CAPITAL CITY BANK GROUP INC

An investment in our common stock contains a high degree

of risk. You should

consider carefully the following risk factors before

deciding whether to invest in our common stock. Our business, including

our operating results and financial condition, could be

harmed by any of these risks. Additional risks and uncertainties not currently

known to us or that we currently deem to be

immaterial also may materially and adversely affect our business. The trading

price of our common stock could decline due to

any of these risks, and you may lose all or part of your investment. In assessing these risks,

you should also refer to the other

information contained in our filings with the SEC, including our financial

statements and related notes.

Market Risks

We may incur losses if we are

unable to successfully manage interest rate risk.

Our profitability depends to a large extent on Capital City Bank’s

net interest income, which is the difference between income on

interest-earning assets, such as loans and investment securities, and

expense on interest-bearing liabilities such as deposits and

borrowings. We

are unable to predict changes in market interest rates, which are affected

by many factors beyond our control,

including inflation, changes in trade policies by the United States or other

countries, such as tariffs or retaliatory tariffs, recession,

unemployment, federal funds target rate, money supply,

domestic and international events and changes in the United States and

other financial markets. Our net interest income may be reduced if: (i) more

interest-earning assets than interest-bearing liabilities

reprice or mature during a time when interest rates are declining or (ii) more interest-bearing

liabilities than interest-earning assets

reprice or mature during a time when interest rates are rising.

Changes in the difference between short-term

and long-term interest rates may also harm our business. We

generally use short-

term deposits to fund longer-term assets. When interest rates change,

assets and liabilities with shorter terms reprice more quickly

than those with longer terms, which could have a material adverse effect

on our net interest margin. During 2022 and 2023, the

Federal Reserve raised the federal funds rate 11

times for a cumulative increase of 5.25%. In 2024, the Federal Reserve began

lowering the federal funds rate and lowered it three times during the year for a cumulative

decrease of 1.00%. We

are currently

operating in an environment in which the Federal Reserve has shifted toward reducing

interest rates, although modestly,

with cuts

implemented in September, October

and December 2025.

However, the inflationary outlook remains uncertain

and if the Federal

Reserve were to further decrease interest rates, this may constrain our interest

rate spread due to our asset sensitivity and may

adversely affect our business forecasts. On the other hand,

rapid increases in the target federal funds rate may result in a change

in

the mix of noninterest and interest-bearing accounts and effect

our interest rate spread. New appointments to the Board of

Governors at the Federal Reserve could result in a change in monetary policy

and interest rates, and the potential erosion of

Federal Reserve independence could negatively impact financial markets

and impact our profitability.

We are unable to

predict

changes in interest rates, which are affected by factors beyond

our control, including inflation, deflation, recession,

unemployment, money supply and other changes in financial markets.

Although we continuously monitor interest rates and have a number

of tools to manage our interest rate risk exposure, changes in

market assumptions regarding future interest rates could significantly impact our

interest rate risk strategy, our financial

position

and results of operations. If we do not properly monitor our interest rate risk management

strategies, these activities may not

effectively mitigate our interest rate sensitivity or have the desired

impact on our results of operations or financial condition.

Interest rates and economic conditions affect consumer

demand for housing and can create volatility in the mortgage industry.

These risks can have a material impact on the volume of mortgage originations

and refinancings, adversely affecting mortgage

banking revenues and the profitability of our mortgage banking business.

See Item 7.

Management’s Discussion and Analysis of

Financial Condition and Results of Operations under the section captioned

“Net Interest Income” and “Market Risk and Interest Rate Sensitivity” elsewhere

in this report for further discussion related to

interest rate sensitivity and our management of interest rate risk.

The impact of interest rates on our mortgage banking business can

have a significant impact on revenues.

Changes in interest rates can impact our mortgage-related revenues and net revenues

associated with our mortgage activities.

A

decline in mortgage rates generally increases the demand for mortgage loans

as borrowers refinance, but also generally leads to

accelerated payoffs. Conversely,

in a constant or increasing rate environment, we would expect fewer loans to be refinanced

and a

decline in payoffs. Although we use models to assess the impact

of interest rates on mortgage-related revenues, the estimates of

revenues produced by these models are dependent on estimates and assumptions

of future loan demand, prepayment speeds and

other factors which may differ from actual subsequent

experience.

Inflationary pressures and rising prices may

affect our results of operations and financial condition.

Small to medium-sized businesses may be impacted more during periods

of high inflation as they are not able to leverage

economies of scale to mitigate cost pressures compared to larger

businesses. Consequently, the

ability of our business customers

to repay their loans may deteriorate, and in some cases this deterioration may occur

quickly, which would adversely impact

our

results of operations and financial condition. Furthermore, a prolonged

period of inflation could cause wages and other costs to

further increase which could adversely affect our results of

operations and financial condition. Sustained higher interest rates by

the Federal Reserve may be needed to tame persistent inflationary price

pressures, which could push down asset prices and

weaken economic activity.

A deterioration in economic conditions in the United States and our markets could result in

an increase

in loan delinquencies and non-performing assets, decreases in loan collateral

values and a decrease in demand for our products

and services, all of which, in turn, would adversely affect our business,

financial condition and results of operations.

Our profitability depends significantly on economic

conditions in the States of Florida and Georgia.

Our profitability and the success of our business depends substantially on the general

economic conditions of the States of Florida

and, to a lesser extent, Georgia, as well as the specific local markets in

which we operate. Unlike larger national or other regional

banks that are more geographically diversified, we provide banking

and financial services primarily to customers across northern

Florida and Georgia. The local economic conditions in

these areas have a significant impact on the demand for our products and

services as well as the ability of our customers to repay loans, the value of the

collateral securing loans and the stability of our

deposit funding sources. As a result, a significant decline in general economic

conditions in Florida or Georgia, whether caused

by recession, inflation, unemployment, in-flows and out-flows of residents,

shifts in political landscape, changes in securities

markets, acts of terrorism, pandemics, natural disasters, climate change,

outbreak of hostilities or other occurrences or other

factors could have a material adverse effect on our business, financial

condition and results of operations.

Changes in customer behavior may have a negative impact on our business, financial

Individual,

economic,

political, industry

-specific

conditions and

other factors

outside of

our

control,

such as

fuel prices,

energy

costs,

real

estate

values,

inflation,

tariffs

and

trade

wars,

taxes

or

other

factors

that

affect

customer

income

levels,

could

alter

anticipated

customer

behavior,

borrowing,

repayment,

investment

and

deposit

practices.

Such

a

change

in

these

practices

could

materially

adversely

affect

our

ability

to

anticipate

needs

and

meet

regulatory

requirements.

Further,

difficult economic conditions may

negatively affect consumer confidence

levels. A decrease in consumer confidence

levels would

likely aggravate the adverse effects of these difficult

market conditions on us and our customers.

The fair value of our investments could decline, which would cause a reduction

in shareowners’ equity.

A portion of our investment securities portfolio (62.9%) at December

31, 2025 has been designated as available-for-sale pursuant

to U.S. generally accepted accounting principles relating to accounting for

investments. Such principles require that unrealized

gains and losses in the estimated value of the available-for-sale

portfolio be “marked to market” and reflected as a separate item in

shareowners’ equity (net of tax) as accumulated other comprehensive

income/losses. Shareowners’ equity will continue to reflect

the unrealized gains and losses (net of tax) of these investments. The fair value

of our investment portfolio may decline, causing a

corresponding decline in shareowners’ equity.

Management believes that several factors will affect the

fair values of our investment portfolio. These include, but are not limited

to, changes in interest rates or expectations of changes in interest rates, the degree

of volatility in the securities markets, inflation

rates or expectations of inflation and the slope of the interest rate yield curve

(the yield curve refers to the differences between

short-term and long-term interest rates; a positively sloped yield curve means short

-term rates are lower than long-term rates).

These and other factors may impact specific categories of the portfolio differently,

and we cannot predict the effect these factors

may have on any specific category.

Shares of our common stock are not an insured

deposit and may lose value.

The shares of our common stock are not a bank deposit and will not be insured or guaranteed

by the FDIC or any other

government agency.

Your

investment will be subject to investment risk, and you must be capable of affording the

loss of your

entire investment.

Limited trading activity for shares of our common stock may

contribute to price volatility.

While our common stock is listed and traded on the Nasdaq Global Select Market, there

has historically been limited trading

activity in our common stock.

