Capital City Bank Group 提交截至2026年9月30日季度的10-Q报告

UNITED STATES

SECURITIES AND EXCHANGE

COMMISSION

WASHINGTON,

D.C.20549

FORM

10-Q

☒

QUARTERLY

REPORT PURSUANT TO SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934

For the Quarterly Period Ended

September 30, 2026

☐

TRANSITION REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934

For the transition period from ____________ to ____________

Commission File Number:

0-13358

Capital City Bank Group, Inc.

(Exact name

of Registrant asspecified in its charter)

Florida

59-2273542

(State or other jurisdiction of incorporation or organization)

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

217 North Monroe Street

Tallahassee

Florida

32301

(Address of principal executive office)

(Zip Code)

(

850

)

402-7821

(Registrant’s

telephone number, including area code)

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

Title of each

class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, Par value $0.01

CCBG

Nasdaq Stock Market

, LLC

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

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

filing requirements for the past 90 days.

Yes

[X]

No []

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

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

such files).

Yes

[X]

No []

Indicate by check

mark whether the registrantis a large acceleratedfiler, an acceleratedfiler, a non-acceleratedfiler, a smallerreporting company, or

an emerging growth company.

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

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

Large accelerated

filer

☐

Accelerated filer

☒

Non-accelerated

filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

☐

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

] No

[X]

At October 29, 2026,

17,115,671

shares of the Registrant’s Common Stock, $0.01 par value, were outstanding.

CAPITAL CITY

BANK GROUP,INC.

QUARTERLY

REPORT ON FORM10-Q

FOR THE PERIOD

ENDED SEPTEMBER30, 2026

TABLE OF CONTENTS

PART I – Financial Information

Page

Item 1.

Consolidated Financial Statements (Unaudited)

Consolidated Statements of Financial Condition – September 30, 2026 and December 31, 2025

Consolidated Statements of Income – Three and Nine Months Ended September 30, 2026 and 2025

Consolidated Statements of Comprehensive Income (Loss) – Three and Nine Months Ended September 30, 2026 and 2025

Consolidated Statements of Changes in Shareowners’ Equity – Three and Nine Months Ended September 30, 2026 and 2025

Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2026 and 2025

Notes to Consolidated Financial Statements

Item 2.

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

Item 3.

Quantitative and Qualitative Disclosure About Market Risk

Item 4.

Controls and Procedures

PART II – Other Information

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosure

Item 5.

Other Information

Item 6.

Exhibits

Signatures

INTRODUCTORY NOTE

Special Cautionary Notice Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q

contains “forward-lookingstatements” withinthe meaning of the Private Securities Litigation Reform

Act of 1995. These forward-looking

statements include,among others, statements about our beliefs, plans, objectives,goals, expectations,

estimates and intentions that are subject

to significant risksand uncertainties and are subject tochange basedon various factors,manyof

which are beyond our control.

The words “may,” “could,” “should,”“would,” “believe,” “anticipate,”“estimate,” “expect,”“intend,” “plan,”

“target,” “vision,” “goal,” “will,”

“project,” “continue,” “outlook,”“approximate,” “seasonal,”“future,” and similar expressionsare intended

to identify forward

-looking statements.

All forward-looking statements,

by their nature, are subjectto risks and uncertainties.Forward-looking statementsare basedon current

assumptions and expectations that are subject

to change and mayprove to be inaccurate.Our actual future results maydiffer materially from

those set forth

in our forward-looking statements.

Our ability to

achieveour financialobjectives couldbe adversely affectedby the factorsdiscussed in detail in Part II,Item1A. “Risk

Factors” in this Quarterly Report on Form

10-Q and inPart I, Item 1A. “Risk Factors” inour Annual Report on Form10-K for the year ended

December 31, 2025 (the “2025 Form

10-K”), as updated in our subsequentquarterly reports filed onForm 10-Q, as well as, among other

factors

●

Changes in trade, monetary, and fiscal

policies and laws, includingactual changes ininterest rates and the Fed Funds rate and

changes in international

trade policies, tariffsand treatiesaffectingimports andexports, andtheir related impactson

macroeconomic

conditions, customerbehavior, fundingcosts andloan andsecurities portfolios;

●

Inflation,

interest rate, marketand monetaryfluctuations;

●

Local, regional, national,

and internationaleconomic conditions(including the value ofthe U.S. Dollar in relation to the

currencies of other advanced and emerging

market countries and the performance of both domestic andinternationalequity

and debt markets and valuation of

securities traded on recognizeddomestic and internationalexchanges), and the impact they

may have

on us andour clients and our assessmentof thatimpact;

●

Supply-demand imbalances and general

economic conditions affecting local real estate prices anda general deteriorationin

commercial real estate

market fundamentals;

●

The costs and

effects oflegal and regulatorydevelopments,the outcomesof legal proceedings or regulatory or other

governmental

inquiries, the results of regulatory examinationsor reviews and the ability toobtain requiredregulatory

approvals;

●

The effect

of changesin laws and regulations (including laws andregulations concerning taxes,banking, securities, and

insurance) and

their applicationwith which we and our subsidiaries mustcomply;

●

The effect of changes in accounting policies and practices,

as maybe adoptedby the regulatoryagencies, as well as other

accounting

standardsetters;

●

The accuracy

of our financialstatementestimates andassumptions;

●

Changes in the creditworthiness,

financial performanceand/or conditionof our borrowers;

●

Changes in the mix

of loan geographies,sectors and typesor the level of non-performingassets andcharge-offs;

●

Changes in estimates

of future creditloss reserve requirements basedupon the periodicreview thereof under relevant

regulatory and

accountingrequirements;

●

Changes in our liquidity position;

●

Changes in our capital

levels, capital requirementsor our ability to maintainadequateregulatory capitalratios;

●

The timely development and acceptance

of new products and services aswell as risks (including reputational andlitigation)

attendant

thereto, andperceived overall valueof these productsand services by users;

●

Changes in consumer

spending, borrowing, and savinghabits;

●

Changes in deposit

levels, deposit mix, pricing, or the availability andcost of otherfunding sources;

●

Greater than

expected costsor difficulties related to theintegration of new productsand lines of business;

●

Increased

competition andits effect onpricing (including deposit fees), spending, third-partyrelationships andrevenues;

●

Technological changes;

●

Risks associated

with the developmentand use ofartificial intelligence;

●

The cost and effects

of cyber incidents or otherfailures, interruptions, or security breachesof our systemsor those of our

customers or third-party

providers;

●

Fraud or misconduct

by internal or externalparties which we maynot be ableto prevent, detector mitigate;

●

Dispositions, acquisitions and

integration of acquiredbusinesses;

●

Impairment

of our goodwill or other intangible assets;

●

Changes in the reliability of our

vendors, internal controlsystems, or informationsystems;

●

Our ability to increase market

share andcontrol expenses;

●

Our ability to attract

and retainqualified employees;

●

Changes in our organization,

compensation,and benefitplans;

●

The soundness

of other financialinstitutions;

●

Volatility and

disruption in nationaland internationalfinancial andcommoditymarkets;

●

Changes in the competitive

environmentin our markets andamong bankingorganizationsand otherfinancial service

providers;

●

Action or inaction by the federal government,

including as a result of anyprolonged governmentshutdown or government

intervention in the U.S. financial

system;

●

A deterioration of the credit rating for U.S. long-term sovereign debt, actions

that theU.S. government maytake toavoid

exceeding the debt

ceiling, and uncertainties surroundingthe federal budgetand economicpolicy;

●

The effects of natural disasters (including

hurricanes), widespread healthemergencies (including pandemics),military conflict

(including impacts related

to the conflictsin the Middle East andresulting disruptions to energy andother commodities

markets and

supply chains),terrorism, civil unrest, climate change or othergeopolitical events;

●

Our ability to declare and

pay dividends;

●

Structural changes

in the marketsfor origination, sale andservicing of residential mortgages;

●

Any inability to implement

and maintaineffective internalcontrol over financialreporting and/or disclosurecontrol;

●

Potential claims, damages,

penalties, fines, costs andreputationaldamageresulting from pending or futurelitigation,

regulatory proceedings and

enforcementactions;

●

Negative publicity and the impact on our

reputation,including the speed and scale at which informationcan spreadthrough

social media or digital channels,

which could amplifyadverse marketor customer reactions;and

●

The limited trading activity

and concentrationof ownership of ourcommonstock.

However, other factors besides those listed

Item 1A Risk Factors

or discussed in this Form 10-Q also could adverselyaffectour results,

and you

should not considerany suchlist of factors tobe a completeset of all potentialrisks or uncertainties.Any forward-looking

statements made by us or on our behalf

speak onlyas of thedate theyare made.We do not undertaketo updateany forward-looking

statement,

except asrequired by applicablelaw.

PART

FINANCIAL INFORMATION

Item 1.

CAPITAL CITY

BANK GROUP,INC.

CONSOLIDATED

STATEMENTSOF FINANCIALCONDITION

(Unaudited)

September 30,

December 31,

(Dollars in Thousands,

Except Par Value)

2026

2025

ASSETS

Cash and

Due From Banks

71,617

62,189

Federal Funds Sold and

Interest Bearing Deposits

340,015

467,782

Total Cash

and CashEquivalents

411,632

529,971

Investment

Securities, Available forSale, at fair value(amortized cost of $

893,054

and $

656,546

)

862,097

643,922

Investment

Securities, Held to Maturity (fairvalue of $

293,832

and $

369,320

)

315,142

377,446

Equity Securities

3,203

2,069

Total Investment

Securities

1,180,442

1,023,437

Loans Held For Sale,

at fair value

23,455

21,695

Loans Held for

Investment

2,489,724

2,546,118

Allowance for Credit

Losses

(30,369)

(31,001)

Loans Held for

Investment,Net

2,459,355

2,515,117

Premises and

Equipment, Net

83,257

79,457

Goodwill

89,095

Other Real Estate

Owned

2,353

1,936

Other Assets

147,163

125,057

Total Assets

4,396,752

4,385,765

LIABILITIES

Deposits:

Noninterest Bearing

Deposits

1,331,669

1,251,886

Interest Bearing Deposits

2,334,899

2,410,426

Total Deposits

3,666,568

3,662,312

Short-Term Borrowings

38,881

50,092

Subordinated

Notes Payable

33,303

42,582

Other Long-Term

Borrowings

567

680

Other Liabilities

83,571

77,248

Total Liabilities

3,822,890

3,832,914

SHAREOWNERS’

EQUITY

Preferred Stock, $

0.01

par value;

3,000,000

shares authorized;

shares issued andoutstanding

Common

Stock, $

0.01

par value;

90,000,000

shares authorized;

17,113,297

and

17,084,386

shares issued andoutstandingat September30, 2026 andDecember 31, 2025,respectively

171

Additional Paid-In Capital

41,516

41,650

Retained Earnings

543,611

508,443

Accumulated

Other Comprehensive(Loss) Income, netof tax

(11,436)

2,587

Total Shareowners’

Equity

573,862

552,851

Total Liabilities

and Shareowners’Equity

4,396,752

4,385,765

The accompanying Notes to Consolidated Financial Statements are an integral part

of these statements.

CAPITAL CITY

BANK GROUP,INC.

CONSOLIDATED

STATEMENTSOF INCOME

(Unaudited)

Three Months Ended

September 30,

Nine Months Ended

September 30,

(Dollars in Thousands,

Except Per ShareData)

2026

2025

2026

2025

INTEREST INCOME

Loans, including Fees

38,652

40,279

115,118

121,629

Investment

Securities:

Taxable

10,629

7,175

29,920

19,644

Tax Exempt

Funds Sold and

Interest Bearing Deposits

3,194

3,964

10,271

11,369

Total Interest

Income

52,486

51,431

155,344

152,672

INTEREST EXPENSE

Deposits

6,780

7,265

21,108

22,053

Short-Term Borrowings

395

216

1,205

832

Subordinated

Notes Payable

293

383

979

1,473

Other Long-Term

Borrowings

Total Interest

Expense

7,476

7,874

23,319

24,384

NET INTEREST

INCOME

45,010

43,557

132,025

128,288

Provision for Credit

Losses

(80)

1,881

1,551

3,269

Net Interest

IncomeAfter Provision For Credit Losses

45,090

41,676

130,474

125,019

NONINTEREST INCOME

Deposit Fees

5,168

5,877

16,422

16,258

Bank Card

Fees

3,830

3,733

11,318

11,021

Wealth Management

Fees

4,640

5,173

12,876

16,142

Mortgage Banking

Revenues

3,673

4,794

12,585

12,804

Other

2,073

2,754

6,715

6,027

Total Noninterest

Income

19,384

22,331

59,916

62,252

NONINTEREST EXPENSE

Compensation

25,620

26,056

77,159

78,794

Occupancy,

Net

7,294

7,037

21,696

20,901

Other

9,381

9,823

27,453

24,460

Total Noninterest

Expense

42,295

42,916

126,308

124,155

INCOME BEFORE

INCOME TAXES

22,179

21,091

64,082

63,116

Income

Tax Expense

5,239

5,141

15,048

15,264

NET INCOME

16,940

15,950

49,034

47,852

BASIC NET INCOME

PER SHARE

0.99

0.93

2.87

2.81

DILUTED NET INCOME

PER SHARE

0.99

0.93

2.86

2.80

Average

CommonBasic Shares Outstanding

17,113

17,068

17,114

17,050

Average

CommonDiluted Shares Outstanding

17,152

17,114

17,141

17,083

The accompanying Notes to Consolidated Financial Statements are an integral part

of these statements.

CAPITAL CITY

BANK GROUP,INC.

CONSOLIDATED

STATEMENTSOF COMPREHENSIVEINCOME (LOSS) (Unaudited)

Three Months Ended

Nine Months Ended

September 30,

(Dollars in Thousands)

2026

2025

2026

2025

NET INCOME

16,940

15,950

49,034

47,852

Other comprehensive

income, before tax:

Investment

Securities:

Change in net unrealized

loss on securities availablefor sale

(12,163)

2,932

(18,326)

10,676

Amortization of

unrealized losses on securitiestransferred from

available

for sale to held tomaturity

202

164

1,044

Derivative:

Change in net unrealized

gain on effectivecash flow derivative

(253)

(1,442)

Amortization of

terminatedcash flow derivativegain

(202)

(600)

Other comprehensive

(loss) income, beforetax

(12,365)

2,881

(18,762)

10,278

Deferred tax (benefit)

expense relatedto other comprehensive(loss) income

(3,117)

720

(4,739)

2,571

Other comprehensive

(loss) income, net oftax

(9,248)

2,161

(14,023)

7,707

TOTAL COMPREHENSIVE

INCOME

7,692

18,111

35,011

55,559

The accompanying Notes to Consolidated Financial Statements are an integral part

of these statements.

CAPITAL CITY

BANK GROUP,INC.

CONSOLIDATED

STATEMENTSOF CHANGES IN SHAREOWNERS’EQUITY

(Unaudited)

Accumulated

Other

Additional

Comprehensive

Common

Paid-In

Retained

(Loss) Income,

(Dollars In Thousands,

Except ShareData)

Outstanding

Stock

Capital

Earnings

Net of Taxes

Total

Balance, July 1, 2026

17,111,077

171

40,821

531,291

(2,188)

570,095

Net Income

16,940

Other Comprehensive

Loss, net of tax

(9,248)

Cash Dividends ($

0.2700

per share)

(4,620)

Stock Based

Compensation

133

Stock Compensation

Plan Transactions,net

2,220

562

Balance, September 30, 2026

17,113,297

171

41,516

543,611

(11,436)

573,862

Balance, July 1, 2025

17,066,395

171

39,527

487,665

(940)

526,423

Net Income

15,950

Other Comprehensive

Income, netof tax

2,161

Cash Dividends ($

0.2600

per share)

(4,439)

Stock Based

Compensation

448

Stock Compensation

Plan Transactions,net

2,255

Balance, September 30, 2025

17,068,650

171

40,067

499,176

1,221

540,635

Balance, January

1, 2026

17,084,386

171

41,650

508,443

2,587

552,851

Net Income

49,034

Other Comprehensive

Loss, net of tax

(14,023)

Cash Dividends ($

0.8100

per share)

(13,866)

Repurchase

of CommonStock

(63,088)

(2,639)

Stock Based

Compensation

1,478

Stock Compensation

Plan Transactions,net

91,999

1,027

Balance, September 30, 2026

17,113,297

171

41,516

543,611

(11,436)

573,862

Balance, January

1, 2025

16,974,513

170

37,684

463,949

(6,486)

495,317

Net Income

47,852

Other Comprehensive

Income, netof tax

7,707

Cash Dividends ($

0.7400

per share)

(12,625)

Stock Based

Compensation

1,373

Stock Compensation

Plan Transactions,net

94,137

1,010

1,011

Balance, September 30, 2025

17,068,650

171

40,067

499,176

1,221

540,635

The accompanying Notes to Consolidated Financial Statements are an integral part

of these statements.

CAPITAL CITY

BANK GROUP,INC.

CONSOLIDATED

STATEMENTSOF CASH FLOWS (Unaudited)

Nine Months Ended September

30,

(Dollars in Thousands)

2026

2025

CASH FLOWS FROM

OPERATINGACTIVITIES

Net Income

49,034

47,852

Adjustments

to Reconcile Net Incometo Cash Provided byOperating Activities: Provision for CreditLosses

1,551

3,269

Depreciation

5,521

5,548

Amortization ofPremiums, Discounts andFees, net

2,280

3,403

Amortization ofIntangible Asset

107

Gain on Sale of Subsidiary

(773)

Originations ofLoans Held-for-Sale

(315,284)

(332,760)

Proceeds From Salesof LoansHeld-for-Sale

328,332

350,882

Mortgage BankingRevenues

(12,585)

(12,804)

Net Deletions for CapitalizedMortgage Servicing Rights

Stock BasedCompensation

1,478

1,373

Net TaxBenefit fromStock BasedCompensation

(132)

(154)

Deferred IncomeTaxes

(2,532)

2,429

Net Changein Operating Leases

(18)

Net Gain on Sales andWrite-Downs of Other RealEstate Owned

(796)

(4,514)

Gain from InsuranceClaim on Premises

(453)

Net (Increase)Decrease in Other Assets

(1,000)

3,770

Net Increasein Other Liabilities

6,425

8,364

Net Cash

Provided By Operating Activities

61,837

76,054

CASH FLOWS FROM

INVESTING ACTIVITIES

Securities Held to Maturity:

Purchases

(113,266)

(66,697)

Proceeds from Payments,Maturities, andCalls

175,326

228,784

Securities Available

for Sale: Purchases

(360,296)

(225,039)

Proceeds from Payments,Maturities, andCalls

116,071

60,899

Equity Securities:

Purchases

(1,219)

(60)

Net Decrease inEquity Securities

1,191

Purchases of

Loans Held forInvestment

(7,013)

(958)

Proceeds from Sales of

Loans

53,229

39,802

Net Decrease in

Loans Held forInvestment

1,147

23,666

Purchase of

Bank Owned Life Insurance

(6,000)

Net Cash

Received for Divestitures

2,375

Proceeds from Insurance

Claims on Premises

453

Proceeds From Sales

of Other Real EstateOwned

3,921

7,340

Purchases of

Premises andEquipment

(10,571)

(5,967)

Net Cash

(Used In) Provided By InvestingActivities

(148,133)

65,336

CASH FLOWS FROM

FINANCING ACTIVITIES

Net Increase

(Decrease) in Deposits

4,256

(57,065)

Net (Decrease) Increase

in Short-Term Borrowings

(11,211)

11,940

Principal Payments

of SubordinatedNotes

(9,279)

(10,305)

Dividends Paid

(13,866)

(12,625)

Payments

to RepurchaseCommonStock

(2,639)

Proceeds from Issuance

of CommonStock Under PurchasePlans

696

710

Net Cash

Used In Financing Activities

(32,043)

(67,345)

NET (DECREASE)

INCREASE IN CASH ANDCASH EQUIVALENTS

(118,339)

74,045

Cash and

Cash Equivalentsat Beginning of Period

529,971

391,854

Cash and

Cash Equivalentsat End ofPeriod

411,632

465,899

Supplemental Cash

Flow Disclosures: Interest Paid

23,949

24,148

Federal IncomeTaxes Paid

10,975

7,700

State andLocal IncomeTaxes Paid: Florida

1,975

775

All Other

112

225

Supplemental Noncash

Items: Loans andPremises Transferred toOther Real EstateOwned

3,542

4,290

Loans Transferredfrom Held for Investmentto Held for Sale, net

55,452

40,652

The accompanying Notes to Consolidated Financial Statements are an integral part

of these statements.

