Capital City Bank Group

Our profitability depends significantly on economic conditions in the States of Florida and Georgia.

Our profitability and the success of our business depends substantially on the               general               economic conditions of the States of Florida

and, to a lesser extent, Georgia, as well as the specific local markets in which we operate. Unlike larger national or other regional

banks that are more geographically diversified, we provide banking and financial services primarily to customers across northern

Florida and Georgia. The local economic conditions in these areas have a significant impact on the demand for our products and

services as well as the ability of our customers to repay loans, the value of the              collateral securing loans and the stability of our

deposit funding sources. As a result, a significant decline in general economic              conditions in Florida or Georgia, whether caused

by recession, inflation, unemployment, in-flows and out-flows of residents, shifts in political landscape, changes in securities

markets, acts of terrorism, pandemics, natural disasters, climate change, outbreak of hostilities or other occurrences or other

factors could have a material adverse effect on our business, financial condition and results of operations.

Changes in customer behavior may have a negative impact on our business, financial              condition, and results of operations.

Individual, economic, political, industry -specific conditions and other factors              outside of              our              control,              such as              fuel prices,              energy

costs, real estate values, inflation, taariffs and trade wars,              taxes              or              other              factors              that              affect              customer              income              levels,              could              alter               

anticipated customer 

 behavior, including borrowing, repayment, investment and deposit              practices.              Such              a              change              in              these               

practices could materially 

 adversely  affect our  ability to  anticipate business  needs and               meet              regulatory               requirements.              Further,               

difficult economic  conditions

may  negatively  affect consumer  confidence  levels.  A decrease in               consumer confidence              levels would               

likely aggravate  the adverse

effects of these difficult  market conditions  on us and our customers.

The fair value of our investments could decline, which would cause a reduction              in shareowners equity.

A portion of our investment securities portfolio (41.562.9%) at December  31,               20245 has been designated as available-for-sale pursuant

to U.S. generally accepted accounting principles relating to accounting for investments. Such principles require that unrealized

gains and losses in the estimated value of the available-for-sale portfolio be marked to market and reflected as a separate item in

shareowners equity (net of tax) as accumulated other comprehensive income/losses. Shareowners equity will continue to reflect

the unrealized gains and losses (net of tax) of these investments. The fair value              of our investment portfolio may decline, causing a

corresponding decline in shareowners equity.

Management believes that several factors will affect the fair values of our investment portfolio. These include, but are not limited

to, changes in interest rates or expectations of changes in interest rates, the degree              of volatility in the securities markets, inflation

rates or expectations of inflation and the slope of the interest rate yield curve              (the yield curve refers to the differences between

short-term and long-term interest rates; a positively sloped yield curve means short              -term rates are lower than long-term rates).

These and other factors may impact specific categories of the portfolio differently,              and we cannot predict the effect these factors

may have on any specific category.

The impact of interest rates on our mortgage banking business can have a significant impact on revenues.

Changes in interest rates can impact our mortgage-related revenues and net revenues              associated with our mortgage activities.              A

decline in mortgage rates generally increases the demand for mortgage loans              as borrowers refinance, but also generally leads to

accelerated payoffs. Conversely, in a constant or increasing rate environment, we would expect fewer loans to be refinanced              and a

decline in payoffs. Although we use models to assess the impact of interest rates on mortgage-related revenues, the estimates of

revenues produced by these models are dependent on estimates and assumptions              of future loan demand, prepayment speeds and

other factors which may differ from actual subsequent experience.

Shares of our common stock are not an insured deposit and may lose value.

The shares of our common stock are not a bank deposit and will not be insured or guaranteed              by the FDIC or any other

government agency. Your investment will be subject to investment risk, and you must be capable of affording the              loss of your

entire investment.

Limited trading activity for shares of our common stock may contribute to price volatility.

While our common stock is listed and traded on the Nasdaq Global Select Market, there              has historically been limited trading

activity in our common stock. The average daily trading volume of our common stock over the 12-month              period ending

December 31, 20245 was approximately 31,3907,371 shares. Due to the limited               trading               activity of our common stock, relativity small

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

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

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Securities analysts may not initiate coverage or continue to cover our common              stock, and this may have a negative impact

on its market price.

The trading market for our common stock will depend in part on the research              and reports that securities analysts publish about us

and our business. We do not have any control over securities analysts, and they may not initiate coverage              or continue to cover our

common stock. If any securities analysts covering our common stock publishes              an unfavorable report, our stock price would

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

reports on us, the lack of research coverage and lose of visibility in the financial              markets may cause our stock price or trading

volume to decline.

Credit Risks

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

assets.

We originate commercial real estate loans, commercial loans, construction loans, vacant land              loans, consumer loans, and

residential mortgage loans primarily within our market area. Commercial real estate, commercial, construction, vacant land, and

consumer loans may expose a lender to greater credit risk than traditional fixed-rate fully amortizing loans secured by residential

real estate because the collateral securing these loans may not be sold as easily as residential              real estate. In addition, these loan

types tend to involve larger loan balances to a single borrower or groups of related borrowers and are more susceptible to a risk of

loss during a downturn in the business cycle. These loans also have historically              had greater credit risk than other loans for the

following reasons:

Commercial Real Estate Loans

. Repayment is dependent on income being generated in amounts sufficient to cover

operating expenses and debt service. These loans also involve greater risk because              they are generally not fully amortizing

over the loan period, but rather have a balloon payment due at maturity. A borrowers ability to make a balloon payment

typically will depend on the borrowers ability to either refinance the loan or timely sell the underlying property.              Further,

these loans generally are more affected by adverse conditions in the economy. Because payments              on loans secured by

commercial real estate often depend upon the successful operation and management of the properties and the businesses

which operate from within them, repayment of such loans may be affected by factors outside the borrowers control,

such as adverse conditions in the real estate market or the economy or changes              in government regulations.              At December

31, 20245, commercial mortgage loans comprised approximately 29.4%               30.2% of our total loan portfolio.             

Commercial Loans

. Repayment is generally dependent upon the successful operation  of the borrowers               business. In

addition, the collateral securing the loans may depreciate over time, be difficult to appraise, be illiquid, or fluctuate in

value based on the success of the business. These loans are also sensitive to broader              economic conditions, competitive

pressures, and industry-specific trends, any of which may disproportionately              impact certain segments during periods of

stress and increase the likelihood of credit deterioration. At December 31, 20245, commercial               loans comprised

approximately 7.1% of

our total loan portfolio.

Construction Loans

. The risk of loss is largely dependent on our initial estimate of whether the propertys value at

completion equals or exceeds the cost of property construction and the availability              of take-out financing. During the

construction phase, a number of factors can result in delays or cost overruns. If              our estimate is inaccurate or if actual

construction costs exceed estimates, t

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

and immigration policies, the value of the property securing our loan may be insufficient to ensure full

repayment when

completed through a permanent loan, sale of the property, or by seizure of collateral.              At December 31,

2024, 5,

construction loans comprised approximately 8.35.8% of our total loan  portfolio.

Vacant Land Loans

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

future use, payments on loans secured by vacant or unimproved land will typically              rank lower in priority to the borrower

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

conditions in the real estate market and local economy. At December 31, 20245, vacant land loans comprised

approximately 3.78% of our total loan portfolio.

HELOCs

. Our open-ended home equity loans have an interest-only draw period followed by a five-year repayment

period of 0.75% of the principal balance monthly and a balloon payment at maturity. Upon the commencement              of the

repayment period, the monthly payment can increase significantly, thus, there is a heightened risk that the borrower will

be unable to pay the increased payment. Further, these loans also involve greater risk because they are generally not fully

amortizing over the loan period, but rather have a balloon payment due  at maturity.              A borrowers ability to make a

balloon payment may depend on the borrowers ability to either refinance the loan or timely sell the underlying property.             