The average daily trading volume of our common stock over the 12-month

period ending

December 31, 2025 was approximately 37,371 shares. Due to the limited

trading activity of our common stock, relativity small

trades may have a significant impact on the price of our common stock. Similarly,

significant sales of our common stock, or the

expectation of these sales, could cause our stock prices to fall.

Securities analysts may not initiate coverage or continue to cover our common

stock, and this may have a negative impact

on its market price.

The trading market for our common stock will depend in part on the research

and reports that securities analysts publish about us

and our business. We do

not have any control over securities analysts, and they may not initiate coverage

or continue to cover our

common stock. If any securities analysts covering our common stock publishes

an unfavorable report, our stock price would

likely decline. If one or more of analysts covering our common stock ceases to cover

our Company or fails to publish regular

reports on us, the lack of research coverage and lose of visibility in the financial

markets may cause our stock price or trading

volume to decline.

Credit Risks

Our loan portfolio includes loans with a higher risk of loss which could lead to higher loan losses and nonperforming

assets.

We originate

commercial real estate loans, commercial loans, construction loans, vacant land

loans, consumer loans, and

residential mortgage loans primarily within our market area. Commercial

real estate, commercial, construction, vacant land, and

consumer loans may expose a lender to greater credit risk than traditional

fixed-rate fully amortizing loans secured by residential

real estate because the collateral securing these loans may not be sold as easily as residential

real estate. In addition, these loan

types tend to involve larger loan balances to a single borrower or

groups of related borrowers and are more susceptible to a risk of

loss during a downturn in the business cycle. These loans also have historically

had greater credit risk than other loans for the

following reasons:

●

Commercial Real Estate Loans

. Repayment is dependent on income being generated in amounts sufficient

to cover

operating expenses and debt service. These loans also involve greater risk because

they are generally not fully amortizing

over the loan period, but rather have a balloon payment due at maturity.

A borrower’s ability to make a balloon payment

typically will depend on the borrower’s ability to either refinance

the loan or timely sell the underlying property.

Further,

these loans generally are more affected by adverse conditions in the

economy. Because payments

on loans secured by

commercial real estate often depend upon the successful operation and

management of the properties and the businesses

which operate from within them, repayment of such loans may be affected

by factors outside the borrower’s control,

such as adverse conditions in the real estate market or the economy or changes

in government regulations.

At December

31, 2025, commercial mortgage loans comprised approximately

30.2% of our total loan portfolio.

●

Commercial Loans

. Repayment is generally dependent upon the successful operation of the borrower’s

business. In

addition, the collateral securing the loans may depreciate over time, be

difficult to appraise, be illiquid, or fluctuate in

value based on the success of the business. These loans are also sensitive to broader

economic conditions, competitive

pressures, and industry-specific trends, any of which may disproportionately

impact certain segments during periods of

stress and increase the likelihood of credit deterioration.

At December 31, 2025, commercial loans comprised

approximately 7.1% of our total loan portfolio.

●

Construction Loans

. The risk of loss is largely dependent on our initial estimate of whether

the property’s value at

completion equals or exceeds the cost of property construction and the availability

of take-out financing. During the

construction phase, a number of factors can result in delays or cost overruns. If

our estimate is inaccurate or if actual

construction costs exceed estimates,

which could be impacted by factors outside of our control, including

tariff, trade,

and immigration policies, the value of the property securing our

loan may be insufficient to ensure full repayment when

completed through a permanent loan, sale of the property,

or by seizure of collateral.

At December 31, 2025,

construction loans comprised approximately 5.8% of our total loan

●

Vacant

Land Loans

. Because vacant or unimproved land is generally held by the borrower

for investment purposes or

future use, payments on loans secured by vacant or unimproved land will typically

rank lower in priority to the borrower

than a loan the borrower may have on their primary residence or business. These loans

are susceptible to adverse

conditions in the real estate market and local economy.

At December 31, 2025, vacant land loans comprised

approximately 3.8% of our total loan portfolio.

●

HELOCs

. Our open-ended home equity loans have an interest-only draw period

followed by a five-year repayment

period of 0.75% of the principal balance monthly and a balloon payment

at maturity. Upon the commencement

of the

repayment period, the monthly payment can increase significantly,

thus, there is a heightened risk that the borrower will

be unable to pay the increased payment. Further,

these loans also involve greater risk because they are generally not fully

amortizing over the loan period but rather have a balloon payment due at maturity.

A borrower’s ability to make a

balloon payment may depend on the borrower’s ability

to either refinance the loan or timely sell the underlying property.

At December 31, 2025, HELOCs comprised approximately 9.5% of

our total loan portfolio.

●

Consumer Loans

. Consumer loans (such as automobile loans and personal lines of

credit) are collateralized, if at all,

with assets that may not provide an adequate source of payment of the loan due

to depreciation, damage, or loss. At

December 31, 2025, consumer loans comprised approximately 7.2%

of our total loan portfolio, with indirect auto loans

making up a majority of this portfolio at approximately 85.9% of the total balance.

The increased risks associated with these types of loans result in a correspondingly

higher probability of default on such loans (as

compared to fixed-rate fully amortizing single-family real estate loans).

Loan defaults would likely increase our loan losses and

nonperforming assets and could adversely affect our allowance

for credit losses and our results of operations.

In addition, credit

risk may be elevated by borrower or third party fraud, inaccuracies in financial

information, or misrepresentations in loan

documentation. As seen across the banking industry,

evolving fraud schemes and greater digitization of financial transactions can

increase the risk that loans are underwritten based on incomplete, inaccurate,

or falsified information, which may heighten the risk

of unexpected credit losses.

Our loan portfolio is heavily concentrated in mortgage loans secured

by properties in Florida and Georgia which causes

our risk of loss to be higher than if we had a more geographically diversified

Our interest-earning assets are heavily concentrated in mortgage loans secured

by real estate, particularly real estate located in

Florida and Georgia.

At December 31, 2025, approximately 85.7% of our loans included real estate as a primary,

secondary, or

tertiary component of collateral. The real estate collateral in each case provides

an alternate source of repayment in the event of

default by the borrower; however, the value

of the collateral may decline during the time the credit is extended. If we are required

to liquidate the collateral securing a loan during a period of reduced real estate values

to satisfy the debt, our earnings and capital

could be adversely affected.

Additionally, at December

31, 2025, a significant number of our loans secured by real estate are secured by commercial and

residential properties located in Florida and Georgia. The

concentration of our loans in these areas subjects us to risk that a

downturn in the economy or recession in these areas could result in a decrease in

loan originations and increases in delinquencies

and foreclosures, which would more greatly affect us than

if our lending were more geographically diversified. In addition, since

a large portion of our portfolio is secured by properties located

in Florida and Georgia, the occurrence of a natural disaster,

such

as a hurricane, or a man-made disaster could result in a decline in loan originations,

a decline in the value or destruction of

mortgaged properties and an increase in the risk of delinquencies, foreclosures

or loss on loans originated by us. Severe weather

events, catastrophic natural disasters, or other large-scale

disruptions may also rapidly impair collateral values and borrower

repayment capacity across an entire geographic market, increasing both

credit losses and required credit-loss reserves. We

may

suffer further losses due to the decline in the value of the properties underlying

our mortgage loans, which would have an adverse

impact on our results of operations and financial condition.

Our concentration in loans secured by real estate

may increase our credit losses, which would negatively

affect our

financial results.

Due to the lack of diversified industry within some of the markets served by CCB and the relatively

close proximity of our

geographic markets, we have both geographic concentrations as well as concentrations

in the types of loans funded. Specifically,

due to the nature of our markets, a significant portion of the portfolio has historically

been secured with real estate. At December

31, 2025, approximately 31.5% and 54.2% of our $2.546 billion loan

portfolio was secured by commercial real estate and

residential real estate, respectively.

As of this same date, approximately 5.8% was secured by property under construction.

Due to

the exposure in these concentrations, disruptions in markets, economic

conditions, changes in laws or regulations or other events

could cause a significant impact on the ability of borrowers to repay and may

financial condition and results of operations.