CAPITAL CITY

BANK GROUP,INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

NOTE 1 –

BUSINESS AND BASIS

OF PRESENTATION

Nature of Operations

Capital City BankGroup, Inc. (“CCBG” or the “Company”)provides a full range ofbanking andbanking-

related services to

individual andcorporateclients through its wholly ownedsubsidiary, CapitalCity Bank(“CCB” or the “Bank”),

with banking offices

located in Florida, Georgia,and Alabama.The Companyis subject to competitionfrom other financial

institutions, is subject

to regulation by certaingovernment agenciesand undergoesperiodic examinationsby those regulatory

authorities.

Basis of Presentation

The consolidatedfinancial statementsin this Quarterly Report on Form10-Q include the accountsof CCBG

and CCB.

All material inter-companytransactionsand accountshave beeneliminated.Certain previously reportedamountshave

been reclassified

to conformto the current year’spresentation.

The accompanying

unaudited consolidatedfinancial statements havebeen prepared in accordancewith generally acceptedaccounting

principles for interim

financial informationand with the instructionsto Form 10-Q andArticle 10 of Regulation S-X.Accordingly,

they do not

include all of the informationand notesrequired by generally acceptedaccountingprinciples for complete financial

statements.

In the opinionof management,all adjustments(consisting of normal recurring accruals)considered necessaryfor a fair

presentation

have beenincluded.

The Consolidated

Statementof Financial Conditionat December31, 2025 hasbeen derived fromthe auditedconsolidatedfinancial

statements

at thatdate,but does notinclude all of the informationand notesrequired by generally acceptedaccountingprinciples for

complete financial statements.

For further information,refer to the consolidatedfinancial statementsand notesthereto includedin the

Company’s

2025 Form 10-K.

Accounting Standards

Updates

Proposed Accounting Standards

ASU No. 2023-06, “Disclosure

Improvements: CodificationAmendments in Responseto the SEC’s

Disclosure Update

and SimplificationInitiative.”

Accounting Standards

Update

(“ASU”) 2023-06 is intended to

clarify or improve

disclosure and

presentationrequirements ofa variety oftopics, which will allow users to more easily compareentities subjectto the

SEC’s existing

disclosures with thoseentities that were notpreviously subjectto the requirementsand align the requirementsin the

FASB accounting

standardcodification with theSEC’s regulations. ASU 2023-06 is to be appliedprospectively, andearly adoptionis

prohibited. For reporting

entities subject tothe SEC’s existingdisclosure requirements,the effectivedates ofASU 2023-06 will be the

date on

which the SEC’s removalof thatrelated disclosure requirementfrom RegulationS-X or Regulation S-K becomeseffective. If

by June 30, 2027,

the SEC has notremoved theapplicable requirementfrom RegulationS-X or Regulation S-K, the pending content

of the related

amendmentwill not become effectivefor any entities. TheCompanyis currently evaluating theprovisions of the

amendments

and theimpact onits future consolidatedstatements.

ASU No. 2024-03,

“Income Statement— ReportingComprehensiveIncome — Expense DisaggregationDisclosures (Subtopic220-

40): Disaggregation

of Income StatementExpenses.”

ASU 2024-03 introduces new requirements

to disclose additionalinformation

about

certain typesof expenses, including employeecompensation,depreciation, intangibleasset amortization,and selling expenses.

ASU 2024-03 is effective

for the Companyas of January 1, 2027. TheCompanyis currently evaluating theimpact ofthe incremental

disclosures that

will be required under the standard.

ASU 2025-06, “Intangibles

- Goodwill andOther -Internal-Use Software(Subtopic350-40): TargetedImprovements to the

Accounting

for Internal-Use Software.”

The ASU updates accounting

for internal-use softwareby shifting from astage-basedmodel

to a principles-based

approachaligned with modern development.Key provisions include new capitalizationcriteria based on

authorization,

funding commitment,and probablecompletion, removalof developmentstages, integrated website guidance,and

enhanced

disclosures. ASU 2025-06 is effectivefor the Companyas of January1, 2028. The Companyis currently evaluating the

provisions of the

amendmentsand theimpact onits future consolidatedstatementsand disclosures.

ASU 2025-08, “Financial

Instruments—CreditLosses (Topic 326):Purchased Loans.”

The ASU updates the

accountingfor

purchased

loans under ASC 326.The amendmentsexpandthe populationof loans subjectto the “gross-up” accountingmodel by

eliminating the former

distinction between purchasedcredit-deteriorated(“PCD”) and non-PCD loans. Underthe new guidance,

entities will apply

a single model for purchasedloans by recognizing anallowance for creditlosses and adjustingthe amortized cost

basis for the associated

noncredit discountat acquisition.ASU 2025-08 is effective forthe Companyas of January1, 2027. The

Company

is currently evaluating theprovisions of the amendmentsand theimpact onits future consolidatedstatementsand

disclosures.

ASU 2025-11, “Interim

Reporting (Topic270): Narrow-ScopeImprovements.”

The ASU aims to clarify

and enhanceinterim financial

reporting by defining

its scope, consolidatingGAAP disclosures inTopic 270, addinga principle for materialpost-year-end event

disclosure, and

refining statementformatguidance to improveconsistency forall preparers. These changesdo not alterthe

fundamental

requirements ofinterim reporting but seek tostreamline andstandardizethe process. ASU 2025-11 is effectivefor the

Company

in interim reporting periods beginning asof January1, 2028.The Companyis currently evaluating theprovisions of the

amendments

and theimpact onits future consolidatedstatements.

ASU 2025-12, “Codification

Improvements.”The ASU was issued to maketechnical corrections, clarifyambiguousguidance and

generally streamline

the Accounting StandardsCodificationacross varioustopics, affectingmost reporting entities, with keychanges

including clarifications

for diluted EPS during losses,lease receivable disclosures,beneficial interestcalculations, andtreasury stock

accounting, aiming

for better usabilitywithout significantlyaltering core accountingoutcomes.ASU 2025-12 is effective forthe

Company

as of January1, 2027. The Companyis currently evaluating theprovisions of the amendmentsand theimpact onits future

consolidated

statements.

NOTE 2 –

INVESTMENT SECURITIES

Investment Portfolio

Composition

. The following table summarizes

the amortizedcost andrelated fair valueof investment

securities available

-for-sale (“AFS”) andsecurities held-to-maturity(“HTM”) and thecorresponding amountsof gross

unrealized gains and

losses.

Available

for Sale

Amortized

Unrealized

Allowance for

Fair

(Dollars in Thousands)

Cost

Gains

Losses

Credit Losses

Value

September 30, 2026

U.S. Government

Treasury

605,514

11,171

594,343

U.S. Government

Agency

164,330

4,095

160,311

States and

Political Subdivisions

35,004

2,429

32,575

Mortgage-Backed

Securities

(1)

55,044

10,715

44,329

Corporate

Debt Securities

33,162

2,574

(49)

30,539

Total

893,054

30,984

(49)

862,097

December 31, 2025

U.S. Government

Treasury

331,495

1,940

171

333,264

U.S. Government

Agency

174,527

2,484

172,114

States and

Political Subdivisions

36,918

2,045

34,911

Mortgage-Backed

Securities

(1)

59,699

7,697

52,004

Corporate

Debt Securities

45,810

2,236

(42)

43,532

Other Securities

(2)

8,097

Total

656,546

2,051

14,633

(42)

643,922

Held to Maturity

Amortized

Unrealized

Fair

(Dollars in Thousands)

Cost

Gains

Losses

Value

September 30, 2026

Mortgage-Backed

Securities

(1)

315,142

21,310

293,832

Total

315,142

21,310

293,832

December 31, 2025

U.S. Government

Treasury

129,782

514

129,268

Mortgage-Backed

Securities

(1)

247,664

930

8,542

240,052

Total

377,446

930

9,056

369,320

(1)

Comprised of residential mortgage-backed securities.

(2)

Includes Federal

Home Loan Bank stockand FederalReserve Bank stockrecordedat cost of $

3.0

million and$

5.1

million at

December 31, 2025,

respectively.These securities arepresentedin Other Assets beginningSeptember 30, 2026.

At September

30, 2026 andDecember 31, 2025,the investmentportfolio had$

3.2

million and $

2.1

million, respectively, in equity

securities. These securities

do not havea readily determinablefair value andwere not credit impaired.

Securities with an

amortizedcost of $

605.5

million and $

461.3

million at September30, 2026 andDecember 31, 2025,respectively,

were pledged to

secure public depositsand for otherpurposes.

Investment Sales.

There were

sales of investmentsecurities for the three andnine monthsended September30, 2026 and2025.

Maturity Distribution

At September 30, 2026,the Company’s investmentsecurities had the following maturitydistribution basedon

contractual

maturity.Expected maturitiesmay differfrom contractualmaturities becauseborrowers may havethe right to call or

prepay obligations.

Mortgage-backedsecurities, certain amortizing U.S.government agencysecurities and othersecurities are shown

separately

because theyare not dueat a certainmaturitydate.

Available

for Sale

Held to Maturity

(Dollars in Thousands)

Amortized Cost

Fair Value

Amortized Cost

Fair Value

Due in one year

or less

159,015

158,279

Due after

one year throughfive years

532,658

516,640

Mortgage-Backed

Securities

55,044

44,329

315,142

293,832

U.S. Government

Agency

146,337

142,849

Total

893,054

862,097

315,142

293,832

Unrealized Losses

on Investment Securities.The following table summarizesthe availablefor sale andheld to maturityinvestment

securities with unrealized

losses aggregated bymajor securitytype andlength of time in a continuousunrealized loss position:

Less Than

Greater Than

12 Months

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

(Dollars in Thousands)

Value

Losses

Value

Losses

Value

Losses

September 30, 2026

Available

for Sale

U.S. Government

Treasury

591,355

11,156

2,988

594,343

11,171

U.S. Government

Agency

54,953

1,648

74,492

2,447

129,445

4,095

States and

Political Subdivisions

1,842

28,453

2,408

30,295

2,429

Mortgage-Backed

Securities

44,274

10,714

44,321

10,715

Corporate

Debt Securities

657

28,782

2,574

29,439

2,574

Total

648,854

12,826

178,989

18,158

827,843

30,984

Held to Maturity

Mortgage-Backed

Securities

201,991

9,348

91,838

11,962

293,829

21,310

Total

201,991

9,348

91,838

11,962

293,829

21,310

December 31, 2025

Available

for Sale

U.S. Government

Treasury

31,319

8,902

149

40,221

171

U.S. Government

Agency

62,809

182

91,760

2,302

154,569

2,484

States and

Political Subdivisions

3,030

124

30,705

1,921

33,735

2,045

Mortgage-Backed

Securities

51,932

7,697

51,932

7,697

Corporate

Debt Securities

42,333

2,236

42,333

2,236

Total

97,158

328

225,632

14,305

322,790

14,633

Held to Maturity

U.S. Government

Treasury

129,268

514

129,268

514

Mortgage-Backed

Securities

33,589

106,262

8,444

139,851

8,542

Total

33,589

235,530

8,958

269,119

9,056

At September

30, 2026, therewere

848

positions (combinedAFS and HTM) with unrealizedpre-tax losses totaling$

52.3

million.

of these positions

are U.S. Treasurybonds and carrythe full faith andcredit of the U.S. Government.

688

are U.S. government agency

securities issued by

U.S. governmentsponsored entities.We believethe long history ofno credit losses on governmentsecurities

indicates that

the expectationof nonpaymentof the amortizedcost basis is effectivelyzero.At September 30, 2026,all collateralized

mortgage obligation

securities, mortgage-backedsecurities, Small Business Administrationsecurities, U.S. Agency,and U.S. Treasury

bonds held were AAA

rated.The remaining

positions (municipal securitiesand corporatebonds) havea credit component.At

September 30,

2026, corporatedebt securities had

allowance for

credit losses of $

49,000

ne of the securities held by

the

Company

were past due or in nonaccrualstatus

September 30,

2026.

Credit Quality Indicators

The Company

monitors the credit qualityof its investmentsecurities through various risk managementprocedures, including the

monitoring of

credit ratings.A majorityof the debtsecurities in the Company’sinvestmentportfolio were issued by aU.S.

government entity

or agency andare either explicitly or implicitly guaranteedby the U.S. government.The Companybelieves the

long history of no

credit losses on thesesecurities indicatesthat theexpectationof nonpaymentof the amortizedcost basis is

effectively zero, even

if the U.S. governmentwere to technically default.Further, certain municipalsecurities held by theCompany

have been pre-refunded

and secured bygovernment guaranteedtreasuries.Therefore, for the aforementionedsecurities, the Company

does

t assess or record expected

credit losses due to thezero loss assumption.The Companymonitors the credit qualityof its

municipal and

corporatesecurities portfolio via credit ratingswhich are updatedon a quarterlybasis.On a quarterlybasis, municipal

and corporate

securities in an unrealized loss positionare evaluatedto determineif the loss is attributableto credit related factorsand

if an allowance

for credit loss is needed.

NOTE 3 – LOANS HELD

FOR INVESTMENTAND ALLOWANCEFOR CREDIT LOSSES

Loan Portfolio

Composition

The compositionof the held forinvestment(“HFI”) loan portfoliowas as follows:

(Dollars in Thousands)

September 30, 2026

December 31, 2025

Commercial, Financial

and Agricultural

168,144

180,341

Real Estate

– Construction

149,335

146,920

Real Estate

– CommercialMortgage

736,380

768,731

Real Estate

– Residential

(1)

1,004,438

1,025,690

Real Estate

– Home Equity

246,120

240,897

Consumer

(2)

185,307

183,539

Loans Held For Investment,

Net of UnearnedIncome

2,489,724

2,546,118

(1)

Includes loans

in process balancesof $

0.5

million and$

5.6

million at September30, 2026 andDecember 31, 2025, respectively.

(2)

Includes overdraft

balances of$

1.3

million and$

1.2

million at September30, 2026 andDecember 31, 2025, respectively.

Net deferred loan

costs, which include premiumson purchasedloans, included in loanswere $

8.8

million at September30, 2026 and

8.6

million at December31, 2025.

Accrued interest receivable

on loans which isexcluded fromamortizedcost, totaled$

9.4

million at September30, 2026 and$

9.8

million at December

31, 2025, andis reported separatelyin Other Assets.

The Company

has pledged ablanket floatinglien on all 1-4 family residentialmortgage loans,commercial real estatemortgage loans,

and home

equity loans tosupport availableborrowing capacityat the FHLBof Atlantaand haspledged a blanketfloating lien on all

consumer loans,

commercial loans,and constructionloans to supportavailableborrowing capacityat the FederalReserve Bank

Atlanta.

Loan Purchase

The Company

will periodically purchase commercialreal estate loansfor its portfolio.Commercial loanpurchases

totaled $

6.7

million for the three andnine monthsended September30, 2026, andwere not credit impaired.

ne were purchased

during the comparable

2025 periods.

Allowance for Credit Losses

The methodologyfor estimating theamountof credit losses reported in theallowance for creditlosses

(“ACL”) has

two basic components:first, an asset-specific componentinvolving loans thatdo not sharerisk characteristics andthe

measurement

of expectedcredit losses for such individual loans;and second,a pooled componentfor expectedcredit losses for pools

of loans that

share similar risk characteristics.This allowancemethodologyis discussed further in Note 1 – SignificantAccounting

Policies in the Company’s

2025Form 10-K.

The following table

details the activityin the allowancefor credit losses by portfolio segment.Allocation ofa portion ofthe

allowance to

one categoryof loans doesnot preclude its availabilityto absorblosses in other categories.

Commercial,

Real Estate

Financial,

Real Estate

Commercial

Real Estate

(Dollars in Thousands)

Agricultural

Construction

Mortgage

Residential

Home Equity

Consumer

Total

Three Months Ended

September 30, 2026

Beginning Balance

1,828

1,282

7,540

14,877

2,467

3,013

31,007

Provision for Credit Losses

(25)

179

(241)

(837)

(52)

847

(129)

Charge-Offs

(251)

(9)

(1,883)

(2,136)

Recoveries

282

163

1,171

1,627

Net Recoveries (Charge-Offs)

154

(712)

(509)

Ending Balance

1,834

1,461

7,306

14,194

2,426

3,148

30,369

Nine Months Ended

September 30, 2026

Beginning Balance

1,751

1,681

6,859

15,317

2,368

3,025

31,001

Provision for Credit Losses

790

(220)

349

(1,343)

1,788

1,410

Charge-Offs

(1,128)

(47)

(6)

(4,503)

(5,684)

Recoveries

421

267

2,838

3,642

Net (Charge-Offs) Recoveries

(707)

220

(1,665)

(2,042)

Ending Balance

1,834

1,461

7,306

14,194

2,426

3,148

30,369

Three Months Ended

September 30, 2025

Beginning Balance

1,425

1,811

6,256

15,264

2,014

3,092

29,862

Provision for Credit Losses

370

(352)

268

164

200

900

1,550

Charge-Offs

(373)

(12)

(10)

(1,573)

(1,968)

Recoveries

632

758

Net (Charge-Offs) Recoveries

(278)

(941)

(1,210)

Ending Balance

1,517

1,459

6,532

15,429

2,214

3,051

30,202

Nine Months Ended

September 30, 2025

Beginning Balance

1,514

2,384

5,867

14,568

1,952

2,966

29,251

Provision for Credit Losses

331

(925)

648

733

235

2,329

3,351

Charge-Offs

(615)

(69)

(34)

(4,359)

(5,077)

Recoveries

287

197

2,115

2,677

Net (Charge-Offs) Recoveries

(328)

128

(2,244)

(2,400)

Ending Balance

1,517

1,459

6,532

15,429

2,214

3,051

30,202

At September 30, 2026,

the allowancefor credit losses for loansHFI totaled $

30.4

million comparedto $

31.0

million

December 31,

2025 and

30.2

million

September 30,

2025. Activity within the allowancefor the nine monthperiod ended September30, 2026,

reflected a provision

expense of $

1.4

million and netloan charge-

offs

of $

2.0

million. The September30, 2026 allowance reflectedthe

utilization of a

lower forecastedunemploymentrate in forecastingloan loss rates andlower loan balances,

compared

to the

December 31, 2025

allowance. At September30, 2025, theallowance forloans HFI totaled$

30.2

million, a $

1.0

million increase over

December 31, 2024. Activity

within the allowance forthe nine-month periodended September 30, 2025,reflected a provisionexpense

of $

3.4

million and netloan charge-

offs

of $

2.4

million. The net increase in the allowancewas primarily attributableto qualitative

factor adjustments

that were partiallyoffset bylower loan balances.Four unemploymentforecast scenarioswere utilized to estimate

probability of default

and are weighted basedon management’sestimate of probabilit

See Note 8 – Commitments

and Contingencies

for information

on the allowancefor off-balancesheet credit commitments.

Loan Portfolio

Aging.

A loan is defined as a

past due loan whenone full paymentis past due or a contractualmaturityis over 30 days

past due

(“DPD”).

The following table

presents the aging ofthe amortizedcost basis in accruing pastdue loans byclass of loans.

