 compared to $0.6 million for the second

quarter of 2025 and $1.2 million for the third quarter of 2024. For the first nine months of 2025, we recorded a provision expense for

credit losses of $3.3 million which was comparable to the same period of 2024. For the third quarter of 2025, the provision reflected

an expense of $1.5 million for loans HFI and a $0.4 million expense for unfunded loan commitments. This compares to a $0.7 million

expense for loans HFI, and a benefit of $0.1 million for unfunded loan commitments in the second quarter of 2025, and a $1.9 million

expense for loans HFI, $0.6 million benefit for unfunded loan commitments, and a $0.1 million expense for debt securities in the third

quarter of 2024. For the first nine months of 2025, the provision reflected a $3.4 million expense for loans HFI and a $0.1 million

benefit for unfunded loan commitments compared to a $3.9 million expense for loans HFI, a $0.7 million benefit for unfunded loan

commitments, and a $0.1 million benefit for debt securities for the first nine months of 2024. We discuss the various factors that

impacted our provision expense in further detail below under the heading Allowance for Credit Losses.

Noninterest Income

Noninterest income for the third quarter of 2025 totaled $22.3 million compared to $20.0 million for the second quarter of 2025 and

$19.5 million for the third quarter of 2024. The $2.3 million, or 11.6%, increase over the second quarter of 2025 was primarily due to

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

fees. The increase in other income was primarily due to a $0.7 million gain from the sale of our insurance subsidiary (Capital City

Strategic Wealth) in the third quarter of 2025, and to a lesser extent higher miscellaneous income. The increase in mortgage revenues

was driven by an increase in the gain on sale margin for loan sales. Fee adjustments made late in the second quarter of 2025

contributed to the increase in deposit fees and miscellaneous income. Compared to the third quarter of 2024, the $2.8 million, or

14.4%, increase was primarily due to a $1.1 million increase in other income, a $0.8 million increase in mortgage banking revenues, a

$0.4 million increase in wealth management fees, and a $0.4 million increase in deposit fees. The increase in other income reflected

the aforementioned gain from the sale of our insurance subsidiary and higher miscellaneous income. Higher production volume and

gain on sale margin drove the improvement in mortgage banking revenues. The increase in wealth management fees was primarily

due to higher retail brokerage fees. The aforementioned fee adjustments drove the improvement in deposit fees.

For the first nine months of 2025, noninterest income totaled $62.3 million compared to $57.2 million for the same period of 2024,

primarily attributable to a $2.2 million increase in wealth management fees, a $1.6 million increase in mortgage banking revenues, and

a $1.1 million increase in other income. The increase in wealth management fees reflected increases in trust fees of $1.1 million and

retail brokerage fees of $1.0 million attributable to a combination of new business and higher account valuations. A fee increase

implemented in early 2025 also contributed to the increase in trust fees. Higher production volume and gain on sale margin drove the

improvement in mortgage banking revenues. The increase in other income reflected the aforementioned gain from the sale of our

insurance subsidiary and higher miscellaneous income.

Noninterest income represented 33.9% of operating revenues (net interest income plus noninterest income) in the third quarter of 2025

compared to 31.7% in the second quarter of 2025 and 32.7% in the third quarter of 2024. For the first nine months of 2025,

noninterest income represented 32.7% of operating revenues comparable to the same period of 2024.

The table below reflects the major components of noninterest income.

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

(Dollars in Thousands)

2025

2025

2024

2025

2024

Deposit Fees

5,877

5,320

5,512

16,258

16,139

Bank Card Fees

3,733

3,774

3,624

11,021

11,010

Wealth Management Fees

5,173

5,206

4,770

16,142

13,891

Mortgage Banking Revenues

4,794

4,190

3,966

12,804

11,225

Other

2,754

1,524

1,641

6,027

4,951

Total Noninterest Income

22,331

20,014

19,513

62,252

57,216

Significant components of noninterest income are discussed in more detail below.

Deposit Fees

. Deposit fees for the third quarter of 2025 totaled $5.9 million, an increase of $0.6 million, or 10.5%, over the second

quarter of 2025, and an increase of $0.4 million, or 6.6%, over the third quarter of 2024. For the first nine months of 2025, deposit

fees totaled $16.3 million, a $0.1 million, or 0.7%, increase over the same period of 2024. Compared to all prior periods the increases

were primarily due to service charge fee adjustments made late in the second quarter of 2025.

Bank Card Fees

. Bank card fees for the third quarter of 2025 totaled $3.7 million, comparable to the second quarter of 2025, and $0.1

million, or 3.0%, increase over the third quarter of 2024. For the first nine months of 2025, bank card fees totaled $11.0 million,

comparable to the same period of 2024.