In weak economies, or in areas where real estate market conditions are distressed,

we may experience a higher than normal level

of nonperforming real estate loans. The collateral value of the portfolio and the revenue stream

from those loans could come

under stress, and additional provisions for the allowance for credit losses could

be necessitated. In the event we are required to

foreclose on a property securing one of our mortgage loans or otherwise pursue

our remedies in order to protect our investment,

we may be unable to recover funds in an amount equal to our projected return

on our investment or in an amount sufficient to

prevent a loss to us due to prevailing economic conditions, real estate values and

other factors associated with the ownership of

real property. As a result,

the market value of the real estate or other collateral underlying our loans may not, at any given

time, be

sufficient to satisfy the outstanding principal amount of the

loans, and consequently, we would

sustain loan losses.

An inadequate allowance for credit losses would reduce our

earnings.

We are exposed

to the risk that our clients may be unable to repay their loans according to their terms and

that any collateral

securing the payment of their loans may not be sufficient

to assure full repayment. This could result in credit losses that are

inherent in the lending business. We

evaluate the collectability of our loan portfolio and provide an allowance

for credit losses

that we believe is adequate based upon such factors as: the risk characteristics of various

classifications of loans; previous loan

loss experience; specific loans that have loss potential; delinquency trends;

estimated fair market value of the collateral; current

and future economic conditions; and geographic and industry loan

concentrations.

At December 31, 2025, our allowance for credit losses for loans held for investment

was $31.0 million, which represented

approximately 1.22% of our total loans held for investment.

We had $8.6

million in nonaccruing loans at December 31, 2025.

We cannot provide

any assurance that our monitoring procedures and policies will reduce certain lending

risks, and while the

allowance is based on management’s

reasonable estimate and may not prove sufficient to cover future

loan losses.

Although

management uses the best information available to make determinations

with respect to the allowance for credit losses, future

adjustments may be necessary if economic conditions differ substantially

from the assumptions used or adverse developments

arise with respect to our nonperforming or performing loans.

In addition, regulatory agencies, as an integral part of their

examination process, periodically review our estimated losses on loans.

Our regulators may require us to recognize additional

losses based on their judgments about information available to them at the time of

their examination.

Accordingly, the allowance

for credit losses may not be adequate to cover all future loan losses and significant increases

to the allowance may be required in

the future if, for example, economic conditions worsen.

A material increase in our allowance for credit losses would adversely

impact our net income and capital in future periods, while having the effect

of overstating our current period earnings.

Failures in the analytical

and forecasting models

relied upon for our

accounting estimates and risk

management processes

could have a material adverse effect on our business, financial condition, and results

of operations.

The processes

we use

to estimate

our expected

credit losses and

to measure

the fair value

of financial

instruments, as

well as

the

processes used

to estimate

the effects

of changing

interest rates

and other

market measures

on our

financial condition

and results

of

operations,

depends

upon

the

use

of

analytical

and

forecasting

models.

These

models

reflect

that

may

not

be

accurate,

particularly

in

times

of

market

stress

or

other

unforeseen

circumstances.

Even

if

these

are

adequate,

the

models may

prove to

be inadequate

or inaccurate

because of

other flaws

in their

design or

their implementation,

including flaws

caused by failures in controls, data management, human error

or from the reliance on technology.

If the models we use for interest

rate

risk

and

asset-liability

are

we

may

incur

or

unexpected

losses

upon

changes

in

market

interest

rates

or

other

market

measures.

If

the

models

we

use

for

estimating

our

expected

credit

losses

are

the

allowance for

credit losses

may not

be sufficient

to support

future charge-offs.

If the

models we

use to

measure the

fair value

of

instruments

are

the

fair

value

of

such

instruments

may

fluctuate

unexpectedly

or

may

not

accurately reflect

what we

could realize

upon sale

or settlement

of such

financial instruments.

Any such

failure in

our analytical

or forecasting models could have a material adverse effect

We may incur significant costs associated

with the ownership of real property as a

result of foreclosures, which could

reduce our net income.

Since we originate loans secured by real estate, we may have to foreclose on the

collateral property to protect our investment and

may thereafter own and operate such property,

in which case we would be exposed to the risks inherent in the ownership of real

estate.

The amount that we, as a mortgagee, may realize after a foreclosure is dependent

upon factors outside of our control, including,

but not limited to: general or local economic conditions; environmental

cleanup liability; neighborhood values; interest rates; real

estate tax rates; operating expenses of the mortgaged properties; supply of

and demand for rental units or properties; ability to

obtain and maintain adequate occupancy of the properties; zoning

laws; governmental rules, regulations and fiscal policies; and

acts of God.

Certain expenditures associated with the ownership of real estate, including

real estate taxes, insurance and maintenance costs,

may adversely affect the income from the real estate. Furthermore,

we may need to advance funds to continue to operate or to

protect these assets. As a result, the cost of operating real property

assets may exceed the rental income earned from such

properties or we may be required to dispose of the real property at a loss.

Reliance on inaccurate or misleading financial statements, credit

reports, or other financial information could have a

material adverse impact on our business, financial condition,

In deciding whether to extend credit or enter into other transactions, we rely

on information furnished by or on behalf of

customers and counterparties, including financial statements, credit

reports, and other financial information. We

also rely on

representations of those customers, counterparties, or other third parties, such

as independent auditors, as to the accuracy and

completeness of that information. Reliance on inaccurate or misleading

financial statements, credit reports, or other financial

information could have a material adverse impact on our business, financial condition,

Liquidity and Capital Risks

Liquidity risk could impair our ability to fund operations and jeopardize our financial

condition.

Effective liquidity management is essential for the operation of

our business. We require

sufficient liquidity to meet client loan

requests, client deposit maturities and withdrawals, payments on our debt obligations

as they come due and other cash

commitments under both normal operating conditions and other unpredictable

circumstances causing industry or general financial

market stress. If we are unable to raise funds through deposits, borrowings,

earnings and other sources, it could have a substantial

negative effect on our liquidity.

In particular, a majority of our liabilities during

2025 were checking accounts and other liquid

deposits, which are generally payable on demand or upon short notice.

By comparison, a substantial majority of our assets were

loans, which cannot generally be called or sold in the same time frame. Although

we have historically been able to replace

maturing deposits and advances as necessary,

we might not be able to replace such funds in the future, especially if a large

number of our depositors seek to withdraw their accounts at the same time, regardless

of the reason. Our access to funding

sources in amounts adequate to finance our activities on terms that are acceptable

to us could be impaired by factors that affect us

specifically or the financial services industry or economy in general.

Factors that could negatively impact our access to liquidity

sources include a decrease in the level of our business activity as a result of a downturn

in the markets in which our loans are

concentrated, adverse regulatory action against us, or our inability to attract and

retain deposits. Our access to deposits may be

negatively impacted by,

among other factors, periods of low interest rates or high interest rates.

Periods of high interest rates

could promote increased competition for deposits, including from new

financial technology competitors, or provide customers

with alternative investment options.

Our ability to borrow could also be impaired by factors that are not specific to us, such

as a

disruption in the financial markets or negative views and expectations about

the prospects for the financial services industry.

If we

are unable to maintain adequate liquidity,

it could materially and adversely affect our business, results of operations

or financial

condition.

A

significant

decrease

in

our

public

fund

deposit

balances

as

a

result

of

competition

in

the

current

higher

interest-rate environment and seasonal nature

of these deposits could materially and adversely affect our liquidity.

The Company has many long-standing relationships with municipal entities

throughout its markets and the deposits held by these

customers have provided a relatively attractive and stable (although seasonal)

funding source for the Company over an extended

period of time. Public fund deposits from local government entities such as universities,

counties, school districts, and other

municipalities generally have higher average balances and historically been

more volatile than nonpublic deposits because they

are heavily impacted by the seasonality of tax collection, changes in competitive

and market forces, and fiscal spending patterns,

as well as the longer-term financial position of local government entities, which

can change from year to year. Such public

fund

deposits are often subject to competitive bidding and in many cases must be secured

by pledging a portion of our investment

The Company’s inability to

retain public fund deposit balances due to increased competition in the current higher

interest-rate environment and seasonal nature of these deposits could materially

and adversely affect our liquidity or result in the

use of higher-cost funding sources, which, in turn, could

materially and adversely affect our business, results of operations or

financial condition.

Unrealized losses in our securities portfolio could materially

and adversely affect our liquidity.

We have experienced

significant unrealized losses on our available-for-sale securities portfolio

as a result of increases in market

interest rates. Unrealized losses related to available-for-sale

securities are reflected in accumulated other comprehensive income

in our consolidated statements of financial condition and reduce the level of our

book capital and tangible common equity.

However, such unrealized losses do not

affect our regulatory capital ratios. We

actively monitor our available-for-sale securities

portfolio and we do not currently anticipate the need to realize material losses from

the sale of securities for liquidity purposes.