30-59

60-89

90 +

Total

Nonaccrual

Total

(Dollars in Thousands)

DPD

Past Due

Current

Loans

September 30, 2026

Commercial, Financial

and Agricultural

246

167,780

118

168,144

Real Estate

– Construction

634

148,322

379

149,335

Real Estate

– CommercialMortgage

1,829

732,478

2,073

736,380

Real Estate

– Residential

235

151

386

1,000,227

3,825

1,004,438

Real Estate

– Home Equity

122

245,734

264

246,120

Consumer

933

970

183,641

696

185,307

Total

3,365

822

4,187

2,478,182

7,355

2,489,724

December 31, 2025

Commercial, Financial

and Agricultural

537

172

709

178,354

1,278

180,341

Real Estate

– Construction

295

146,625

146,920

Real Estate

– CommercialMortgage

1,386

764,785

2,560

768,731

Real Estate

– Residential

807

1,930

2,737

1,020,810

2,143

1,025,690

Real Estate

– Home Equity

239,061

1,769

240,897

Consumer

1,561

262

1,823

180,871

845

183,539

Total

4,653

2,364

7,017

2,530,506

8,595

2,546,118

Nonaccrual Loans

Loans are generally placedon nonaccrual statusif principal or interest paymentsbecome 90days pastdue and/or

management

deemsthe collectability ofthe principal and/orinterest to be doubtful.Loans arereturned to accrualstatus whenthe

principal and

interest amountscontractuallydue are broughtcurrent or when futurepaymentsare reasonablyassured.

The following table

presents the amortizedcost basis of loansin nonaccrualstatus and loans pastdue over 90 daysand still on accrual

by class of loans.

September 30, 2026

December 31, 2025

Nonaccrual

With No

With

90 + Days

With No

With

90 + Days

(Dollars in Thousands)

ACL

Still Accruing

ACL

Still Accruing

Commercial, Financial

and Agricultural

118

1,038

240

Real Estate

– Construction

379

Real Estate

– CommercialMortgage

668

1,405

753

1,807

Real Estate

– Residential

1,810

2,015

1,275

868

Real Estate

– Home Equity

264

1,382

387

Consumer

696

845

Total Nonaccrual

Loans

2,478

4,877

4,448

4,147

Collateral

Dependent Loans.

The following table presents the

amortizedcost basis of collateral-dependentloans.

September 30, 2026

December 31, 2025

Real Estate

Non Real Estate

Real Estate

Non Real Estate

(Dollars in Thousands)

Secured

Commercial, Financial

and Agricultural

1,087

Real Estate

– Construction

379

Real Estate

– CommercialMortgage

11,697

2,450

Real Estate

– Residential

2,168

1,275

Real Estate

– Home Equity

391

1,561

Consumer

Total Collateral

Dependent Loans

14,635

5,286

1,087

A loan is collateral

dependentwhen the borrower is experiencing financialdifficulty andrepaymentof the loanis dependent onthe

sale or operation

of the underlying collateral.

The Bank’s

collateral dependentloan portfolio is comprisedprimarily of real estatesecured loans, collateralizedby either residential

or commercial collateral

types.The loans are carried atfair value based oncurrent values determinedby either independentappraisals

or internal evaluations,

adjustedfor selling costs or other amountsto be deductedwhen estimating expectednet sales proceeds.

Residential Real Estate Loans In Process of Foreclosure

At September 30, 2026,the Companyhad $

0.4

million of 1-4 family

residential real estate

loans for which formalforeclosure proceedings werein process, comparedto $

0.2

million at December 31,

2025.

Modifications to Borrowers Experiencing Financial Difficulty.

Occasionally, the

Companymay modifyloans to borrowers who are

experiencing financial

difficulty.Loan modificationsto borrowers in financial difficultyare loans in which theCompanyhas granted

an economic

concession to theborrower that it would nototherwise consider.In these instances,as part ofa work-out alternative,the

Company

will make concessions including the extensionof the loanterm, a principal moratorium,a reduction in theinterest rate, or a

combination

thereof.The impact ofthe modificationsand defaultsare factoredinto the allowancefor credit losses on a loan-by-loan

basis.

Thus, specific reservesare establishedbased uponthe results of either adiscounted cashflow analysis or the underlying

collateral value,

if the loan is deemedto be collateral dependent.A modified loan classificationcan be removedif the borrower’s

financial condition

improves such thatthe borrower is no longer in financialdifficulty, theloan hasnot hadany forgivenessof

principal or interest,

and theloan is subsequentlyrefinancedor restructured atmarket termsand qualifiesas a new loan.

During the nine months

ended September30, 2026, theCompanydid

t modify any

loans to borrowers experiencing financial

difficulty.

During the nine monthsended September30, 2025,

one

commercial mortgageloan for $

2.5

million was provided a

month interest

only extension in exchangefor additionalcollateral.

The Company

closely monitors the performanceof loans modifiedfor borrowers experiencing financialdifficulty to evaluatethe

effectiveness

of its modificationstrategies. At September 30,2026, there were

outstandingbalancesof loans modifiedduring the

preceding twelve months

.At September 30, 2025, the amortizedcost basis of loansmodified during the precedingtwelve monthswas

2.8

million, of which $

2.5

million were current and$

0.3

million were 30 -59 dayspast due.

Credit Risk Management

The Companyhas adoptedcomprehensivelending policies, underwriting standards andloan review

procedures designed

to maximize loan incomewithin

acceptable

level of risk.Managementand theBoard ofDirectors review and

approve

these policies and procedureson a regular basis (atleast annually).

Reporting systems are

used to monitor loanoriginations, loan quality,concentrationsof credit, loan delinquenciesand nonperforming

loans and

potential problemloans.Managementand theCredit Risk Oversight Committeeperiodically review the Company’slines

of business to monitor

asset qualitytrends andthe appropriatenessof credit policies.In addition,total borrower exposurelimits are

established and

concentrationrisk is monitored.As part of this process, theoverall compositionof the portfoliois reviewed to gauge

diversification of

risk, client concentrations,industry group, loantype, geographic area,or other relevantclassifications ofloans.

Specific segments of the

loan portfolioare monitoredand reportedto the Boardon a quarterlybasis andhave strategicplans in place

to supplement

Board approvedcredit policies governing exposure limits andunderwriting standards.Detailed below are the typesof

loans within the

Company’sloan portfolioand risk characteristicsunique to each.

Commercial, Financial,

and Agricultural – Loansin this category are primarilymadebased onidentified cashflows of the borrower

with consideration

given to underlying collateraland personalor other guarantees.Lending policy establishes debtservice coverage

ratio limits that

require a borrower’s cashflow to be sufficientto cover principal andinterest paymentson all new andexisting debt.

The majority of these

loans are secured bythe assets being financedor other business assets such

account

sreceivable, inventory,or

equipment.

Collateral valuesare determined basedupon third party appraisalsand evaluations.Loan to value ratios

origination are

governed by established

policy guidelines.

Real Estate

Construction– Loans in this categoryconsistsof short-term constructionloans, revolving andnon-revolving credit lines

and construction/permanent

loans madeto individuals andinvestors to financethe acquisition, development,construction or

rehabilitation of real

property.These loans areprimarily madebased on identified cashflows of the borrower orproject andgenerally

secured by the

property being financed,including 1-4 family residentialproperties andcommercial propertiesthat areeither owner-

occupied or investment

in nature.These properties

may

include either vacant

or improved property.Constructionloans are generally

based upon

estimates ofcosts andvalue associatedwith the completedproject.Collateral valuesare determinedbased uponthird

party appraisals

and evaluations.Loan tovalue ratios

origination are governed

by establishedpolicy guidelines.The disbursement

of funds

for constructionloans is madein relation to the progress ofthe project and

such these loans

are closely monitoredby on-

site inspections.

Real Estate

Commercial Mortgage– Loans in this categoryconsists of commercialmortgage loanssecured by propertythat is either

owner-occupied or

investmentin nature.These loans areprimarily madebased onidentified cashflows of the borrower or project

with consideration

given to underlying real estatecollateral andpersonal guarantees.Lending policy establishes debtservice

coverage ratios

and loanto value ratiosspecific to the propertytype.Collateral valuesare determinedbased uponthird party

appraisals

and evaluations.

Real Estate Residential

– Residential mortgageloans held in the Company’sloan portfolio are madeto borrowers that demonstratethe

ability to make

scheduled paymentswith full consideration to underwritingfactors such

current income, employment

status, current

assets, and

other financialresources, credit history, andthe value ofthe collateral.Collateral consists ofmortgage liens on 1-4 family

residential properties.

Collateral valuesare determinedbased uponthird party appraisalsand evaluations.The Companydoes not

originate sub-prime loans.

Real Estate

Home Equity– Home equityloans andlines are madeto qualified individualsfor legitimate purposesgenerally secured

by senior or junior mortgage

liens on owner-occupied1-4 familyhomes or vacationhomes.Borrower qualificationsinclude

favorable

credit history combinedwith supportive incomeand debtratio requirementsand combinedloan to valueratios within

established policy guidelines.

Collateral valuesare determinedbased uponthird party appraisalsand evaluations.

Consumer Loans

– This loan portfolioincludes personal installmentloans, direct andindirect automobilefinancing, andoverdraft

lines of credit.

The majorityof the consumerloan categoryconsists of direct andindirect automobileloans.Lending policy

establishes maximum

debt to income ratios, minimumcredit scores, and includesguidelines for verificationof applicants’ income and

receipt of credit reports.

Credit Quality

Indicators

As part of the ongoingmonitoring of theCompany’sloan portfolioquality, managementcategorizes loans

into risk categories

based onrelevant informationaboutthe ability of borrowers toservice their debt such as:current financial

information,

historical paymentperformance,credit documentation,and currenteconomic andmarkettrends, amongother

factors.

Risk ratings are assignedto each loanand revised

needed through

established monitoringprocedures for individualloan

relationships over

a predetermined amountand review of smaller balancehomogenousloan pools.The Companyuses the definitions

noted below for categorizing

and managingits criticized loans.Loans categorized

“Pass” do not

meet the criteria setforth below

and are

not consideredcriticized.

Special Mention – Loans

in this category are presentlyprotected fromloss, but weaknesses areapparentwhich, if not corrected, could

cause future

problems.Loans in this category

may

not meet

required underwriting criteria and haveno mitigating factors.More than

the ordinary amount

of attentionis warranted for theseloans.

Substandard

– Loans in this categoryexhibit well-defined weaknessesthat would typicallybring normal repaymentinto jeopardy.

These loans are

no longer adequatelyprotected dueto well-defined weaknessesthat affectthe repaymentcapacityof the

borrower.

The possibility ofloss is much moreevident andaboveaverage supervisionis required for these loans.

Doubtful – Loans

in this category haveall the weaknessesinherent in a loancategorized

Substandard,

with the characteristicthat

the weaknesses

make collectionor liquidation in full, on thebasis of currently existingfacts, conditions,and values,highly

questionable

and improbable.

Performing/Nonperforming

– Loans within certainhomogenous loanpools (home equity andconsumer) arenot individually reviewed,

but are monitored for

credit quality viathe aging statusof the loanand bypaymentactivity.The performing or nonperformingstatus

is updated

ongoing basis dependent

upon improvementand deteriorationin credit quality.

The following table

ssummarizegross loans held for investmentat September30, 2026and December31, 2025and currentperiod

gross writeoffs for

the nine monthsended September30, 2026and 12months endedDecember 31, 2025by years oforigination and

internally assigned

credit risk ratings (referto Credit RiskManagementsection for detail onrisk rating system).

(Dollars in Thousands)

Term Loans

by OriginationYear

Revolving

As of September 30, 2026

2026

2025

2024

2023

2022

Prior

Loans

Total

Commercial, Financial,

Agriculture:

Pass

34,032

28,937

16,563

13,119

13,790

13,510

43,485

163,436

Special Mention

2,340

1,090

768

4,296

Substandard

114

105

412

Total

34,146

28,998

16,705

15,508

14,947

13,513

44,327

168,144

Current-Period Gross

Writeoffs

110

279

184

435

1,128

Real Estate

- Construction:

Pass

56,034

70,866

2,433

2,212

9,694

6,545

147,837

Special Mention

485

Substandard

634

379

1,013

Total

56,034

70,866

3,067

2,591

10,179

6,545

149,335

Real Estate

- Commercial

Mortgage:

Pass

73,556

81,383

63,168

83,575

146,789

203,907

20,802

673,180

Special Mention

3,993

4,780

267

3,431

27,590

8,159

1,250

49,470

Substandard

4,202

3,559

1,857

2,470

144

12,328

Doubtful

1,402

Total

77,549

90,365

68,396

87,102

176,236

214,536

22,196

736,380

Real Estate

- Residential:

Pass

110,864

115,191

105,477

231,979

292,824

129,618

10,575

996,528

Special Mention

337

113

1,172

1,622

Substandard

457

286

555

946

792

3,252

6,288

Total

111,658

115,477

106,032

232,925

293,729

134,042

10,575

1,004,438

Current-Period Gross

Writeoffs

Real Estate - Home Equity:

Performing

600

269

219

406

244,418

245,928

Nonperforming

192

Total

600

269

219

406

244,610

246,120

Current-Period Gross

Writeoffs

(33)

Consumer:

Performing

61,018

46,514

14,991

17,655

18,508

12,339

13,586

184,611

Nonperforming

113

176

171

696

Total

61,131

46,690

15,060

17,731

18,679

12,430

13,586

185,307

Current-Period Gross

Writeoffs

2,364

613

200

454

487

257

128

4,503

(Dollars in Thousands)

Term Loans

by OriginationYear

Revolving

As of December

31, 2025

2025

2024

2023

2022

2021

Prior

Loans

Total

Commercial, Financial,

Agriculture:

Pass

37,680

23,425

22,907

23,068

10,922

8,740

48,354

175,096

Special Mention

322

121

2,740

180

163

3,593

Substandard

146

245

1,114

1,652

Total

38,002

23,692

25,742

23,376

10,942

8,956

49,631

180,341

Current-Period Gross

Writeoffs

209

114

344

782

Real Estate

- Construction:

Pass

76,850

39,024

3,298

14,996

187

9,295

143,703

Special Mention

372

2,127

2,499

Substandard

718

Total

76,850

39,024

4,388

17,123

187

9,295

146,920

Real Estate

- Commercial

Mortgage:

Pass

93,723

76,348

101,262

174,959

92,388

152,307

22,555

713,542

Special Mention

9,830

4,477

5,725

20,547

3,922

4,074

720

49,295

Substandard

750

1,402

418

1,229

1,847

150

5,894

Total

104,303

82,227

107,085

195,924

97,539

158,228

23,425

768,731

Current-Period Gross

Writeoffs

Real Estate

- Residential:

Pass

142,278

130,895

269,844

316,402

59,950

87,545

10,521

1,017,435

Special Mention

116

954

807

378

2,255

Substandard

558

429

1,201

1,310

2,341

161

6,000

Total

142,278

131,453

270,273

317,719

62,214

90,693

11,060

1,025,690

Current-Period Gross

Writeoffs

136

Real Estate - Home Equity:

Performing

391

411

106

587

237,678

239,201

Nonperforming

1,696

Total

391

411

106

587

239,374

240,897

Current-Period Gross

Writeoffs

Consumer:

Performing

63,443

21,866

27,919

31,464

21,524

5,164

11,315

182,695

Nonperforming

186

191

149

215

844

Total

63,629

22,057

28,068

31,679

21,596

5,195

11,315

183,539

Current-Period Gross

Writeoffs

2,789

376

1,003

1,036

454

144

152

5,954

NOTE 4 – MORTGAGE

BANKING ACTIVITIES

The Company’s

mortgage banking activities include mandatorydelivery loan sales, forward salescontracts usedto manageresidential

loan pipeline price

risk, utilization ofwarehouse lines to fundsecondarymarketresidential loan closings, andresidential mortgage

servicing.

Residential Mortgage Loan Production

The Company

originates, markets,and services conventionaland government-sponsored residential mortgageloans.Generally,

conforming fixed

rate residential mortgageloans are held forsale in the secondarymarketand non-conformingand adjustable-rate

residential mortgage

loans

may

be held for investment.

The volume ofresidential mortgage loansoriginated for sale andsecondary

market

prices are the primarydrivers of origination revenue.

Residential mortgage

loan commitmentsare generally outstandingfor 30 to 90days, which representsthe typical periodfrom

commitment

to originate a residentialmortgage loanto when the closedloan is sold to

investor.

Residential mortgageloan

commitments

are subjectto both credit andprice risk.Credit risk is managedthrough underwriting policies andprocedures, including

collateral requirements,

which are generallyacceptedby the secondaryloan markets.Price risk is primarily related to interest rate

fluctuations

and is partially managedthrough forwardsales of residential mortgage-backedsecurities (primarily to-be announced

securities, or TBAs)

or mandatorydelivery commitmentswith investors.

The unpaid principal balance

of residential mortgageloans held for sale,notional amountsof derivative contractsrelated to residential

mortgage loan commitments

,such

interest rate lock commitments

(“IRLCs”) and forward contractsales and their related fair values

are set forth

below.

September 30, 2026

December 31, 2025

Unpaid Principal

(Dollars in Thousands)

Balance/Notional

Fair Value

Balance/Notional

Fair Value

Residential Mortgage

Loans Held forSale

22,937

23,455

20,944

21,695

Residential Mortgage

Loan Commitments("IRLCs")

(1)

29,368

474

20,699

464

Forward Sales Contracts

(2)

20,500

397

25,500

(1)

Recorded in other assets at fair value.

(2)

Recorded in other assets and other liabilities at fair value atSeptember 30, 2026 and December 31, 2025, respectively.

At September 30, 2026

and December31, 2025, theCompanyhad

residential mortgage loansheld for sale 30-89days pastdue or

on nonaccrual

status.

Mortgage banking

revenue was

follows:

Three Months Ended

September 30,

Nine Months Ended

September 30,

(Dollars in Thousands)

2026

2025

2026

2025

Net realized gains

on sales of mortgageloans

2,991

3,871

9,470

10,356

Net change

in unrealized (loss) gain onmortgage loansheld for

sale

(595)

130

(266)

302

Net change

in the fair valueof IRLCs

(152)

(45)

359

Net change

in the fair valueof forward salescontracts

452

199

482

(85)

Pair-Offs on

net settlementof forward salescontracts

(234)

276

(404)

Mortgage servicing rights

additions

125

Net origination fees

864

833

2,488

2,192

Total mortgage

banking revenues

3,673

4,794

12,585

12,804

Residential Mortgage Servicing

The Company

may

retain the right to service residential mortgage

loans sold.The unpaidprincipal balanceof loans servicedfor

others is the primary

driver of servicing revenue.

The following represents

a summaryof mortgageservicing rights.

(Dollars in Thousands)

September 30, 2026

December 31, 2025

Number of residential

mortgage loansserviced for others

456

Outstanding principal

balanceof residential mortgageloans serviced for others

119,277

118,429

Weighted average

interest rate

5.78%

5.69%

Remaining contractual

term (in months)

353

354

Conforming conventional

loans serviced by theCompanyare sold to Federal NationalMortgage Association(“FNMA”) on a non-

recourse basis, whereby

foreclosure lossesare generally the responsibilityof FNMA andnot the Company.The governmentloans

serviced by the

Companyare secured throughthe GovernmentNational MortgageAssociation (“GNMA”),whereby the Companyis

insured against

loss by the Federal HousingAdministration orpartially guaranteedagainst loss by theUnited States Departmentof

Veterans

Affairs.At September 30, 2026,the servicing portfolio balanceconsisted of thefollowing loan types: FNMA (

62.5

%),

GNMA (

4.6

%), and private

investor (

32.9

%).

FNMA andprivate investor loansare structured

actual

/actualpaymentremittance.

At September

30, 2026 andDecember 31, 2025,the Companydid

t have delinquent

residential mortgage loansin GNMA pools

serviced by the

Company.The right to repurchasethese loans andthe corresponding liability hasbeen recorded in otherassets and

other liabilities, respectively,

in the ConsolidatedStatementsof Financial Condition.The Companyhad

repurchases forthe three

months ended

September 30,2026 and2025, and

repurchases and$

0.3

million repurchases in the ninemonths endedSeptember

30, 2026 and

2025, respectively,of GNMA delinquent or defaultedmortgage loanswith the intention tomodify their termsand

include the loans

in new GNMA pools.

