# CAPITAL CITY BANK GROUP INC (CCBG) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from CAPITAL CITY BANK GROUP INC's 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/726601/000072660125000013/ccbg-20241231.htm
Accession: 0000726601-25-000013
Filing date: 2025-03-11
Report date: 2024-12-31
Extracted from a later financial-section MD&A body after the formal Item 7 span was a short reference.
Confidence: high

Company profile: /company/CCBG/
All MD&A years: /company/CCBG/mda/
Previous year: /company/CCBG/mda/fy2023/ (FY 2023)
Next year: /company/CCBG/mda/fy2025/ (FY 2025)

Management’s Discussion and Analysis of
 
Financial Condition and Results of Operations under the section captioned

“Business Overview” for discussion related to the expansion of our
 
Business.

Competition

We face significant
 
competition in our market areas. We
 
compete against a wide range of banking and nonbanking institutions

including banks, savings and loan associations, credit unions, money market
 
funds, mutual fund advisory companies, mortgage

banking companies, investment banking companies, insurance agencies and
 
companies, securities firms, brokerage firms,

financial technology firms, finance companies and other types of financial
 
institutions. Some of our competitors are larger

financial institutions with greater resources and, as such, may have higher
 
lending limits and may offer other services that are not

provided by us. However, we believe that the
 
larger financial institutions are less familiar with the markets in which we operate

and typically target a different client base. We
 
also believe clients who bank at community banks tend to prefer the relationship

style service of community banks compared to larger banks and
 
financial services companies.

As a result, we expect to be able to effectively compete in our markets
 
with larger financial institutions through providing

superior client service and leveraging our knowledge and experience
 
in providing banking products and services in our market

areas. See Item 1A. Risk Factors under the section captioned “Our future success is dependent
 
on our ability to compete

effectively in the highly competitive banking and financial
 
services industry” for further discussion related to the competitive

environment in which we operate.

Our primary market area consists of 21 counties in Florida, six counties in Georgia,
 
and one county in Alabama. Most of Florida’s

major banking concerns have a presence in Leon County,
 
where our main office is located.
 
Our Leon County deposits totaled

$1.200 billion, or 32.7% of our consolidated deposits at December 31, 2024.

9

The table below depicts our market share percentage within each county,
 
based on commercial bank deposits within the county.

Market Share as of June 30,

(1)

County

2024

2023

2022

Florida

Alachua

4.9%

5.1%

4.9%

Bay

0.2%

0.3%

0.3%

Bradford

34.3%

37.1%

34.9%

Citrus

4.3%

4.4%

4.7%

Clay

2.2%

2.4%

2.3%

Dixie

21.5%

17.5%

19.8%

Gadsden

81.8%

81.9%

82.1%

Gilchrist

41.6%

42.2%

41.2%

Gulf

11.2%

12.4%

14.8%

Hernando

5.2%

4.9%

5.0%

Jefferson

24.6%

28.3%

24.8%

Leon

15.5%

16.9%

15.4%

Levy

26.4%

26.4%

25.4%

Madison

13.5%

13.5%

14.0%

Putnam

28.3%

34.4%

26.4%

St. Johns

0.7%

0.8%

0.7%

Suwannee

6.4%

6.6%

7.0%

Taylor

73.7%

75.0%

73.8%

Wakulla

8.4%

8.4%

10.0%

Walton

0.6%

0.3%

-

Washington

7.8%

9.2%

11.2%

Georgia

Bibb

3.1%

2.9%

3.2%

Cobb

0.1%

0.1%

0.0%

Gwinnett

(2)

0.0%

0.0%

-

Grady

14.0%

13.8%

16.3%

Laurens

6.0%

6.7%

7.8%

Troup

5.4%

5.6%

6.4%

Alabama

Chambers

9.0%

8.6%

9.3%

(1)

Obtained from the FDIC Summary of Deposits Report for the year indicated.

(2)

Bank office opened in the second quarter of 2023.

Seasonality

We believe our
 
commercial banking operations are not generally seasonal in nature; however,
 
public deposits tend to increase

with tax collections in the fourth and first quarters of each year and decline
 
as a result of governmental spending thereafter.

Human Capital Matters

Our culture distinguishes us from our competitors and is the driving force
 
behind our continued success. Our leadership is

committed to a culture that values people alongside results.

Our brand promise (“More than your bank. Your
 
banker.”)
 
and purpose (“We
 
empower our clients’ financial wellness and help

them build secure futures”), together with our core values statement (“Do
 
the Right Thing, Build Relationships & Loyalty,

Embrace Individuality & Value
 
Others, Promote Career Growth, Be Committed to Community,
 
and Represent the Star (our bank)

Proudly”), are the foundation on which our culture is built.