Wealth Management Fees

. Wealth management fees include trust fees through Capital City Trust (i.e., managed accounts and

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

accounts). In September 2025, we sold our subsidiary, Capital City Strategic Wealth, which provided the sale of life insurance, risk

management and asset protection services. Wealth management fees for the third quarter of 2025 totaled $5.2 million, comparable to

the second quarter of 2025 and a $0.4 million, or 8.4%, increase over the third quarter of 2024. For the first nine months of 2025,

wealth management fees totaled $16.1 million, an increase of $2.2 million, or 16.2%, over the same period of 2024, and reflected a

$1.1 million increase in trust fees, a $1.0 million increase in retail brokerage fees, and a $0.1 million increase in insurance commission

revenue. At September 30, 2025, total assets under management were approximately $3.244 billion compared to $3.192 billion at

June 30, 2025, and $3.049 billion at December 31, 2024. Compared to the prior periods, the growth in assets under management was

primarily due to new retail brokerage accounts and to a lesser extent new managed trust accounts. A fee increase in first quarter of

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

Mortgage Banking Revenues.

Mortgage banking revenues totaled $4.8 million for the third quarter of 2025, an increase of $0.6

million, or 14.4%, over the second quarter of 2025 and an increase of $0.8 million, or 20.9%, over the third quarter of 2024. For the

first nine months of 2025, mortgage banking revenues totaled $12.8 million compared to $11.2 million for the same period of 2024.

The increase compared to the second quarter of 2025 was attributable to a higher gain on sale margin for loan sales. Higher

production volume and gain on sale margin drove the improvement over both prior year periods. We provide a detailed overview of

our mortgage banking operation, including a detailed break-down of mortgage banking revenues, mortgage servicing activity, and

warehouse funding within Note 4 – Mortgage Banking Activities in the Notes to Consolidated Financial Statements.

Other

. Other income totaled $2.8 million for the third quarter of 2025, an increase of $1.2 million, or 80.7%, over the second quarter

of 2025, and an increase of $1.1 million, or 67.8%, over the third quarter of 2024. For the first nine months of 2025, other income

totaled $6.0 million, a $1.1 million, or 21.7%, increase over the same period of 2024. Compared to all prior periods, the increase was

primarily due to a $0.7 million gain from the sale of our insurance subsidiary (Capital City Strategic Wealth) in the third quarter of

2025 and to a lesser extent higher miscellaneous income.

Noninterest Expense

Noninterest expense for the third quarter of 2025 totaled $42.9 million compared to $42.5 million for the second quarter of 2025 and

$42.9 million for the third quarter of 2024. The $0.4 million, or 0.9%, increase over the second quarter of 2025 reflected a $0.8

million increase in other expense that was partially offset by a $0.4 million decrease in compensation expense. The increase in other

expense was driven by higher miscellaneous expenses of $0.7 million and professional fees of $0.1 million. The decrease in

compensation was primarily due to lower performance-based compensation (cash and stock incentives). Compared to the third quarter

of 2024, a $0.3 million increase in compensation expense was offset by a $0.2 million decrease in other expense and a $0.1 million

decline in occupancy expense.

For the first nine months of 2025, noninterest expense totaled $124.2 million compared to $123.5 million for the same period of 2024

with the $0.6 million, or 0.5%, increase primarily due to a $4.2 million increase in compensation expense that was partially offset by a

$3.4 million decrease in other expense and a $0.2 million decrease in occupancy expense. The increase in compensation was due to a

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

primarily due to increases in incentive plan expense of $1.3 million, base salaries of $0.6 million (merit based), and commissions of

$0.7 million (retail brokerage and mortgage). The increase in associate benefit expense was attributable to a higher cost for associate

insurance. The decrease in other expense was primarily due to a $4.5 million decrease in other real estate expense due to higher gains

from the sale of banking facilities, and a $1.4 million decrease in miscellaneous expense (non-service component of pension expense),

partially offset by increases in processing expense of $1.4 million (outsource of core processing system), charitable contribution

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

The table below reflects the major components of noninterest expense.

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

(Dollars in Thousands)

2025

2025

2024

2025

2024

Salaries

21,740

22,013

21,637

65,636

62,995

Associate Benefits

4,316

4,477

4,163

13,158

11,618

Total Compensation

26,056

26,490

25,800

78,794

74,613

Premises

3,176

3,272

3,245

9,620

9,461

Equipment

3,861

3,799

3,853

11,281

11,628

Total Occupancy

7,037

7,071

7,098

20,901

21,089

Legal Fees

491

480

407

1,474

1,272

Professional Fees

1,621

1,518

1,869

4,761

4,467

Processing Services

2,475

2,491

2,260

7,434

6,030

Advertising

711

801

654

2,350

2,320

Telephone

762

714

692

2,195

2,119

Insurance – Other

750

757

737

2,239

2,401

Other Real Estate Owned, net

18

21

46

(4,431)

83

Pension - Other

(871)

(872)

(419)

(2,616)

(1,256)

Miscellaneous

3,866

3,067

3,777

11,054

10,395

Total Other

9,823

8,977

10,023

24,460

27,831

Total Noninterest Expense

42,916

42,538

42,921

124,155

123,533

Significant components of noninterest expense are discussed in more detail below.