Activity in the

capitalized mortgageservicing rights was

follows:

Three Months Ended

September 30,

Nine Months Ended

September 30,

(Dollars in Thousands)

2026

2025

2026

2025

Beginning balance

927

889

924

933

Additions due to

loans sold with servicingretained

124

Deletions and

amortization

(47)

(44)

(140)

(132)

Ending balance

908

885

908

885

The Company

did

t record any

permanentimpairmentlosses on mortgage servicing rights for the threeor nine monthsended

September 30,

2026 or 2025.

The key unobservable

inputs used in determining thefair value ofthe Company’smortgage servicing rights were

follows:

September 30, 2026

December 31, 2025

Minimum

Maximum

Minimum

Maximum

Discount rates

9.50%

12.00%

9.50%

12.00%

Annual prepayment

speeds

8.78%

17.99%

8.50%

18.73%

Cost of servicing (per

loan)

Changes in residential

mortgage interest ratesdirectly affectthe prepaymentspeeds used in valuing theCompany’smortgage

servicing rights.

A separatethird party modelis used to estimateprepaymentspeeds basedon interest rates, housingturnover rates,

estimated

loan curtailment,anticipateddefaults, andother relevantfactors.The weighted averageannualprepaymentspeed was

11.75

% at September

30, 2026 and

13.05

December 31, 2025.

Warehouse

Line Borrowings

The Company

has the following warehouselines of credit and masterrepurchase agreementswith various financialinstitutions

September 30,

2026:

Amounts

(Dollars in Thousands)

Outstanding

million master repurchaseagreement withoutdefined expiration.Interest is at thesecured overnight

financing rate

(SOFR) rate plus

2.25%

3.25%

, with a floor rate of

3.25%

4.25%

A cash pledge deposit of

0.1

million is requiredby the lender.

13,528

million warehouse line ofcredit agreementexpiring in

September 2027

Interest is at theSOFR rate plus

2.50%

6.00%

, with a floor rate

3.00%

6.50%

18,166

Total Warehouse

Borrowings

31,694

Warehouse

line borrowings areclassified as short-termborrowings.At December 31, 2025,warehouse line borrowingstotaled $

28.1

million. At September

30, 2026, the Companyhad residentialmortgage loansheld for sale pledged ascollateral under theabove

warehouse lines of

credit and masterrepurchase agreements.The aboveagreements alsocontain covenantswhich include certain

financial requirements,

including maintenanceof minimumtangible net worth, minimumliquid assets, andmaximumdebt to net

worth ratio, as defined

in the agreements.The Companywas in compliance with all significantdebt covenantsat September30, 2026.

NOTE 5 – DERIVATIVES

The Company

enters into derivativefinancial instrumentsto manageexposures thatarise from business activitiesthat result in the

receipt or payment

of future known and uncertaincash amounts,the value ofwhich are determinedby interest rates.The Company’s

derivative financial

instruments areused to managedifferences in theamount,timing, and durationof the Company’sknown or

expected cash

receipts and its knownor expected cashpaymentsprincipally related to theCompany’ssubordinateddebt.

Cash Flow Hedges of

Interest RateRisk

The Company

previously maintainedinterest rate swapswith notional amountstotaling $

million designated as acash flow hedge

for subordinated

debt. Under the swaparrangement,the Companypaid a fixedinterest rate of

2.50

% and received

a variableinterest

rate based

on three-monthCME Term SOFR. In October2025, theCompanyterminatedthe swaps andderecognized the derivative

assets. The unrealized

gain of $

2.7

million was deferred inaccumulatedother comprehensiveincome andwill be amortized on a

straight-line basis into

interest expense throughthe remaining termof the original cashflow hedge. The Companyestimates therewill

be approximately

0.8

million reclassified as a decreaseto interest expensewithin the next 12 months.

For derivatives designated

and thatqualify ascash flow hedges ofinterest rate risk, the gain or loss onthe derivative is recordedin

accumulated

other comprehensiveincome (“AOCI”) andsubsequentlyreclassified into interest expensein the same period(s) during

which the hedged

transactionaffectsearnings. Amounts reportedin AOCI related to derivativeswill be reclassified to interest expense

as interest payments

are madeon the Company’svariable-ratesubordinateddebt.

The following table

presents the changein net gains (losses) recorded inAOCI andthe consolidatedstatementsof income relatedto

the cash flow derivative

instruments (interest rateswaps related tosubordinateddebt).

Change in Gain

Amount of Gain

(Loss) Recognized

Reclassified

(Dollars in Thousands)

Category

in AOCI

from AOCI to Income

Three months

ended September30, 2026

Interest expense

202

Three months

ended September30, 2025

Interest expense

(189)

303

Nine months

ended September30, 2026

Interest expense

600

Nine months

ended September30, 2025

Interest expense

(1,076)

899

NOTE 6 – LEASES

Operating leases in

which the Companyis the lessee are recorded asoperating lease right of use(“ROU”) assets and operating

liabilities, included

in other assets andliabilities, respectively, onits Consolidated Statementsof Financial Condition.

The Company’s

operating leases primarilyrelate to bankingoffices with remaining leaseterms from less thanone to

years.The

Company’s

leases are notcomplex anddo not containresidual value guarantees,variable lease payments,or significant assumptions

or judgments made

in applying the requirementsof Topic 842.

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

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

over the lease term.

At September30, 2026, theoperating lease ROU assetsand liabilities were $

24.8

million and $

25.5

million,

respectively. At

December 31, 2025,ROU assets andliabilities were $

26.3

million and $

26.9

million, respectively. TheCompany

does not have

any financeleases.

The table below summarizes

our lease expenseand otherinformationrelated to theCompany’soperating leases.

Three Months Ended

Nine Months Ended

September 30,

(Dollars in Thousands)

2026

2025

2026

2025

Operating lease expense

922

928

2,746

2,689

Short-term lease expense

139

171

467

722

Total lease

expense

1,061

1,099

3,213

3,411

Other information:

Cash paid

for amountsincluded in the measurementof lease liabilities:

Operating cash

flows from operatingleases

929

882

2,775

2,676

Right-of-use assets

obtainedin exchange fornew operating lease liabilities

866

4,041

Weighted average

remaining lease term— operating leases (in years)

15.4

15.7

15.4

15.7

Weighted average

discount rate— operating leases

3.7%

The table below summarizes

the maturityof remaining leaseliabilities:

(Dollars in Thousands)

September 30, 2026

2026

915

2027

3,478

2028

3,201

2029

2,911

2030

2,919

2031 and

thereafter

18,790

Total

32,214

Less: Interest

(6,757)

Present Value

of Lease liability

25,457

A related party

is the lessor in a land leasewith the Company.The paymentsunder the leaseagreement providefor annuallease

payments

of approximately $

0.1

million annually through December2033, and thereafter,increase by

% every

years until 2053at

which time the rent

amountwill adjust based on reappraisalof the parcel rental value.The Companythen has

four

successive options

to extend

the lease for

five years

each with rentalincreases of

% at each

extension.The aggregate remainingobligation of thelease

totaled $

1.9

million at September30, 2026.Further, in accordancewith the lease agreement,the Companymade a$

0.2

million

payment

in July 2025 to thelessor as reimbursementfor a portionof the costs relatedto the developmentof subjectproperty to

support the construction

of a new bankingoffice by theCompany.

NOTE 7 - EMPLOYEE

BENEFIT PLANS

The Company

has a definedbenefit pensionplan covering substantiallyall full-time and eligible part-time associatesand a

Supplemental

Executive RetirementPlan (“SERP”) and aSupplementalExecutive RetirementPlan II (“SERP II”)covering its

executive officers.

The defined benefitplan was amendedin December 2019to remove planeligibilityfor new associateshired after

December 31, 2019.

The SERP II wasadoptedby the Company’sBoard onMay 21, 2020and coverscertain executiveofficers that

were not covered

by the SERP.

The components

of the net periodicbenefit cost forthe Company’squalified benefitpension planwere as follows:

Three Months Ended

September 30,

Nine Months Ended September

30,

(Dollars in Thousands)

2026

2025

2026

2025

Service Cost

833

861

2,498

2,581

Interest Cost

1,531

1,676

4,594

5,029

Expected Return

on Plan Assets

(2,218)

(2,265)

(6,653)

(6,794)

Net Loss Amortization

(474)

(413)

(1,421)

(1,240)

Net Periodic Benefit

Cost

(328)

(141)

(982)

(424)

Discount Rate

5.67%

5.82%

5.67%

5.82%

Long-term Rate

of Return onAssets

6.50%

6.75%

6.50%

6.75%

The components

of the net periodicbenefit cost forthe Company’sSERP and SERP II were asfollows:

Three Months Ended

September 30,

Nine Months Ended September

30,

(Dollars in Thousands)

2026

2025

2026

2025

Service Cost

Interest Cost

150

131

450

395

Prior Service Cost Amortization

Net Loss Amortization

238

(30)

713

(88)

Net Periodic Benefit

Cost

432

137

1,296

417

Discount Rate

5.24%

5.57%

5.24%

5.57%

The service cost component

of net periodic benefitcost is reflected in compensationexpense in the accompanyingstatementsof

income.

The other componentsof net periodic costare included in “other”within the noninterest expensecategory in the

Consolidated

Statementsof Income.

NOTE 8 - COMMITMENTS

AND CONTINGENCIES

Lending Commitments

The Companyis a party tofinancial instrumentswith off-balancesheet risks in the normal courseof business

to meet the

financing needsof its clients.These financialinstruments consistof commitmentsto extendcredit and standbyletters of

credit.

The Company’s

maximum exposureto credit loss under standbyletters of credit andcommitmentsto extendcredit is represented by

the contractual

amountof those instruments.The Companyuses the samecredit policies in establishing commitmentsand issuing

letters of credit as

it does for on-balancesheet instruments.The amountsassociatedwith the Company’soff-balancesheet

obligations were as

follows:

September 30, 2026

December 31, 2025

(Dollars in Thousands)

Fixed

Variable

Total

Fixed

Variable

Total

Commitments

to Extend Credit(1)

187,468

441,355

628,823

188,834

456,328

645,162

Standby

Letters of Credit

7,287

7,828

Total

194,755

441,355

636,110

196,662

456,328

652,990

(1)

Commitments include

unfundedloans, revolvinglines of credit,and off-balancesheet residentialloan commitments.

Commitments

to extendcredit are agreementsto lend to aclient so long

there is no violation of

any conditionestablished in the

contract.

Commitmentsgenerally have fixedexpiration datesor other terminationclauses and

may

require payment

of a fee.Since

many

of the commitmentsare expectedto expire without being drawnupon, the totalcommitmentamountsdo not necessarily

represent future

cash requirements.

Standby

letters of credit are conditionalcommitmentsissued by the Companyto guaranteethe performanceof a client to athird

party.

The credit risk involvedin issuing letters of creditis essentially thesame

that involved

in extending loan facilities. In

general, management

does not anticipate anymaterial losses

a result of participating

in these types oftransactions.However, any

potential losses arising

from such transactionsare reserved for in thesame manner

management

reserves for its other credit

facilities.

For both on-

and off-balancesheet financialinstruments, theCompanyrequires collateral to supportsuch instrumentswhen it is

deemed necessary.

The Companyevaluateseach client’s creditworthinesson a case-by-case basis.The amountof collateral

obtained

upon extensionof credit is based onmanagement’scredit evaluationof the counterparty.Collateral held varies, but

may

include deposits

held in financialinstitutions; U.S. Treasurysecurities; other marketablesecurities; real estate;accountsreceivable;

property, plant

and equipment;and inventory.

The

lowance for credit losses

for off-balancesheet credit commitmentsthat arenot unconditionallycancellable bythe bankis

adjusted

a provision for credit loss expense

and is recorded in otherliabilities.The following tableshows the activityin the

allowance.

Three Months Ended

September30,

Nine Months Ended September

30,

(Dollars in Thousands)

2026

2025

2026

2025

Beginning Balance

2,197

1,738

2,107

2,155

Provision for Credit

Losses

357

134

(60)

Ending Balance

2,241

2,095

2,241

2,095

Other Commitments.

In the normal

course of business, theCompanyenters into lease commitmentswhich are classified as operating

leases. See Note 6 – Leases

for additionalinformationon the maturityof the Company’soperating lease commitments.

The Company

has anoutstandingcommitmentof up to $

1.0

million in a bank techventure capitalfund focusedon finding and

funding technology

solutions for communitybanksand acommitmentof up to $

10.0

million in a solar tax credit equityfund.At

September 30, 202

6, the amount remainingto be fundedfor the banktech venturecapital andsolar tax credit equityinvestmentfund

commitments

was $

0.2

million and $

8.9

million, respectively.

Contingencies

The Companyis a party to lawsuits andclaims arising out of the normalcourse of business.In management'sopinion,

there are

known pending claimsor litigation, the outcomeof which would, individually or in theaggregate, havea materialeffect

on the consolidated

results of operations,financial position,or cash flows of theCompany.

Indemnification

Obligation

The Companyis a member ofthe Visa U.S.A. network.Visa U.S.A member banksare required to

indemnify the

Visa U.S.A. networkfor potential future settlementof certain litigation (the “CoveredLitigation”) that relatesto several

antitrust lawsuits challenging

the practices ofVisa andMasterCardInternational.In 2008, theCompany,as a memberof the Visa

U.S.A. network, obtained

Class B shares ofVisa, Inc. uponits initial public offering.Since its initialpublic offering, Visa,Inc. has

funded a

litigation reserve for the CoveredLitigation resulting in a reductionin the Class B shares heldby the Company.In 2011,the

Company

sold its remaining Class B shares.Associated with this sale,the Companyentered into aswap contractwith the purchaser

of the shares

that requires apaymentto the counterpartyin the event thatVisa, Inc. makessubsequentrevisions to the conversion

ratio.

Conversion ratiopaymentsand ongoing fixedquarterly chargesare reflected in earnings in theperiod incurred.Fixed charges

included in the swap

liability are payablequarterly until the litigation reserve isfully liquidatedand atwhich time the aforementioned

swap contract

will be terminated.Quarterly fixed paymentsare approximately$

0.1

million.There was a $

0.1

million counterparty

payment

accrued andpayableat September30, 2026due to a revision tothe share conversionrate related toadditionalfunding by

VISA of the merchant

litigation reserve.

NOTE 9 – FAIR

VALUEMEASUREMENTS

The fair value

of an assetor liability is the price that would bereceived to sell thatasset or paidto transferthat liability in anorderly

transaction

occurring in the principal market(or most advantageousmarket in theabsence ofa principal market)for such assetor

liability.

In estimating fair value, theCompanyutilizes valuation techniquesthat are consistentwith the marketapproach,the income

approach

and/or thecost approach.Such valuationtechniques areconsistently applied.Inputs tovaluationtechniques include the

assumptions

that marketparticipantswould use in pricing an asset or liability.Accounting StandardsCodificationTopic 820

establishes a fair

value hierarchyfor valuationinputs thatgives the highest priority to quotedprices in active marketsfor identical

assets or liabilities

and thelowest priority to unobservableinputs.The fair valuehierarchy is as follows:

●

Level 1 Inputs -

Unadjusted

quoted prices in activemarkets foridentical assets or liabilities thatthe reporting entity hasthe

ability to access

at the measurementdate

●

Level 2 Inputs -

Inputs other than

quoted prices includedin Level 1 that areobservable forthe asset or liability, either directly

or indirectly. These

might include quotedprices for similar assetsor liabilities in active markets,quoted prices foridentical

or similar assets or

liabilities in markets thatare not active, inputs otherthan quotedprices that are observablefor the assetor

liability (such as

interest rates, volatilities,prepaymentspeeds, credit risks, etc.) or inputs thatare derived principallyfrom, or

corroborated,

by marketdataby correlation or othermeans

●

Level 3 Inputs -

Unobservable inputs

for determining the fairvalues ofassets or liabilities thatreflect an entity’sown

assumptions

aboutthe assumptionsthat marketparticipantswould use in pricing the assets or liabilities.

Assets and Liabilities

Measured at Fair Valueon a RecurringBasis

Securities Available for Sale.

U.S. Treasury securities are reported

at fair valueutilizing Level 1 inputs.Other securitiesclassified as

available for sale are

reported at fair valueutilizing Level 2 inputs.For these securities,the Companyobtains fair value measurements

from an

independentpricing service.The fair valuemeasurementsconsider observabledatathat mayinclude dealer quotes,market

spreads, cash

flows, the U.S. Treasuryyield curve, live trading levels,trade executiondata,credit informationand thebond’s terms

and conditions,

among otherthings.

In general, the Company

does not purchasesecurities that havea complicatedstructure.The Company’sentire portfolio consistsof

traditional investments,

nearly all of which areU.S. Treasury obligations,federal agencybullet or mortgage pass-through securities, or

general obligation or revenue

-based municipal bonds.Pricing for suchinstruments is easily obtained.At least annually,the Company

will validate prices

supplied by the independentpricing service by comparing them to prices obtainedfrom an independentthird-party

source.

Loans Held for Sale

The fair valueof residential mortgageloans held for salebased onLevel 2 inputs is determined,when possible,

using either quoted

secondary-market prices or investorcommitments.If no suchquoted price exists, thefair value is determined

using quoted

prices for a similar assetor assets, adjustedfor the specific attributesof thatloan, which would be usedby other market

participants.

The Companyhas elected thefair value optionaccountingfor its held for sale loans.

Mortgage Banking

Derivative Instruments.

The fair values

of interest ratelock commitments(“IRLCs”) are derived byvaluation

models incorporating

market pricing forinstruments with similar characteristics,commonlyreferred to as bestexecution pricing, or

investor commitment

prices for best effortIRLCs which haveunobservableinputs, such as anestimate ofthe fair valueof the

servicing rights expected

to be recorded uponsale of the loans,net estimatedcosts to originate theloans, andthe pull-through rate,

and are

therefore classified asLevel 3 within the fair valuehierarchy.The fair valueof forward salecommitmentsis based on

observable market

pricing for similar instruments andare thereforeclassified

Level 2 within the fair value

hierarchy.

Interest Rate Swap.

The Company’s

derivative positionsare classified

Level 2 within the fair value

hierarchy andare valuedusing

models generally

acceptedin the financialservices industry andthat useactively quotedor observable marketinput values from

external market

dataproviders.The fair valuederivatives aredetermined using discountedcash flow models.

Fair Value

Swap

The Companyentered into astand-alonederivative contractwith the purchaserof its Visa Class B shares.The

valuation

represents the amountdue andpayableto the counterpartybased uponthe revised share conversionrate, if any,during the

period. The Company’s

derivative positionsare classified

Level 2 within the fair value

hierarchy anduse actively quotedor

observable market

input values from externalmarket dataproviders.There was a $

0.1

million and $

0.2

million counterpartypayment

accrued and

payable

September 30,

2026 andDecember 31, 2025, respectively.

A summary

of fair valuesfor assets andliabilities recorded at fair valueon a recurring basis consistedof the following:

Level 1

Level 2

Level 3

Total Fair

(Dollars in Thousands)

Inputs

Value

September 30, 2026

ASSETS:

Securities Available

for Sale:

U.S. Government

Treasury

594,343

U.S. Government

Agency

160,311

States and

Political Subdivisions

32,575

Mortgage-Backed

Securities

44,329

Corporate

Debt Securities

30,539

Loans Held for

Sale

23,455

Forward Sales Contracts

397

Residential Mortgage

Loan Commitments("IRLCs")

474

December 31, 2025

ASSETS:

Securities Available

for Sale:

U.S. Government

Treasury

333,264

U.S. Government

Agency

172,114

States and

Political Subdivisions

34,911

Mortgage-Backed

Securities

52,004

Corporate

Debt Securities

43,532

Equity Securities

2,069

Loans Held for

Sale

21,695

Residential Mortgage

Loan Commitments("IRLCs")

464

LIABILITIES:

Forward Sales Contracts

Mortgage Banking Activities

The Companyhad Level 3 issuances andtransfers related tomortgage bankingactivities of $

5.9

million

and $

12.1

million, respectively, for thenine monthsended September30, 2026, and$

6.1

million and $

13.0

million, respectively, for

the nine months

ended September30, 2025.Issuancesare valuedbased onthe changein fair value ofthe underlying mortgageloan

from inception

of the IRLCto the ConsolidatedStatementof Financial Conditiondate,adjustedfor pull-through ratesand coststo

originate.