At December 31, 20245, HELOCs comprised approximately 8.39.5% of our total loan portfolio.

Consumer Loans

. Consumer loans (such as automobile loans and personal lines of credit) are collateralized, if at all,

with assets that may not provide an adequate source of payment of the loan due              to depreciation, damage, or loss. At

December 31, 20245, consumer loans comprised approximately 7.62% of our total loan portfolio, with indirect auto loans

making up a majority of this portfolio at approximately 875.9% of the total balance.

The increased risks associated with these types of loans result in a correspondingly              higher probability of default on such loans (as

compared to fixed-rate fully amortizing single-family real estate loans). Loan defaults would likely increase our loan losses and

nonperforming assets and could adversely affect our allowance for credit losses and our results of operations. 

In addition, credit

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

documentation. As seen across the banking industry, evolving fraud schemes and greater digitization of financial transactions can

increase the risk that loans are underwritten based on incomplete, inaccurate,              or falsified information, which may heighten the risk

of unexpected credit losses.

Our loan portfolio is heavily concentrated in mortgage loans secured              by properties in Florida and Georgia which causes

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

Our interest-earning assets are heavily concentrated in mortgage loans secured              by real estate, particularly real estate located in

Florida and Georgia. At December 31, 20245, approximately 85.37% of our loans included real estate as a primary,              secondary, or

tertiary component of collateral. The real estate collateral in each case provides              an alternate source of repayment in the event of

default by the borrower; however, the value of the collateral may decline during the time the credit is extended. If we are required

to liquidate the collateral securing a loan during a period of reduced real estate values              to satisfy the debt, our earnings and capital

could be adversely affected.

Additionally, at December 31, 20245, a significant number of our loans secured by real estate are secured by commercial and

residential properties located in Florida and Georgia. The concentration of our loans in these areas subjects us to risk that a

downturn in the economy or recession in these areas could result in a decrease in              loan originations and increases in delinquencies

and foreclosures, which would more greatly affect us than if our lending were more geographically diversified. In addition, since

a large portion of our portfolio is secured by properties located in Florida and Georgia, the occurrence of a natural disaster,              such

as a hurricane, or a man-made disaster could result in a decline in loan originations,              a decline in the value or destruction of

mortgaged properties and an increase in the risk of delinquencies, foreclosures              or loss on loans originated by us. Severe weather

events, catastrophic natural disasters, or other large-scale disruptions may also rapidly impair collateral values and borrower

repayment capacity across an entire geographic market, increasing both credit losses and required credit-loss reserves. We              may

suffer

further losses due to the decline in the value of the properties underlying  our               mortgage loans, which would have an adverse

impact on our results of operations and financial condition.

Our concentration in loans secured by real estate may increase our credit losses, which would negatively              affect our

financial results. 

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

geographic markets, we have both geographic concentrations as well as concentrations              in the types of loans funded. Specifically,

due to the nature of our markets, a significant portion of the portfolio has historically              been secured with real estate. At December

31, 20245, approximately 29.431.5% and 47.654.2% of our $2.652546 billion loan              portfolio was secured by commercial real estate and

residential real estate, respectively. As of this same date, approximately 8.35.8% was secured by property under construction.              Due to

the exposure in these concentrations, disruptions in markets, economic conditions, changes in laws or regulations or other events

could cause a significant impact on the ability of borrowers to repay and may              have a material adverse effect on our business,

financial condition and results of operations.

In weak economies, or in areas where real estate market conditions are distressed,              we may experience a higher than normal level

of nonperforming real estate loans. The collateral value of the portfolio and the revenue stream              from those loans could come

under stress, and additional provisions for the allowance for credit losses could              be necessitated. In the event we are required to

foreclose on a property securing one of our mortgage loans or otherwise pursue              our remedies in order to protect our investment,

we may be unable to recover funds in an amount equal to our projected return              on our investment or in an amount sufficient to

prevent a loss to us due to prevailing economic conditions, real estate values and              other factors associated with the ownership of

real property. As a result, the market value of the real estate or other collateral underlying our loans may not, at any given              time, be

sufficient to satisfy the outstanding principal amount of the loans, and consequently, we would              sustain loan losses.

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An inadequate allowance for credit losses would reduce our earnings.

We are exposed to the risk that our clients may be unable to repay their loans according to their terms and              that any collateral

securing the payment of their loans may not be sufficient to assure full repayment. This could result in credit losses that are

inherent in the lending business. We evaluate the collectability of our loan portfolio and provide an allowance              for credit losses

that we believe is adequate based upon such factors as:

the risk characteristics of various  classifications of loans;

previous loan

loss experience;

specific loans that have loss potential;

delinquency trends; 

 estimated fair market value of the collateral;

current

and future economic conditions; and

geographic and industry loan  concentrations.

At December 31, 20245, our allowance for credit losses for loans held for investment              was $29.331.0 million, which represented

approximately 1.1022% of our total loans held for investment. We had $6.38.6              million in nonaccruing loans at December 31, 20245.             

The allWe cannot provide any assurance that our monitoring procedures and policies will reduce certain lending              risks, and while the

allowance is based on managements reasonable estimate and may not prove sufficient to cover future               loan               losses.              Although

management uses the best information available to make determinations with respect to the allowance for credit losses, future

adjustments may be necessary if economic conditions differ substantially from the assumptions used or adverse developments

arise with respect to our nonperforming or performing loans. In addition, regulatory agencies, as an integral part of their

examination process, periodically review our estimated losses on loans. Our regulators may require us to recognize additional

losses based on their judgments about information available to them at the time of              their examination.              Accordingly, the allowance

for credit losses may not be adequate to cover all future loan losses and significant increases              to the allowance may be required in

the future if, for example, economic conditions worsen. A material increase in our allowance for credit losses would adversely

impact our net income and capital in future periods, while having the effect              of overstating our current period earnings.

Failures in the analytical and forecasting models relied upon for our              accounting estimates and risk              management processes             

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

The processes we use to estimate our expected credit losses and to measure              the fair value              of financial              instruments, as              well as              the

processes used to estimate the effects of changing interest rates and other              market measures              on our              financial condition              and results

of operations, depends upon the use of analytical and forecasting              models.              These              models              reflect              assumptions              that              may              not              be

accurate, particularly in times of market stress or other unforeseen              circumstances.              Even              if              these              assumptions              are              adequate,              the

models may prove to be inadequate or inaccurate because of other flaws              in their              design or              their implementation,              including flaws

caused by failures in controls, data management, human error or from the reliance on technology.              If the models we use for interest

rate risk and asset-liability management are inadequate, we may              incur              increased              or              unexpected              losses              upon              changes              in              market

interest rates or other market measures. If the models we              use              for              estimating              our              expected              credit              losses              are              inadequate,              the

allowance for credit losses may not be sufficient to support future charge-offs.              If the              models we              use to              measure the              fair value              of

financial instruments are inadequate, the fair value of such financial              instruments              may              fluctuate              unexpectedly              or              may              not

accurately reflect what we could realize upon sale or settlement              of such              financial instruments.              Any such              failure in              our analytical

or forecasting models could have a material adverse effect on our business, financial condition, and results of operations.

We may incur significant costs associated with the ownership of real property               as a               result of foreclosures, which could

reduce our net income.

Since we originate loans secured by real estate, we may have to foreclose on the              collateral property to protect our investment and

may thereafter own and operate such property, in which case we would be exposed to the risks inherent in the ownership of real

estate.

The amount that we, as a mortgagee, may realize after a foreclosure is dependent              upon factors outside of our control, including,

but not limited to:

general or local economic conditions;

environmental  cleanup liability;

neighborhood values;

interest rates;

real

estate tax rates;

operating expenses of the mortgaged properties;

supply of  and demand for rental units or properties;

ability to

obtain and maintain adequate occupancy of the properties;

zoning  laws;

governmental rules, regulations and fiscal policies; and

acts of God.