Compensation.

Compensation expense totaled $26.1 million for the third quarter of 2025, a $0.4 million, or 1.6%, decrease from the

second quarter of 2025 and a $0.3 million, or 1.0%, increase over the third quarter of 2024. The decrease from the second quarter of

2025 reflected a $0.3 million decrease in salary expense and a $0.1 million decrease in associate benefit expense, both due to lower

performance-based compensation (cash incentives and stock compensation) . Compared to the third quarter of 2024, the increase

reflected a $0.1 million increase in salary expense and a $0.2 million increase in associate benefit expense. The increase in salary

expense was primarily attributable to a $0.2 million increase in cash incentive s, a $0.2 million increase in commissions, and a $0.1

million increase in 401K matching expense, that was partially offset by a $0.3 million decrease in base salaries. The increase in

associate benefit expense was primarily due to an increase in stock compensation expense.

For the first nine months of 2025, compensation expense totaled $78.8 million compared to $74.6 million for the same period of 2024

with the $4.2 million increase attributable to a $2.6 million increase in salary expense and a $1.6 million increase in associate benefit

expense. The increase in salary expense was primarily due to increases in incentive plan expense of $1. 3 million, commissions of

$0.7 million (retail brokerage and mortgage), and base salaries of $0.6 million (merit-based). The increase in associate benefit

expense was primarily due to higher cost for associate insurance.

Occupancy

. Occupancy expense totaled $7.0 million for the third quarter of 2025, a $0.1 million, or 0.5%, decrease from the second

quarter of 2025 and a $0.1 million, or 0.9%, decrease from the third quarter of 202 4. For the first nine months of 2025, occupancy

expense totaled $20.9 million compared to $21.1 million for the same period of 2024. Lower property expenses related to our

operations center that was sold in 2024 was partially offset by higher banking office lease expense drove the variance for the prior

period comparisons.

Other

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

$10.0 million for the third quarter of 2024. For the first nine months of 2025, other expense totaled $24.5 million compared to $27.8

million for the same period of 2024. Compared to the second quarter of 2025, the $0.8 million increase was an increase in

miscellaneous expense which reflected a non-routine expense related to our VISA share swap due to additional funding of VISA’s

litigation reserve, a higher level of other losses, and an increase in expense for our residential mortgage sale indemnification reserve.

The $3.3 million increase for the nine-month comparison was primarily due to a $4.5 million decrease in other real estate expense and

a $1.4 million decrease in pension-other expense, that was partially offset by $1.4 million increase in processing expense, a $0.8

million increase in charitable contribution expense, and a $0.3 million increase in professional fees. The decrease in other real estate

expense was attributable to a gain from the sale of our operations center building in the first quarter of 2025. The decrease in other-

pension expense reflected lower expense for the non-service component of pension expense which reflected strong asset returns in the

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

Our operating efficiency ratio (expressed as noninterest expense as a percentage of the sum of taxable-equivalent net interest income

plus noninterest income) improved to 65.09% for the third quarter of 2025 compared to 67.26% for the second quarter of 2025 and

71.81% for the third quarter of 2024. For the first nine months of 2025, this ratio was 65.11% compared to 70.49% for the same

period of 2024.

Income Taxes

We realized income tax expense of $5.1 million (effective rate of 24.4%) for the third quarter of 2025 compared to $5.0 million

(effective rate of 24.9%) for the second quarter of 2025 and $3.0 million (effective rate of 19.1%) for the third quarter of 2024. For

the first nine months of 2025, we realized income tax expense of $15.3 million (effective rate of 24.2%) compared to $9.7 million

(effective rate of 20.1%) for the same period of 2024. A lower level of tax benefit accrued from a solar tax credit equity fund drove

the increase in our effective tax rate compared to the prior year periods. Absent discrete items or new tax credit investments, we

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

FINANCIAL CONDITION

Average earning assets totaled $3.982 billion for the third quarter of 2025, a decrease of $50.5 million, or 1.3%, from the second

quarter of 2025, and an increase of $59.6 million, or 1.5%, over the fourth quarter of 2024. The change for both prior periods was

driven by variances in deposit balances (see below –

Deposits

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

asset mix reflected a $46.4 million decrease in loans HFI and a $14.1 million decrease in investment securities, partially offset by a

$7.4 million increase in overnight funds sold and a $2.6 million increase in loans held for sale. Compared to the fourth quarter of

2024, the change in the earning asset mix reflected a $78.7 million increase in investment securities and a $57.9 million increase in

overnight funds sold, partially offset by a $71.2 million decrease in loans HFI and a $5.8 million decrease in loans HFS.