10

The bank has grown significantly since its beginnings in 1895. Our commitment
 
to fostering a culture that values our associates

across our entire footprint remains unwavering. We
 
have a Chief Culture Officer and a Chief Inclusion Officer
 
who make it a

priority to ensure our culture is maintained and associates exemplify our values.

At December 31, 2024, we had approximately 940 full-time associates and
 
approximately 29 part-time associates. At December

31, 2024, approximately 68% of our workforce was female, 32% was male,
 
and approximately 21% was ethnic minorities. None

of our associates are represented by a labor union or covered by a collective bargaining
 
agreement.

Our commitment to people and being an employer with integrity and heart has
 
earned us numerous accolades including:
 
one of

the “Best Companies to Work
 
for in Florida” by Florida Trend for 13 consecutive
 
years, a “Best Bank to Work
 
For” by American

Bankers for 12 consecutive years and being named by Forbes in 2023 and 2024
 
as one of “America’s Best-in-State Banks,
 
a

selection made from direct consumer feedback and online reviews.

The average tenure of our associates is approximately 9.4 years, and
 
the average tenure of our management team is 23.9 years.

Tenure statistics support
 
these accolades and further demonstrate that associates enjoy working
 
for CCBG.

Compensation and Benefits Program

. To attract and retain experienced
 
associates we offer a competitive compensation and

benefits program, foster a culture where everyone feels included and empowered
 
to do to their best work, and give associates the

opportunity to give back to their communities and make a social impact.

Our compensation program is designed to attract and reward talented individuals
 
who possess the skills necessary to support our

business objectives, assist in the achievement of our strategic goals and
 
create long-term value for our shareowners. We
 
provide

our associates with compensation packages that include base salary and
 
annual incentive bonuses, and certain associates can

receive equity awards tied to the Company’s
 
performance.

Experience has taught us that a compensation program with both
 
short-
 
and long-term awards provides fair and competitive

compensation and aligns associate and shareowner interests by incentivizing
 
business and individual performance. This dual

approach also encourages long-term company performance and integrates compensation
 
with our business plans.

In addition to cash and equity compensation, we offer associates benefits
 
including life and health (medical, dental & vision)

insurance, paid time off, an associate stock purchase plan, and a
 
401(k) plan. Associates hired prior to 2020 are eligible to

participate in a pension plan.

A core value is providing associates the ability to “grow a career.”
 
To that end, we support and encourage
 
associates to develop a

life-long habit of continuous learning that focuses on personal and professional
 
development through higher education. We
 
offer

an educational Tuition Assistance Plan to help eligible
 
associates continue or begin post-high school education, develop skills,

increase knowledge and aid in career development.

We have invested
 
in tools and capabilities that allow our team members to work remotely as appropriate.

Inclusion.

Integral to our culture and values is a commitment to an equitable, diverse, and inclusive work
 
environment whereby

respect, acceptance and belonging are practiced and experienced by all.

Our associates are our most valuable assets, and our differences make
 
us stronger. The individual perspectives,
 
life experiences,

capabilities and talents, which our associates invest in their work, represent a
 
significant part of our culture, reputation and

collective achievements.

The Chief Inclusion Officer and the Inclusion Council, which comprises
 
diverse associates from various levels and offices

throughout our organization, connect the company’s
 
diversity and inclusion initiatives with our broader business strategies.

A

diverse team produces more creative solutions, offers better client
 
service and is vital to attracting and retaining talent—key

factors that contribute to our success. We
 
continue to build an inclusive culture through a variety of inclusion initiatives
 
for

internal promotions and hiring practices.

Health and Safety

. Our business success is fundamentally connected to our associates’ well-being.
 
We make available to our

associates a voluntary wellness program,
 
StarFit that provides associates with resources and good-health opportunities through

exercise, diet and preventive care.

In response to emerging workplace practices, we made changes to our
 
flex–work program to assist our associates in maintaining a

work/life balance consistent with their professional and personal goals.

11

Social Matters

Community Involvement.

We aim to give back
 
to the communities where we live and work and believe that this commitment

helps in our efforts to attract and retain associates. Our commitment
 
to help our community starts with our associates. Community

involvement is a hallmark for our organization, and it comes naturally
 
to our associates. We encourage
 
our associates to volunteer

their hours with service organizations and philanthropic groups in
 
the communities we serve.

We recorded
 
9,542 community service hours in 2024, and 10,526, and 9,508 hours in 2023 and 2022,
 
respectively. Additionally,

the CCBG Foundation donated approximately $0.3 million in 2024 and 2023
 
and approximately $0.2 million in 2022 to various

non-profit organizations in the communities we serve.

Since 2015, we have annually supported the United Way
 
of the Big Bend in analyzing financial information for its annual grant

review process. Many of these grants are provided to low-moderate income
 
communities in the Big Bend area.