Certain expenditures associated with the ownership of real estate, including              real estate taxes, insurance and maintenance costs,

may adversely affect the income from the real estate. Furthermore, we may need to advance funds to continue to operate or to

protect these assets. As a result, the cost of operating real property assets may exceed the rental income earned from such

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

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Reliance on inaccurate or misleading financial statements, credit reports, or other financial information could have a

material adverse impact on our business, financial condition, and results of operations.

In deciding whether to extend credit or enter into other transactions, we  rely               on information furnished by or on behalf of

customers and counterparties, including financial statements, credit reports, and other financial information. We              also rely on

representations of those customers, counterparties, or other third parties, such              as independent auditors, as to the accuracy and

completeness of that information. Reliance on inaccurate or misleading financial statements, credit reports, or other financial

information could have a material adverse impact on our business, financial condition,              and results of operations.

Liquidity and Capital Risks

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

Effective liquidity management is essential for the operation of our business. We require              sufficient liquidity to meet client loan

requests, client deposit maturities and withdrawals, payments on our debt obligations              as they come due and other cash

commitments under both normal operating conditions and other unpredictable              circumstances causing industry or general financial

market stress. If we are unable to raise funds through deposits, borrowings,              earnings and other sources, it could have a substantial

negative effect on our liquidity. In particular, a majority of our liabilities during               2024              5 were checking accounts and other liquid

deposits, which are generally payable on demand or upon short notice. By comparison, a substantial majority of our assets were

loans, which cannot generally be called or sold in the same time frame. Although              we have historically been able to replace

maturing deposits and advances as necessary, we might not be able to replace such funds in the future, especially if a large

number of our depositors seek to withdraw their accounts at the same time, regardless              of the reason. Our access to funding

sources in amounts adequate to finance our activities on terms that are acceptable              to us could be impaired by factors that affect us

specifically or the financial services industry or economy in general. Factors that could negatively impact our access to liquidity

sources include a decrease in the level of our business activity as a result of a downturn              in the markets in which our loans are

concentrated, adverse regulatory action against us, or our inability to attract and              retain deposits. Our access to deposits may be

negatively impacted by, among other factors, periods of low interest rates or high interest rates.              Periods of high interest rates

could promote increased competition for deposits, including from new financial technology competitors, or provide customers

with alternative investment options. Our ability to borrow could also be impaired by factors that are not specific to us, such              as a

disruption in the financial markets or negative views and expectations about              the prospects for the financial services industry.              If we

are unable to maintain adequate liquidity, it could materially and adversely affect our business, results of operations              or financial

condition.

A significant decrease in our public fund deposit balances              as              a              result              of              increased              competition              in              the              current              higher

interest-rate environment and seasonal nature of these deposits could materially and adversely affect our liquidity.             

The Company has many long-standing relationships with municipal  entities               throughout its markets and the deposits held by these

customers have provided a relatively attractive and stable (although seasonal)              funding source for the Company over an extended

period of time. Public fund deposits from local government entities such as universities,              counties, school districts, and other

municipalities generally have higher average balances and historically been              more volatile than nonpublic deposits because they

are heavily impacted by the seasonality of tax collection, changes in competitive              and market forces, and fiscal spending patterns,

as well as the longer-term financial position of local government entities, which              can change from year to year. Such public              fund

deposits are often subject to competitive bidding and in many cases must be secured              by pledging a portion of our investment

securities.

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

interest-rate environment and seasonal nature of these deposits could materially              and adversely affect our liquidity or result in the

use of higher-cost funding sources, which, in turn, could materially and adversely affect our business, results of operations or

financial condition.

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Unrealized losses in our securities portfolio could materially and adversely affect our liquidity.

We have experienced significant unrealized losses on our available-for-sale securities portfolio              as a result of increases in market

interest rates. Unrealized losses related to available-for-sale securities are reflected in accumulated other comprehensive income

in our consolidated statements of financial condition and reduce the level of our              book capital and tangible common equity.

However, such unrealized losses do not affect our regulatory capital ratios. We              actively monitor our available-for-sale securities

portfolio and we do not currently anticipate the need to realize material losses from              the sale of securities for liquidity purposes.

Furthermore, we believe it is unlikely that we would be required to sell any such securities              before recovery of their amortized cost

bases, which may be at maturity. Nonetheless, our access to liquidity sources could be affected by unrealized              losses if securities

must be sold at a loss, tangible capital ratios decline from an increase in unrealized              losses or realized credit losses, the Federal

Home Loan Bank of Atlanta (FHLB) or other funding sources reduce capacity,              or bank regulators impose restrictions on us that

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

Additionally, significant unrealized losses could negatively impact market and customer perceptions              of the Company, which

could lead to a loss of depositor confidence and an increase in deposit withdrawals,              particularly among those with uninsured

deposits.

We may need to raise additional capital in the future, and such capital may not be available on acceptable terms or at all.

We may need to raise additional capital in the future to              provide              us              with              sufficient              capital              resources              and              liquidity              to              meet              our

commitments and business needs, particularly if our asset quality or earnings              were to deteriorate significantly.              Our ability to raise

additional capital, if needed, will depend on, among other things, conditions              in the capital              markets at that              time, which are              outside

of our control, and our financial condition. Economic conditions and              the loss of              confidence in              financial institutions              may increase

our cost of funding and limit access to certain customary              sources              of              capital,              including              inter-bank              borrowings,              repurchase

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

Further, as a result of our failure to timely file our Quarterly Report on Form 10-Q for the three-month period ended March 31,

2024, we are currently ineligible to file new short form registration statements              on Form S-3 and, absent a waiver of the Form S-3

eligibility requirements, we are not currently permitted to use our existing registration              statement on Form S-3D. If we seek to

access the capital markets through a registered offering during the period of time that we are unable to use Form S-3, we may be

required to publicly disclose the proposed offering and the material terms thereof before the offering commences and we will be

required to use a registration statement on Form S-1 to register securities with              the SEC, which would hinder our ability to act

quickly in raising capital to take advantage of market conditions in our capital              raising activities and would increase our cost of

raising capital. 

As a result, we may be unable to raise capital on terms favorable to us, in a timely manner              or at all, which could materially and

adversely affect our liquidity, business, results of operations, or financial condition. Moreover,              if we need to raise capital in the

future, we may have to do so when many other financial institutions are also seeking              to raise capital and would have to compete

with those institutions for investors.

We may be unable to pay dividends in the future.

In 20245, our Board of Directors declared four quarterly cash dividends. Declarations of any future dividends will be contingent on

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

comply with the Common Equity Tier 1 (CET1) Capital conservation buffer requirement. In addition,              due to our contractual

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

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

Further, under applicable statutes and regulations, CCBs board of directors,              after charging-off bad debts, depreciation and other

worthless assets, if any, and making provisions for reasonably anticipated future losses on loans and other assets, may              quarterly,

semi-annually, or annually declare and pay dividends to CCBG of up to the aggregate net income              of that period combined with

the CCBs retained net income for the preceding two years and, with the approval of the Florida OFR, declare a dividend from

retained net income which accrued prior to the preceding two years. The prior              approval of the Federal Reserve is required if the

total of all dividends declared by a state-chartered member bank in any calendar              year would exceed the sum of the banks net

income for that year and its retained net income for the preceding two calendar              years, less any required transfers to surplus or to

fund the retirement of preferred stock. Additional state laws generally applicable to Florida corporations and guidelines of the

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

restricted by state and federal laws and regulations.

Regulatory and Compliance Risks

We are subject to extensive regulation, which could restrict our activities              and impose financial requirements or limitations

on the conduct of our business.