Furthermore, we believe it is unlikely that we would be required to sell any such securities

before recovery of their amortized cost

bases, which may be at maturity.

Nonetheless, our access to liquidity sources could be affected by unrealized

losses if securities

must be sold at a loss, tangible capital ratios decline from an increase in unrealized

losses or realized credit losses, the Federal

Home Loan Bank of Atlanta (“FHLB”) or other funding sources reduce capacity,

or bank regulators impose restrictions on us that

impact the level of interest rates we may pay on deposits or our ability to access federal

funds lines or brokered deposits.

Additionally, significant

unrealized losses could negatively impact market and customer perceptions

of the Company, which

could lead to a loss of depositor confidence and an increase in deposit withdrawals,

particularly among those with uninsured

deposits.

We may need to raise additional capital

in the future, and such capital may not be available on acceptable terms or at all.

We

may

need

to

raise

additional

capital

in

the

future

to

provide

us

with

sufficient

capital

resources

and

liquidity

to

meet

our

commitments and business

needs, particularly if our

asset quality or earnings

were to deteriorate significantly.

Our ability to raise

additional capital,

if needed, will

depend on, among

other things, conditions

in the capital

markets at that

time, which are

outside

of our

control, and

our financial

condition. Economic

conditions and

the loss of

confidence in

financial institutions

may increase

our

cost

of

funding

and

limit

access

to

certain

customary

sources

of

capital,

inter-bank

borrowings,

repurchase

agreements and borrowings from the discount window of the Federal Reserve.

As a result, we may be unable to raise capital on terms favorable to us, in a timely manner

or at all, which could materially and

adversely affect our liquidity,

business, results of operations, or financial condition. Moreover,

if we need to raise capital in the

future, we may have to do so when many other financial institutions are also seeking

to raise capital and would have to compete

with those institutions for investors.

We may be unable to pay dividends in the future.

In 2025, our Board of Directors declared four quarterly cash dividends.

Declarations of any future dividends will be contingent on

our ability to earn sufficient profits and to remain well capitalized, including

our ability to hold and generate sufficient capital to

comply with the Common Equity Tier 1 (“CET1”)

Capital conservation buffer requirement. In addition,

due to our contractual

obligations with the holders of our trust preferred securities, if we defer the payment of accrued

interest owed to the holders of our

trust preferred securities, we may not make dividend payments to our

Further, under applicable statutes and regulations,

CCB’s board of directors,

after charging-off bad debts, depreciation and other

worthless assets, if any,

and making provisions for reasonably anticipated future losses on loans and other assets, may

quarterly,

semi-annually, or

annually declare and pay dividends to CCBG of up to the aggregate net income

of that period combined with

the CCB’s retained net income for

the preceding two years and, with the approval of the Florida OFR, declare a dividend from

retained net income which accrued prior to the preceding two years. The prior

approval of the Federal Reserve is required if the

total of all dividends declared by a state-chartered member bank in any calendar

year would exceed the sum of the bank’s net

income for that year and its retained net income for the preceding two calendar

years, less any required transfers to surplus or to

fund the retirement of preferred stock. Additional state laws generally

applicable to Florida corporations and guidelines of the

Federal Reserve may also limit our ability to declare and pay dividends. Thus,

our ability to fund future dividends may be

restricted by state and federal laws and regulations.

Regulatory and Compliance Risks

extensive regulation, which could restrict our activities

and impose financial requirements or limitations

on the conduct of our business.

extensive regulation, supervision and examination by our regulators, including

the Florida OFR, the Federal

Reserve, and the FDIC. Our compliance with these industry regulations

is costly and restricts certain of our activities, including

payment of dividends, mergers and acquisitions, investments,

lending and interest rates charged on loans, interest rates paid

on

deposits, the fees we can charge for certain products or transactions, access to

capital and brokered deposits, and locations of

banking offices. If we are unable to meet these regulatory requirements,

our financial condition, liquidity and results of operations

would be materially and adversely affected.

Our activities are also regulated under consumer protection laws applicable to

our lending, deposit, and other activities. Many of

these regulations are intended primarily for the protection of our

depositors, the DIF,

and the banking system as a whole, and not

for the benefit of our shareowners. In addition to the regulations of the bank regulatory

agencies, as a member of the FHLB of

Atlanta, we must also comply with applicable regulations of the Federal

Housing Finance Agency and the Federal Home Loan

Bank.

Regulators have continued to focus on compliance with AMLA and BSA obligations

and the rules enforced by OFAC.

If our

policies, procedures and systems are deemed deficient or the policies, procedures

are deficient, we would be subject to liability,

including fines and regulatory actions such as restrictions on our

ability to pay dividends and the necessity to obtain regulatory

approvals to proceed with certain aspects of our business plan, including any acquisition

plans.

Our failure to comply with these laws and regulations could subject us to the loss of

FDIC insurance, reputational damage, the

revocation of our banking charter,

enforcement actions, sanctions, or other legal actions by regulatory agencies, restrictions

on our

business activities, fines, and other penalties, any of which could adversely

affect our results of operations, capital base, and the

price of our securities. Changes to any new laws, rules, regulations, policies,

and supervisory guidance (including changes in

interpretation and implementation) have and could make compliance

more difficult or expensive and could otherwise adversely

affect our business and financial condition.

Government authorities, including the bank regulatory agencies, are pursuing

aggressive enforcement actions with respect to

compliance and other legal matters involving financial activities (including

new prohibitions on politicized debanking), which

heightens the risks associated with actual and perceived compliance failures.

Directives issued to enforce such actions may be

confidential and thus, in some instances, we are not permitted to publicly

disclose these actions. Litigation challenging actions or

regulations by federal or state authorities could, depending on the outcome,

significantly affect the regulatory and supervisory

framework affecting our operations. Any of the foregoing could

have a material adverse effect on our business, financial

In addition, we face increased regulatory scrutiny,

in the course of routine examinations and otherwise, and new regulations

in

response to negative developments in the banking industry,

which may increase our cost of doing business and reduce our

profitability. Among

other things, there may be increased focus by both regulators and investors on

deposit composition, the level

of uninsured deposits, brokered deposits, unrealized losses in securities portfolios,

liquidity, commercial real estate loan

composition and concentrations, and capital as well as general oversight

and control of the foregoing. We

could face increased

scrutiny or be viewed as higher risk by regulators and the investor community,

which could have a material adverse effect on our

business, financial condition, and results of operations.

U.S. federal banking agencies may require us to increase

our regulatory capital, long-term debt or liquidity

requirements,

which could result in the need to issue additional qualifying securities or to

take other actions, such as to sell company

assets.

U.S. regulatory capital and liquidity rules. These rules, among other things, establish minimum

requirements to

qualify as a well-capitalized institution. If CCB fails to maintain its status as well capitalized

under the applicable regulatory

capital rules, the Federal Reserve will require us to agree to bring the bank back to

well-capitalized status. For the duration of

such an agreement, the Federal Reserve may impose restrictions on our

activities. If we were to fail to enter into or comply with

such an agreement or fail to comply with the terms of such agreement, the Federal

Reserve may impose more severe restrictions

on our activities, including requiring us to cease and desist activities permitted

under the Bank Holding Company Act of 1956.

Additionally, if our

CET1 to Risk Weighted Assets ratio

does not exceed the minimum required plus the additional CET1

conservation buffer,

we may be restricted in our ability to pay dividends or make other distributions of capital to our shareowners.

Capital and liquidity requirements are frequently introduced and amended.

It is possible that regulators may increase regulatory

capital requirements, change how regulatory capital is calculated or increase liquidity

requirements. Requirements to maintain

higher levels of capital may lower our return on equity.

Further changes to and compliance with the regulatory capital and liquidity requirements

may impact our operations by requiring

us to liquidate assets, increase borrowings, issue additional equity or other securities,

cease or alter certain operations, sell

company assets or hold highly liquid assets, which may adversely affect

our results of operations. We

may be prohibited from

taking capital actions such as paying or increasing dividends or repurchasing

Changes in accounting standards or assumptions in applying accounting policies

could adversely affect us.