Access, affordability,
 
and financial inclusion.

Our community commitment to further financial literacy in the markets we service

remains an ongoing focus. In 2024, the CCBG Foundation made grants totaling
 
$167,000 to Community Reinvestment Act of

1977 (“CRA”) eligible organizations in our market
 
area. We are committed
 
to providing educational outreach regarding home

ownership and financial access for minorities. We
 
are a long-time supporter of Habitat for Humanity,
 
with our associates

providing volunteer hours on home builds.
 
During 2020 to 2023, we partnered with Habitat for Humanity and Warrick
 
Dunn

Charities to build and furnish four homes.
 
Further, we continue to originate loans under the Habitat for
 
Humanity loan program

and community development loans under various affordable
 
housing, community service, and revitalization projects.

During tax season, we provide locations for community residents to access Volunteer
 
Income Tax Assistance (VITA)
 
services.

VITA is a nationwide
 
IRS program that offers free tax preparation assistance to people who generally
 
make $60,000 or less,

persons with disabilities, the elderly,
 
and limited English-speaking taxpayers who need assistance in preparing their
 
own tax

returns.

Environmental Matters

We recognize
 
the value of environmental stewardship and seek opportunities to reduce our carbon
 
footprint and incorporate

energy efficiency products into business operations.
 
We have implemented
 
company-wide recycling programs and have

converted exterior lighting to LED at 58 offices. Further reducing
 
our environmental impact, our office model design is reduced

from an average 5,500 square feet to 3,300 square feet. As we renovate or build
 
new facilities, we employ energy efficient

equipment such as HVAC
 
systems and lighting controls in offices.

In 2022 through 2024, we made commitments for a $7 million investment in SOLCAP 2022
 
-1, LLC, a $7 million investment in

SOLCAP 2023-1, LLC, and an $9.1 million investment in SOLCAP 2024-1, LLC. Each of these funds
 
were formed to make solar

tax equity investments in renewable solar energy projects and
 
provided us with tax credits and other tax benefits. These projects

will produce approximately 31,778,716 kw hours of clean power each
 
year. The clean power produced is equivalent
 
to removing

approximately 21,350 metric tons of greenhouse gas emissions. We
 
plan to continue to review these kinds of investment

opportunities as they arise.

We work to ensure
 
lending activities do not encourage business activities that could cause irreparable
 
damage to our reputation or

the environment. In general, we evaluate each credit or transaction
 
on its individual merits, with larger deals receiving more

attention and deeper analysis, including a review of environmental matters
 
related to certain real estate loans, which is overseen

by our Credit Risk Oversight Committee.

To prepare for any climate-related
 
occurrences, we have a business continuity plan that addresses how to maintain
 
business

operations in the event of a disastrous event. We
 
also offer disaster assistance to our associates, which includes

accommodation/shelter reimbursement in case of evacuations or sustained
 
power outages.

Regulatory Considerations

We

must comply with state and federal banking laws and regulations
 
that control virtually all aspects of our operations.
 
These

laws and regulations generally aim to
 
protect our depositors, not necessarily our shareowners
 
or our creditors. Any changes in

applicable laws or regulations may materially
 
affect our business and prospects. Proposed
 
legislative or regulatory changes may

also affect our operations. The following description summarizes some of the
 
laws and regulations to which we are
 
subject.

References to applicable statutes and
 
regulations are brief summaries,
 
do not purport to be complete, and are qualified
 
in their

entirety by reference
 
to such statutes and regulations.

12

Capital City Bank Group, Inc.

We are registered
 
with the Board of Governors of the Federal Reserve System (the “Federal Reserve”) as a bank
 
holding

company under the Bank Holding Company Act of 1956 (“BHC Act”) and have
 
also elected to be a financial holding company.

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

Street Reform and Consumer Protection Act (the “Dodd-Frank Act”),
 
the Gramm-Leach-Bliley Financial Modernization Act (the

“GLBA”), 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.

Permitted Activities

The GLBA reformed the U.S. banking system by: (i) allowing bank holding
 
companies (“BHCs”) that qualify as “financial

holding companies,” such as CCBG, to engage in a broad range of financial
 
and related activities; (ii) allowing insurers and other

financial service companies to acquire banks; (iii) removing restrictions that applied
 
to bank holding company ownership of

securities firms and mutual fund advisory companies; and (iv) establishing
 
the overall regulatory scheme applicable to bank

holding companies that also engage in insurance and securities operations.
 
The general effect of the law was to establish a

comprehensive framework to permit affiliations among
 
commercial banks, insurance companies, securities firms, and other

financial service providers. Activities that are financial in nature are broadly
 
defined to include not only banking, insurance, and

securities activities, but also merchant banking and additional activities that the
 
Federal Reserve, in consultation with the

Secretary of the Treasury,
 
determines to be financial in nature, incidental to such financial activities, or complementary
 
activities

that do not pose a substantial risk to the safety and soundness of depository
 
institutions or the financial system generally.