We are subject to extensive regulation, supervision and examination by our regulators, including              the Florida OFR, the Federal

Reserve, and the FDIC. Our compliance with these industry regulations is costly and restricts certain of our activities, including

payment of dividends, mergers and acquisitions, investments, lending and interest rates charged on loans, interest rates paid              on

deposits, the fees we can charge for certain products or transactions, access to              capital and brokered deposits, and locations of

banking offices. If we are unable to meet these regulatory requirements, our financial condition, liquidity and results of operations

would be materially and adversely affected. 

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Our activities are also regulated under consumer protection laws applicable to              our lending, deposit, and other activities. Many of

these regulations are intended primarily for the protection of our depositors, the DIF,              and the banking system as a whole, and not

for the benefit of our shareowners. In addition to the regulations of the bank regulatory              agencies, as a member of the FHLB of

Atlanta, we must also comply with applicable regulations of the Federal Housing Finance Agency and the Federal Home Loan

Bank.

Regulators have continued to focus on compliance with AMLA and BSA obligations              and the rules enforced by OFAC.              If our

policies, procedures and systems are deemed deficient or the policies, procedures              are deficient, we would be subject to liability,

including fines and regulatory actions such as restrictions on our ability to pay dividends and the necessity to obtain regulatory

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

Our failure to comply with these laws and regulations could subject us to the loss of              FDIC insurance, reputational damage, the

revocation of our banking charter, enforcement actions, sanctions, or other legal actions by regulatory agencies, restrictions              on our

business activities, fines, and other penalties, any of which could adversely affect our results of operations, capital base, and the

price of our securities. Changes to any new laws, rules, regulations, policies,              and supervisory guidance (including changes in

interpretation and implementation) have and could make compliance more difficult or expensive and could otherwise adversely

affect our business and financial condition. 

Government authorities, including the bank regulatory agencies, are pursuing              aggressive enforcement actions with respect to

compliance and other legal matters involving financial activitiess (including              new prohibitions on politicized debanking), which

heightens  the risks associated with actual and perceived

compliance failures.  Directives issued to enforce such actions may be  

confidential and thus, in some instances, we are not

permitted to publicly  disclose these actions. Litigation challenging actions or               

regulations by federal or state authorities could,

depending on the outcome,  significantly affect the regulatory  and supervisory

framework affecting our operations.  Any of the

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

condition, and results of operations.  

In addition, we face increased regulatory scrutiny, in the course of routine examinations and otherwise, and new regulations              in

response to negative developments in the banking industry, which may increase our cost of doing business and reduce our

profitability. Among other things, there may be increased focus by both regulators and investors on              deposit composition, the level

of uninsured deposits, brokered deposits, unrealized losses in securities portfolios,              liquidity, commercial real estate loan

composition and concentrations, and capital as well as general oversight and control of the foregoing. We              could face increased

scrutiny or be viewed as higher risk by regulators and the investor community,              which could have a material adverse effect on our

business, financial condition, and results of operations.

U.S. federal banking agencies may require us to increase our regulatory capital, long-term debt or liquidity              requirements,

which could result in the need to issue additional qualifying securities or to              take other actions, such as to sell company

assets.

We are subject to U.S. regulatory capital and liquidity rules. These rules, among other things, establish minimum              requirements to

qualify as a well-capitalized institution. If CCB fails to maintain its status as well capitalized              under the applicable regulatory

capital rules, the Federal Reserve will require us to agree to bring the bank back to              well-capitalized status. For the duration of

such an agreement, the Federal Reserve may impose restrictions on our activities. If we were to fail to enter into or comply with

such an agreement or fail to comply with the terms of such agreement, the Federal              Reserve may impose more severe restrictions

on our activities, including requiring us to cease and desist activities permitted              under the Bank Holding Company Act of 1956.

Additionally, if our CET1 to Risk Weighted Assets ratio does not exceed the minimum required plus the additional CET1

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

Capital and liquidity requirements are frequently introduced and amended. It is possible that regulators may increase regulatory

capital requirements, change how regulatory capital is calculated or increase               liquidity               requirements. Requirements to maintain

higher levels of capital may lower our return on equity.

Further changes to and compliance with the regulatory capital and liquidity requirements              may impact our operations by requiring

us to liquidate assets, increase borrowings, issue additional equity or other securities,              cease or alter certain operations, sell

company assets or hold highly liquid assets, which may adversely affect our results of operations. We              may be prohibited from

taking capital actions such as paying or increasing dividends or repurchasing              securities.

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Changes in accounting standards or assumptions in applying accounting policies              could adversely affect us.

Our accounting policies and methods are fundamental to how we record and report              our financial condition and results of

operations. Some of these policies require use of estimates and assumptions that              may affect the reported value of our assets or

liabilities and results of operations and are critical because they require management              to make difficult, subjective and complex

judgments about matters that are inherently uncertain. If those assumptions, estimates or              judgments were incorrectly made, we

could be required to correct and restate prior-period financial statements. Accounting              standard-setters and those who interpret the

accounting standards, the SEC, banking regulators and our independent registered              public accounting firm may also amend or even

reverse their previous interpretations or positions on how various standards              should be applied. These changes may be difficult to

predict and could impact how we prepare and report our financial statements. In              some cases, we could be required to apply a new

or revised standard retrospectively, resulting in us revising prior-period financial statements.             

We are subject to government regulation and oversight relating to              data and privacy protection.

Our business requires the collection and retention of large volumes of customer data, including personally identifiable information

in various information systems that we maintain and in those maintained by third parties with whom we contract. We              also

maintain important internal company data such as personally identifiable information              about our associates and information

relating to our operations. The integrity and protection of that customer and company              data is important to us.             

We are subject to complex and evolving laws and regulations relating to the privacy of the information              of our customers,

associates and others, and any failure to comply with these laws and regulations,              or any misuse or mismanagement of such

information, could expose us to liability and reputational damage, which could              adversely affect our financial condition and results

of operations. As new privacy-related laws and regulations are implemented,              the time and resources needed for us to comply with

such laws and regulations, as well as our potential liability for non-compliance              and reporting obligations in the case of data

breaches, may significantly increase. It is possible that these laws may be interpreted              and applied by various jurisdictions in a

manner inconsistent with our current or future practices, or that is inconsistent              with one another.             

Fee revenues from overdraft protection programs constitute a significant portion of our noninterest income              and may

continue to be subject to increased supervisory scrutiny. 

Revenues derived from transaction fees associated with overdraft protection              programs offered to consumers represent a

significant portion of our noninterest income. In 2024, the Company collected              approximately $9.5 million in net consumer

overdraft transaction fees. 

In response to increased congressional and regulatory scrutiny (See Item 1. Business under the section captioned Consumer

Laws and Regulations), and in anticipation of enhanced supervision and enforcement              of overdraft protection practices in the

future, certain banking organizations have begun to modify their overdraft protection programs, including by discontinuing the

imposition of overdraft transaction fees, lowering their overdraft transaction              fees, and amending their payment priority policies

and procedures. These competitive pressures from our peers, as well as any adoption              by our regulators of new rules or supervisory

guidance or more aggressive examination and enforcement policies in respect              of banks overdraft protection practices, could

cause us to modify our program and practices in ways that may have a negative impact              on our revenue and earnings, which, in

turn, could have an adverse effect on our financial condition and results of operations.

Operational Risks

Many types of operational risks can affect our earnings negatively.