IRLCs transferredout of Level 3 representIRLCs thatwere funded andmoved tomortgage loansheld for sale, at fair

value.

Assets Measured at

Fair Value ona Non-RecurringBasis

Certain assets

are measuredat fair valueon a non-recurring basis (i.e., the assets are not measuredat fair valueon an ongoing basis

but are subject

to fair valueadjustmentsin certain circumstances).An example wouldbe assets exhibiting evidenceof impairment.

The following is

a description ofvaluationmethodologies usedfor assets measuredon a non-recurring basis.

Collateral Dependent Loans

Impairmentfor collateral dependentloans is measuredusing the fair valueof the collateralless selling

costs.

The fair valueof collateral is determinedby an independentvaluationor professional appraisalin conformancewith banking

regulations.

Collateral valuesare estimatedusing Level 3 inputs due to thevolatility in the real estatemarket, andthe judgmentand

estimation involved

in the real estateappraisalprocess.Collateral dependentloans are reviewed andevaluatedon at leasta quarterly

basis for additional

impairmentand adjustedaccordingly.Valuationtechniques areconsistent with thosetechniques appliedin prior

periods.

Collateral-dependentloans hada carrying valueof $

14.7

million with valuation allowanceof $

1.0

million at September30,

2026 and

a carrying valueof $

6.4

million and a $

0.1

million valuation allowanceat December31, 2025.

Other Real Estate Owned

During the first ninemonths of 2026, certainforeclosed assets, uponinitial recognition, were measuredand

reported at

fair value througha charge-offto the allowancefor credit losses basedon the fair valueof the foreclosedasset less

estimated

cost to sell.The fair valueof the foreclosedasset is determinedby an independentvaluationor professional appraisalin

conformance

with banking regulations.On an ongoing basis, we obtainupdatedappraisalson foreclosed assetsand realize valuation

adjustments

as necessary.The fair valueof foreclosed assetsis estimated using Level 3 inputsdue to the judgmentand estimation

involved in the

real estate valuationprocess.

Mortgage Servicing Rights

Residential mortgageloan servicing rights are evaluatedfor impairmentat eachreporting period based

upon the fair

value of therights as comparedto the carrying amount.Fair value is determinedby a third partyvaluationmodel using

estimated

prepaymentspeeds of theunderlying mortgage loansserviced and stratificationsbased onthe risk characteristics ofthe

underlying loans

(predominantlyloan typeand noteinterest rate).The fair valueis estimated using Level 3 inputs,including

discount rate,

weighted average prepaymentspeed, andthe cost of loanservicing.Further detail on thekey inputs utilized are

provided in Note 4

– Mortgage BankingActivities.At eachof September30, 2026 andDecember 31, 2025,there was

valuation

allowance for loan

servicing rights.

Assets and Liabilities

Disclosed at Fair Value

The Company

is required to disclose the estimatedfair value offinancial instruments,both assetsand liabilities, for which it is

practical to estimate

fair value andthe following is a description of valuationmethodologies usedfor those assetsand liabilities.

Cash and Short-Term

Investments.

The carrying amount

of cash andshort-term investmentsis used to approximatefair value, given

the short time frame

to maturityand assuch assets donot present unanticipatedcredit concerns.

Securities Held to Maturity

Securities held to maturityare valuedin accordancewith the methodologypreviously notedin the

caption “Assets and

Liabilities Measured atFair Value ona Recurring Basis – Securities Availablefor Sale.”

Loans.

The loan portfoliois segregated into categoriesand thefair value ofeach loancategory is calculatedusing present value

techniques based

upon projectedcash flows andestimateddiscount rates.The values reportedreflect the incorporationof a liquidity

discount to meet

the objectiveof “exit price” valuation.

Deposits.

The fair valueof Noninterest Bearing Deposits,NOW Accounts, MoneyMarket Accountsand Savings Accountsare the

amounts

payableon demandat the reporting date.The fair valueof fixed maturitycertificates of depositis estimated using present

value techniques

and ratescurrently offeredfor deposits of similar remainingmaturities.

Subordinated Notes Payable.

The fair valueof eachnote is calculatedusing present value techniques,based uponprojected cash

flows and

estimateddiscount ratesas well as rates being offeredfor similar obligations.

Short-Term

and Long-TermBorrowings.The fair valueof eachnote is calculatedusing present value techniques,based upon

projected cash

flows and estimateddiscount ratesas well as rates being offeredfor similar debt.

A summary

of estimatedfair values ofsignificant financialinstruments notrecorded at fairvalue consistedof the following:

September 30, 2026

Carrying

Level 1

Level 2

Level 3

(Dollars in Thousands)

Value

Inputs

ASSETS:

Cash

71,617

Fed Funds Sold and

Interest Bearing Deposits

340,015

Investment

Securities, Held to Maturity

315,142

293,832

Mortgage Servicing

Rights

908

1,534

Loans, Net of Allowance

for Credit Losses

2,459,355

2,321,370

LIABILITIES:

Deposits

3,666,568

3,665,513

Short-Term Borrowings

38,881

Subordinated

Notes Payable

33,303

31,339

Long-Term

Borrowings

567

December 31, 2025

Carrying

Level 1

Level 2

Level 3

(Dollars in Thousands)

Value

Inputs

ASSETS:

Cash

62,189

Fed Funds Sold and

Interest Bearing Deposits

467,782

Investment

Securities, Held to Maturity

377,446

129,268

240,052

Other Equity Securities

2,848

Mortgage Servicing

Rights

924

1,359

Loans, Net of Allowance

for Credit Losses

2,515,117

2,416,937

LIABILITIES:

Deposits

3,662,312

3,662,466

Short-Term Borrowings

50,092

Subordinated

Notes Payable

42,582

40,116

Long-Term

Borrowings

680

All non-financial

instruments areexcluded fromthe abovetable.The disclosures also do notinclude goodwill.Accordingly, the

aggregate fair value

amountspresented donot represent theunderlying value ofthe Company.

NOTE 10 – ACCUMULATED

OTHER COMPREHENSIVEINCOME (LOSS)

The amounts

allocatedto accumulatedother comprehensiveincome (loss) are presentedin the table below.

Accumulated

Securities

Other

Available

Interest Rate

Retirement

Comprehensive

(Dollars in Thousands)

for Sale

Swap

Plans

Income (Loss)

Balance as of

January 1, 2026

(9,530)

2,676

9,441

2,587

Other comprehensive

loss during the period

(13,575)

(448)

(14,023)

Balance as of

September 30, 2026

(23,105)

2,228

9,441

(11,436)

Balance as of

January 1, 2025

(20,179)

3,971

9,722

(6,486)

Other comprehensive

income (loss) during theperiod

8,783

(1,076)

7,707

Balance as of

September 30, 2025

(11,396)

2,895

9,722

1,221

NOTE 11 -

SEGMENT REPORTING

The Company

operates asingle reportable business segmentthat is comprisedof commercialbanking within the statesof Florida,

Georgia, and

Alabama.The Company’schief executiveofficer is deemedthe Chief Operating Decision Maker(“CODM”). The

CODM evaluates

the financial performanceof the Companyby evaluating revenue streams,significant expenses, andbudget to actual

results in assessing

the Company’ssingle reporting segment andin the determinationof allocating resources.The CODM uses

consolidated

net income tobenchmarkthe Companyagainst peers andto evaluateperformanceand allocateresources.Significant

revenue and expense

categories evaluatedby the CODM are consistent with thepresentation of theConsolidated Statementof Income

and components

of other noninterestexpense.

Item 2.

MANAGEMENT'S

DISCUSSION ANDANALYSISOF FINANCIALCONDITION ANDRESULTSOF

OPERATIONS

Management’s

discussion and analysis(“MD&A”) provides supplementalinformation,which sets forth the majorfactors thathave

affected

our financialcondition andresults of operationsand shouldbe read in conjunctionwith the ConsolidatedFinancial

Statements

and relatednotes.The following informationshould provide abetter understandingof the majorfactors andtrends that

affect

our earnings performanceand financialcondition, andhow our performanceduring the third quarterof 2026compareswith

prior periods.

Throughout this section,Capital City BankGroup, Inc., andsubsidiaries, collectively, is referredto as “CCBG,”

“Company,”

“we,” “us,” or “our.”

CAUTION CONCERNING

FORWARD-LOOKINGSTATEMENTS

This Quarterly Report

on Form 10-Q, includingthis MD&A section,contains “forward-looking statements”within the meaning ofthe

Private Securities Litigation

Reform Act of1995.These forward-looking statementsinclude, among others,statementsaboutour

beliefs, plans, objectives,

goals, expectations,estimates andintentions thatare subjectto significant risks anduncertaintiesand are

subject to change

based onvarious factors,manyof which are beyondour control.The words “may,”“could,” “should,” “would,”

“believe,” “anticipate,”

“contemplate,”“estimate,” “expect,”“intend,” “plan,”“point to,” “project,”“target,” “vision,” “goal,”

“continue,” “further,”

and similar expressionsare intendedto identify forward-looking statements.

All forward-looking statements,

by their nature,are subjectto risks and uncertainties.Our actual futureresults may differmaterially

from those

set forth in our forward-looking statements.Please see the IntroductoryNote of this quarterlyreport on Form 10-Q as well

as the Introductory

Note and

Item 1A. Risk Factors

of our 2025Form 10-K, as updatedin our subsequentquarterly reports filed on

Form 10-Q, and

in our other filings madefrom time totime with the SEC afterthe dateof this report.

However, other

factors besidesthose listed in our QuarterlyReport or in our AnnualReport also couldadversely affectour results,

and you

should not considerany suchlist of factors tobe a completeset of all potentialrisks or uncertainties.Any forward-looking

statements

made by us or on our behalfspeak only as of thedate theyare made.We do not undertaketo updateany forward-looking

statement,

except asrequired by applicablelaw.

BUSINESS OVERVIEW

We are a

financial holding companyheadquarteredin Tallahassee,Florida, and we are theparent ofour wholly owned subsidiary,

Capital City Bank

(the “Bank”or “CCB”).We offer abroad arrayof productsand services througha totalof 62 full-service offices

and 107

ATMs/ITMslocated in Florida, Georgia,and Alabama.Through CapitalCity Home Loans,LLC (“CCHL”), we have 27

additional

offices in the Southeastfor our mortgagebanking business.We provide afull range of bankingservices, including

traditional deposit

and credit services, mortgagebanking, assetmanagement,trust, merchantservices, bankcards,securities brokerage

services and

financial advisoryservices, including life insuranceproducts,risk managementand assetprotection services.

Our profitability,

like mostfinancial institutions,is dependent toa large extentupon net interestincome, which is the difference

between the interest

and feesreceived on interest earningassets, such asloans andsecurities, and the interestpaid on interest-bearing

liabilities, principally deposits

and borrowings.Results of operationsare also affectedby the provision forcredit losses, operating

expenses such

as salaries andemployee benefits,occupancyand otheroperating expensesincluding income taxes,and noninterest

income such as

mortgage bankingrevenues,wealth managementfees, deposit fees, andbank cardfees.

We have

included a detaileddiscussion

our long-term strategic objectives

as part ofthe MD&A section of our 2025Form 10-K.

NON-GAAP FINANCIAL

MEASURES (UNAUDITED)

We present

a tangible commonequity ratio anda tangible bookvalue per diluted sharethat, in eachcase, removesthe effect

goodwill and

other intangibles thatresulted from merger andacquisition activity.We believe these measuresare useful to investors

because

they allow investors tomore easily compareour capital adequacyto other companiesin the industry.Non-GAAP financial

measures should

not be consideredalternativesto generally acceptedaccountingprinciples (“GAAP”)-basis financial statementsand

other bank

holding companiesmay defineor calculate thesenon-GAAP measures or similar measuresdifferently.

The GAAP to non

-GAAP reconciliation for eachquarter presentedis provided below.

2026

2025

(Dollars in Thousands, except per share data)

Third

Second

First

Fourth

Third

Shareowners' Equity (GAAP)

573,862

570,095

559,912

552,851

540,635

Less: Goodwill and Other Intangibles (GAAP)

89,095

Tangible Shareowners' Equity (non-GAAP)

484,767

481,000

470,817

463,756

451,540

Total Assets (GAAP)

4,396,752

4,450,483

4,453,734

4,385,765

4,323,774

Less: Goodwill and Other Intangibles (GAAP)

89,095

Tangible Assets (non-GAAP)

4,307,657

4,361,388

4,364,639

4,296,670

4,234,679

Tangible Common Equity Ratio (non-GAAP)

A/B

11.25%

11.03%

10.79%

10.66%

Actual Diluted Shares Outstanding (GAAP)

17,152,603

17,135,824

17,114,954

17,154,586

17,115,336

Tangible Book Value per Diluted Share (non-GAAP)

A/C

28.26

28.07

27.51

27.03

26.38

SELECTED QUARTERLY

FINANCIAL DATA(UNAUDITED)

2026

2025

(Dollars in Thousands, Except Per Share Data)

Third

Second

First

Fourth

Third

Summary of Operations

Interest Income

52,486

51,838

51,020

51,715

51,431

Interest Expense

7,476

7,640

8,203

8,355

7,874

Net Interest Income

45,010

44,198

42,817

43,360

43,557

Provision for Credit Losses

(80)

919

712

1,995

1,881

Net Interest Income After

Provision for Credit Losses

45,090

43,279

42,105

41,365

41,676

Noninterest Income

19,384

20,599

19,933

20,103

22,331

Noninterest Expense

42,295

42,640

41,373

42,867

42,916

Income Before Income Taxes

22,179

21,238

20,665

18,601

21,091

Income Tax Expense

5,239

4,961

4,848

4,896

5,141

Net Income

16,940

16,277

15,817

13,705

15,950

Net Interest Income (FTE)

(1)

45,059

44,241

42,857

43,404

43,602

Per Common Share

Net Income Basic

0.99

0.95

0.92

0.80

0.93

Net Income Diluted

0.99

0.95

0.92

0.80

0.93

Cash Dividends Declared

0.27

0.26

Diluted Book Value

33.46

33.27

32.71

32.23

31.59

Diluted Tangible Book Value

(2)

28.26

28.07

27.51

27.03

26.38

Market Price:

High

53.60

51.04

46.83

45.63

44.69

Low

47.63

42.79

39.26

38.27

38.00

48.33

49.42

43.46

42.57

41.79

Selected Average Balances

Investment Securities

1,177,883

1,167,321

1,119,125

1,006,040

993,880

Loans Held for Investment

2,495,535

2,505,875

2,538,318

2,568,073

2,606,213

Earning Assets

4,038,273

4,068,827

4,089,838

4,035,910

3,981,530

Total Assets

4,386,496

4,407,371

4,418,904

4,367,036

4,317,951

Deposits

3,647,526

3,678,776

3,691,016

3,647,510

3,612,331

Shareowners’ Equity

575,766

573,839

567,663

556,100

542,216

Common Equivalent Average Shares:

Basic

17,113

17,101

17,129

17,070

17,068

Diluted

17,152

17,126

17,146

17,140

17,114

Performance Ratios:

Return on Average Assets (annualized)

1.53

1.48

1.45

1.25

1.47

Return on Average Equity (annualized)

11.67

11.38

11.30

9.78

11.67

Net Interest Margin (FTE)

4.42

4.35

4.24

4.26

4.34

Noninterest Income as % of Operating Revenue

30.10

31.79

31.77

31.68

33.89

Efficiency Ratio

65.63

65.76

65.89

67.50

65.09

Asset Quality:

Allowance for Credit Losses (“ACL”)

30,369

31,007

30,999

31,001

30,202

Nonperforming Assets (“NPAs”)

9,708

13,435

12,965

10,531

10,026

ACL to Loans HFI

1.22

1.24

1.23

1.22

1.17

NPAs to Total Assets

0.22

0.30

0.29

0.24

0.23

NPAs to Loans HFI plus OREO

0.39

0.54

0.51

0.41

0.39

ACL to Non-Performing Loans

412.92

309.72

278.19

360.69

368.54

Net Charge-Offs to Average Loans HFI

0.08

0.14

0.10

0.18

Capital Ratios:

Tier 1 Capital

21.74

21.10

20.37

20.20

19.33

Total Capital

22.99

22.35

21.62

21.45

20.59

Common Equity Tier 1

20.43

19.80

19.08

18.56

17.73

Leverage

12.31

11.96

11.65

11.77

11.64

Tangible Common Equity

(2)

11.25

11.03

10.79

10.66

(1)

Fully Tax

Equivalent.

(2)

Non-GAAP financial measure.

See non-GAAP reconciliation on page 37.

FINANCIAL OVERVIEW

Results of Operations

Performance Summary.

Net income of

$16.9million, or $0.99per diluted share, for thethird quarter of2026 comparedto $16.3

million, or $0.

95 per diluted share, for thesecond quarterof 2026, and$16.0 million, or $0.93 per diluted share,for the third quarterof

2025. For the first

nine monthsof 2026, netincome totaled$49.0 million, or $2.86 per dilutedshare, comparedto net incomeof $47.9

million, or $2.80

per diluted share, for thesame period of2025.

Net Interest Income.

Tax

-equivalent net

interest income forthe third quarterof 2026totaled $45.1million, compared to$44.2 million

for the second

quarter of2026, and$43.6 million for the third quarterof 2025. Comparedto the secondquarter of2026, the increase

was primarily attributable

to higher income frominvestmentsecurities and loaninterest, in addition tolower deposit interest expense,

partially offset

by lower overnight fundsincome due tolower average balances.The increase over thethird quarter of2025 was also

driven by the same

aforementionedfactors. One additionalcalendarday alsocontributed tothe increase overthe second quarterof

2026.

For the first nine monthsof 2026, tax-equivalent netinterest income totaled$132.2million comparedto $128.4 million for the

same period of

2025,primarily attributableto higher investmentsecurities income andlower deposit interest expense, partiallyoffset

by lower loan interest

income andovernight fundsincome.

Provision and Allowance for Credit Losses.

We recorded a

provision benefit forcredit losses of $0.1 million for thethird quarter of

2026, compared

to a provision expenseof $0.9 million for the secondquarter of2026 and$1.9 million for the third quarterof 2025.

For the first nine

months of2026, we recorded aprovision expense forcredit losses of $1.6 million comparedto $3.3 million for the

same period of

2025. At September30, 2026, theallowance for creditlosses for loans HFI totaled$30.4 million (1.22% ofloans HFI)

compared

to $31.0 million (1.24% ofloans HFI) atJune 30, 2026and $31.0million at December 31, 2025(1.22% of loansHFI).We

discuss the various factors

that impactedour provision expensein further detail below underthe headingAllowance for Credit Losses.

Noninterest

Income

. Noninterest income for

the third quarterof 2026totaled $19.4million, a $1.2 million, or 5.9%, decrease fromthe

second quarter of 2026

and a $2.9 million,or 13.2%, decreasefrom the third quarter of 2025.The decrease fromthe second quarterof

2026 was primarily attributable

to decreases in mortgagebanking revenuesof $1.0 million, deposit feesof $0.5 million andother

income of $0.2

million partially offsetby a $0.5million increase in wealth managementfees. The decreasefrom the third quarterof

2025 was driven

by decreasesin mortgage bankingrevenues of $1.1million, deposit fees of $0.7million, other income of $0.7million

and wealth management

fees of $0.5 million, partially offsetby an increasein bank cardfees of $0.1million. For the first nine months

of 2026, noninterest

income totaled$59.9 million, a $2.3 million, or 3.8%, decreasefrom the sameperiod of 2025,primarily

attributable

to decreases in wealthmanagementfees of $3.3million,partially offsetby increases in other incomeof $0.7 million and

bank card

fees of $0.3million.