In contrast to financial holding companies, bank holding companies
 
are limited to managing or controlling banks, furnishing

services to or performing services for its subsidiaries, and engaging
 
in other activities that the Federal Reserve determines by

regulation or order to be so closely related to banking or managing or
 
controlling banks as to be a proper incident thereto. In

determining whether a particular activity is permissible, the Federal Reserve
 
must consider whether the performance of such an

activity reasonably can be expected to produce benefits to the public
 
that outweigh possible adverse effects. Possible benefits

include greater convenience, increased competition, and gains in efficiency.
 
Possible adverse effects include undue concentration

of resources, decreased or unfair competition, conflicts of interest, and unsound
 
banking practices. Despite prior approval, the

Federal Reserve may order a bank holding company or its subsidiaries to terminate
 
any activity or to terminate ownership or

control of any subsidiary when the Federal Reserve has reasonable cause
 
to believe that a serious risk to the financial safety,

soundness or stability of any bank subsidiary of that bank holding company
 
may result from such an activity.

Changes in Control

Subject to certain exceptions, the BHC Act and the Change in Bank Control Act
 
(“CBCA”), together with the applicable

regulations, require Federal Reserve approval (or,
 
depending on the circumstances, no notice of disapproval) prior to any

acquisition of “control” of a bank or bank holding company.
 
Under the BHC Act, a company (a broadly defined term that includes

partnerships among other things) that acquires the power,
 
directly or indirectly, to direct
 
the management or policies of an insured

depository institution or to vote 25% or more of any class of voting securities of
 
any insured depository institution is deemed to

control the institution and to be a bank holding company.
 
A company that acquires less than 5% of any class of voting security

(and that does not exhibit the other control factors) is presumed not to have control.
 
For ownership levels between the 5% and

25% thresholds, the Federal Reserve has developed an extensive body of
 
law on the circumstances in which control may or may

not exist.

Under the CBCA, if an individual or a company that acquires 10% or more of any
 
class of voting securities of an insured

depository institution or its holding company and either that institution or
 
company has registered securities under Section 12 of

the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or no
 
other person will own a greater percentage of that

class of voting securities immediately after the acquisition, then that investor is presumed
 
to have control and may be required to

file a change in bank control notice with the institution’s
 
or the holding company’s primary
 
federal regulator. Our common
 
stock

is registered under Section 12 of the Exchange Act, so we are subject to these rules.

As a financial holding company,
 
we are required to obtain prior approval from the Federal Reserve before (i) acquiring
 
all or

substantially all of the assets of a bank or bank holding company,
 
(ii) acquiring direct or indirect ownership or control of more

than 5% of the outstanding voting stock of any bank or bank holding company
 
(unless we own a majority of such bank’s voting

shares), or (iii) acquiring, merging or consolidating with
 
any other bank or bank holding company.
 
In determining whether to

approve a proposed bank acquisition, federal bank regulators will consider,
 
among other factors, the effect of the acquisition on

competition, the public benefits expected to be received from the acquisition,
 
the projected capital ratios and levels on a post-

acquisition basis, and the companies’ records of addressing the credit needs of
 
the communities they serve, including the needs of

low and moderate income neighborhoods, consistent with the safe and sound
 
operation of the bank, under the CRA.

13

Under Florida law,
 
a person or entity proposing to directly or indirectly acquire control of a Florida chartered
 
bank must also

obtain permission from the Florida Office of Financial
 
Regulation (the “Florida OFR”). The Florida Statutes define “control”
 
as

either (i) indirectly or directly owning, controlling or having power to vote
 
25% or more of the voting securities of a bank; (ii)

controlling the election of a majority of directors of a bank; (iii) owning,
 
controlling, or having power to vote 10% or more of the

voting securities as well as directly or indirectly exercising a controlling
 
influence over management or policies of a bank; or (iv)

as determined by the
 
Florida OFR. These requirements will affect us because the Bank is chartered
 
under Florida law and

changes in control of CCBG are indirect changes in control of CCB.

Prohibitions Against Tying Arrangements

Banks are subject to the prohibitions on certain tying arrangements.

We

are prohibited, subject to some exceptions, from

extending credit to or offering any other service, or fixing
 
or varying the consideration for such extension of credit or service, on

the condition that the customer obtain some additional service from
 
the institution or its affiliates or not obtain services of a

competitor of the institution.