Investment Securities

Average investments totaled $993.9 million in the third quarter of 2025, a $14.1 million, or 1.4%, decrease from the second quarter of

2025 and a $78.7 million, or 8.6% increase over the fourth quarter of 2024. Our investment portfolio represented 25.0% of our average

earning assets for the third quarter of 2025 compared to 25.0% for the second quarter of 2025 and 23.3% for the fourth quarter of

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

and $404.7 million, or 41.1%, was classified as HTM. The average maturity of our total portfolio at September 30, 2025 was 2.70

years compared to 2.66 years at June 30, 2025 and 2.54 years at December 31, 2024. The duration of our investment portfolio at

September 30, 2025 was 2.15 years compared to 2.14 years at June 30, 2025 and 2.19 years at December 31, 2024. Additional

information on unrealized gains/losses in the AFS and HTM portfolios is provided in Note 2 – Investment Securities.

We

determine the classification of a security at the time of acquisition based on how the purchase will affect our asset/liability strategy

and future business plans and opportunities.

We

consider multiple factors in determining classification, including regulatory capital

requirements, volatility in earnings or other comprehensive income, and liquidity needs. Securities in the AFS portfolio are recorded at

fair value with unrealized gains and losses associated with these securities recorded net of tax, in the accumulated other

comprehensive income component of shareowners’ equity. HTM securities are acquired or owned with the intent of holding them to

maturity. HTM investments are measured at amortized cost.

We

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

securities for the purpose of recognizing gains and therefore we do not maintain a trading portfolio.

At September 30, 2025, there were 750 positions (combined AFS and HTM) with unrealized pre-tax losses totaling $27.8 million. 33

of these positions are U.S. Treasury bonds and carry the full faith and credit of the U.S. Government. 634 are U.S. government

agency securities issued by U.S. government sponsored entities. We believe the long history of no credit losses on government

securities indicates that the expectation of nonpayment of the amortized cost basis is effectively zero. At September 30, 2025, all

collateralized mortgage obligation securities, mortgage -backed securities, Small Business Administration securities, U.S. Agency, and

U.S. Treasury bonds held were rated AA+ or higher. The remaining 83 positions (municipal securities and corporate bonds) have a

credit component. At September 30, 2025, corporate debt securities had an allowance for credit losses of $43,000 and municipal

securities had an allowance of less than $1,000. None of the securities held by the Company were past due or in nonaccrual status at

September 30, 2025.

Loans HFI

Average loans HFI decreased by $46.4 million, or 1.8%, from the second quarter of 2025 and decreased by $71.2 million, or 2.7%,

from the fourth quarter of 2024. Compared to the second quarter of 2025, the decline reflected decreases in construction loans of

$22.4 million, consumer loans (primarily indirect auto) of $10.4 million, commercial real estate loans of $8.7 million, residential real

estate loans of $2.9 million, and commercial loans of $2.7 million, partially offset by a $2.0 million increase in home equity loans.

Compared to the fourth quarter of 2024, the decline was primarily attributable to decreases in construction loans of $55.6 million,

consumer loans (primarily auto indirect loans) of $14.4 million, commercial loans of $11.9 million and commercial real estate loans of

$6.8 million, partially offset by increases in home equity loans of $12.8 million and residential real estate loans of $7.0 million.

Loans HFI at September 30, 2025, decreased by $49.5 million, or 1.9%, from June 30, 2025, and decreased by $69.5 million, or 2.6%,

from December 31, 2024. Compared to June 30, 2025, the decline was primarily due to decreases in construction loans of $17.4

million, commercial real estate loans of $17.2 million, consumer loans (primarily indirect auto) of $11.6 million, and residential real

estate loans of $9.0 million, partially offset by a $5.9 million increase in home equity loans. Compared to December 31, 2024, the

decrease was primarily attributable to decreases in construction loans of $63.2 million, consumer loans (primarily indirect auto) of

$13.6 million, and commercial loans of $10.2 million, partially offset by increases in home equity loans of $14.0 million, residential

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

Without compromising our credit standards , changing our underwriting standards, or taking on inordinate interest rate risk, we

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

Credit Quality

Nonperforming assets (nonaccrual loans and other real estate) totaled $10.0 million at September 30, 2025, compared to $6.6 million

at June 30, 2025, and $6.7 million at December 31, 2024. At September 30, 2025, nonperforming assets as a percentage of total assets

was 0.23%, compared to 0.15% at June 30, 2025 and 0.15% at December 31, 2024. Nonaccrual loans totaled $8.2 million at

September 30, 2025, a $1.7 million increase over June 30, 2025 and a $1.9 million increase over December 31, 2024 with the increase

over both periods primarily attributable to two home equity loans totaling $1.8 million. Classified loans totaled $26.5 million at

September 30, 2025, a $2.1 million decrease from June 30, 2025, and a $6.6 million increase over December 31, 2024. The increase

over December 31, 2024 was primarily due to the downgrade of four residential real estate loans totaling $4.2 million and two

commercial real estate loans totaling $4.3 million.