Noninterest Expense.

Noninterest expense

for the third quarterof 2026totaled $42.3million, a $0.3 million, or 0.8%, decrease from

the second quarter of

2026 and a$0.6 million, or 1.4%, decrease fromthe third quarterof 2025. Thedecrease fromthe secondquarter

of 2026

was primarily attributableto decreases in compensationexpense of$0.2 million and otherexpense of$0.1 million. The

decrease from the third

quarter of 2025 reflecteddecreases in compensationexpense of$0.4 million and otherexpense of$0.4 million

offset by

a $0.3million increase in occupancyexpense. For the first nine monthsof 2026, noninterestexpense totaled$126.3 million,

a $2.2 million, or

1.7%, increase over thesame period of 2025and reflectedincreases in other expenseof $3.0 million andoccupancy

expense of

$0.8 million partially offsetby a decreasein compensationexpense of$1.6 million. The increase in otherexpense was

primarily due to

a $3.9 million increase inORE expense,reflecting lower gains onproperty sales comparedto the prior year period,

which included a

significant gain fromthe sale of ouroperations centerbuilding in the first quarterof 2025.

Financial Condition

Earning Assets.

Averageearning assets totaled$4.038 billion for the third quarterof 2026, adecrease of$30.6 million, or 0.8%, from

the second quarter

of 2026, andan increase of$2.4 million, or 0.1% over the fourthquarter of2025. Comparedto the secondquarter

of 2026, the

change in earning assetmix reflected a$27.2 million decreasein overnight funds,

a $

10.3 million decrease in loans

held

for investment

,and a$3.5 million decrease in loansheld for sale (“HFS”),partially offsetby a $10.5million increase in investment

securities. Compared

to the fourthquarter of2025, the changereflected a $171.8million increase in investmentsecurities and a $2.7

million increase in

loans HFS, partially offsetby a $99.7million decrease in overnight fundsand a$72.5 million decreasein loans

held for investment.

Loans.

Average

loans HFI decreasedby $10.3 million, or 0.4%, fromthe second quarterof 2026, anddecreased by$72.5 million, or

2.8%, from the

fourth quarterof 2025. LoansHFI at September30, 2026, decreasedby $10.1 million, or 0.4%, fromJune 30, 2026,

and decreased

by $56.4 million, or 2.2%, fromDecember 31, 2025.

Credit Quality

. Nonperforming assets

(nonaccrual loansand other real estate) totaled$9.7 million at September30, 2026 comparedto

$13.4 million at June

30, 2026and $10.5 millionat December 31, 2025.At September 30, 2026,nonperforming assetsas a percentage

of total assets

was 0.22%, comparedto 0.30% atJune 30, 2026and 0.24%at December31, 2025. Nonaccrualloans totaled$7.4

million at September

30, 2026, a$2.7 million decrease fromJune 30, 2026and a$1.2 million decrease fromDecember 31, 2025.

Other real estate

totaled $2.4million at September30, 2026,a $1.1million decrease fromJune 30, 2026,and a$0.4 million increase

over December 31, 2025.

Further, classified loanstotaled $20.8million at September30, 2026, a$9.0 million decrease fromJune 30,

2026, and

a $6.5 million increase overDecember 31, 2025.

Deposits

. Average total

deposits were $3.648 billion for thethird quarter of2026, a decreaseof $31.2 million, or 0.9%, fromthe

second quarter

of 2026, andcomparableto the fourthquarter of2025. At September30, 2026, totaldeposits were $3.667billion, a

decrease of

$54.4 million, or 1.5%, fromJune 30, 2026, andan increaseof $4.3 million, or 0.1%, over December31, 2025. Total

public funds

balanceswere $503.2 million at September30, 2026, $561.5million at June 30, 2026, and $654.7million at December

31, 2025.

Capital

. At September 30, 2026,

we were “well-capitalized”with a totalrisk-based capitalratio of 22.99%and atangible common

equity ratio (a non-GAAP

financial measure) of11.25% comparedto 22.35%and 11.03%,respectively,

June 30, 2026,

and 21.45%

and 10.79

%, respectively,

December 31, 2025.

At September 30, 2026,all of our regulatory capitalratios exceededthe threshold to

be “well-capitalized”

under the BaselIII capitalstandards.

RESULTS

OF OPERATIONS

The following table

provides a condensedsummary of our resultsof operations -a discussion of the variouscomponentsare discussed

in further detail

below.

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

(Dollars in Thousands,

except per sharedata)

2026

2025

2026

2025

Interest Income

52,486

51,838

51,431

155,344

152,672

Taxable

Equivalent Adjustments

132

133

Total Interest

Income(FTE)

52,535

51,881

51,476

155,476

152,805

Interest Expense

7,476

7,640

7,874

23,319

24,384

Net Interest Income

(FTE)

45,059

44,241

43,602

132,157

128,421

Provision for Credit Losses

(80)

919

1,881

1,551

3,269

Taxable

Equivalent Adjustments

132

133

Net Interest Income

After Provision for Credit Losses

45,090

43,279

41,676

130,474

125,019

Noninterest Income

19,384

20,599

22,331

59,916

62,252

Noninterest Expense

42,295

42,640

42,916

126,308

124,155

Income

Before IncomeTaxes

22,179

21,238

21,091

64,082

63,116

Income

Tax Expense

5,239

4,961

5,141

15,048

15,264

Net Income

Attributable to CommonShareowners

16,940

16,277

15,950

49,034

47,852

Basic Net Income

Per Share

0.99

0.95

0.93

2.87

2.81

Diluted Net Income Per Share

0.99

0.95

0.93

2.86

2.80

Net Interest Income

Net interest income

represents our singlelargest source of earningsand is equal to interestincome and feesgenerated byearning assets

less interest expense

paid on interest bearingliabilities.This informationis provided on a “taxableequivalent”basis to reflect thetax-

exempt status

of income earnedon certain loansand stateand local governmentdebt obligations.We provide ananalysis ofour net

interest income

including averageyields and ratesin Table I, “AverageBalances& Interest Rates,”on page 51.

Tax

-equivalent net interest income

for the third quarter of2026 totaled $45.1million, compared to$44.2 million for the secondquarter

of 2026, and

$43.6 million for the third quarterof 2025. Comparedto the secondquarter of2026, the increasewas primarily

attributable

to higher income frominvestmentsecurities and loaninterest income, in additionto lower deposit interest expense,

partially offset

by lower overnight fundsincome due tolower average balances.The increase in investmentsecurities income reflected

new investment

purchases athigher rates andhigher balances aswe deploy additionalliquidity into the investmentsecurity portfolio.

The decrease in deposit

interest expense wasprimarily driven by loweraverage balanceson seasonalpublic funds accountsandlower

rates on time deposits.

One additional calendarday alsocontributed tothe increase overthe second quarterof 2026. Theincrease over

the third quarter

of 2025was also driven by thesame aforementionedfactors.

For the first nine

months of2026, tax-equivalent netinterest income totaled$132.2 million comparedto $128.4 million for thesame

period of 2025.

The increase was primarily attributableto higher investmentsecurities income andlower deposit interest expense,

partially offset

by lower loan interest incomeand overnightfunds income.New investment purchasesat higher yields and higher

balances

drove the increasein investment securities income.The decrease in depositinterest expense wasprimarily attributableto

lower rates across

several productlines. Lower average loanbalancescontributed tothe decreasein loan interest income,while the

decrease in overnight funds

income reflectedthe deploymentof more liquidity into theinvestmentportfolio as well as a lower average

overnight funds

rate.

Our net interest margin

for the third quarterof 2026was 4.42%, anincrease of sevenbasis points over thesecond quarterof 2026and

an increase of

eight basis points over thethird quarter of2025. For the first nine monthsof 2026, ournet interest marginincreased by

six basis points to

4.34% comparedto the sameperiod of 2025.The increase in net interestmargin over all prior periods waslargely

attributable

to higher investmentsecurity yield driven by new purchasesat higher rates andlower deposit costs. For thethird quarter of

2026, our cost

of fundswas 73 basis points,a decreaseof two basis pointsfrom the secondquarter of2026 andfive basis pointsfrom

the third quarter

of 2025. Our costof deposits (including noninterestbearing accounts)was 74 basis points,76 basis points,and 80

basis points, respectively,

for the sameperiods.

Provision for

Credit Losses

We recorded

a provision benefit forcredit losses of $0.1million for the thirdquarter of 2026, comparedto a provision expenseof $0.9

million for the second

quarter of2026 and$1.9 million for the third quarterof 2025. For thefirst nine months of2026, we recordeda

provision expense

for credit losses of $1.6million comparedto $3.3 million for the sameperiod of 2025.For the first nine monthsof

2026, the provision

reflected a $1.4million expense for loansHFI anda $0.1million expense for unfundedloan commitments

compared

to a $3.4million expense for loansHFI and

$0.1 million benefit for unfunded

loan commitmentsfor the sameperiod

2025. We discuss

the various factorsthat impactedour provision expensein further detail below underthe heading Allowancefor

Credit Losses.

Noninterest Income

Noninterest income

for the third quarterof 2026totaled $19.4million, a $1.2 million, or 5.9%, decrease fromthe second quarterof

2026 and

a $2.9 million, or 13.2%, decreasefrom the third quarterof 2025. Thedecrease fromthe second quarterof 2026was

attributable

to decreases in mortgagebanking revenuesof $1.0 million, deposit feesof $0.5 million andother income of$0.2 million

partially offset

by a $0.5million increase in wealth managementfees. The decreasein mortgage bankingrevenues was primarilydue

to lower production

volume andthe decreasein deposit fees reflectedlower overdraft feesattributableto processing changesthat

better align with industry

practices. The increasein wealth managementfees was primarily dueto higher retail brokerage fees.

The decrease from

the third quarterof 2025was driven by decreasesin mortgage bankingrevenues of $1.1million, deposit fees of

$0.7 million, other

income of $0.7million and wealth managementfees of $0.5million, partially offsetby an increasein bankcard

fees of $0.1

million. The decrease in mortgagebanking revenueswas due to lower productionvolume andgain on sale margin. The

decrease in deposit

fees reflected lower overdraftfees. The decreasein other income reflecteda $0.7 million gain fromthe sale ofour

insurance subsidiary

in the third quarter of2025 – theadvisors atthis subsidiary also serviced retail brokerageclients which drove the

decline in wealth

managementfees.

For the first nine

months of2026, noninterestincome totaled$59.9 million, a $2.3 million, or 3.8%, decreasefrom the sameperiod of

2025, attributable

to decreases in wealthmanagementfees of $3.3million partially offsetby increases in other incomeof $0.7million

and bank card

fees of $0.3 million. The decreasein wealth managementfees was attributableto decreases in retail brokeragefees (due

to lower assets under

management)and lower insurancecommissions (attributableto the aforementionedsale of our insurance

subsidiary). The increase

in other incomewas primarily attributableto increases in other fees/commissionsof $0.3 million andbank

owned life insurance

income of $0.2million. The increase in bankcard fees reflectedhigher card volume.

Noninterest income

represented 30.1%of operating revenues(net interest income plusnoninterest income)for the third quarterof

2026 compared

to 31.8% for thesecond quarterof 2026and 33.9%for the third quarterof 2025. For thefirst nine monthsof 2026,

noninterest income

represented 31.2%of operating revenuescomparedto 32.7%for the sameperiod of 2025.

The table below reflects

the majorcomponentsof noninterestincome.Three MonthsEnded

Nine Months Ended

September 30,

June 30,

September 30,

(Dollars in Thousands)

2026

2025

2026

2025

Deposit Fees

5,168

5,656

5,877

16,422

16,258

Bank Card

Fees

3,830

3,858

3,733

11,318

11,021

Wealth Management

Fees

4,640

4,185

5,173

12,876

16,142

Mortgage Banking

Revenues

3,673

4,660

4,794

12,585

12,804

Other

2,073

2,240

2,754

6,715

6,027

Total Noninterest

Income

19,384

20,599

22,331

59,916

62,252

Significant components

of noninterestincome are discussedin more detail below.

Deposit Fees

. Deposit fees for

the third quarterof 2026totaled $5.2million, a decrease of$0.5 million, or 8.6%, from the second

quarter of

2026, anda decreaseof $0.7 million,or 12.1%, from thethird quarter of2025. For the first nine monthsof 2026, deposit

fees totaled $16.4

million, a $0.2 million,or 1.0%, increase overthe same period of 2025. Compared to the secondquarter of 2026 and

third quarter

of 2025, thedecreases reflectedlower overdraft feesattributableto processing changesthat betteralign with industry

practices. Compared

to the first nine monthsof 2025, theincrease was primarily dueto higher service charge fees andcommercial

account

analysis fees.

Bank Card Fees

. Bank card fees for the third

quarter of 2026totaled $3.8million,

decrease of

$0.1 million,or 0.7%, from thesecond

quarter of

2026, andan increase of$0.1 million, or 2.6%, over the third quarterof 2025. For the first ninemonths of2026, bankcard

fees totaled

$11.3 million, a $0.3million, or 2.7% increaseover the sameperiod of 2025. Theincrease over thefirst nine months of

2025 reflected

higher card volume.

Wealth

ManagementFees

. Wealth management

fees include trust feesthrough CapitalCity Trust (i.e., managedaccountsand

trusts/estates),

and retail brokeragefees through CapitalCity Investments(i.e., investment, insuranceproducts, andretirement

accounts)

.Wealth managementfees for the thirdquarter of2026totaled $4.6million, an increase of $0.5million, or 10.9%, over the

second quarter of 202

6and a $0.5 million,or 10.3%, decrease fromthe third quarter of 2025.For the first nine monthsof 2026, wealth

management

fees totaled $12.9 million, adecrease of $3.3 million,or 20.2%, from thesame period of 2025. Theincrease comparedto

the second quarter

of 2026was driven by higher retail brokeragefees. The decreasecomparedto the prior year periodswas primarily

attributable

to a decreasein retail brokerage assetsunder management.Further, to a lesser extent,lower insurance commissions

contributed to

the decreasesand reflectedthe sale of ourinsurance subsidiaryin the third quarter of2025. At September30, 2026,

total assets

under managementwere approximately$2.892 billion comparedto $2.839billion at June 30, 2026and $3.244 billion at

September 30,

2025. The increaseover June 30, 2026reflected higher accountvaluations.Comparedto September30, 2025, the

decline was due

to lower retail brokerageassets partiallyattributableto the sale ofour insurance subsidiaryin the third quarterof

2025.

Mortgage Banking Revenues.

Mortgage banking revenues

totaled $3.7 millionfor the third quarterof 2026, adecrease

$1.0 million,

or 21.2%, from

the second quarterof 2026and adecrease

$1.1 million, or 23.4%, from the

third quarter of2025. For the first nine

months of 2026,

mortgage bankingrevenues totaled$12.6 million,a decreaseof $0.2 million, or 1.7%, from thesame period of2025.

Compared

to the secondquarter of2026, the decreasewas attributableto lower production volume.The decrease comparedto the

prior year periods was

due to lower productionvolume andgain on sale margin.We provide adetailed overview ofour mortgage

banking operation,

including a detailed break-down of mortgagebanking revenues,mortgage servicing activity,and warehouse

funding within Note

4 – Mortgage BankingActivities in the Notes toConsolidatedFinancial Statements.

Other

. Other income totaled

$2.1 million for the third quarterof 2026, adecrease

$0.2 million, or 7.5%, from the second

quarter of

2026, and a decrease

of $0.7 million, or 24.7%, fromthe third quarter of2025. For the first nine monthsof 2026, otherincome totaled

$6.7 million,

an increase of $0.7million, or 11.4%, over the same periodof 2025. Comparedto the third quarterof 2025,the decrease

was due to the

aforementioned$0.7 million gain from thesale of our insurancesubsidiary in the third quarterof 2025.The increase

over the first nine

months of2025 was primarilyattributableto increases in other fees/commissionsof $0.3 million andbank owned

life insurance income

of $0.2 million.

Noninterest Expense

Noninterest expense

for the third quarterof 2026totaled $42.3million, a $0.3 million, or 0.8%, decrease fromthe second quarterof

2026 and a $0.6

million, or 1.4%, decreasefrom the third quarter of2025. The decreasefrom the second quarterof 2026 was primarily

attributable

to decreases in compensationexpense of$0.2 million (commission expense)and otherexpense of$0.1 million. A $0.5

million decrease

in other real estateexpense thatwas partially offsetby a $0.3million increase in telephone expensedrove the

variance

in other expense. Thedecrease fromthe third quarterof 2025was also driven by thesame aforementionedfactors.

For the first nine

months of 2026, noninterestexpense totaled$126.3 million, a $2.2million, or 1.7%, increase overthe sameperiod of

2025 and

reflected increases in otherexpense of$3.0 million and occupancyexpense of$0.8 million partially offsetby a $1.6million

decrease in compensation

expense. The increasein other expensewas primarily due to a$3.9 million increase in ORE expense,

reflecting lower gains

on property salescomparedto the prior year period, which includeda significant gain fromthe sale ofour

operations center

building in the first quarterof 2025. Lower charitablecontribution expenseof $0.6 million andprofessionalfee

expense of

$0.6 million partially offsetthe increase. The increasein occupancyexpense reflectedhigher expense for FF&E

maintenance

agreements andsoftware licenses. The decreasein compensationexpense reflectedlower salary expenseof $1.1 million

and associate

benefit expenseof $0.5 million. Lower commission expensedrove the decline in salaryexpense andthe decreasein

associate

benefit expensewas primarily attributableto lower stock basedcompensation.

The table below reflects

the majorcomponentsof noninterestexpense.Three MonthsEnded

Nine Months Ended

September 30,

June 30,

September 30,

(Dollars in Thousands)

2026

2025

2026

2025

Salaries

21,502

21,668

21,740

64,542

65,636

Associate Benefits

4,118

4,168

4,316

12,617

13,158

Total Compensation

25,620

25,836

26,056

77,159

78,794

Premises

3,132

3,096

3,176

9,407

9,620

Equipment

4,162

4,223

3,861

12,289

11,281

Total Occupancy

7,294

7,319

7,037

21,696

20,901

Legal Fees

492

537

491

1,529

1,474

Professional Fees

1,460

1,400

1,621

4,165

4,761

Processing Services

2,513

2,440

2,475

7,386

7,434

Advertising

787

854

711

2,511

2,350

Telephone

1,148

845

762

2,813

2,195

Insurance

– Other

735

738

750

2,205

2,239

Other Real Estate

Owned, net

(352)

117

(556)

(4,431)

Pension - Other

(747)

(744)

(871)

(2,236)

(2,616)

Miscellaneous

3,345

3,298

3,866

9,636

11,054

Total Other

9,381

9,485

9,823

27,453

24,460

Total Noninterest

Expense

42,295

42,640

42,916

126,308

124,155

Significant components

of noninterestexpense arediscussed in more detail below.

Compensation.

Compensation

expense totaled$25.6million for the third quarterof 2026, adecrease of$0.2 million, or 0.8%, from

the second quarter of

2026 and a decreaseof $0.4million, or 1.7%, from the third quarterof 2025. Comparedto the secondquarter of

2026, the decrease

reflected a $0.2million decrease in salary expense(primarily commission expense). Comparedto the third quarter

of 2025, the

decrease reflectedlower salaryexpense of$0.2 million (primarily commission expense)and lower associatebenefits of

$0.2 million (primarily

lower healthinsurance costs).

For the first nine

months of 2026, compensationexpense totaled$77.2 million comparedto $78.8 million for thesame period of2025

with the $1.6 million

decrease reflectiveof lower salaryexpense of$1.1 million and associatebenefit expenseof $0.5 million. Lower

commission expense

drove the decline in salaryexpense andthe decreasein associate benefitexpense was primarilyattributableto

lower health

care insurancecosts.