Our accounting policies and methods are fundamental to how we record and report

our financial condition and results of

operations. Some of these policies require use of estimates and assumptions that

may affect the reported value of our assets or

liabilities and results of operations and are critical because they require management

to make difficult, subjective and complex

judgments about matters that are inherently uncertain. If those assumptions, estimates or

judgments were incorrectly made, we

could be required to correct and restate prior-period financial statements. Accounting

standard-setters and those who interpret the

accounting standards, the SEC, banking regulators and our independent registered

public accounting firm may also amend or even

reverse their previous interpretations or positions on how various standards

should be applied. These changes may be difficult to

predict and could impact how we prepare and report our financial statements. In

some cases, we could be required to apply a new

or revised standard retrospectively,

resulting in us revising prior-period financial statements.

government regulation and oversight relating to

data and privacy protection.

Our business requires the collection and retention of large

volumes of customer data, including personally identifiable information

in various information systems that we maintain and in those maintained

by third parties with whom we contract. We

also

maintain important internal company data such as personally identifiable information

about our associates and information

relating to our operations. The integrity and protection of that customer and company

data is important to us.

complex and evolving laws and regulations relating to the privacy of the information

of our customers,

associates and others, and any failure to comply with these laws and regulations,

or any misuse or mismanagement of such

information, could expose us to liability and reputational damage, which could

adversely affect our financial condition and results

of operations. As new privacy-related laws and regulations are implemented,

the time and resources needed for us to comply with

such laws and regulations, as well as our potential liability for non-compliance

and reporting obligations in the case of data

breaches, may significantly increase. It is possible that these laws may be interpreted

and applied by various jurisdictions in a

manner inconsistent with our current or future practices, or that is inconsistent

with one another.

Operational Risks

Many types of operational risks can affect our earnings negatively.

We regularly

assess and monitor operational risk in our businesses. Despite our efforts to

assess and monitor operational risk, our

risk management framework may not be effective in all cases.

Factors that can impact operations and expose us to risks varying

in

size, scale and scope include:

(1)

failures of technological systems or breaches of security measures, including, but not

limited to, those resulting from

computer viruses or cyber-attacks;

(2)

unsuccessful or difficult implementation of computer

systems upgrades;

(3)

human errors or omissions, including failures to comply with applicable

laws or corporate policies and procedures;

(4)

theft, fraud or misappropriation of assets, whether arising from the intentional

actions of internal personnel or external

third parties;

(5)

breakdowns in processes, breakdowns in internal controls or failures of

the systems and facilities that support our

operations;

(6)

deficiencies in services or service delivery;

(7)

negative developments in relationships with key counterparties, third-party

vendors, or associates in our day-to-day

operations; and

(8)

external events that are wholly or partially beyond our control, such as pandemics,

geopolitical events, political unrest,

natural disasters or acts of terrorism.

Operational risks can also arise from increased reliance on digital platforms,

remote‑work technologies, cloud‑based solutions,

and other external service providers whose performance or resilience may be outside

of our direct control. These forms of reliance

may increase the speed and breadth with which disruptions, control

failures, or cyber‑events can affect our operations.

While we have in place many controls and business continuity plans designed

to address these factors and others, these plans may

not operate successfully to mitigate these risks effectively.

If our controls and business continuity plans do not mitigate the

associated risks successfully,

such factors may have a negative impact on our business, financial condition or results

of

operations. In addition, an important aspect of managing our operational

risk is creating a risk culture in which all associates fully

understand that there is risk in every aspect of our business and the importance of

managing risk as it relates to their job functions.

to enhance our risk management program to support our risk culture.

Nonetheless, if we fail to provide the

appropriate environment that sensitizes all of our associates to managing

risk, our business could be impacted adversely.

certain operational risks, including, but not limited to

risk arising from failure or circumvention

of our

Our internal controls, including fraud detection and controls, disclosure controls

and procedures, and corporate governance

procedures are based in part on certain assumptions and can provide only reasonable,

not absolute, assurances that the objectives

of the controls and procedures are met. Notwithstanding the proliferation of

technology and technology-based risk and control

systems, we rely on the ability of our associates and systems to process a high number

of transactions, and we are subject to the

risk that our associates may make mistakes or engage in violations of applicable

policies, laws, rules, or procedures that in the

past have not, and in the future may not, always be prevented by our technological

processes or by our controls and other

procedures intended to prevent and detect such errors or violations. Any

failure or circumvention of our controls and procedures,

failure to comply with regulations related to controls and procedures, failure to comply

with our corporate governance procedures,

fraud by associates or persons outside our Company,

the execution of unauthorized transactions by associates, or errors relating to

transaction processing and technology could have a material adverse effect

on our reputation, business, financial condition and

results of operations, including subjecting us to litigation, customer attrition,

regulatory fines, penalties, or other sanctions.

Insurance coverage may not be available for losses relating to such event,

or where available, such losses may exceed insurance

limits.

In addition, evolving regulatory expectations regarding operational

resilience, business continuity,

vendor oversight, and

internal control effectiveness may require additional investment

and may heighten supervisory scrutiny if deficiencies are

identified.

credit and/or settlement risk arising from

the soundness of other financial institutions and

counterparties which may have a material adverse effect on our business, financial condition,

Financial services institutions are interrelated as a result of trading,

clearing, counterparty, or other

relationships. We

have

exposure to many different industries and counterparties,

and routinely execute transactions with counterparties in the financial

services industry, including

commercial banks, brokers and dealers, investment banks, other institutional clients,

and certain

vendors. Many of these transactions expose us to credit or settlement risk in the

event of a default or other failure to adhere to

contractual obligations by a counterparty or client. In addition, our credit or

settlement risk may be exacerbated when any

collateral held by us cannot be realized upon or is liquidated at prices not sufficient

to recover the full amount of the credit or

derivative exposure due to us. Increased interconnectivity amongst

financial institutions also increases the risk of cyber-attacks

and information system failures for financial institutions. Any such losses could

financial condition, and results of operations.

incidents,

security

breaches

and

failures

of

our

information

systems

could

significantly

disrupt

our

result

in

the

unintended

disclosure

or

misuse

of

confidential

or

proprietary

information,

damage

our

reputation, increase our costs, and cause losses.

In the ordinary course of business, we rely on electronic communications

and information systems to conduct our operations and

to store sensitive data, including our proprietary business information

and that of our clients, and personal information of our

clients and associates. The secure processing, maintenance, and transmission

of this information is critical to our operations.

Our

systems, including those we maintain with our service providers, vendors,

or our clients, could be vulnerable to cybersecurity-

related incidents, which include compromises of information systems, attempts to

access information, including customer and

company information, malicious code, computer viruses or other malware,

denial of service attacks, phishing attempts, brute

force attacks, exploiting software vulnerabilities (including “zero-day

attacks”), ransomware, supply chain attacks, and other

events that could result in unauthorized access, theft, misuse, loss, release, or

destruction of data (including confidential customer

information), account takeovers, unavailability of service, or other events. These

types of threats may result from human error,

fraud, or criminal activity on the part of external or internal parties, or may result from

the failure of technology or information

systems. Further, these types of threats may

be exacerbated by recent developments in artificial intelligence and their increased

use to produce sophisticated malware, phishing schemes, and other fraudulent

activities. Any failure, interruption, or compromise

in security of these systems could result in significant disruption to our operations.

Financial institutions and companies engaged in data processing have

increasingly reported compromises in the security of their

websites or other systems, some of which have involved sophisticated and

targeted attacks intended to obtain unauthorized access

to confidential information, destroy data, disrupt or degrade service, sabotage

systems, or cause other damage. Our technologies,

systems, networks, and software have been and continue to be subject to cybersecurity

threats and attacks, which range from

uncoordinated individual attempts to sophisticated and targeted

measures by criminal organizations directed at us. Our customers,

associates, and third parties that we do business with have been, and will likely continue

to be, targeted in cybersecurity-related

incidents by parties using fraudulent e-mails, artificial intelligence,

and other communications in attempts to misappropriate

passwords, bank account information, or other personal information,

or to introduce viruses or other malware programs to our

information systems, or the information systems and devices of our third-party

(or fourth-party) service providers and our

customers that are beyond our security control systems. Although we try to mitigate

these threats through product improvements,

use of encryption and authentication technology,

and customer and employee education, among other things, cybersecurity-

attacks against us, our third-party (or fourth-party) service providers

,

and our customers are a risk to our business.