Capital; Dividends; Source of Strength

The Federal Reserve imposes certain capital requirements on financial
 
holding companies under the BHC Act, including a

minimum leverage ratio and a minimum ratio of “qualifying” capital
 
to risk-weighted assets. These requirements are described

below under “Capital Regulations.” Subject to these capital requirements
 
and certain other restrictions, we are generally able to

borrow money to make a capital contribution to CCB, and such loans
 
may be repaid from dividends paid from CCB to us.

We

are

also able to raise capital for contributions to CCB by issuing securities without having
 
to receive regulatory approval, subject to

compliance with federal and state securities laws.

It is the Federal Reserve’s policy
 
that bank holding companies should generally pay dividends on common
 
stock only out of

income available over the past year,
 
and only if prospective earnings retention is consistent with the organization’s
 
expected

future needs and financial condition. It is also the Federal Reserve’s
 
policy that bank holding companies should not maintain

dividend levels that undermine their ability to be a source of strength to
 
their banking subsidiaries. Additionally,
 
the Federal

Reserve has indicated that bank holding companies should carefully
 
review their dividend policies and has discouraged payment

ratios that are at maximum allowable levels unless both asset quality and capital
 
are very strong. The Federal Reserve possesses

enforcement powers over bank holding companies and their non-bank subsidiaries
 
to prevent or remedy actions that represent

unsafe or unsound practices or violations of applicable statutes and regulations.
 
Among these powers is the ability to proscribe the

payment of dividends by banks and bank holding companies.

Bank holding companies are expected to consult with the Federal Reserve before
 
redeeming any equity or other capital instrument

included in Tier 1 or Tier
 
2 capital prior to stated maturity,
 
if such redemption could have a material effect on the level or

composition of the organization’s
 
capital base. In addition, a bank holding company may not repurchase
 
shares equal to 10% or

more of its net worth if it would not be well-capitalized (as defined by the
 
Federal Reserve) after giving effect to such repurchase.

Bank holding companies experiencing financial weaknesses, or
 
that are at significant risk of developing financial weaknesses,

must consult with the Federal Reserve before redeeming or repurchasing
 
common stock or other regulatory capital instruments.

In accordance with Federal Reserve policy,
 
which has been codified by the Dodd-Frank Act, we are expected to act as a source of

financial strength to CCB and to commit resources to support CCB in circumstances
 
in which we might not otherwise do so. In

furtherance of this policy,
 
the Federal Reserve may require a financial holding company to terminate any
 
activity or relinquish

control of a nonbank subsidiary (other than a nonbank subsidiary
 
of a bank) upon the Federal Reserve’s determination
 
that such

activity or control constitutes a serious risk to the financial soundness or stability
 
of any subsidiary depository institution of the

financial holding company.
 
Further, federal bank regulatory authorities have
 
additional discretion to require a financial holding

company to divest itself of any bank or nonbank subsidiary if the agency
 
determines that divestiture may aid the depository

institution’s financial condition.

Safe and Sound Banking Practices

Bank holding companies and their nonbanking subsidiaries are prohibited
 
from engaging in activities that represent unsafe and

unsound banking practices or that constitute a violation of law or regulations.
 
Under certain conditions the Federal Reserve may

conclude that some actions of a bank holding company,
 
such as a payment of a cash dividend, would constitute an unsafe and

unsound banking practice. The Federal Reserve also has the authority
 
to regulate the debt of bank holding companies, including

the authority to impose interest rate ceilings and reserve requirements on
 
such debt. The Federal Reserve may also require a bank

holding company to file written notice and obtain its approval prior to purchasing
 
or redeeming its equity securities, unless certain

conditions are met.

14

Capital City Bank

Capital City Bank is a state-chartered commercial banking institution that is chartered
 
by and headquartered in the State of Florida

and is subject to supervision and regulation by the Florida OFR. The Florida OFR supervises and
 
regulates all areas of our

operations including, without limitation, the making of loans, the issuance of
 
securities, the conduct of our corporate affairs, the

satisfaction of capital adequacy requirements, the payment of dividends,
 
and the establishment or closing of banking centers. We

are also a member bank of the Federal Reserve System, which makes our operations
 
subject to broad federal regulation and

oversight by the Federal Reserve. In addition, our deposit accounts are insured
 
by the Federal Deposit Insurance Corporation (the

”FDIC”) up to the maximum extent permitted by law,
 
and the FDIC has certain supervisory enforcement powers over us.

As a Florida state-chartered bank, we are empowered by statute, subject to
 
the limitations contained in those statutes, to take and

pay interest on savings and time deposits, to accept demand deposits, to
 
make loans on residential and other real estate, to make

consumer and commercial loans, to invest (with certain limitations) in equity securities
 
and in debt obligations of banks and

corporations and to provide various other banking services for the benefit
 
of our clients. Various
 
consumer laws and regulations

also affect our operations, including state usury laws, laws relating to
 
fiduciaries, consumer credit and equal credit opportunity

laws, and fair credit reporting. In addition, the Federal Deposit Insurance Corporation
 
Improvement Act of 1991, or FDICIA,

prohibits insured state-chartered institutions from conducting activities as principal
 
that are not permitted for national banks. A

bank, however, may engage in certain otherwise
 
prohibited activity if it meets its minimum capital requirements and the FDIC

determines that the activity does not present a significant risk to the Deposit Insurance
 
Fund (“DIF”).