Occupancy

. Occupancy

expense totaled$7.3 million for the third quarterof 2026, comparableto the secondquarter of2026 and

$0.3 million, or 3.7%,

increase over thethird quarter of2025. For the first nine monthsof 2026, occupancyexpense totaled$21.7

million,

a $0.8 million,or 3.8%, increaseover the sameperiod of 2025. Theincrease comparedto all prior periods was primarily

attributable

to higher FF&E maintenanceagreements andsoftware license expense.

Other

. Other expense totaled

$9.4 million for the third quarterof 2026, a$0.1 million, or 1.1% decreasefrom the secondquarter of

2026 and

a $0.4 million, or 4.5%, decreasefrom the thirdquarter of2025. For the first nine monthsof 2026, otherexpense totaled

$27.5 million,

a $3.0 million, or 12.2%,increase over thesame period of2025. Comparedto the secondquarter of2026and thethird

quarter of

2025,the decreasewas primarily attributableto

decrease in other

real estate expense(ORE) that was partiallyoffset by

higher telephone

expense. The increaseover the first nine monthsof 2025was primarily due to a$3.9 million increase in ORE

expense, which reflected

a lower level of gainsfrom the sale of properties,namely a large gainrealized from thesale of our operations

center building in the

first quarterof 2025. Lower expensefor charitablecontributions of$0.6 million and professionalfees of $0.6

million were partially

offsetting.

Our operating efficiency

ratio (expressed asnoninterest expenseas a percentageof the sumof taxable-equivalent netinterest income

plus noninterest income)

was 65.63% forthe third quarter of 2026 comparedto 65.76% for the second quarterof 2026and 65.09%for

the third quarter

2025. For the first nine months

of 2026, this ratiowas 65.76% comparedto 65.11%for the sameperiod of 2025.

Income Taxes

We realized income

tax expenseof $5.2 million (effectiverate of 23.6%)for the third quarterof 2026, comparedto $5.0 million

(effective rate of 23.4%)

for the second quarterof 2026 and $5.1 million(effective rate of 24.4%)for the third quarterof 2025.For the

first nine months

of 2026, we realized incometax expenseof $15.0 million (effectiverate of 23.5%)comparedto $15.3 million

(effective rate

of 24.2%) for thesame period of2025. Taxbenefits accruedfrom a solartax credit investmentin 2026 drovethe

decrease in our effective

tax ratecomparedto the prior year periods. Absentdiscrete items or new taxcredit investments, weexpect

our annual

effective taxrate to approximate23-24% for 2026.

FINANCIAL CONDITION

Average

earning assets totaled$4.038 billion for the third quarterof 2026, adecrease of$30.6 million, or 0.8%,from the second

quarter of 2026, and

an increase of $2.4 million,or 0.1% over the fourthquarter of 2025. Comparedto the second quarterof 2026,the

change in earning asset

mix reflected a$27.2 million decreasein overnight funds, a$10.3 million decreasein loans held for

investment, and

a $3.5 million decreasein loans held for sale (“HFS”), partiallyoffset bya $10.5million increase in investment

securities. Compared

to the fourthquarter of2025, the changereflected a $171.8million increase in investmentsecurities and a$2.7

million increase in

loans HFS, partially offsetby a $99.7million decrease in overnight fundsand a$72.5 million decreasein loans

held for investment.

Investment Securities

Average

investmentstotaled $1.178billion for the third quarter of2026, a $10.6million, or 0.9%,increase over thesecond quarterof

2026 and

$171.8 million,

or 17.1%, increase overthe fourth quarter of2025. Averageinvestmentsrepresented 29.2%of our average

earning assets for

the third quarterof 2026comparedto 28.7%for the secondquarter of2026and 24.9%for the fourthquarter of

2025. For the remainder

of 2026, we will continueto monitor ouroverall liquidity position andmarket conditionsto determine if cash

flow from the

investmentportfolio should bereinvested or utilized to supportloan growth.

The investment

portfolio is a significant componentof our operationsand, as such,it functions asa key elementof liquidity and

asset/liability management.

Two types ofclassifications areapprovedfor investmentsecurities which are Available-for-Sale (“AFS”)

and Held-to-Maturity

(“HTM”). At September 30,2026, $862.1million, or 73.0%, of the investmentportfolio was classified asAFS

and $315.1

million, or 26.7%, was classified asHTM.The averagematurityof our totalinvestmentportfolio

September 30,

2026

was 2.98 years

comparedto 2.95 years

June 30, 2026

and 2.57years

December 31, 2025.

The durationof our totalinvestment

portfolio

September 30,

2026 was 2.63years comparedto 2.60 years

June 30, 2026

and 2.12years

December 31, 2025.

Additional information

on unrealized gains/losses in the AFS and HTMinvestmentportfolios is provided in Note 2 –Investment

Securities.

We determine

the classification of asecurity

the time of acquisition

based on how the purchasewill affect our asset/liabilitystrategy

and future

business plans andopportunities. Weconsider multiple factorsin determining classification,including regulatory capital

requirements, volatility

in earnings or other comprehensiveincome, andliquidity needs. Securities in theAFS portfolio are recordedat

fair value with unrealized

gains and losses associatedwith these securities recordednet of tax,in the accumulatedother

comprehensive

loss componentof shareowners’ equity.HTM securities are acquiredor owned with the intentof holding themto

maturity.

HTM investmentsare measured

amortized

cost. We do nottrade, nor dowe presently intend tobegin trading investment

securities for the

purpose of recognizinggains and thereforewe do not maintaina trading portfolio.

At September

30, 2026, therewere 848 positions (combinedAFS and HTM) with unrealizedpre-tax losses totaling $52.3million. 91

of these positions

are U.S. Treasurybonds and carrythe full faith andcredit of the U.S. Government.688 are U.S. governmentagency

securities issued by

U.S. governmentsponsored entities. Webelieve the long historyof no credit losses ongovernment securities

indicates that

the expectationof nonpaymentof the amortizedcost basis is effectivelyzero. At September30, 2026, all collateralized

mortgage obligation

securities, mortgage-backedsecurities, Small Business Administrationsecurities, U.S. Agency,and U.S. Treasury

bonds held were rated

AA+ or higher. The remaining69 positions (municipalsecurities andcorporatebonds) havea credit

component.

At September 30, 2026,municipal securities andcorporatedebt securities had

immaterial allowance

for credit losses.

None of these securities

were past dueor in nonaccrualstatus

September 30,

2026.

Loans HFI

Average

loans HFI decreasedby $10.3 million, or 0.4%,from the secondquarter of2026, anddecreased by$72.5 million, or 2.8%,

from the fourth

quarter of2025. Comparedto the secondquarter of2026, the decline wasprimarily attributableto decreasesin

commercial real estate

loans of $8.4million, residential real estate loansof $4.5 million, andconstruction loansof $3.7 million,

partially offset

by increases in consumerloans (primarily indirect auto)of $2.2 million, homeequity loans of$2.0 million, and

commercial loans

of $1.5 million. Comparedto the fourthquarter of2025, the decline wasprimarily attributableto decreasesin

residential real estate

loans of $35.2million, commercial real estateloans of $33.0million, construction loansof $7.8 million,

commercial loans

of $5.1 million, andconsumer loans(primarily indirect auto) of$0.7 million, partially offsetby increases in home

equity loans of

$7.9 million.

Loans HFI

at September30, 2026, decreased$10.1 million, or 0.4%,from June 30,2026, anddecreased $56.4million, or 2.2%,from

December 31, 2025. Compared

to June 30, 2026, thedecline was primarily attributableto decreases in commercialreal estate loansof

$14.3 million, commercial

loans of $4.4million, and other loansof $2.3 million, partially offsetby increases in residentialreal estate

loans of $5.9

million, consumer loans(primarily indirect auto)of $3.2 million, homeequity loans of$1.7 million, and construction

loans of $0.2

million. Comparedto December 31, 2025,the decline was primarily attributableto decreases in commercialreal estate

loans of $32.4

million, residential real estateloans of $16.9million, commercial loans of$12.2 million, and otherloans of$4.4

million, partially offset

by increases in homeequity loans of$5.2 million, construction loansof $2.4 million, andconsumerloans

(primarily indirect auto)

of $1.7 million.

Without compromising

our credit standards,changing our underwriting standards,or taking on inordinateinterest rate risk,we

continue to closely monitor

our marketsand makeminor adjustmentsas necessary.

Credit Quality

Nonperforming assets

(nonaccrualloans andother real estate)totaled $9.7million at September30, 2026, comparedto $13.4 million

at June 30, 2026 and

$10.5 million at December31, 2025. At September30, 2026, nonperformingassets as a percentageof total assets

was 0.22%, compared

to 0.30% atJune 30, 2026and 0.24%at December31, 2025. Nonaccrualloans totaled$7.4 million at

September 30, 2026,

a $2.7 million decreasefrom June 30,2026 anda $1.2 million decreasefrom December31, 2025. Other real

estate totaled

$2.4 million at September30, 2026, a$1.1 million decrease fromJune 30, 2026and a$0.4 million increase over

December 31, 2025.

Further, classified loanstotaled $20.8million at September30, 2026, a$9.0 million decrease fromJune 30, 2026

and a

$6.5 million increase over December31, 2025.

Allowance for

Credit Losses

The allowance

for credit losses is a valuationaccountthat is deductedfrom the loans’amortizedcost basis to presentthe net amount

expected to

be collected on theloans.The allowancefor credit losses is adjustedby a credit loss provision which is reportedin

earnings and

reduced by thecharge-offof loan amounts(net of recoveries).Loans arecharged offagainst theallowance when

management

believes the uncollectability ofa loan balance is confirmed.Expected recoveriesdo not exceed the aggregateof amounts

previously charged

-off andexpected tobe charged-

off.

Expected credit loss inherent

in non-cancellableoff-balancesheet credit

exposures is provided

through the credit lossprovision butrecorded

a separate

liability included in other liabilities.

Management

estimates the allowance balanceusing relevant availableinformation,from internal andexternal sourcesrelating to past

events, current conditions,

and reasonableand supportableforecasts. Historicalloan defaultand loss experienceprovides the basisfor

the estimation

of expectedcredit losses. Adjustmentsto historical loss informationincorporate management’sview of current

conditions and

forecasts.

At September 30, 2026,

the allowance for creditlosses for loansHFI totaled $30.4million comparedto $31.0 million

June 30, 2026

and $31.0

million

December 31, 2025.

Activity within the allowanceis provided in Note 3 – LoansHeld for Investmentand

Allowance for Credit

Losses in the Notes toConsolidatedFinancial Statements.Comparedto June 30, 2026,the decline in the

allowance reflected

improved credit qualitymetrics and alower level of net loan charge-

offs

of 8 basis points

of averageloans for the

third quarter

of 2026versus 14 basis pointsfor the secondquarter of2026 and18 basis points forthe third quarterof 2025. Net loan

charge-

offs

for the nine months

ended September30, 2026 were 11basis points comparedto 12 basis pointsfor the sameperiod of

2025. Compared

to December 31, 2025,the decline in the allowancewas primarily attributableto a decline in loanbalances.At

September 30, 2026,

the allowance represented1.22% of loans HFI comparedto 1.24%

June 30, 2026,

and 1.22%

December 31,

2025.

At September

30, 2026, theallowance forcredit losses for unfundedcommitmentstotaled $2.2million compared to$2.2 million and

$2.1 million

June 30, 2026

and December31, 2025, respectively.The slight change in the allowancefor unfundedcommitments

from December 31, 2025

reflected a variancein the level of unfundedloan commitments.The allowancefor unfundedcommitments

is recorded in other

liabilities.

Deposits

Average

total depositswere $3.648 billion for thethird quarter of2026, a decreaseof $31.2 million, or 0.9%, fromthe second quarter

of 2026, and

comparableto the fourthquarter of2025. Comparedto the secondquarter of2026, the decreasewas primarily due to

lower public funds

balancesof $63.8 million (primarily NOW accounts)due to the seasonalreduction in those balances,partially

offset by

higher core deposit balancesof $32.6 million (primarily MMAand noninterestbearing checking).

At September

30, 2026, totaldeposits were $3.667 billion, a decreaseof $54.4 million, or 1.5%,from June 30,2026, andan increase

of $4.3 million, or

0.1%,over December 31, 2025.The decrease fromJune 30, 2026,was driven by lower public fundsbalancesof

$58.3 million (primarily

NOW accounts),partially offsetby an increasein core deposit balancesof $3.9 million (primarily NOW

accounts).

The increase over December31, 2025, was primarilydue to core depositgrowth of $155.8million, partially offsetby lower

public funds

balancesof $151.5million. Total public fundsbalanceswere $503.2 million at September30, 2026, $561.5million at

June 30, 2026,

and $654.7million at December 31, 2025,respectively.

Business deposit

transactionaccountsclassified as repurchaseagreements averaged$14.2 million for thethird quarter of2026, an

increase of $3.2 million

over the second quarterof 2026and a decreaseof $6.5 million fromthe fourthquarter of2025. At September

30, 2026, repurchase

agreement balanceswere $7.2 million comparedto $7.4 million at June30, 2026and $22.0million at December

31, 2025.

We continue

to closely monitor our costof deposits anddeposit mix as we managethrough the currentrate environment.

MARKET RISK AND

INTEREST RATESENSITIVITY

Market Risk and Interest

Rate Sensitivity

Overview.

Market risk arises from

changes in interest rates,exchangerates, commodityprices, and equityprices.We haverisk

management

policies designed to monitor andlimit exposure to marketrisk and we do notparticipatein activities thatgive rise to

significant market

risk involving exchangerates, commodityprices, or equity prices.In asset andliability managementactivities, our

policies are designed

to minimize structuralinterest rate risk.

Interest Rate Risk Management.

Our net income

is largely dependenton net interest income.Net interest income is susceptible to

interest rate

risk to the degree thatinterest-bearing liabilities matureor reprice on a differentbasis thaninterest-earning assets.When

interest-bearing liabilities

mature or reprice morequickly thaninterest-earning assets in agiven period, a significantincrease in

market rates

of interest could adverselyaffectnet interest income.Similarly, when interest-earning assetsmature or reprice more

quickly than

interest-bearing liabilities, fallingmarket interestrates could result in a decreasein net interest income.Net interest

income is also affected

by changes in theportion of interest-earningassets thatare fundedby interest-bearing liabilities rather thanby

other sources of

funds, such asnoninterest-bearing depositsand shareowners’equity.

We have

established whatwe believe to be a comprehensiveinterest rate risk managementpolicy, which is administered by

management’s

Asset Liability ManagementCommittee(“ALCO”).The policy establishes limits ofrisk, which are quantitative

measures of the percentage

change in net interestincome (a measureof net interest incomeat risk) and thefair value ofequity capital

(a measure

of economicvalue of equity(“EVE”) at risk) resulting from a hypotheticalchange in interest ratesfor maturitiesfrom one

day to 30

years.We measurethe potentialadverse impactsthat changinginterest rates mayhave onour short-term earnings, long-

term value, and

liquidity by employing simulationanalysis throughthe use of computermodeling.The simulation modelcaptures

optionality factors

such as call featuresand interest rate caps andfloors embeddedin investment andloan portfolio contracts.As with

any method

of gauging interest rate risk, there arecertain shortcomingsinherent in the interest ratemodeling methodologyused by

us.

When interest rates change,actualmovementsin different categoriesof interest-earning assetsand interest-bearingliabilities, loan

prepayments,

and withdrawalsof time andother deposits, maydeviate significantlyfrom assumptionsused in the model.Finally, the

methodology

does not measureor reflect the impactthat higher ratesmay haveon adjustable-rate loan clients’ ability toservice their

debts, or the impact

of rate changeson demandfor loan anddeposit products.

The statement

of financialcondition is subject totesting for both paralleland upwardand downwardshifts in interest rates(assuming

no balance

sheet growth) to indicatethe inherent interest raterisk. We prepare a basecase (assumesa static rateenvironment)and

several alternative

interest rate simulationsfor various ranges ofupward and downwardinterest rate changes.This analysis is prepared

quarterly and

reported to ALCO, our MarketRisk Oversight Committee(“MROC”), our Risk OversightCommittee(“ROC”) andthe

Board of

Directors. We will periodicallyaugment our interestrate simulationswith alternative interestrate scenarios thatmay include

various non-parallel

shifts in interest rates, includinga flatteningor steepening of theyield curve.

Our goal is to structure

the statementof financialcondition so thatnet interest earnings atrisk over 12-month and24-monthperiods

and the

economic valueof equity atrisk do not exceedpolicy guidelines at the variousinterest rate shocklevels. We attemptto

achieve this goal by

balancing, within policylimits, the volumeof floating-rate liabilities with a similar volumeof floating-rate assets,

by keeping the average

maturityof fixed-rate assetand liability contractsreasonablymatched,by managingthe mix of ourcore

deposits, and

by adjustingour rates to marketconditions on acontinuing basis.

Analysis.

Measures of

net interest incomeat risk producedby simulation analysisare indicators ofan institution’sshort-term

performance

in alternative rateenvironments.These measuresare typically basedupon arelatively brief period, anddo not

necessarily indicate

the long-term prospectsor economic valueof the institution.The following table presents ournet interest income

simulation results

for gradual 12-monthand 24-month “ramp”scenarios applied to the basescenario. The “ramp”scenario is a parallel

shift applied gradually

over a 12-monthperiod for the projected12-monthand 24-monthperiod on a prorata basis.

ESTIMATED

CHANGES INNET INTEREST INCOME

As of September 30, 2026

% Change in NII

Change in Interest

Rates

12 Months

24 Months

+200 bp Ramp

3.9%

17.5%

+100 bp Ramp

2.0%

11.1%

-100 bp Ramp

-2.0%

-1.9%

-200 bp Ramp

-4.0%

-8.9%

As of June 30, 2026

% Change in NII

Change in Interest

Rates

12 Months

24 Months

+200 bp Ramp

4.8%

18.0%

+100 bp Ramp

2.4%

11.0%

-100 bp Ramp

-2.3%

-3.6%

-200 bp Ramp

-4.8%

-11.5%

The Net Interest Income

(“NII”) at Risk positionof an instantaneous,parallel rate shockindicates thatin the short-term (over thenext

12 months),

all rising rate environmentswill positively impactthe net interest marginof the Company,while declining rate

environment

swill have anegative impacton the net interestmargin.Comparedto the secondquarter of2026, these metrics became

more favorable

in the declining rate scenariosdue to the deploymentof variablerate overnight fundsinto the investmentsecurities

portfolio.

The measures

of equity valueat risk indicate our ongoingeconomic valueby considering the effectsof changesin interest rates onall

of our cash

flows by discounting the cashflows to estimatethe present valueof assets andliabilities. The difference betweenthese

discounted values

of the assetsand liabilities is the economic valueof equity,which in theory approximatesthe fair valueof our net

assets.

ESTIMATED

CHANGES INECONOMIC VALUEOF EQUITY

% Change in EVE

EVE Ratio

Changes in Interest

Rates

September 30, 2026

June 30, 2026

September 30, 2026

June 30, 2026

+200 bp Shock

4.6%

10.6%

29.9%

27.2%

+100 bp Shock

3.2%

7.0%

29.0%

25.9%

-100 bp Shock

-6.1%

-9.0%

25.5%

21.4%

-200 bp Shock

-14.9%

-20.7%

22.7%

18.3%

At September

30, 2026, the economicvalue of equitywas favorablein all rising rate environments andunfavorablein the falling rate

environment

s.EVE was within prescribedtolerance levels asthe EVE ratio (EVE/EVA)in all rate scenariosis greater than5.0%.

Factors that

can impactEVE values include the absolutelevel of rates, the overallstructure of thebalancesheet (including liquidity

levels), pre-payment

speeds, loan floors, andthe changeof model assumptions.

As the interest rate

environmentand thedynamicsof the economycontinue to change,additionalsimulations will be analyzedto

address not

only the changing rateenvironment,but also thechange in mix ofour financialassets andliabilities measured over

multiple years, to

help assess the risk tothe Company.