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 September 30, 2025, the allowance for credit losses for loans HFI totaled $30.2 million compared to $29.9 million at June 30, 2025

and $29.3 million at December 31, 2024. Activity within the allowance is provided in Note 3 – Loans Held for Investment and

Allowance for Credit Losses in the Notes to Consolidated Financial Statements. The increase in the allowance over June 30, 2025 and

December 31, 2024 was primarily attributable to qualitative factor adjustments that were partially offset by lower loan balances. At

September 30, 2025, the allowance represented 1.17% of loans HFI compared to 1.13% at June 30, 2025, and 1.10% at December 31,

At September 30, 2025, the allowance for credit losses for unfunded commitments totaled $2.1 million compared to $1.7 million and

$2.2 million at June 30, 2025 and December 31, 2024, respectively. The change in the allowance for unfunded commitments from

both prior periods reflected variances in the level of unfunded loan commitments. The allowance for unfunded commitments is

recorded in other liabilities.

Deposits

Average total deposits were $3.612 billion for the third quarter of 2025, a decrease of $68.4 million, or 1.86%, from the second quarter

of 2025 and an increase of $11.9 million, or 0.33%, over the fourth quarter of 2024. Compared to the second quarter of 2025, the

decrease was attributable to lower public funds balances (primarily NOW accounts) due to the seasonal reduction in those balances,

partially offset by higher core deposit balances (primarily noninterest bearing checking, money market accounts, and certificates of

deposit). The increase over the fourth quarter of 2024 reflected strong growth in core deposit balances, partially offset by the seasonal

decline in public fund balances.

At September 30, 2025, total deposits were $3.615 billion, a decrease of $89.9 million, or 2.4%, from June 30, 2025, and a decrease of

$57.1 million, or 1.6%, from December 31, 2024. The decrease compared to both prior periods was due to a decline in public fund

deposits, partially offset by growth in our core deposits. Public funds totaled $497.9 million at September 30, 2025, $596.6 million at

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

Business deposit transaction accounts classified as repurchase agreements averaged $22.0 million for the third quarter of 2025, a

decrease of $0.6 million from the second quarter of 2025 and a decrease of $6.1 million from the fourth quarter of 2024. At September

30, 2025, repurchase agreement balances were $25.6 million compared to $21.8 million at June 30, 2025 and $26.2 million at

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%

-7.5%

-10.0%

-12.5%

-15.0%

September 30, 2025

18.9%

14.2%

9.5%

4.9%

-5.3%

-11.3%

-17.9%

-23.8%

June 30, 2025

19.2%

14.4%

9.6%

5.0%

-5.3%

-11.1%

-17.5%

-23.3%

Percentage Change (24-month shock)

+400 bp

+300 bp

+200 bp

+100 bp

-100 bp

-200 bp

-300 bp

-400 bp

Policy Limit

-17.5%

-15.0%

-12.5%

-10.0%

-10.0%

-12.5%

-15.0%

-17.5%

September 30, 2025

37.7%

29.5%

21.1%

13.1%

-5.1%

-15.9%

-28.1%

-39.1%

June 30, 2025

39.3%

31.0%

22.5%

14.4%

-3.8%

-14.4%

-26.2%

-37.0%

The Net Interest Income (“NII”) at Risk position of an instantaneous, parallel rate shock indicates that in the short-term (over the next

12 months), all rising rate environments will positively impact the net interest margin of the Company, while declining rate

environments will have a negative impact on the net interest margin. Compared to the second quarter of 2025, these metrics became

slightly less favorable primarily due to a change in asset mix favoring variable rate overnight funds, making us more asset sensitive

with slightly more exposure to falling rates. The instantaneous parallel rate shock results over the next 12-month and 24-month

periods are outside of policy in the rates down 200 bps, 300 bps, and 400 bps scenarios largely due to the limited ability to decrease

deposit rates the full extent of this rate change.

The measures of equity value at risk indicate our ongoing economic value by considering the effects of changes in interest rates on all

of our cash flows by discounting the cash flows to estimate the present value of assets and liabilities. The difference between these

discounted values of the assets and liabilities is the economic value of equity, which in theory approximates the fair value of our net

assets.

