CAPITAL CITY BANK GROUP INC

for 2023

.

At December 31, 2023, the end of the period covered by this

Annual Report on Form 10-K, 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 each concluded that our disclosure controls

and procedures were ineffective as of December 31, 2023 due to the

identification of the material weakness discussed in

for 2022

. As discussed in Part III, Item 9A, of the Company’s

Annual Report

on Form 10-K/A for the year ended December 31, 2022 filed with the SEC on December

22, 2023 (the “2022 Form 10-K/A”), our

management, including our Chief Executive Officer

and Chief Financial Officer, after re-assessing

the effectiveness of our

disclosure controls and procedures, concluded that our disclosure controls

and procedures were ineffective as of December 31,

2022 due to the identification of the material weakness discussed in “Existence

of Material Weakness as of

December 31, 2023”

below.

for 2021

. At December 31, 2021, the end of the period covered by the

Company’s Annual Report

on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 1, 2022 (the “2021

Form 10-K”), our management, including our Chief Executive Officer

and Chief Financial Officer, evaluated

the effectiveness of

our disclosure controls and procedures. Based upon that evaluation, at the

time the 2021 Form 10-K was filed, our Chief

Executive Officer and Chief Financial Officer

each concluded that at December 31, 2021, we maintained effective

controls and procedures. Subsequent to that evaluation, management

conducted a reevaluation, concluding that our disclosure

controls and procedures were ineffective as of December 31,

2021 due to the identification of the material weakness discussed in

Management’s

Report on Internal Control Over Financial Reporting.

Our management is responsible for establishing and

maintaining effective internal control over financial

Internal control over financial reporting is a process designed to

provide reasonable assurance regarding the reliability of financial reporting

and the preparation of financial statements for

external purposes in accordance with U.S. generally accepted accounting

principles.

Internal control over financial reporting cannot provide absolute assurance

of achieving financial reporting objectives because of

its inherent limitations. Internal control over financial reporting is a process

that involves human diligence and compliance and is

subject to lapses in judgment and breakdowns resulting from human failures.

Internal control over financial reporting can also be

circumvented by collusion or improper management override. Because of such

limitations, there is a risk that material

misstatements may not be prevented or detected on a timely basis by internal

control over financial reporting. However, these

inherent limitations are known features of the financial reporting

process. Therefore, it is possible to design into the process

safeguards to reduce, though not eliminate, this risk.

Management is also responsible for the preparation and fair presentation

of the consolidated financial statements and other

financial information contained in this report. The accompanying consolidated

financial statements were prepared in conformity

with U.S. generally accepted accounting principles and include, as necessary,

best estimates and judgments by management.

Under the supervision and with the participation of management, including

the Chief Executive Officer and Chief Financial

Officer, we conducted

an evaluation of the effectiveness of internal control over financial reporting based

on the framework in

Internal Control—Integrated Framework issued by the Committee of

Sponsoring Organizations of the Treadway

Commission

(2013 framework) (the COSO criteria).

Based on this evaluation under the framework in Internal Control -

Integrated

Framework, our management has concluded that our internal control over financial

reporting, as such term is defined in Exchange

Act Rule 13a-15(f), was ineffective as of December 31, 2023 due

to the identification of the material weakness discussed below.

As discussed in Part III, Item 9A, of the 2022 Form 10-K/A, management conducted

a reevaluation under the framework in

Internal Control - Integrated Framework as of December 31, 2022 and

concluded that our internal control over financial reporting

was ineffective as of December 31, 2022 due to the identification

of the material weakness discussed in “Existence of Material

Weakness as of December

31, 2023” below. At the

time the 2021 Form 10-K was filed, under the framework in Internal Control -

Integrated Framework, our management concluded that we maintained

effective internal control over financial reporting as of

December 31, 2021. Subsequent to that evaluation, management conducted

a reevaluation, concluding that our internal control

over financial reporting was ineffective as of December 31,

2021 due to the identification of the material weakness discussed in

Existence of Material Weakness

as of December 31, 2023

A material weakness is a deficiency,

or a combination of deficiencies, in internal control over financial reporting such

that there is

a reasonable possibility that a material misstatement of the Company’s

annual or interim financial statements will not be

prevented or detected on a timely basis. As a result of the material weakness noted

below, management has

concluded that our

internal control over financial reporting was not effective

as of December 31, 2023. Based on management’s

assessment

described above, the Company’s

control over the review of significant inter-company

mortgage loan sales and servicing

transactions was not designed effectively.

Specifically, its management

review control over the completeness and accuracy of

elimination entries in its consolidation process was not designed effectively

as it was not sufficiently precise to identify all of the

necessary elimination entries between CCB and its subsidiary,

CCHL. The material weakness resulted in the restatement of the

Company’s consolidated

financial statements as of and for the year ended December 31, 2022 and the restatement of the

Company’s Consolidated

Statement of Cash Flows for the year ended December 31, 2021.

Remediation Plan

Since identifying the material weakness described above, management,

with oversight from the Audit Committee and input from

the Board of Directors, has devoted substantial resources to the ongoing

implementation of remediation efforts. These

remediation efforts, summarized below are intended to

address both the identified material weakness and to enhance the

Company’s overall internal

control over financial reporting and disclosure controls and procedures. Based on

additional

procedures and post-closing review,

management concluded that the Consolidated Financial Statements included

in this report

present fairly, in all material

respects, our financial position, results of operations, and cash flows for the periods

presented, in

conformity with GAAP.