LIQUIDITY AND CAPITAL

RESOURCES

Liquidity

In general terms, liquidity

is a measurementof our ability to meetour cash needs.Our objective in managingour liquidity is to

maintain

our ability to meetloan commitments,purchase securities or repaydeposits andother liabilities in accordancewith their

terms, without an adverse

impact onour current or futureearnings.Our liquidity strategyis guided by policies thatare formulatedand

monitored by

our ALCO andsenior management,which take into accountthe marketabilityof assets, thesources andstability of

funding and

the level of unfundedcommitments.We regularly evaluateall of our various fundingsources with an emphasison

accessibility,

stability, reliability andcost-effectiveness.Our principal source offunding hasbeen our client deposits, supplemented

by our short-term and

long-term borrowings, primarilyfrom securities sold underrepurchase agreements,federal funds purchasedand

FHLB borrowings.

We believethat the cash generatedfrom operations,our borrowing capacityand our access to capital resourcesare

sufficient to meet

our future operatingcapital andfunding requirements.

At September

30, 2026,we had the abilityto generate approximately$1.745 billion (excludes overnightfunds positionof $340

million) in additional

liquidity through various sourcesincluding variousfederal fundspurchasedlines, Federal Home LoanBank

borrowings, the Federal

Reserve DiscountWindow,and brokereddeposits. We recognizethe importanceof maintainingliquidity and

have developed

a ContingentLiquidity Plan, which addresses variousliquidity stress levels andour response andaction basedon the

level of severity.

We periodicallytest our credit facilitiesfor access tothe fundsbut also understandthat asthe severity of the

liquidity level increases

certain credit facilitiesmay nolonger be available.We conducta liquidity stress test on aquarterly basis

based on

events thatcould potentiallyoccur at theBank andreport results to our ALCO, MROC, ROC, and Boardof Directors.We

believe the liquidity

available to us at September30, 2026was sufficient to meetour ongoing needs andexecute our businessstrategy.

We also view

our investmentportfolio as aliquidity source and havethe option topledge securities in our portfolio as collateralfor

borrowings or deposits,

and/or tosell selected securities. Our portfolioconsists of debtissued by the U.S. Treasury,U.S. governmental

agencies, municipal governments,

and corporateentities. Additional informationon our investmentportfolio is provided within Note 2

– Investment

Securities.

The Bank

maintainedan averagenet overnight funds(i.e., deposits with banks plus FED funds sold,less FED funds purchased)sold

position of $337.9

million in the thirdquarter of 2026 comparedto $365.1million in the second quarterof 2026and $437.5million in

the fourth quarter

of 2025. Comparedto the second quarter of2026, the variancereflected lower averagedeposits andthe deployment

of excess liquidity into

the investmentsecurity portfolio. Comparedto the fourthquarter of2025, the variancewas driven by the

deployment

of excess liquidity into theinvestmentsecurity portfolio. During thefirst nine monthsof 2026, excessliquidity was

partially deployed

into investmentsecurities as loan demandremained selective andmanagementcontinued its disciplined

underwriting approach.

Managementbelieves the repositioning enhancesearnings while maintaining appropriateliquidity levels.

We expect

our capital expenditureswill be approximately$10.0 million over the next12 months,which will primarily consist of

construction of

a new office, officeremodeling, office equipment/furniture,and technologypurchases.Managementexpects that

these capital

expenditures will be fundedwith existing resources withoutimpairing our abilityto meet our ongoingobligations.

Borrowings

Average

short-term borrowingstotaled $45.7 million forthe third quarterof 2026comparedto $44.5 million for thesecond quarterof

2026 and

$41.6 million for the fourthquarter of2025.The increase over thesecond quarterof 2026reflected higher repurchase

agreement balances

.The increase over thefourth quarterof 2025was attributableto higher mortgage warehouseline borrowings.

Additional detail on

warehouse borrowingsis provided in Note 4 –Mortgage BankingActivities in the ConsolidatedFinancial

Statements.

We have

issued two junior subordinateddeferrable interest notesto our wholly owned Delawarestatutorytrusts.The first note for

$30.9 million was issued

to CCBG CapitalTrust I in November2004, of which $10million was retired in April 2016.We made

principal payments

on this note of$4.1 million and $5.1million in the first quarter of 2026and thesecond quarterof 2025,

respectively.

The second notefor $32.0 million was issuedto CCBG CapitalTrust II in May2005. Wemade principalpaymentson

this note of

$5.1 million each in thefirst quarter of2026 andthe second quarterof 2025.The interest paymentfor the CCBG Capital

Trust I borrowing

is due quarterlyand adjustsquarterly to avariable rateof three-monthCME Term SOFR (secured overnight

financing rate) plus

a margin of 1.90%.This note matures onDecember 31, 2034. Theinterest paymentfor the CCBG CapitalTrust II

borrowing is due quarterly

and adjustsquarterly to avariable interest ratebased onthree-monthCME Term SOFR plus a marginof

1.80%. This note

matures onJune 15, 2035.The proceeds fromthese borrowings were used to partiallyfund acquisitions.Under the

terms of each

junior subordinateddeferrable interest note,in the event ofdefault or if we elect todefer interest onthe note, we may

not, with certain

exceptions, declareor pay dividendsor make distributionson our capitalstock or purchaseor acquire anyof our

capital stock.

The Company

previously maintaineda derivativecash flow hedge ofour interest rate risk relatedto our subordinateddebt. The

notional amount

of the derivativeis $30 million ($10 million of the CCBG CapitalTrust I borrowing and$20 million of the CCBG

Capital Trust

II borrowing). In October2025, the interestrate swaps were terminated.Additional detail onthe interest rate swap

agreement is provided

in Note 5 – Derivativesin the ConsolidatedFinancial Statements.

Capital

Our capital ratios

are presentedin the Selected Quarterly FinancialData tableon page 38.At September 30, 2026, our regulatory

capital ratios

exceeded thethreshold to be designatedas “well-capitalized”under the BaselIII capitalstandards.

Shareowners’ equity

was $573.9million at September30, 2026 comparedto $570.1million at June 30, 2026and $552.9million at

December 31, 2025.

For the first nine monthsof 2026, shareowners’equity was positively impactedby net incomeof $49.0million,

the issuance of

stock of $3.5million, and stock compensationaccretion of$1.5 million. Shareowners’ equitywas reduced bya

common

stock dividendsof $13.9 million ($0.81per share), repurchasesof our commonstock of $2.6million (63,088 shares), net

adjustments

totaling $2.5million related to transactionsunder our stock-based compensationplans, andan unfavorablenet changeof

$14.0 million in accumulated

other comprehensiveloss due to an unfavorablefair value markon investmentsecurities driven by

higher bond rates

At September 30, 2026,

our total risk-basedcapital ratio was 22.99%comparedto 22.35% atJune 30, 2026and 21.45%at December

31, 2025. Our common

equity tier 1 capitalratio was 20.43%, 19.80%, and18.56%, respectively,on these dates.Our leverage ratio

was 12.31%, 11.96

%, and 11.77%, respectively, onthese dates.At September 30,2026, all our regulatorycapital ratiosexceeded the

thresholds to be designated

as “well-capitalized”under the Basel III capitalstandards. Further,our tangible commonequity ratio (non-

GAAP financial

measure) was 11.25%at September30, 2026,comparedto 11.03%at June 30,2026, and10.79% atDecember 31,

2025. If our

unrealized held-to-maturitysecurities loss of $16.0 million (after-tax) were recognized in accumulatedother

comprehensive

loss, our adjustedtangible capitalratio would be 10.88%.

Our tangible capital

ratio is also impactedby the recording of ourunfundedpension liability through othercomprehensiveincome in

accordance

with Accounting StandardsCodificationTopic 715. At September30, 2026, June30, 2026 andDecember 31, 2025,the

net pension asset

reflected in other comprehensiveincome was $9.4million. This liability is re-measuredannuallyon December 31

based on

an actuarialcalculationof our pension liability. Significantassumptionsused in calculating theliability include the weighted

average discount rate

used to measure thepresent value of the pensionliability, the weightedaverage expectedlong-term rate of return

on pension plan assets,

and the assumedrate of annual compensationincreases, all of which will vary when re-measured.The discount

rate assumption

used to calculatethe pension liability is subject tolong-term corporatebond ratesat December31

. These

assumptions

and sensitivities are discussedin the section entitled “CriticalAccounting Policiesand Estimates”in Part II, Item7.

Management’s

Discussion and Analysis ofFinancial Conditionand Results ofOperations, ofour 2025Form 10-K.

OFF-BALANCE

SHEET ARRANGEMENTS

We are a party

to financial instrumentswith off-balancesheet risks in the normal course of businessto meet the financing needsof our

clients.

At September

30, 2026,we had $628.8million in commitmentsto extendcredit and $7.3million in standby letters ofcredit.

Commitments

to extendcredit are agreementsto lend to a client solong as there is no violationof anycondition establishedin the

contract.

Commitmentsgenerally have fixedexpiration datesor other terminationclauses andmay require paymentof a fee.Since

many

of the commitmentsare expectedto expire without being drawnupon, the totalcommitmentamountsdo not necessarily

represent future

cash requirements.Standbyletters of credit are conditionalcommitmentsissued by us to guaranteethe performance

of a client to a

third party.We use the samecredit policies in establishing commitmentsand issuing letters of credit aswe do for on-

balance

sheet instruments.

If commitments

arising from these financialinstruments continueto require funding athistorical levels, managementdoes not

anticipate that

such funding will adverselyimpact our ability tomeet our ongoing obligations.In the event these commitmentsrequire

funding in excess

of historical levels, managementbelieves current liquidity, advancesavailablefrom the FHLBand theFederal

Reserve, and

investmentsecurity maturities providea sufficientsource of fundsto meet thesecommitments.

Certain agreements

provide that the commitmentsare unconditionally cancellableby the bankand for thoseagreements noallowance

for credit losses has

been recorded.We haverecorded

allowance for

credit losses on loan commitmentsthat arenot

unconditionally

cancellable bythe Bank,which is included in other liabilities on theConsolidatedStatementsof Financial Condition

and totaled

$2.2 million

September 30,

2026.

CRITICAL ACCOUNTING

POLICIES

Our significant accounting

policies are described in Note 1 tothe ConsolidatedFinancial Statementsincluded in our 2025Form 10-K.

The preparation

of our Consolidated FinancialStatementsin accordancewith GAAP and reporting practices applicableto the banking

industry requires us

to makeestimates andassumptionsthat affectthe reported amountsof assets, liabilities, revenues andexpenses,

and to disclose contingent

assets andliabilities.Actual results coulddiffer from thoseestimates.

We have

identified accountingfor (i) the allowance forcredit losses, (ii) goodwill,(iii) pension assumptions,and (iv) income taxesas

our most critical accounting

policies and estimatesin that they are importantto the portrayal of ourfinancial condition andresults, and

they require our

subjective andcomplex judgmentas a result ofthe need tomake estimatesaboutthe effectsof mattersthatare

inherently uncertain.

These accountingpolicies, including the natureof the estimatesand typesof assumptionsused, are described

throughout

this Item 2, Management’sDiscussion and Analysis ofFinancial Conditionand Results ofOperations, andPart II, Item7,

Management’s

Discussion and Analysis ofFinancial Conditionand Results ofOperations includedin our 2025 Form10-K.

TABLE I

AVERAGE BALANCES & INTEREST RATES (UNAUDITED)

Three Months Ended September 30,

Nine Months Ended September 30,

2026

2025

2026

2025

Average

(Dollars in

Thousands)

Balances

Interest

Rate

Balances

Interest

Rate

Balances

Interest

Rate

Balances

Interest

Rate

Assets:

Loans Held for Sale

26,993

420

6.17

25,276

425

6.68

27,413

1,324

6.46

24,226

1,390

7.67

Loans Held for Investment

(1)(2)

2,495,535

38,277

6.09

2,606,213

39,894

6.07

2,513,086

113,914

6.06

2,641,346

120,359

6.09

Taxable Securities

1,176,534

10,629

3.60

992,260

7,175

2.88

1,153,550

29,920

3.46

993,460

19,644

2.64

Tax-Exempt

Securities

(2)

1,349

4.39

1,620

4.44

1,441

4.35

1,313

4.43

Federal Funds Sold and Interest Bearing

Deposits

337,862

3,194

3.75

356,161

3,964

4.42

369,967

10,271

3.71

342,094

11,369

4.44

Total Earning

Assets

4,038,273

52,535

5.15

3,981,530

51,476

5.12

4,065,457

155,476

5.11

4,002,439

152,805

5.10

Cash & Due

From Banks

70,540

65,085

66,013

68,074

Allowance For Credit

Losses

(31,607)

(30,342)

(31,585)

(30,282)

Other Assets

309,290

301,678

304,254

300,788

TOTAL ASSETS

4,386,496

4,317,951

4,404,139

4,341,019

Liabilities:

Noninterest

Bearing Deposits

1,316,425

1,314,560

1,302,686

1,324,753

NOW Accounts

1,224,587

3,804

1.23

1,198,124

3,782

1.25

1,263,412

11,963

1.27

1,224,402

11,386

1.24

Money Market Accounts

433,430

1,964

1.80

416,656

2,090

1.99

419,028

5,573

1.78

422,817

6,617

2.09

Savings Accounts

511,313

102

0.08

503,189

159

0.13

511,500

334

0.09

506,255

509

0.13

Other Time Deposits

161,771

910

2.23

179,802

1,234

2.72

175,655

3,238

2.46

174,418

3,541

2.71

Total Interest

Bearing Deposits

2,331,101

6,780

1.15

2,297,771

7,265

1.25

2,369,595

21,108

1.19

2,327,892

22,053

1.27

Total Deposits

3,647,526

6,780

0.74

3,612,331

7,265

0.80

3,672,281

21,108

0.77

3,652,645

22,053

0.81

Repurchase

Agreements

14,160

2.20

21,966

158

2.86

13,616

213

2.09

24,752

478

2.58

Other Short-Term

Borrowings

31,532

316

3.98

12,753

1.82

30,984

992

4.28

10,251

354

4.62

Subordinated

Notes Payable

33,303

293

3.45

42,582

383

3.52

36,045

979

3.58

49,113

1,473

3.95

Other Long-Term

Borrowings

567

5.55

681

5.55

635

5.68

755

4.50

Total Interest

Bearing Liabilities

2,410,663

7,476

1.23

2,375,753

7,874

1.32

2,450,875

23,319

1.27

2,412,763

24,384

1.35

Other Liabilities

83,642

85,422

78,126

75,664

TOTAL LIABILITIES

3,810,730

3,775,735

3,831,687

3,813,180

TOTAL SHAREOWNERS’ EQUITY

575,766

542,216

572,452

527,839

TOTAL LIABILITIES

AND SHAREOWNERS’ EQUITY

4,386,496

4,317,951

4,404,139

4,341,019

Interest Rate Spread

3.92

3.81

3.83

3.75

Net Interest Income

45,059

43,602

132,157

128,421

Net Interest Margin

(3)

4.42

4.34

4.28

(1)

Average Balances

include netloan fees,discountsand premiums.Interest incomeincludes loancosts of$0.5 millionand $1.5million forthe three andnine monthsended September30, 2026, and loan costs of $0.4 million and $1.1 million for thethree and nine month periods ended September 30, 2025.

(2)

Interest income

includes theeffects oftaxable equivalentadjustmentsusing a 21%Federal tax rate.

(3)

Taxable equivalent

net interestincome dividedby average earningassets.

Item 3.

QUANTITATIVEAND QUALITATIVEDISCLOSURESABOUT MARKETRISK

See “Market

Risk and InterestRate Sensitivity” in Management’sDiscussion and Analysis ofFinancial Conditionand Results of

Operations, above,

which is incorporatedherein by reference.Managementhas determinedthat noadditionaldisclosures are

necessary to

assess changesin informationaboutmarket risk thathave occurredsince December 31, 2025.

Item 4.

CONTROLS AND PROCEDURES

Evaluation of

Disclosure Controlsand Procedures

At September 30, 2026

,the end ofthe period coveredby this Form 10-Q, our management,including our Chief ExecutiveOfficer and

Chief Financial Officer,

evaluatedthe effectivenessof our disclosure controls andprocedures (as definedin Rule 13a-15(e) under the

Securities Exchange

Act of 1934).Based uponthat evaluation,our Chief ExecutiveOfficer and ChiefFinancial Officer concluded

that, as

of the endof the period coveredby this report,our disclosure controls andprocedures were effective.

Our management,

including our Chief ExecutiveOfficer and ChiefFinancial Officer, hasreviewed our internal control overfinancial

reporting (as defined

in Rule 13a-15(f) underthe Securities ExchangeAct of 1934). During thequarter endedSeptember 30, 2026,

there have

been no significantchanges in our internalcontrol over financialreporting during our most recentlycompleted fiscal

quarter that

have materiallyaffected,or are reasonablylikely to materially affect,our internal control overfinancial reporting.

PART

II.OTHER INFORMATION

Item 1.

Legal Proceedings

We are party

to lawsuits arising out ofthe normalcourse of business.In management'sopinion, there is no knownpending litigation,

the outcome

of which would, individually orin the aggregate, havea materialeffect onour consolidatedresults of operations,

financial position,

or cash flows.

Item 1A.

Risk Factors

In addition

to the other informationset forth in this Quarterly Report,you should carefullyconsider the factorsdiscussed in Part I,

Item 1A. “Risk Factors”

in our 2025Form 10-K, as updatedin our subsequentquarterly reports. Therisks described in our 2025 Form

10-K, and

our subsequentquarterly reports arenot the only risks facingus. Additional risks and uncertaintiesnot currently knownto

us or that

we currently deem to beimmaterial alsomay materiallyadversely affectour business, financialcondition and/oroperating

results.

There have not been

any material changesto the risk factorsdisclosed in Item 1A. of PartI of the Company’sAnnual Reporton Form

10-K for the year

ended December31, 2025, previouslyfiled with the SEC.

Item 2.

Unregistered Salesof Equity Securitiesand Use of Proceeds

None.

Item 3.

Defaults Upon SeniorSecurities

None.

Item 4.

Mine Safety Disclosure

Not Applicable.

Item 5.

Other Information

-1 Trading Plans

During the three months

ended September30, 2026,none of ourdirectors or officers (as definedin Rule 16a-1(f) under theExchange

Act)

adopted

, modified or

terminated

any contract,instruction or written plan forthe purchaseor sale of our securities thatwas

intended to satisfy

the affirmativedefense conditionsof Rule 10b5-1(c)under the ExchangeAct or any “

non-Rule

10b5-1

trading

arrangement”

as definedin Item 408(c) ofRegulation S-K.

Item 6.

Exhibits

(A)

Exhibits

3.1

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

the Registrant’s

Form 8-K (filed 5/3/21) (No. 000-13358).

3.2

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

Form 8-K (filed

12/20/2024) (No. 000-13358).

31.1

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

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

31.2

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

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

32.1

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

to 18 U.S.C. Section 1350.

32.2

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

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

101.SCH

XBRL TaxonomyExtension SchemaDocument

101.CAL

XBRL TaxonomyExtension CalculationLinkbase Document

101.LAB

XBRL TaxonomyExtension LabelLinkbase Document

101.PRE

XBRL TaxonomyExtension PresentationLinkbase Document

101.DEF

XBRL TaxonomyExtension Definition LinkbaseDocument

104

Cover Page InteractiveData File (formattedas Inline XBRL andcontainedin Exhibit 101)

SIGNATURES

Pursuant to

the requirementsof the Securities ExchangeAct of 1934, theRegistrant hasduly causedthis Report to be signedon its

behalf by

the undersigned ChiefFinancial Officer hereuntoduly authorized.

CAPITAL

CITY BANK GROUP,INC. (Registrant)

/s/ Jeptha

E. Larkin

Jeptha E. Larkin

Executive Vice

President andChief Financial Officer

(Mr. Larkin is

the Principal FinancialOfficer and has

been duly authorized

to sign on behalfof the Registrant)

Date: October 30,

2026