ESTIMATED CHANGES IN ECONOMIC VALUE OF EQUITY

Changes in Interest Rates

+400 bp

+300 bp

+200 bp

+100 bp

-100 bp

-200 bp

-300 bp

-400 bp

Policy Limit

-30.0%

-25.0%

-20.0%

-15.0%

-15.0%

-20.0%

-25.0%

-30.0%

September 30, 2025

34.2%

27.6%

19.6%

10.5%

-12.0%

-24.7%

-36.2%

-40.7%

June 30, 2025

29.4%

23.9%

17.1%

9.2%

-11.5%

-23.9%

-34.8%

-40.8%

EVE Ratio (policy minimum 5.0%)

32.1%

30.0%

27.7%

25.2%

19.4%

16.3%

13.6%

12.5%

At September 30, 2025, the economic value of equity was favorable in all rising rate environments and unfavorable in the falling rate

environments. EVE is currently in compliance with policy in all rate scenarios as the EVE ratio exceeds the policy minimum of 5.0%

in each shock scenario.

As the interest rate environment and the dynamics of the economy continue to change, additional simulations will be analyzed to

address not only the changing rate environment, but also the change in mix of our financial assets and liabilities measured over

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

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

In general terms, liquidity is a measurement of our ability to meet our cash needs. Our objective in managing our liquidity is to

maintain our ability to meet loan commitments, purchase securities or repay deposits and other liabilities in accordance with their

terms, without an adverse impact on our current or future earnings. Our liquidity strategy is guided by policies that are formulated and

monitored by our ALCO and senior management, which take into account the marketability of assets, the sources and stability of

funding and the level of unfunded commitments. We regularly evaluate all of our various funding sources with an emphasis on

accessibility, stability, reliability and cost-effectiveness. Our principal source of funding has been our client deposits, supplemented

by our short-term and long-term borrowings, primarily from securities sold under repurchase agreements, federal funds purchased and

FHLB borrowings. We believe that the cash generated from operations, our borrowing capacity and our access to capital resources are

sufficient to meet our future operating capital and funding requirements.

At September 30, 2025, we had the ability to generate approximately $1.625 billion (excludes overnight funds position of $398

million) in additional liquidity through various sources including various federal funds purchased lines, Federal Home Loan Bank

borrowings, the Federal Reserve Discount Window, and brokered deposits. We recognize the importance of maintaining liquidity and

have developed a Contingent Liquidity Plan, which addresses various liquidity stress levels and our response and action based on the

level of severity. We periodically test our credit facilities for access to the funds, but also understand that as the severity of the

liquidity level increases that certain credit facilities may no longer be available. We conduct a liquidity stress test on a quarterly basis

based on events that could potentially occur at the Bank and report results to our ALCO, MROC, EROC, and Board of Directors. We

believe the liquidity available to us at September 30, 2025 was sufficient to meet our on-going needs and execute our business

strategy.

We also view our investment portfolio as a liquidity source and have the option to pledge securities in our portfolio as collateral for

borrowings or deposits, and/or to sell selected securities. Our portfolio consists of debt issued by the U.S. Treasury, U.S. governmental

agencies, municipal governments, and corporate entities. Additional information on our investment portfolio is provided within Note 2

• Investment Securities.

The Bank maintained an average net overnight funds (i.e., deposits with banks plus FED funds sold less FED funds purchased) sold

position of $356.2 million in the third quarter of 2025 compared to $348.8 million in the second quarter of 2025 and $298.3 million in

the fourth quarter of 2024. Compared to the second quarter of 2025, the slight increase reflected lower average loan and investment

security balances, partially offset by lower average deposit balances. The increase over the fourth quarter of 2024 was primarily due

to lower average loan balances.

We expect our capital expenditures will be approximately $10.0 million over the next 12 months, which will primarily consist of

construction of a new office, office remodeling, office equipment/furniture, and technology purchases. Management expects that

these capital expenditures will be funded with existing resources without impairing our ability to meet our on-going obligations.

Borrowings

Average short -term borrowings totaled $34.7 million for the third quarter of 2025 compared to $33.1 million for the second quarter of

2025 and $34.5 million for the fourth quarter of 2024. The variances compared to both prior periods were primarily due to mortgage

warehouse borrowing activity. Additional detail on warehouse borrowings is provided in Note 4 – Mortgage Banking Activities in the

Consolidated Financial Statements.

We have issued two junior subordinated deferrable interest notes to our wholly owned Delaware statutory trusts. The first note for

$30.9 million was issued to CCBG Capital Trust I in November 2004, of which $10 million was retired in April 2016. In the second

quarter of 2025, we made a principal payment of $5.1 million on this note. The second note for $32.0 million was issued to CCBG

Capital Trust II in May 2005. In the second quarter of 2025, we made a principal payment of $5.1 million on this note. The interest

payment for the CCBG Capital Trust I borrowing is due quarterly and adjusts quarterly to a variable rate of three-month CME Term

SOFR (secured overnight financing rate) plus a margin of 1.90%. This note matures on December 31, 2034. The interest payment for

the CCBG Capital Trust II borrowing is due quarterly and adjusts quarterly to a variable interest rate based on three-month CME Term

SOFR plus a margin of 1.80%. This note matures on June 15, 2035. The proceeds from these borrowings were used to partially fund

acquisitions. Under the terms of each junior subordinated deferrable interest note, in the event of default or if we elect to defer interest

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

acquire any of our capital stock.