We may be required

to spend significant capital and other resources to protect against the threat of

cybersecurity-related incidents

or to alleviate problems caused by such incidents. Any failures related to upgrades

and maintenance of our technology and

information systems could increase our information and system security

risk. Our increased use of cloud and other technologies,

such as remote work technologies, and the increased connectivity of third parties

and electronic devices to our systems also

increases our risk of being subject to a cybersecurity-related incident. The risk

of a cybersecurity-related incident has increased as

the number, intensity,

and sophistication of attempted attacks and intrusions from around the world have

increased. A

cybersecurity-related incident or other significant disruption of our information

systems or those of our customers or third-party

service providers and vendors could (i) disrupt the proper functioning of

our networks and systems and, therefore, our operations

and

those of our customers; (ii) result in the unauthorized access to, destruction, loss, theft, misappropriation,

or release of

confidential, sensitive, or otherwise valuable information of ours or

our customers; (iii) result in a violation of applicable privacy,

data protection, and other laws, subjecting us to additional regulatory

scrutiny and exposing us to civil litigation, enforcement

actions, governmental fines, sanctions, or penalties (which may not be

covered by our insurance policies), and possible financial

liability; (iv) require significant management attention and resources to remedy

the damages that result; (v) cause increased

expenses and lost revenue; or (vi) cause negative publicity,

harm our reputation, or cause a decrease in the number of customers

that choose to do business with us, damaging our ability to generate deposits. The

occurrence of any of the foregoing could have a

material adverse effect on our business, financial condition,

and results of operations. Furthermore, in the event of a

cybersecurity-related incident, we may be delayed in identifying or responding to

the incident, which could increase the negative

impact of the incident on our business, financial condition, and results of

operations. While we maintain cybersecurity insurance

coverage, which may apply in the event of certain cybersecurity-related

incidents, the amount of coverage may not be adequate

depending on the magnitude of the incident. Furthermore, because cybersecurity

-related incidents are inherently difficult to

predict and can take many forms, some incidents may not be covered under

our cyber insurance coverage.

Increased fraudulent activity may cause losses to us or our clients, damage

to our brand, and increases in our costs, in

turn, materially and adversely affecting our business, financial condition,

Additionally, fraud

losses have risen in recent years due in large part to growing and evolving schemes,

as well as the

advancement of artificial intelligence.

Fraudulent activity has taken many forms, ranging from wire fraud, debit card fraud,

credit

card fraud, check fraud, mechanical devices attached to ATMs,

social engineering, and phishing attacks to obtain personal

information, business email compromise, or impersonation of clients through

the use of falsified or stolen credentials. Many

financial institutions have suffered significant losses in recent years

due to the theft of cardholder data that has been illegally

exploited for personal gain. The potential for debit and credit card fraud, as well as check

fraud, against us or our clients and our

third-party service providers is a serious issue. Debit and credit card fraud

and check fraud are pervasive, and the risks of

cybercrime are complex and continue to evolve. While we have policies and procedures,

as well as fraud detection tools, designed

to prevent fraud losses, such policies, procedures, and tools may be insufficient

to accurately detect and prevent fraud. A

significant increase in fraudulent activities could lead us to take additional

steps to reduce fraud risk, which could increase our

costs. Fraud losses could cause losses to us or our clients, damage to our brand, and an

increase in our costs, in turn, materially

and adversely affecting our business, financial condition,

The development and use of Artificial Intelligence (“AI”) presents risks

and challenges that may adversely impact our

The banking and financial services industry continually experiences technological

changes, with frequent introductions

of new

technology-driven products and services, including recent and rapid developments

in AI, including with agentic AI. Our

future

success will depend, in part, upon our ability to address the needs of our clients by using

technology to provide products

and

services that will satisfy client demands for convenience, as well as to assess the proper

operation of AI models and

capabilities

to create additional efficiencies in our operations. We

may not be able to effectively implement new technology- driven products

and services or be successful in marketing these products and services to our

clients. In addition, the

implementation of

technological changes and upgrades to maintain current systems and

integrate new ones may also create

service interruptions,

transaction processing errors, and system conversion delays and

may cause us to fail to comply with

applicable laws. There can

be no assurance that we will be able to successfully manage the risks associated with our

dependency on technology.

Failure to successfully keep pace with technological change affecting

the banking and financial

services industry could

negatively affect our revenue and profitability.

We or our

third-party (or fourth party) vendors, customers or counterparties may develop or incorporate

AI technology

in certain

business processes, services, or products. The development and use of AI

presents a number of risks and challenges to

our

business. The legal and regulatory environment relating to AI is uncertain

and rapidly evolving, both in the U.S. and

internationally,

and includes regulatory schemes targeted specifically at AI as well as provisions in intellectual

property,

privacy,

consumer protection, employment, and other laws applicable to the use of AI.

These evolving laws and regulations

could require

changes in our implementation of AI technology and increase our compliance costs and

the risks to us of non- compliance. AI

models, particularly generative or agentic AI models, may produce outputs or

take action that is incorrect, that

reflects biases

included in the data on which they are trained, that results in the release of private,

confidential, or proprietary

information, that

infringes on the intellectual property rights of others, or that is otherwise harmful.

In addition, the complexity

of many AI models

makes it difficult to understand why they are generating particular

outputs. This limited transparency

increases the challenges

associated with assessing the proper operation of AI models, understanding

and monitoring the

capabilities of the AI models,

reducing erroneous output, eliminating bias, and complying with regulations

that require

documentation or explanation of the

basis on which decisions are made. Further,

we may rely on AI models developed by third

parties, and, to that extent, would be

dependent in part on the manner in which those third parties develop and train their

models, including risks arising from the

inclusion of any unauthorized material in the training data for their models and

the

effectiveness of the steps these third parties

have taken to limit the risks associated with the output of their models, matters over

which we may have limited visibility.

Any of

these risks could expose us to liability or adverse legal or regulatory

consequences and harm our reputation and the public

perception of our business or the effectiveness of our security

measures.

We may not be able to attract and

retain skilled people, which may have a negative impact on

our business and

operations.

Our success depends, in large part, on our ability to attract and retain

key people. Competition for the best people in many

activities engaged in by us is intense, including with respect to compensation

and emerging workplace practices and

accommodations, and, as a result, we may not be able to sufficiently

hire or to retain key people. We

do not currently have

employment agreements or non-competition agreements with any of our senior officers.

The unexpected loss of service of key

personnel could have a material adverse impact on our business, financial

condition, and results of operations because of their

customer relationships, skills, knowledge of our market, years of industry

experience, and the difficulty of promptly finding

qualified replacement personnel. In addition, the scope and content of U.S. banking

regulators’ policies on incentive

compensation, as well as changes to these policies, could adversely affect

our ability to hire, retain, and motivate our key

associates.

Issues we encounter with respect to external vendors upon which we rely

could have a material adverse effect on our

business and, in turn, our financial condition and results of operations.

We rely on

certain external vendors to provide products and services necessary to maintain our day-to-day

operations. These

third-party vendors are sources of operational, cybersecurity and informational

security risk to us, including risks associated with

operational errors, coding errors, information system failures, interruptions

or breaches, and unauthorized disclosures of sensitive

or confidential client or customer information. If we encounter any of these

issues in connection with our external vendors, or if

we have difficulty communicating with these vendors, we

could be exposed to disruption of operations, loss of service, or

connectivity to customers, reputational damage, and litigation risk that could

have a material adverse effect on our business and,

in turn, our financial condition and results of operations.

In addition, our operations are exposed to risk that these vendors will not perform in

accordance with the contracted arrangements

under service level agreements. Although we have selected these external vendors

carefully, we do not control their actions.

The

failure of an external vendor to perform in accordance with the contracted

arrangements under service level agreements could be

disruptive to our operations, which could have a material adverse effect

on our business and, in turn, our financial condition and

results of operations. Replacing these external vendors could also entail

significant delay and expense.

Severe weather,

natural disasters, global climate change, widespread health emergencies

(including pandemics), acts of

terrorism and global conflicts may have a negative impact

on our business and operations.

Severe weather, natural disasters, global

climate change, widespread health emergencies (including pandemics),

acts of terrorism,

global conflicts, or other similar events have in the past, and may in the future

have, a negative impact on our business and

operations. These events impact us negatively to the extent that they result

in reduced capital markets activity,

lower asset price

levels, or disruptions in general economic activity in the United States or abroad,

or in financial market settlement functions. In

addition, such events could affect the stability of our deposit base,

impair the ability of borrowers to repay outstanding loans,

impair the value of collateral securing loans, cause significant property damage,

result in loss of revenue, cause us to incur

additional expenses, and impact economic growth negatively.