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

risk management framework may not be effective in all cases. Factors that can impact operations and expose us to risks varying              in

size, scale and scope include:

(1)

failures of technological systems or breaches of security measures, including, but not              limited to, those resulting from

computer viruses or cyber-attacks;

(2)

unsuccessful or difficult implementation of computer systems upgrades;

(3)

human errors or omissions, including failures to comply with applicable laws or corporate policies and procedures;

(4)

theft, fraud or misappropriation of assets, whether arising from the intentional              actions of internal personnel or external

third parties;

(5)

breakdowns in processes, breakdowns in internal controls or failures of the systems and facilities that support our

operations;

(6)

deficiencies in services or service delivery;

(7)

negative developments in relationships with key counterparties, third-party              vendors, or associates in our day-to-day

operations; and

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(8)

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

natural disasters or acts of terrorism.

Operational risks can also arise from increased reliance on digital platforms,              remotework technologies, cloudbased solutions,

and other external service providers whose performance or resilience may be outside              of our direct control. These forms of reliance

may increase the speed and breadth with which disruptions, control failures, or cyberevents can affect our operations.

While we have in place many controls and business continuity plans designed              to address these factors and others, these plans may

not operate successfully to mitigate these risks effectively. If our controls and business continuity plans do not mitigate the

associated risks successfully, such factors may have a negative impact on our business, financial condition or results              of

operations. In addition, an important aspect of managing our operational risk is creating a risk culture in which all associates fully

understand that there is risk in every aspect of our business and the importance of              managing risk as it relates to their job functions.

We continue to enhance our risk management program to support our risk culture.              Nonetheless, if we fail to provide the

appropriate environment that sensitizes all of our associates to managing risk, our business could be impacted adversely.

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We are subject to certain operational risks, including, but not limited to

risk arising from failure or circumvention of our

controls and procedures.

Our internal controls, including fraud detection and controls, disclosure controls              and procedures, and corporate governance

procedures are based in part on certain assumptions and can provide only reasonable,              not absolute, assurances that the objectives

of the controls and procedures are met. Notwithstanding the proliferation of              technology and technology-based risk and control

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

risk that our associates may make mistakes or engage in violations of applicable              policies, laws, rules, or procedures that in the

past have not, and in the future may not, always be prevented by our technological              processes or by our controls and other

procedures intended to prevent and detect such errors or violations. Any failure or circumvention of our controls and procedures,

failure to comply with regulations related to controls and procedures, failure to comply              with our corporate governance procedures,

fraud by associates or persons outside our Company, the execution of unauthorized transactions by associates, or errors relating to

transaction processing and technology could have a material adverse effect              on our reputation, business, financial condition and

results of operations, including subjecting us to litigation, customer attrition,              regulatory fines, penalties, or other sanctions.

Insurance coverage may not be available for losses relating to such event, or where available, such losses may exceed insurance

limits. 

 In addition, evolving regulatory expectations regarding operational resilience, business continuity,              vendor oversight, and

internal control effectiveness may require additional investment and may heighten supervisory scrutiny if deficiencies are

identified. 

We are subject to credit and/or settlement risk arising from the soundness of other financial institutions and

counterparties which may have a material adverse effect on our business, financial condition,              and results of operations.

Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other              relationships. We              have

exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial

services industry, including commercial banks, brokers and dealers, investment banks, other institutional clients,              and certain

vendors. Many of these transactions expose us to credit or settlement risk in the              event of a default or other failure to adhere to

contractual obligations by a counterparty or client. In addition, our credit or              settlement risk may be exacerbated when any

collateral held by us cannot be realized upon or is liquidated at prices not sufficient              to recover the full amount of the credit or

derivative exposure due to us. Increased interconnectivity amongst financial institutions also increases the risk of cyber-attacks

and information system failures for financial institutions. Any such losses could              have a material adverse effect on our business,

financial condition, and results of operations.

Cybersecurity incidents, including security breaches and failures              of              our              information              systems              could              significantly              disrupt

our business, result in the unintended disclosure or misuse              of              confidential              or              proprietary              information,              damage              our

reputation, increase our costs, and cause losses.

In the ordinary course of business, we rely on electronic communications and information systems to conduct our operations and

to store sensitive data

, including our proprietary business information  and that of our clients, and personally              identifiable

l information of our

clients and associates. The secure processing, maintenance,  and transmission               of this information is critical to

our operations.

 Our

systems, or those of oincluding those we maintain with our service providers, vendors,              or our clients, could be vulnerable to cybersecurity-

related incidents, which  include

breachcompromises of information systems, attempts to  access information, including               customer and

company information, malicious code,

computer viruses and or other malware, denial of service attacks that , phishing attempts, brute

force attacks, exploiting software vulnerabilities (including zero-day attacks), ransomware, supply chain attacks, and other

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

of data (including confidential customer

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

threats may deriveresult from human error,

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

 the failure of technological failurey or information

systems. Further, these types of  threats may  be exacerbated by recent developments in artificial intelligence and              its

 their increased

use to produce sophisticated malware, phishing schemes, and  other fraudulent               activities. Any failure, interruption, or

breach compromise

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

Financial institutions and companies engaged in data processing have increasingly reported breachcompromises in the security of their

websites or other systems, some of which have involved sophisticated and targeted attacks intended to obtain unauthorized access

to confidential information, destroy data, disrupt or degrade service, sabotage              systems, or cause other damage. Our technologies,

systems, networks, and software have been and continue to be subject to cybersecurity              threats and attacks, which range from

uncoordinated individual attempts to sophisticated and targeted measures  by criminal organizations directed at us. Our customers,

associates, and third

parties that we do business with have been, and will likely continue  to be,  targeted in cybersecurity-related

incidents by parties

using fraudulent e-mails, artificial intelligence,  and other communications               in attempts to misappropriate

passwords, bank account

information, or other personal information , or to introduce viruses or other               malware programs to our

information systems, or the

information systems and devices of our third-party  (or fourth-party) service providers and our

customers personal devices, which that are beyond our security

control systems. TAlthough we endeavortry to mitigate  these threats through product               improvements,

use of encryption and

authentication technology , and customer and employee education, such among other things, cyber-security-

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

 , and our customers remainare a serious issue and have been successful in the past. risk to our business.

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We may be required to spend significant capital and other resources to protect against the threat of              cybersecurity-related incidents

or to alleviate problems caused by such incidents. Any failures related to  upgrades               and maintenance of our technology and

information systems could increase our information and system security risk. Our increased use of cloud and other technologies,

such as remote work technologies, and the increased connectivity of third parties              and electronic devices to our systems also

increases our risk of being subject to a cyberrsecurity-related incident. The risk               of a cybersecurity              -related incident has increased as

the

number, intensity, and sophistication of attempted attacks and intrusions from around the world have               increased.              A  A

cybersecurity-

related incident or other significant disruption of our information  systems or               those of our customers or third-party vend

service providers and vendors could

(i) disrupt the proper functioning of  our networks and systems and, therefore              , our operations

and  those of our customers; (ii) result

in the unauthorized access to, and ddestruction, loss, theft, misappropriation,              or release of

confidential, sensitive, or otherwise

valuable information of ours or  our customers; (iii) result in a violation  of applicable privacy,

data  protection, and other laws,

subjecting us to additional regulatory  scrutiny and exposing us to civil litigation,               enforcement

actions, governmental fines, and

sanctions, or penalties (which may not be covered by our insurance policies), and possible financial

liability; (iv) require significant management attention  and resources to remedy               the damages that result; or (v)

(v) cause increased

expenses and lost revenue; or (vi) cause negative publicity, harm our reputation, or cause a decrease in the number of customers

that choose  to do business with us, damaging our ability to

generate deposits. The  occurrence of any of the foregoing could have a

material adverse  effect on our business, financial

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

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

responding to  the incident, which could increase the negative

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

results of  operations. While we maintain cybersecurity insurance

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

 incidents, the amount of coverage may not be adequate

depending on  the magnitude of the incident. Furthermore, because cyber-

security -related incidents are inherently difficult to

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

insurance coverage.