In the second quarter of 2020, we entered into a derivative cash flow hedge of our interest rate risk related to our subordinated debt.

The notional amount of the derivative is $30 million ($10 million of the CCBG Capital Trust I borrowing and $20 million of the

CCBG Capital Trust II borrowing). The interest rate swap agreement requires CCBG to pay fixed and receive variable (three-month

CME Term SOFR plus spread) and has an average all-in fixed rate of 2.50% for 10 years. Additional detail on the interest rate swap

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

Capital

Our capital ratios are presented in the Selected Quarterly Financial Data table on page 35. At September 30, 2025, our regulatory

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

Shareowners’ equity was $540.6 million at September 30, 2025, compared to $526.4 million at June 30, 2025, and $495.3 million at

December 31, 2024. For the first nine months of 2025, shareowners’ equity was positively impacted by net income attributable to

shareowners of $47.9 million, a net $7.7 million decrease in the accumulated other comprehensive loss, the issuance of common stock

of $2.9 million, and stock compensation accretion of $1.4 million. The net favorable change in accumulated other comprehensive loss

reflected a $8.8 million decrease in the investment securities loss that was partially offset by a $1.1 million decrease in the fair value

of the interest rate swap related to subordinated debt. Shareowners’ equity was reduced by common stock dividends of $12.6 million

($0.74 per share) and net adjustments totaling $2.0 million related to transactions under our stock compensation plans.

At September 30, 2025, our total risk-based capital ratio was 20.59% compared to 19.60% at June 30, 2025, and 18.64% at December

31, 2024. Our common equity tier 1 capital ratio was 17.73%, 16.81%, and 15.54%, respectively, on these dates. Our leverage ratio

was 11.64%, 11.14%, and 11.05%, respectively, on these dates. At September 30, 2025, all our regulatory capital ratios exceeded the

thresholds to be designated as “well-capitalized” under the Basel III capital standards. Further, our tangible common equity ratio

(non-GAAP financial measure) was 10.66% at September 30, 2025, compared to 10.09% and 9.51% at June 30, 2025, and December

31, 2024, respectively.

Our tangible capital ratio is also impacted by the recording of our unfunded pension liability through other comprehensive income in

accordance with Accounting Standards Codification Topic 715. At September 30, 2025, the net pension asset reflected in other

comprehensive income was $9.7 million comparable to June 30, 2025 and December 31, 2024. This liability is re-measured annually

on December 31

st

based on an actuarial calculation of our pension liability. Significant assumptions used in calculating the liability

include the weighted average discount rate used to measure the present value of the pension liability, the weighted average expected

long-term rate of return on pension plan assets, and the assumed rate of annual compensation increases, all of which will vary when

re-measured. The discount rate assumption used to calculate the pension liability is subject to long-term corporate bond rates at

December 31

st

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

in Part II, Item7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our 2024 Form 10-K.

OFF-BALANCE SHEET ARRANGEMENTS

We are a party to financial instruments with off-balance sheet risks in the normal course of business to meet the financing needs of our

clients.

At September 30, 2025, we had $705.3 million in commitments to extend credit and $7.1 million in standby letters of credit.

Commitments to extend credit are agreements to lend to a client so long as there is no violation of any condition established in the

contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since

many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily

represent future cash requirements. Standby letters of credit are conditional commitments issued by us to guarantee the performance

of a client to a third party. We use the same credit policies in establishing commitments and issuing letters of credit as we do for on-

balance sheet instruments.

If commitments arising from these financial instruments continue to require funding at historical levels, management does not

anticipate that such funding will adversely impact our ability to meet our on-going obligations. In the event these commitments

require funding in excess of historical levels, management believes current liquidity, advances available from the FHLB and the

Federal Reserve, and investment security maturities provide a sufficient source of funds to meet these commitments.

Certain agreements provide that the commitments are unconditionally cancellable by the bank and for those agreements no allowance

for credit losses has been recorded.

We

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

unconditionally cancellable by the Bank, which is included in other liabilities on the Consolidated Statements of Financial Condition

and totaled $2.1 million at September 30, 2025.

CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are described in Note 1 to the Consolidated Financial Statements included in our 2024 Form 10-K.

The preparation of our Consolidated Financial Statements in accordance with GAAP and reporting practices applicable to the banking

industry requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses,

and to disclose contingent assets and liabilities. Actual results could differ from those estimates.