Safety and Soundness Standards / Risk Management

The federal banking agencies have adopted guidelines establishing
 
operational and managerial standards to promote the safety

and soundness of federally insured depository institutions. The guidelines
 
set forth standards for internal controls, information

systems, internal audit systems, loan documentation, credit underwriting,
 
interest rate exposure, asset growth, compensation, fees

and benefits, asset quality and earnings.

In general, the safety and soundness guidelines prescribe the goals to be achieved
 
in each area, and each institution is responsible

for establishing its own procedures to achieve those goals. If an institution
 
fails to comply with any of the standards set forth in

the guidelines, the financial institution’s
 
primary federal regulator may require the institution to submit a plan for
 
achieving and

maintaining compliance. If a financial institution fails to submit an acceptable
 
compliance plan or fails in any material respect to

implement a compliance plan that has been accepted by its primary federal
 
regulator, the regulator is required to issue an order

directing the institution to cure the deficiency.
 
Until the deficiency cited in the regulator’s order is cured, the regulator
 
may

restrict the financial institution’s
 
rate of growth, require the financial institution to increase its capital, restrict the
 
rates the

institution pays on deposits or require the institution to take any action
 
the regulator deems appropriate under the circumstances.

Noncompliance with the standards established by the safety and soundness
 
guidelines may also constitute grounds for other

enforcement action by the federal bank regulatory agencies, including
 
cease and desist orders and civil money penalty

assessments.

The bank regulatory agencies have increasingly emphasized the importance
 
of sound risk management processes and strong

internal controls when evaluating the activities of the financial institutions they
 
supervise. Properly managing risks has been

identified as critical to the conduct of safe and sound banking activities and has
 
become even more important as new

technologies, product innovation and the size and speed of financial transactions have
 
changed the nature of banking markets. The

agencies have identified a spectrum of risks facing a banking institution including,
 
but not limited to, credit, market, liquidity,

operational, legal and reputational risk. A particular area of focus for regulators
 
has been operational risk, which arises from the

potential that inadequate information systems, operational problems,
 
breaches in internal controls, fraud or unforeseen

catastrophes will result in unexpected losses. New products and services, third
 
party risk management and cybersecurity are

critical sources of operational risk that financial institutions are expected
 
to address in the current environment. The Bank is

expected to have active board and senior management oversight; adequate
 
policies, procedures and limits; adequate risk

measurement, monitoring and management information systems; and
 
comprehensive internal controls.

Reserves

The Federal Reserve requires all depository institutions to maintain
 
reserves against transaction accounts (noninterest bearing and

NOW checking accounts). The balances maintained to meet the reserve
 
requirements imposed by the Federal Reserve may be

used to satisfy liquidity requirements. An institution may borrow from
 
the Federal Reserve Bank “discount window” as a

secondary source of funds, provided that the institution meets the Federal
 
Reserve Bank’s credit standards.

15

Dividends

CCB is subject to legal limitations on the frequency and amount of dividends
 
that can be paid to CCBG. The Federal Reserve may

restrict the ability of CCB to pay dividends if such payments would constitute an
 
unsafe or unsound banking practice.

Additionally, financial
 
institutions are now required to maintain a capital conservation buffer
 
of at least 2.5% of risk-weighted

assets in order to avoid restrictions on capital distributions and other payments.
 
If a financial institution’s capital conservation

buffer falls below the minimum requirement, its maximum payout
 
amount for capital distributions and discretionary payments

declines to a set percentage of eligible retained income based on the size of the
 
buffer. See “Capital Regulations” below
 
for

additional details on this capital requirement.

In addition, Florida law and Federal regulation place restrictions on the declaration
 
of dividends from state-chartered banks to

their holding companies. Under the Florida Financial Institutions Code,
 
the board of directors of a state-chartered bank, after it

charges off bad debts, depreciation and other
 
worthless assets, if any, and makes provisions
 
for reasonably anticipated future

losses on loans and other assets, may quarterly,
 
semi-annually or annually declare a dividend of up to the aggregate net profits of

that period combined with the bank’s
 
retained net profits for the preceding two years. In addition, with the approval of the

Florida OFR and Federal Reserve, the bank’s
 
board of directors may declare a dividend from retained net profits which accrued

prior to the preceding two years. Before declaring such dividends, 20% of
 
the net profits for the preceding period as is covered by

the dividend must be transferred to the surplus fund of the bank until this fund becomes
 
equal to the amount of the bank’s

common stock then issued and outstanding. However,
 
a Florida state-chartered bank may not declare any dividend if (i) its net

income (loss) from the current year combined with the retained net income
 
(loss) for the preceding two years aggregates a loss or

(ii) the payment of such dividend would cause the capital account of the bank to fall below the
 
minimum amount required by law,

regulation, order or any written agreement with the
 
Florida OFR or a federal regulatory agency.
 