If any of these risks materialized, they could have an adverse effect

on our business and operations and may have other adverse effects on

us in ways that we are unable to predict.

Specifically, our market

areas in Florida are susceptible to hurricanes, tropical storms and related flooding

and wind damage and

other similar weather events. Such weather events can disrupt operations,

result in damage to properties and negatively affect the

local economies in the markets where we operate. We

cannot predict whether or to what extent damage that may be caused by

future weather events will affect our operations or the economies in our

current or future market areas, but such events could

result in a decline in loan originations, a decline in the value or destruction of properties securing

our loans and an increase in

delinquencies, foreclosures or loan losses, negatively impacting our business and

results of operations. As a result of the potential

for such weather events, many of our customers have incurred significantly

higher property and casualty insurance premiums on

their properties located in our markets, which may adversely affect

real estate sales and values in our markets.

Litigation may adversely affect our results.

litigation in the ordinary course of business. Claims and legal actions, including

claims pertaining to our

performance of our fiduciary responsibilities as well as supervisory actions

by our regulators, could involve large monetary

claims and significant defense costs. The outcome of litigation and regulatory

matters as well as the timing of ultimate resolution

are inherently difficult to predict. Actual legal and other costs of resolving

claims may be greater than our legal reserves. The

ultimate resolution of a pending legal proceeding, depending on the remedy sought

and granted, could materially adversely affect

our results of operations and financial condition.

In addition, governmental authorities have, at times, sought criminal penalties

against companies in the financial services sector

for violations, and, at times, have required an admission of wrongdoing from

financial institutions in connection with resolving

such matters. Criminal convictions or admissions of wrongdoing in a settlement with

the government can lead to greater exposure

in civil litigation and reputational harm.

Substantial legal liability or significant regulatory action against us could have material

adverse financial effects or cause

significant reputational harm, which adversely impact our business prospects. Further,

we may be exposed to substantial

uninsured liabilities, which could adversely affect

our results of operations and financial condition.

If

we

fail

to

maintain

an

effective

system

of

control

over

reporting,

we

may

not

be

able

to accurately

report our

financial results,

prevent fraud,

or file

our periodic

reports in

a timely

manner,

which may

cause investors

to

lose confidence in our reported financial information and may lead

to a decline in our stock price.

As a public

company,

we are required

to maintain internal

control over financial

reporting and to

report any material

weaknesses

in such internal control.

Section 404 of the Sarbanes

-Oxley Act requires that

we furnish a report

by management on, among

other

things,

the

effectiveness

of

our

control

over

reporting.

This

assessment

requires

disclosure

of

any

material

weaknesses

by

our

in

our

control

over

reporting.

Our

independent

registered

public

accounting firm

also needs

to attest to

the effectiveness

of our

internal control

over financial

reporting. Effective

internal control

over financial reporting is necessary for us to provide reliable financial

reports and, together with adequate disclosure controls and

procedures,

is

designed

to

prevent

fraud.

Any

failure

to

maintain

or

implement

required

new

or

improved

controls

(as

we

had

recently

discussed

in

Item

9A),

or

difficulties

encountered

in

implementation

could

cause

us

to

fail

to

meet

our

reporting

obligations,

which

could

subject

the

Company

to

litigation,

investigations,

or

breach

of

contract

claims,

require

resources, increase costs, negatively affect investor confidence,

and adversely impact its stock price.

Strategic Risks

Our future success is dependent on our ability to compete effectively

in the highly competitive banking and financial

services industry.

We face vigorous

competition for deposits, loans and other financial services in our market area

from other banks and financial

institutions, including savings and loan associations, savings banks,

finance companies and credit unions. A number of our

competitors are significantly larger than we are and have greater access to

capital and other resources. Many of our competitors

also have higher lending limits, more expansive branch networks, and offer

a wider array of financial products and services.

We also compete

with other non-bank providers of financial services, such as money market mutual

funds, brokerage firms,

consumer finance companies, insurance companies, governmental

organizations, and non-bank financial technology and wealth

technology providers, including digital asset service providers. Many of our

non-bank competitors are not subject to the same

extensive regulations that govern our activities. As a result, these non-bank

competitors have advantages over us in providing

certain services, including the ability to offer financial products and

services on more favorable terms than we are able to offer.

Technology

and other changes have lowered barriers to entry and made it possible for non-banks to

offer products and services

traditionally provided by banks. In particular,

the activity of financial technology companies has grown significantly over recent

years and is expected to continue to grow.

The emergence, adoption and evolution of new technologies that do

not require

intermediation, including distributed ledgers such as digital assets and blockchain,

as well as advances in robotic process

automation, could significantly affect the competition

for financial services. Large technology companies offering

embedded

financial services, digital wallets, and payment platforms have also increased

competitive pressures and may accelerate customer

migration away from traditional banking products. Customer preferences

have also shifted toward digital channels and real‑time,

seamless financial experiences. Failure to meet evolving expectations for

convenience, speed, and personalized service may

negatively impact our ability to retain and attract customers.

Additionally the recently-enacted GENIUS Act establishes a regulatory

framework for “payment stablecoins” and their issuers,

which consumers and businesses may view as a substitute for traditional bank

deposits, resulting in deposit withdrawals.

Depending on consumer and business interest in payment stablecoins, and

the characteristics and utility of payment stablecoins,

the passage of the GENIUS Act could result in increased competition with respect

to our deposit products.

The effect of this competition may reduce or limit our net income,

margins or our market share and may adversely affect our

results of operations and financial condition. Further,

the process of eliminating banks as intermediaries for financial transactions

could result in the loss of fee income, as well as the loss of customer deposits and the related

income generated from those

deposits. The foregoing could have a material adverse effect

on our financial condition and results of operations. Increased

competition may negatively affect our earnings by creating

pressure to lower prices or credit standards on our products and

services requiring additional investment to improve the quality and

delivery of our technology, reducing

our market share, or

affecting the willingness of our clients to do business with us.

Our inability to adapt our business strategies, products, and services could

harm our business.

We rely on

a diversified mix of financial products and services through multiple distribution channels.

Our success depends on

our and our third-party providers’ of products and services abilities to adapt our

business strategies, products, and services and

their respective features in a timely manner,

including available payment processing services and technology to rapidly

evolving

industry standards and consumer preferences.

The widespread adoption and rapid evolution of emerging

technologies in the financial services industry,

including artificial

intelligence, analytic capabilities, cloud technologies, self-service

digital trading platforms and automated trading markets,

internet services, and digital assets, such as central bank digital currencies,

cryptocurrencies (including stablecoins and

memecoins), tokens, and other cryptoassets that utilize blockchain and distributed

ledger technology (DLT),

as well as DLT in

payment, clearing, and settlement processes creates additional risks, could

negatively impact our ability to compete, and require

substantial expenditures to the extent we were to modify or adapt our existing

products and services to keep pace with such new

technologies.

We may not

be timely or successful in developing or introducing new products and services, integrating

new products or services

into our existing offerings, responding, managing, or adapting

to changes in consumer behavior, preferences, spending,

investing

and saving habits, achieving market acceptance of our products and services,

or reducing costs in response to pressures to deliver

products and services at lower prices. There are substantial risks and uncertainties

associated with these efforts, particularly in

instances where the markets are not fully developed. In developing

and marketing new products and services, we invest

significant time and resources. Initial timetables for the introduction and development

of new products or services may not be

achieved, and price and profitability targets may not prove

feasible. External factors, such as compliance with regulations,

competitive alternatives, and shifting market preferences, may also impact

the successful implementation of new products or

services. Potential future actions such as the proposed consumer credit

card interest rate cap may lead to unprofitable products,

especially for riskier borrowers, and could lead to cutting credit lines or eliminating

cards, increased reliance on fees and

increased debt burdens for those needing credit most, thereby having the potential

to negatively impact bank asset quality.

The

Company’s, or its third-party providers’,

inability or resistance to timely innovate or adapt its operations, products, and services to

evolving industry standards and consumer preferences could result in service

disruptions and harm our business, and materially

and adversely affect our results of operations, financial

condition, and reputation.

Furthermore, our implementation of new products, services, or technology

could have unintended negative consequences,

including a significant impact on the effectiveness of

our system of internal controls. Failure to successfully manage these risks in

the development and implementation of new products or services could

have a material adverse effect on our business, financial

Our directors, executive officers, and principal shareowners,

if acting together,

have substantial control over all matters

requiring shareowner approval,

including changes of control. Because Mr.

is a principal

shareowner and our Chairman, President, and Chief Executive

Officer and Chairman of CCB, he has substantial control

over all matters on a day-to-day basis.