We have identified accounting for (i) the allowance for credit losses, (ii) goodwill, (iii) pension assumptions, and (iv) income taxes as

our most critical accounting policies and estimates in that they are important to the portrayal of our financial condition and results, and

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

inherently uncertain. These accounting policies, including the nature of the estimates and types of assumptions used, are described

throughout this Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Part II, Item 7,

Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2024 Form 10-K.

TABLE I

AVERAGE BALANCES & INTEREST RATES (UNAUDITED)

Three Months Ended September 30,

Nine Months Ended September 30,

2025

2024

2025

2024

Average

Average

Average

Average

Average

Average

Average

Average

(Dollars in Thousands)

Balances

Interest

Rate

Balances

Interest

Rate

Balances

Interest

Rate

Balances

Interest

Rate

Assets:

Loans Held for Sale

25,276

425

6.68

24,570

720

7.49

24,226

1,390

7.67

26,050

1,800

6.22

Loans Held for Investment

(1)(2)

2,606,213

39,894

6.07

2,693,533

40,985

6.09

2,641,346

120,359

6.09

2,716,220

121,864

6.02

Taxable Securities

992,260

7,175

2.88

907,610

4,148

1.82

993,460

19,644

2.64

926,241

12,385

1.78

Tax-Exempt Securities

(2)

1,620

18

4.44

846

10

4.33

1,313

43

4.43

848

28

4.34

Federal Funds Sold and Interest Bearing

Deposits

356,161

3,964

4.42

256,855

3,514

5.44

342,094

11,369

4.44

220,056

9,031

5.48

Total Earning Assets

3,981,530

51,476

5.12

3,883,414

49,377

5.06

4,002,439

152,805

5.10

3,889,415

145,108

4.98

Cash & Due From Banks

65,085

70,994

68,074

73,843

Allowance For Credit Losses

(30,342)

(29,905)

(30,282)

(29,833)

Other Assets

301,678

291,359

300,788

292,762

TOTAL ASSETS

4,317,951

4,215,862

4,341,019

4,226,187

Liabilities:

Noninterest Bearing Deposits

1,314,560

1,332,305

1,324,753

1,340,981

NOW Accounts

1,198,124

3,782

1.25

1,145,544

4,087

1.42

1,224,402

11,386

1.24

1,184,596

13,009

1.47

Money Market Accounts

416,656

2,090

1.99

418,625

2,694

2.56

422,817

6,617

2.09

393,294

7,431

2.52

Savings Accounts

503,189

159

0.13

512,098

180

0.14

506,255

509

0.13

523,573

544

0.14

Other Time Deposits

179,802

1,234

2.72

163,462

1,262

3.07

174,418

3,541

2.71

153,991

3,412

2.96

Total Interest Bearing Deposits

2,297,771

7,265

1.25

2,239,729

8,223

1.46

2,327,892

22,053

1.27

2,255,454

24,396

1.44

Total Deposits

3,612,331

7,265

0.80

3,572,034

8,223

0.92

3,652,645

22,053

0.81

3,596,435

24,396

0.91

Repurchase Agreements

21,966

158

2.86

27,126

221

3.24

24,752

478

2.58

26,619

639

3.21

Other Short-Term Borrowings

12,753

58

1.82

2,673

52

7.63

10,251

354

4.62

4,334

159

4.88

Subordinated Notes Payable

42,582

383

3.52

52,887

610

4.52

49,113

1,473

3.95

52,887

1,868

4.64

Other Long-Term Borrowings

681

10

5.55

795

11

5.55

755

26

4.50

447

17

5.16

Total Interest Bearing Liabilities

2,375,753

7,874

1.32

2,323,210

9,117

1.56

2,412,763

24,384

1.35

2,339,741

27,079

1.55

Other Liabilities

85,422

73,767

75,664

71,574

TOTAL LIABILITIES

3,775,735

3,729,282

3,813,180

3,752,296

Temporary Equity

6,443

6,694

TOTAL SHAREOWNERS’ EQUITY

542,216

480,137

527,839

467,197

TOTAL LIABILITIES, TEMPORARY

AND SHAREOWNERS’ EQUITY

4,317,951

4,215,862

4,341,019

4,226,187

Interest Rate Spread

3.81

3.49

3.75

3.43

Net Interest Income

43,602

40,260

128,421

118,029

Net Interest Margin

(3)

4.34

4.12

4.28

4.05

(1)

Average Balances include net loan fees, discounts and premiums and nonaccrual loans. Interest income includes loan costs of $0.4 million and $1.1 million for the three and nine months ended September 30, 2025,

and loan cost of $0.2 and $0.5 million for the three and nine month periods ended September 30, 2024.

(2)

Interest income includes the effects of taxable equivalent adjustments using a 21% Federal tax rate.

(3)

Taxable equivalent net interest income divided by average earning assets.