Under Federal Reserve

regulations, a state member bank may,
 
without the prior approval of the Federal Reserve, pay a dividend in an amount that, when

taken together with all dividends declared during the calendar year,
 
does not exceed the sum of the bank’s net income
 
during the

current calendar year and the retained net income of the prior two calendar years.
 
The Federal Reserve may approve greater

amounts.

Insurance of Accounts and Other Assessments

Deposits at U.S. domiciled banks are insured by the FDIC, subject to limits and
 
conditions of applicable laws and regulations.

Our deposit accounts are insured by the DIF generally up to a maximum of
 
$250,000 per separately insured depositor.
 
In order to

fund the DIF,
 
all insured depository institutions are required to pay quarterly assessments to
 
the FDIC that are based on an

institutions assignment to one of four risk categories based on supervisory
 
evaluations, regulatory capital levels and certain other

factors. The FDIC has the discretion to adjust an institution’s
 
risk rating and may terminate its insurance of deposits upon a

finding that the institution engaged or is engaging in unsafe and unsound practices,
 
is in an unsafe or unsound condition to

continue operations, or violated any applicable law,
 
regulation, rule, order or condition imposed by the FDIC or written

agreement entered into with the FDIC. The FDIC may also prohibit any FDIC-insured
 
institution from engaging in any activity it

determines to pose a serious risk to the DIF.

In October 2022, the FDIC finalized a rule to increase the initial base deposit insurance
 
assessment rate schedules uniformly by 2

basis points beginning with the first quarterly assessment period of 2023. The increased
 
assessment is intended to improve the

likelihood that the DIF reserve ratio would reach the statutory minimum of 1.35%
 
by the statutory deadline of September 30,

2028 prescribed under the FDIC’s amended
 
restoration plan. In November 2023, the FDIC adopted a final rule with respect to a

special assessment to recover the costs associated with protecting uninsured
 
depositors following the closures of Silicon Valley

Bank and Signature Bank. The final rule does not apply to any banking organization
 
with less than $5 billion in total consolidated

assets and therefore the special assessment did not directly impact the Company.

Transactions with Affiliates and
 
Insiders

Pursuant to Sections 23A and 23B of the Federal Reserve Act and Regulation

W,

the authority of CCB to engage in transactions

with related parties or “affiliates” or to make loans to insiders is limited.
 
Loan transactions with an affiliate generally must be

collateralized and certain transactions between CCB and its affiliates,
 
including the sale of assets, the payment of money or the

provision of services, must be on terms and conditions that are substantially the
 
same, or at least as favorable to CCB, as those

prevailing for comparable nonaffiliated transactions.
 
In addition, CCB generally may not purchase securities issued or

underwritten by affiliates.

16

Loans to executive officers and directors of an insured depository
 
institution or any of its affiliates or to any person who directly

or indirectly, or
 
acting through or in concert with one or more persons, owns, controls or has the power
 
to vote more than 10% of

any class of voting securities of a bank, which we refer to as “10% Shareowners,”
 
or to any political or campaign committee the

funds or services of which will benefit those executive officers, directors,
 
or 10% Shareowners or which is controlled by those

executive officers, directors or 10% Shareowners, are
 
subject to Sections 22(g) and 22(h) of the Federal Reserve Act and the

corresponding regulations (Regulation O) and Section 13(k) of
 
the Exchange Act relating to the prohibition on personal loans to

executives (which exempts financial institutions in compliance with the
 
insider lending restrictions of Section 22(h) of the Federal

Reserve Act). Among other things, these loans must be made on terms substantially
 
the same as those prevailing on transactions

made to unaffiliated individuals and certain extensions
 
of credit to those persons must first be approved in advance by a

disinterested majority of the entire board of directors. Section 22(h) of the
 
Federal Reserve Act prohibits loans to any of those

individuals where the aggregate amount exceeds an amount equal
 
to 15% of an institution’s unimpaired
 
capital and surplus plus

an additional 10% of unimpaired capital and surplus in the case of loans
 
that are fully secured by readily marketable collateral, or

when the aggregate amount on all of the extensions of credit outstanding
 
to all of these persons would exceed our unimpaired

capital and unimpaired surplus. Section 22(g) identifies limited circumstances
 
in which we are permitted to extend credit to

executive officers.