Our directors, executive officers, and principal shareowners beneficially

owned approximately 19.3% of the outstanding shares of

our common stock at December 31, 2025.

William G. Smith, Jr.,

our Chairman and Chief Executive Officer beneficially owned

17.3% of our shares as of that date.

Accordingly, these directors, executive

officers, and principal shareowners, if acting together,

may be able to influence or control matters requiring approval by our shareowners,

including the election of directors and the

approval of mergers, acquisitions or other extraordinary

transactions. Moreover, because William

G. Smith, Jr. is the Chairman

and Chief Executive Officer of CCBG, he has substantial control

over all matters on a day-to-day basis, including the nomination

and election of directors.

These directors, executive officers, and principal shareowners may

also have interests that differ from yours and may vote in a

way with which you disagree, and which may be adverse to your interests. The concentration

of ownership may have the effect of

delaying, preventing or deterring a change of control of our Company,

could deprive our shareowners of an opportunity to receive

a premium for their common stock as part of a sale of our Company and might ultimately

affect the market price of our common

stock. You

may also have difficulty changing management, the composition of

the Board of Directors, or the general direction of

our Company.

Our Articles of Incorporation, Bylaws, and certain laws and regulations

may prevent or delay transactions you might

favor,

including a sale or merger of CCBG.

CCBG is registered with the Federal Reserve as a financial holding

company under the Bank Holding Company Act, or BHC Act.

As a result, we are subject to supervisory regulation and examination by the

Federal Reserve. The GLBA, the Dodd-Frank Act,

the BHC Act, and other federal laws subject financial holding companies to

restrictions on the types of activities in which they

may engage, and to a range of supervisory requirements and activities, including

regulatory enforcement actions for violations of

laws and regulations.

Provisions of our Articles of Incorporation, Bylaws, certain laws and regulations

and various other factors may make it more

difficult and expensive for companies or persons to acquire control

of us without the consent of our Board of Directors. It is

possible, however, that you would want a

takeover attempt to succeed because, for example, a potential buyer could offer

a

premium over the then prevailing price of our common stock.

For example, our Articles of Incorporation permit our Board of Directors

to issue preferred stock without shareowner action. The

ability to issue preferred stock could discourage a company from attempting

to obtain control of us by means of a tender offer,

merger, proxy contest or

otherwise. We are also subject to

certain provisions of the Florida Business Corporation Act and our

Articles of Incorporation that relate to business combinations with interested

shareowners. Other provisions in our Articles of

Incorporation or Bylaws that may discourage takeover attempts or make them

more difficult include: Supermajority voting

requirements to remove a director from office; Provisions

regarding the timing and content of shareowner proposals and

nominations; Supermajority voting requirements to amend Articles of Incorporation

unless approval is received by a majority of

“disinterested directors”; Absence of cumulative voting; and Inability

for shareowners to take action by written consent.

Potential acquisitions and other strategic transactions by us, or our inability to

complete acquisitions or strategic

transactions, may have a material adverse effect on our business, financial

We may seek to

strategically dispose of assets or acquire other banks, businesses, or branches, which

involves various risks,

including, among other things, (i) potential exposure to unknown or

contingent liabilities of the target company; (ii) exposure to

potential asset quality issues of the target company; (iii) potential disruption

to our business; (iv) potential diversion of our

management’s time and attention;

(v) the possible loss of key employees and customers of the target company;

(vi) difficulty in

estimating the value of the target company or assets to be sold; and

(vii) potential changes in banking or tax laws or regulations

that may affect the target company.

Acquisitions by financial institutions, including us, are subject to approval by a variety

of regulatory agencies and, therefore,

dependent on the regulators' views at the time as to, among other things, our capital

levels, quality of management, compliance

with laws, and overall condition, in addition to their assessment of a variety of

other factors. Regulatory approvals could be

delayed, impeded, restrictively conditioned, or denied due to existing or new

regulatory issues we have, or may have, with

regulatory agencies. We

may fail to pursue, evaluate or complete strategic and competitively significant

acquisition opportunities

as a result of our inability, or perceived

or anticipated inability, to obtain

regulatory approvals in a timely manner,

under

reasonable conditions or at all.

Accordingly, any acquisition,

disposition or other strategic transaction may not be successful, may not benefit

our business

strategy or may not otherwise result in the intended benefits. It also may take us longer

than expected to fully realize the

anticipated benefits and synergies of these transactions,

and those benefits and synergies may ultimately be smaller than

anticipated or may not be realized at all, which could adversely affect

our business and operating results. Acquisitions typically

involve the payment of a premium over book and market values, and, therefore,

some dilution of our tangible book value and net

income per common share may occur in connection with any future transaction.

Acquisitions may also result in potential dilution

to existing shareowners of our earnings per share if we issue common stock in connection with

the acquisition. Furthermore,

failure to realize the expected revenue increases, cost savings, increases in geographic

or product presence, and/or other projected

benefits from an acquisition, as well as the difficulties associated with potential

acquisitions or dispositions discussed herein

could have a material adverse effect on our business, financial condition

Reputational Risks

Damage to our reputation could harm our businesses, including our

competitive position and business prospects.

Reputation risk, or the risk to our earnings, liquidity,

and capital from negative public opinion, is inherent in our business.

Negative public opinion could adversely affect our ability to attract

and retain customers, clients, investors and associates and

expose us to adverse legal and regulatory consequences. Negative public

opinion could result from our actual or alleged conduct

and can arise from various sources, including (1) officer,

director or associate fraud, misconduct, and unethical behavior; (2)

security breaches; (3) litigation or regulatory outcomes; (4) compensation practices;

(5) lending practices; (6) branching strategy;

(7) the suitability or reasonableness of recommending particular trading or

investment strategies, including the reliability of our

research and models; (8) prohibiting clients from engaging in certain transactions

or actions taken to debank certain clients; (h)

associate sales practices; (9) failure to deliver products and services; (10) subpar

standards of service and quality expected by our

customers, clients, and the community; (11

)

compliance failures; (12) mergers and acquisitions; (13)

the inability to manage

technology change or maintain effective data management; (14)

cyber incidents; (15) internal and external fraud (including check

fraud and debit card and credit card fraud); (16) inadequacy of responsiveness

to internal controls; (17) unintended disclosure of

personal, proprietary or confidential information; (18) failure (or

perceived failure) to identify and manage actual and potential

conflicts of interest; (19) breach of fiduciary obligations; (20) the handling of health

emergencies or pandemics, (21) the activities

of our clients, customers, counterparties, and third parties, including vendors;

(22) our environmental, social, and governance

practices and disclosures, including practices and disclosures related to

climate change; (23) our response (or lack of response) to

social and sustainability concerns; and (24) actions by the financial services industry

generally or by certain members or

individuals in the industry.

Reputation risk may be amplified by the speed and reach of social media, which can rapidly

disseminate accurate or inaccurate information and significantly influence public

perception before we have time to respond.

Negative coverage, regardless of accuracy,

may lead to rapid customer reactions, including deposit withdrawals, heightened

regulatory attention, or community criticism.

Tax Risks

Changes in the Federal, State or Local Tax

Laws May Negatively Impact Our Financial Performance and We

are Subject

to Examinations and Challenges by Tax

Authorities

federal and applicable state tax laws and regulations. Changes in these tax laws and

regulations, some of which

may be retroactive to previous periods, could increase our effective

tax rates and, as a result, could negatively affect our current

and future financial performance. Furthermore, tax laws and regulations are often

complex and require interpretation. In the

normal course of business, we are routinely subject to examinations and challenges

from federal and applicable state tax

authorities regarding the amount of taxes due in connection with investments we

have made and the businesses in which we have

engaged. Recently,

federal and state taxing authorities have become increasingly been aggressive in challenging

tax positions

taken by financial institutions. These tax positions may relate to tax compliance,

sales and use, franchise, gross receipts, payroll,

property and income tax issues, including tax base, apportionment and tax

credit planning. The challenges made by tax authorities

may result in adjustments to the timing or amount of taxable income or deductions

or the allocation of income among tax

jurisdictions. If any such challenges are made and are not resolved in our

favor, they could have a material adverse effect

on our

business, financial condition and results of operations.