Increased fraudulent activity may cause losses to us or our clients, damage              to our brand, and increases in our costs, in

turn, materially and adversely affecting our business, financial condition,              and results of operations.

Additionally, fraud losses have risen in recent years due in large part to growing and evolving schemes,              as well as the

advancement of artificial intelligence. Fraudulent activity has

taken many forms, ranging from wire fraud, debit card fraud,  credit

card fraud,  check fraud, mechanical devices attached to

ATMs, social engineering, and phishing attacks to obtain personal

information, business  email compromise, or impersonation of

clients through  the use of falsified or stolen credentials. Many

financial  institutions have suffered significant losses in recent years 

 due to the theft of cardholder data that has been illegally

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

as well as check  fraud, against us or our clients and our

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

 and check fraud are pervasive, and the risks of

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

procedures,  as well as fraud detection tools, designed

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

insufficient  to accurately detect and prevent fraud. A

significant increase  in fraudulent activities could lead us to take additional 

 steps to reduce fraud risk, which could increase our

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

brand, brand, and an increase in our costs, in turn, materially

and adversely affecting our business, financial condition, and results of operations.

The development and use of Artificial Intelligence (AI) presents risks              and challenges that may adversely impact our             

business.

The banking and financial services industry continually experiences technological              changes, with frequent introductions              of new

technology-driven products and an increase in our costs, in turn, materially and adverservices, including recent and rapid developments              in AI, including with agentic AI. Our              future

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

services that will satisfy client demands for convenience, as well as to assess the proper              operation of AI models and              capabilities

to create additional efficiencies in our operations. We may not be able to effectively implement new technology- driven products

and services or be successful in marketing these products and services to our              clients. In addition, the              implementation of

technological changes and upgrades to maintain current systems and integrate new ones may also create              service interruptions,

transaction processing errors, and system conversion delays and may cause us to fail to comply with              applicable laws. There can

be no assurance that we will be able to successfully manage the risks associated with our              increased              dependency on technology.

Failure to successfully keep pace with technological change affecting the banking and financial              services industry could

negatively affect our revenue and profitability.

We or our third-party (or fourth party) vendorsely affecting our business, financial , customers or counterparties may develop or incorporate              AI technology              in certain

business processes, services, or products. The development and use of AI presents a number of risks and challenges to              our

business. The legal and regulatory environment relating to AI is uncertain and rapidly evolving, both in the U.S. and             

internationally, and includes regulatory schemes targeted specifically at AI as well as provisions in intellectual              property,              privacy,

consumer protection, employment, and other laws applicable to the use of AI.              These evolving laws and regulations              could require

changes in our implementation of AI technology and increase our compliance costs and              the risks to us of non- compliance. AI

models, particularly generative or agentic AI models, may produce outputs or              take action that is incorrect, that              reflects biases

included in the data on which they are trained, that results in the release of private,              conditiofidential, or proprietary              information, and resultthat

infringes on the intellectual property rights of others, or that is otherwise harmful.              In addition, the complexity              of many AI models

makes it difficult to understand why they are generating particular outputs. This limited transparency              increases the challenges

associated with assessing the proper operation of AI models, understanding              and monitoring the              capabilities of

operthe AI models,

reducing erroneous output, eliminating bias, and complying with regulations.

 that require documentation or explanation of the

basis on which decisions are made. Further, we may rely on AI models developed by third              parties, and, to that extent, would be

dependent in part on the manner in which those third parties develop and train their              models, including risks arising from the

inclusion of any unauthorized material in the training data for their models and              the              effectiveness of the steps these third parties

have taken to limit the risks associated with the output of their models, matters over              which we may have limited visibility.              Any of

these risks could expose us to liability or adverse legal or regulatory consequences and harm our reputation and the public

perception of our business or the effectiveness of our security measures.

We may not be able to attract and retain skilled people, which may have a negative impact on              our business and

operations.

Our success depends, in large part, on our ability to attract and retain key people. Competition for the best people in many

activities engaged in by us is intense, including with respect to compensation              and emerging workplace practices and

accommodations, and, as a result, we may not be able to sufficiently hire or to retain key people. We              do not currently have

employment agreements or non-competition agreements with any of our senior officers.              The unexpected loss of service of key

personnel could have a material adverse impact on our business, financial condition, and results of operations because of their

customer relationships, skills, knowledge of our market, years of industry experience, and the difficulty of promptly finding

qualified replacement personnel. In addition, the scope and content of U.S. banking              regulators policies on incentive

compensation, as well as changes to these policies, could adversely affect our ability to hire, retain, and motivate our key

associates.

Issues we encounter with respect to external vendors upon which we rely              could have a material adverse effect on our

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

We rely on certain external vendors to provide products and services necessary to maintain our day-to-day              operations. These

third-party vendors are sources of operational, cybersecurity and informational              security risk to us, including risks associated with

operational errors, coding errors, information system failures, interruptions              or breaches, and unauthorized disclosures of sensitive

or confidential client or customer information. If we encounter any of these issues in connection with our external vendors, or if

we have difficulty communicating with these vendors, we could be exposed to disruption of operations, loss of service, or

connectivity to customers, reputational damage, and litigation risk that could              have a material adverse effect on our business and,

in turn, our financial condition and results of operations.

In addition, our operations are exposed to risk that these vendors will not perform in              accordance with the contracted arrangements

under service level agreements. Although we have selected these external vendors              carefully, we do not control their actions.              The

failure of an external vendor to perform in accordance with the contracted arrangements under service level agreements could be

disruptive to our operations, which could have a material adverse effect on our business and, in turn, our financial condition and

results of operations. Replacing these external vendors could also entail significant delay and expense.

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Severe weather, natural disasters, global climate change, widespread health emergencies              (including pandemics), acts of

terrorism and global conflicts may have a negative impact on our business and operations.

Severe weather, natural disasters, global climate change, widespread health emergencies (including pandemics),              acts of terrorism,

global conflicts, or other similar events have in the past, and may in the future              have, a negative impact on our business and

operations. These events impact us negatively to the extent that they result in reduced capital markets activity,              lower asset price

levels, or disruptions in general economic activity in the United States or abroad,              or in financial market settlement functions. In

addition, such events could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans,

impair the value of collateral securing loans, cause significant property damage,              result in loss of revenue, cause us to incur

additional expenses, and impact economic growth negatively. If any of these risks materialized, they could have an adverse effect

on our business and operations and may have other adverse effects on us in ways that we are unable to predict.

Specifically, our market areas in Florida are susceptible to hurricanes, tropical storms and related flooding              and wind damage and

other similar weather events. Such weather events can disrupt operations, result in damage to properties and negatively affect the

local economies in the markets where we operate. We cannot predict whether or to what extent damage that may be caused by

future weather events will affect our operations or the economies in our current or future market areas, but such events could

result in a decline in loan originations, a decline in the value or destruction of properties securing              our loans and an increase in

delinquencies, foreclosures or loan losses, negatively impacting our business and              results of operations. As a result of the potential

for such weather events, many of our customers have incurred significantly              higher property and casualty insurance premiums on

their properties located in our markets, which may adversely affect real estate sales and values in our markets.

Litigation may adversely affect our results.

We are subject to litigation in the ordinary course of business. Claims and legal actions, including              claims pertaining to our

performance of our fiduciary responsibilities as well as supervisory actions by our regulators, could involve large monetary

claims and significant defense costs. The outcome of litigation and regulatory              matters as well as the timing of ultimate resolution

are inherently difficult to predict. Actual legal and other costs of resolving claims may be greater than our legal reserves. The

ultimate resolution of a pending legal proceeding, depending on the remedy sought              and granted, could materially adversely affect

our results of operations and financial condition.