The internal control and procedural enhancements and remedial actions that

have been implemented include:

●

Enhance the precision level for the review of existing accounts subject to elimination

and confirmation of proper

elimination in consolidation;

●

Enhance the procedures for identifying new inter-company

accounts and activities subject to elimination in

consolidation;

●

Increase the granularity of general ledger mapping for inter-company

accounts subject to elimination in consolidation;

and

●

Enhance financial close checklist and pre-close meeting agenda to ensure proper

and timely identification of inter-

company activities subject to elimination.

The Company implemented the internal control and procedural enhancements

noted above during the fourth quarter of 2023 to

remediate the material weakness. The material weakness cannot be considered

remediated until the applicable controls have

operated for a sufficient period of time and management has concluded,

through testing, that these controls are designed and

operating effectively.

Accordingly, management

will continue to monitor and evaluate the effectiveness of our internal control

over financial reporting and the disclosure controls and procedures.

FORVIS, LLP,

an independent registered public accounting firm, has audited

our consolidated financial statements as of and for

the year ended December 31, 2023, and adversely opined as to the effectiveness

of internal control over financial reporting at

December 31, 2023, as stated in its report, which is included herein on

page 141.

Change in Internal Control

.

Except as identified above with respect to remediation of the material weakness,

there have been no

changes in our internal control during our most recently completed fiscal quarter

that materially affected, or are likely to

materially affect, our internal control over financial reporting.

To the Shareowners,

Board of Directors and Audit Committee

Tallahassee, Florida

Opinion on the Internal Control over Financial Reporting

We have audited

Capital City Bank Group, Inc.’s (the “Company”)

internal control over financial reporting as of December 31,

2023, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by the Committee of Sponsoring

Organizations of the Treadway

Commission (COSO).

A material weakness is a deficiency,

or a combination of deficiencies, in internal control over financial reporting,

such that there

is a reasonable possibility that a material misstatement of the Company’s

annual or interim financial statements will not be

prevented or detected on a timely basis. The following material weakness has been

identified and included in management’s

assessment.

●

The Company's control over the review of significant inter-company

mortgage loan sales and servicing transactions did

not operate effectively.

Specifically, its management

review control over the completeness and accuracy of elimination

entries in its consolidation process was not designed effectively,

as it was not sufficiently precise to identify all of the

necessary elimination entries between Capital City Bank and its subsidiary,

Capital City Home Loans. The Company

determined inter-company transactions related to the sale of residential

mortgage loans between wholly owned

subsidiaries were not properly eliminated and net loan fees were not

properly recorded.

This material weakness was considered in determining the nature, timing,

and extent of auditing procedures applied in our audit

of the Company’s consolidated

financial statements, and this report does not affect our report dated

March 13, 2024, on those

In our opinion, because of the effect of the material weakness described

above on the achievement of the objectives of the control

criteria, the Company has not maintained effective internal

control over financial reporting as of December 31, 2023, based on

criteria established in Internal Control – Integrated Framework: (2013)

issued by the COSO.

We also have audited,

in accordance with the standards of the Public Company Accounting Oversight Board (United

States)

(“PCAOB”), the consolidated financial statements of the Company

as of December 31, 2023 and 2022, and for each of the years

in the three-year period ended December 31, 2023, and our report dated March

13, 2024, expressed an unqualified opinion on

those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible

for maintaining effective internal control over financial reporting

and for its

assessment of the effectiveness of internal control over

financial reporting, included in the accompanying Management’s

Report

on Internal Control Over Financial Reporting. Our responsibility is to express

an opinion on the Company’s

internal control over

financial reporting based on our audit.

We are a public

accounting firm registered with the PCAOB and are required to be independent with

respect to the Company in

accordance with the U.S. federal securities laws and the applicable rules and

regulations of the Securities and Exchange

Commission and the PCAOB.

We conducted

our audit in accordance with the standards of the PCAOB. Those standards require

that we plan and perform the

audit to obtain reasonable assurance about whether effective internal

control over financial reporting was maintained in all

material respects. Our audit included obtaining an understanding of internal

control over financial reporting, assessing the risk

that a material weakness exists, and testing and evaluating the design and operating

effectiveness of internal control based on the

assessed risk. Our audit also included performing such other procedures as we considered

necessary in the circumstances. We

believe that our audit provides a reasonable basis for our opinion.

Definitions and Limitations of Internal Control over Financial Reporting

A company’s internal control over

financial reporting is a process designed to provide reasonable assurance regarding

the

reliability of financial reporting and the preparation of reliable financial

statements for external purposes in accordance with

generally accepted accounting principles. A company’s

internal control over financial reporting includes those policies and

procedures that (1) pertain to the maintenance of records that, in reasonable detail,

accurately and fairly reflect the transactions

and dispositions of the assets of the company; (2) provide reasonable assurance

that transactions are recorded as necessary to

permit preparation of financial statements in accordance with generally

accepted accounting principles, and that receipts and

expenditures of the company are being made only in accordance with authorizations

of management and directors of the

company; and (3) provide reasonable assurance regarding prevention or

timely detection of unauthorized acquisition, use, or

disposition of the company’s

assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting

may not prevent or detect misstatements. Also,

projections of any evaluation of effectiveness to future

periods are subject to the risk that controls may become inadequate

because of changes in conditions or that the degree of compliance with the policies or

procedures may deteriorate.

FORVIS, LLP

Little Rock, Arkansas

March 13, 2024