In addition, governmental authorities have, at times, sought criminal penalties              against companies in the financial services sector

for violations, and, at times, have required an admission of wrongdoing from              financial institutions in connection with resolving

such matters. Criminal convictions or admissions of wrongdoing in a settlement with              the government can lead to greater exposure

in civil litigation and reputational harm.

Substantial legal liability or significant regulatory action against us could have material              adverse financial effects or cause

significant reputational harm, which adversely impact our business prospects. Further,              we may be exposed to substantial

uninsured liabilities, which could adversely affect our results of operations and financial condition.

If we fail to maintain an effective system of internal              control              over              financial              reporting,              we              may              not              be              able              to accurately

report our financial results, prevent fraud, or file our periodic              reports in              a timely              manner,              which may              cause investors              to

lose confidence in our reported financial information and may lead to a decline in our stock price.

As a public company, we are required to maintain internal control over financial              reporting and to              report any material              weaknesses

in such internal control. Section 404 of the Sarbanes -Oxley Act requires that              we furnish a report              by management on, among              other

things, the effectiveness of our internal control over financial              reporting.              This              assessment              requires              disclosure              of              any              material

weaknesses identified by our management in our internal              control              over              financial              reporting.              Our              independent              registered              public

accounting firm also needs to attest to the effectiveness of our internal control              over financial              reporting. Effective              internal control

over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and

procedures, is designed to prevent fraud. Any failure              to              maintain              or              implement              required              new              or              improved              controls              (as              we              had

recently discussed in Item 9A), or difficulties encountered in              implementation              could              cause              us              to              fail              to              meet              our              reporting

obligations, which could subject the Company to litigation,              investigations,              or              breach              of              contract              claims,              require              management

resources, increase costs, negatively affect investor confidence, and adversely impact its stock price.

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Strategic Risks

Our future success is dependent on our ability to compete effectively              in the highly competitive banking and financial

services industry.

We face vigorous competition for deposits, loans and other financial services in our market area              from other banks and financial

institutions, including savings and loan associations, savings banks, finance companies and credit unions. A number of our

competitors are significantly larger than we are and have greater access to capital and other resources. Many of our competitors

also have higher lending limits, more expansive branch networks, and offer a wider array of financial products and services.             

We also compete with other non-bank providers of financial services, such as money market mutual              funds, brokerage firms,

consumer finance companies, insurance companies, governmental organizations, and non-bank financial technology and wealth

technology providers,

including digital asset service providers. Many of our  non-bank competitors               are not subject to the same

extensive regulations that

govern our activities. As a result, these non-bank  competitors have advantages               over us in providing

certain services, including the

ability to offer financial products and  services on more favorable  terms than we are able to offer.               

Technology  and other  changes

have lowered barriers to entry and made it possible for non-banks to  offer  products and services

traditionally provided by banks.

In particular,  the activity of financial technology  companies has grown significantly over recent

years and is expected to continue

to grow.  The emergence,  adoption and evolution of new technologies that do               not require

intermediation,  including distributed

ledgers such as digital assets and blockchain,  as well as advances in robotic process               

automation, could significantly affect the

comcompetition for financial services. Large technology companies offering              embedded

financial services, digital wallets, and payment platforms have also increased              competition for finanve pressures and may accelerate customer

migration away from traditional banking products. Customer preferences have also shifted toward digital channels and realtime,

seamless financial services. 

experiences. Failure to meet evolving expectations for convenience, speed, and personalized service may

negatively impact our ability to retain and attract customers.

Additionally the recently-enacted GENIUS Act establishes a regulatory framework for payment stablecoins and their issuers,

which consumers and businesses may view as a substitute for traditional bank              deposits, resulting in deposit withdrawals.

Depending on consumer and business interest in payment stablecoins, and the characteristics and utility of payment stablecoins,

the passage of the GENIUS Act could result in increased competition with respect              to our deposit products.

The effect of this competition may reduce or limit our net income, margins or our market share and may adversely affect our

results of operations and financial condition. Further, the process of eliminating banks as intermediaries for financial transactions

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

deposits. The foregoing could have a material adverse effect on our financial condition and results of operations. Increased

competition may negatively affect our earnings by creating pressure to lower prices or credit standards on our products and

services requiring additional investment to improve the quality and delivery of our technology, reducing              our market share, or

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

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

We rely on a diversified mix of financial products and services through multiple distribution channels.              Our success depends on

our and our third-party providers of products and services abilities to adapt our              business strategies, products, and services and

their respective features in a timely manner, including available payment processing services and technology to rapidly              evolving

industry standards and consumer preferences.

The widespread adoption and rapid evolution of emerging technologies in the financial services industry,              including artificial

intelligence, analytic capabilities, cloud technologies, self-service digital trading platforms and automated trading markets,

internet services, and digital assets, such as central bank digital currencies,              cryptocurrencies (including stablecoins and

memecoins), tokens, and other cryptoassets that utilize blockchain and distributed              ledger technology (DLT),              as well as DLT in

payment, clearing, and settlement processes creates additional risks, could negatively impact our ability to compete, and require

substantial expenditures to the extent we were to modify or adapt our existing              products and services to keep pace with such new

technologies. 

37

We may not be timely or successful in developing or introducing new products and services, integrating              new products or services

into our existing offerings, responding, managing, or adapting to changes in consumer behavior, preferences, spending,              investing

and saving habits, achieving market acceptance of our products and services,              or reducing costs in response to pressures to deliver

products and services at lower prices. There are substantial risks and uncertainties              associated with these efforts, particularly in

instances where the markets are not fully developed. In developing and marketing new products and services, we invest

significant time and resources. Initial timetables for the introduction and development              of new products or services may not be

achieved, and price and profitability targets may not prove feasible. External factors, such as compliance with regulations,

competitive alternatives, and shifting market preferences, may also impact the successful implementation of new products or

services.  Potential future actions such as the proposed consumer credit card interest rate cap may lead to unprofitable products,

especially for riskier borrowers, and could lead to cutting credit lines or eliminating              cards, increased reliance on fees and

increased debt burdens for those needing credit most, thereby having the potential              to negatively impact bank asset quality.              The

Companys, or  its third-party providers,  inability or resistance to timely innovate or adapt its operations, products,

and services to

evolving industry standards and consumer preferences could result  in service               disruptions and harm our business,

and materially

and adversely affect our results of operations, financial condition, and reputation.             

Furthermore, our implementation of new products, services, or technology could have unintended negative consequences,

including a significant impact on the effectiveness of our system of internal controls. Failure to successfully manage these risks in

the development and implementation of new products or services could have a material adverse effect on our business, financial

condition, and results of operations.

Our directors, executive officers, and principal shareowners, if acting together,              have substantial control over all matters

requiring shareowner approval, including changes of control. Because Mr.              William G. Smith, Jr.              is a principal

shareowner and our Chairman, President, and Chief Executive Officer and Chairman of CCB, he has substantial control

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

Our directors, executive officers, and principal shareowners beneficially owned approximately 19.53% of the outstanding shares of

our common stock at December 31, 20245. William G. Smith, Jr., our Chairman, President  and Chief Executive Officer

beneficially owned

17.3% of our shares as of that date. Accordingly, these directors, executive              officers, and principal

shareowners, if acting together,

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

election of directors and the

approval of mergers, acquisitions or  other extraordinary  transactions. Moreover,               because William               G.

Smith, Jr. is the Chairman, President,  

and Chief Executive Officer of CCBG and Chairman of CCB, he has substantial               control 

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

and election  of directors.

These directors, executive officers, and principal shareowners may also have interests that differ from yours and may vote in a

way with which you disagree, and which may be adverse to your interests. The concentration              of ownership may have the effect of

delaying, preventing or deterring a change of control of our Company, could deprive our shareowners of an opportunity to receive

a premium for their common stock as part of a sale of our Company and might ultimately              affect the market price of our common

stock. You may also have difficulty changing management, the composition of              the Board of Directors, or the general direction of

our Company.

Our Articles of Incorporation, Bylaws, and certain laws and regulations              may prevent or delay transactions you might

favor, including a sale or merger of CCBG.

CCBG is registered with the Federal Reserve as a financial holding company under the Bank Holding Company Act, or BHC Act.

As a result, we are subject to supervisory regulation and examination by the              Federal Reserve. The GLBA, the Dodd-Frank Act,

the BHC Act, and other federal laws subject financial holding companies to restrictions on the types of activities in which they

may engage, and to a range of supervisory requirements and activities, including              regulatory enforcement actions for violations of

laws and regulations.

Provisions of our Articles of Incorporation, Bylaws, certain laws and regulations              and various other factors may make it more

difficult and expensive for companies or persons to acquire control of us without the consent of our Board of Directors. It is

possible, however, that you would want a takeover attempt to succeed because, for example, a potential buyer could offer              a

premium over the then prevailing price of our common stock.

For example, our Articles of Incorporation permit our Board of Directors to issue preferred stock without shareowner action. The

ability to issue preferred stock could discourage a company from attempting              to obtain control of us by means of a tender offer,

merger, proxy contest or otherwise. We are also subject to certain provisions of the Florida Business Corporation Act and our

Articles of Incorporation that relate to business combinations with interested              shareowners. Other provisions in our Articles of

Incorporation or Bylaws that may discourage takeover attempts or make them              more difficult include:             

 Supermajority voting

requirements to remove a director from office;

 Provisions  regarding the timing and content of shareowner proposals  and

nominations;

Supermajority voting requirements to amend Articles of Incorporation unless approval is received by a majority of

disinterested directors;

Absence of cumulative voting; and

Inability  for shareowners to take action by written consent. 

38

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

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

financial  condition, and results of operations.

We may seek to acstrategically dispose of assets or acquire other banks, businesses, or branches, which               involves various risks,

including,  among other things, (i)

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

potential asset quality issues of the

target company; (iii) potential disruption  to our business; (iv) potential  diversion of our

managements time  and attention;  (v) the

possible loss of key employees and customers of the target  company;  (vi) difficulty in

estimating the value of the target  company;

 or assets to be sold; and  (vii) potential changes in banking or tax laws or regulations

that may  affect the target company.

36

Acquisitions by financial institutions, including us, are subject to approval by a variety              of regulatory agencies and, therefore,

dependent on the regulators' views at the time as to, among other things, our capital              levels, quality of management, compliance

with laws, and overall condition, in addition to their assessment of a variety of              other factors. Regulatory approvals could be

delayed, impeded, restrictively conditioned, or denied due to existing or new              regulatory issues we have, or may have, with

regulatory agencies. We may fail to pursue, evaluate or complete strategic and competitively significant              acquisition opportunities

as a result of our inability, or perceived or anticipated inability, to obtain regulatory approvals in a timely manner,              under

reasonable conditions or at all. Difficulties associated with potential acquisitions that              

Accordingly, any acquisition, disposition or other strategic transaction may not be successful, may not benefit              our business

strategy or may rnot otherwise result from these and oin the intended benefits. It also may take us longer              than expected to fully realize ther f 

anticipated benefits and synergies of these transactors

could have aions, and those benefits and synergies may ultimately be smaller than

anticipated or material y not be realized at all, which could adverse ely affect on o              our business, financial condition              and and operating results of operations.

. Acquisitions typically

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

tangible book value and net

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

also result in potential dilution

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

acquisition. Furthermore,

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

presence, and/or other projected

benefits from an acquisition cou, as well as the difficulties associated with potential              acquisitions or dispositions discussed herein

could have  a material adverse effect on our business, financial

condition  and results of operations.

Reputational Risks

Damage to our reputation could harm our businesses, including our competitive position and business prospects.

Reputation risk, or the risk to our earnings, liquidity, and capital from negative public opinion, is inherent in our business.

Negative public opinion could adversely affect our ability to attract and retain customers, clients, investors and associates and

expose us to adverse legal and regulatory consequences. Negative public opinion could result from our actual or alleged conduct

and can arise from various sources, including (a1) officer, director or associate fraud, misconduct, and unethical behavior; (b2)

security breaches; (c3) litigation or regulatory outcomes; (d4) compensation               practices; (e              (5) lending practices; (f6) branching strategy;

(g7) the suitability or reasonableness of recommending particular trading or              investment strategies, including the reliability of our

research and models; (h8) prohibiting clients from engaging in certain transactions;                            or actions taken to debank certain clients; (h)

associate sales practices; (i9) failure to

deliver products and services; (j10) subpar  standards of service and quality expected               by our

customers, clients, and the community;

(k) (11 ) compliance failures; (l12) mergers and acquisitions; (m) 13)              the inability               to manage

technology change or maintain effective data

management; (n) 14) cyber incidents; (o15) internal and external fraud (including               check

fraud and debit card and credit card fraud); (p)

16) inadequacy of responsiveness  to internal controls; (q17) unintended  disclosure of

personal, proprietary or confidential information;

(r(18) failure (or  perceived failure) to identify and manage actual and potential

conflicts  of interest; (s19) breach of fiduciary

obligations; (t20) the handling of health  emergencies or pandemics, (u)              21) the activities

of our clients, customers, counterparties, and

third parties, including vendors; (v (22) our environmental, social, and  governance

practices and disclosures, including practices and

disclosures related to  climate change; (w23) our response (or lack of response)               to

social and sustainability concerns; and (x24) actions

by the financial services industry  generally or by certain members or

individuals  in the industry. 

There has been an increas 

Reputation risk may be amplified focus by investors and other stakeholders on topicsthe speed and related              to corporate policies and approaches

regarding ESG and diversity, equity and inclusion matters. Due to divergent stakeholder              views on these matters, we are at

increased risk that any action, or lack thereof, coach of social media, which can rapidly

disseminate accurate or inaccurate information and significantly influencerning these matters will be  public              perceived              negatively by some stakeholders, which

could negatively affect our business andption before we have time to reputation. In              addition, adverse publicity or negative information posted on social media

by associates, the media or otherwise, whether or not factually correct, spond.

Negative coverage, regardless of accuracy, may adversely impact our reputation or future prospects.

Harm to our reputation may adversely and materially affect our competitive position, business prospects, and financial results.

Further, events that result in damage to our reputation may also increase our litigation risk, increase  lead to rapid customer reactions, including deposit withdrawals, heightened

regulatory scrutiny, affect our

ability to attract and retain customers and employees and have otheattention, or consequences              that we may not be able to predictmmunity criticism.

Tax Risks

Changes in the Federal, State or Local Tax Laws May Negatively Impact Our Financial Performance and We              are Subject

to Examinations and Challenges by Tax Authorities 

39

We are subject to  to federal and applicable state tax laws and regulations. Changes in these               tax laws and               regulations, some of which

may be retroactive to previous periods, could increase our effective tax rates and, as a result, could negatively affect our current

and future financial performance. Furthermore, tax laws and regulations are often              complex and require interpretation. In the

normal course of business, we are routinely subject to examinations and challenges              from federal and applicable state tax

authorities regarding the amount of taxes due in connection with investments we              have made and the businesses in which we have

engaged. Recently, federal and state taxing authorities have become increasingly been aggressive in challenging              tax positions

taken by financial institutions. These tax positions may relate to tax compliance,              sales and use, franchise, gross receipts, payroll,

property and income tax issues, including tax base, apportionment and tax credit planning. The challenges made by tax authorities

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

jurisdictions. If any such challenges are made and are not resolved in our favor, they could have a material adverse effect              on our

business, financial condition and results of operations.