Community Reinvestment Act

The CRA and its corresponding regulations are intended to encourage banks to
 
help meet the credit needs of the communities

they serve, including low- and moderate-income (“LMI”) neighborhoods,
 
consistent with safe and sound banking practices. These

regulations provide for regulatory assessment of a bank’s
 
record in meeting the credit needs of its market area. Federal banking

agencies are required to publicly disclose each bank’s
 
rating under the CRA. The Federal Reserve considers a bank’s
 
CRA rating

when the bank submits an application to establish bank branches, merge
 
with another bank, or acquire the assets and assume the

liabilities of another bank. In the case of a financial holding company,
 
the CRA performance record of all banks involved in a

merger or acquisition are reviewed in connection with
 
the application to acquire ownership or control of shares or assets of a bank

or to merge with another bank or bank holding company.
 
An unsatisfactory record can substantially delay or block the

transaction. We
 
received a satisfactory rating on our most recent CRA assessment.

In 2023, the Federal Reserve, along with the FDIC and OCC, issued a joint final
 
rule that made significant amendments to the

regulations implementing the CRA to “strengthen and modernize” those
 
regulations, including by creating rigorous data-driven

performance tests and growing the geographic areas in which a bank’s
 
CRA performance may be evaluated. The final rules were

intended to achieve the following key goals, among others:

●

strengthen the achievement of the core purpose of the CRA;

●

encourage banks to expand access to credit, investment, and banking services
 
in LMI communities;

●

adapt to changes in the banking industry,
 
including internet and mobile banking;

●

provide greater clarity and consistency in the application of the CRA regulations;
 
and

●

tailor CRA evaluations and data collection to bank size and type.

The compliance date for a majority of the rule’s
 
provisions is January 1, 2026. The remaining requirements, including
 
the data

reporting requirements, will be applicable on January 1, 2027. We
 
are planning for compliance with the final rules and continue to

evaluate the impact of the final rules to our financial condition, results of operations,
 
and liquidity, which cannot
 
be predicted at

this time.

Capital Regulations

The federal banking regulators have adopted rules implementing
 
risk-based, capital adequacy guidelines for financial holding

companies and their subsidiary banks based on the Basel III standards. Under
 
these guidelines, assets and off-balance sheet items

are assigned to specific risk categories each with designated risk weightings.
 
These risk-based capital guidelines were designed to

make regulatory capital requirements more sensitive to differences
 
in risk profiles among banks and bank holding companies, to

account for off-balance sheet exposure, to minimize disincentives
 
for holding liquid assets, and to achieve greater consistency in

evaluating the capital adequacy of major banks throughout the world.
 
The resulting capital ratios represent capital as a percentage

of total risk-weighted assets and off-balance sheet items.

17

In computing total risk-weighted assets, bank and bank holding company
 
assets are given risk-weights of 0%, 20%, 50%, 100%

and 150%. In addition, certain off-balance sheet items are given
 
similar credit conversion factors to convert them to asset

equivalent amounts to which an appropriate risk-weight will apply.
 
Most loans will be assigned to the 100% risk category,
 
except

for performing first mortgage loans fully secured by 1-to-4 family and
 
certain multi-family residential property,
 
which carry a

50% risk rating. Most investment securities (including, primarily,
 
general obligation claims on states or other political

subdivisions of the United States) will be assigned to the 20% category,
 
except for municipal or state revenue bonds, which have

a 50% risk-weight, and direct obligations of the U.S. Treasury
 
or obligations backed by the full faith and credit of the U.S.

Government, which have a 0% risk-weight. In covering off
 
-balance sheet items, direct credit substitutes, including general

guarantees and standby letters of credit backing financial obligations,
 
are given a 100% conversion factor.
 
Transaction-related

contingencies such as bid bonds, standby letters of credit backing nonfinancial
 
obligations, and undrawn commitments (including

commercial credit lines with an initial maturity of more than one year)
 
have a 50% conversion factor. Short
 
-term commercial

letters of credit are converted at 20% and certain short-term unconditionally
 
cancelable commitments have a 0% factor.

The rules implement strict eligibility criteria for regulatory capital instruments
 
and improve the methodology for calculating risk-

weighted assets to enhance risk sensitivity.
 
Consistent with the international Basel III framework, the rules include
 
a minimum

ratio of Common Equity Tier 1 Capital to Risk-Weighted
 
Assets of 4.5%. The rules provide for a Common Equity Tier
 
1 Capital

conservation buffer of 2.5% of risk-weighted assets. This buffer
 
is added to each of the three risk-based capital ratios to determine

whether an institution has established the buffer.
 
The rules provide for a minimum ratio of Tier 1 Capital to
 
Risk-Weighted Assets

of 6% and include a minimum leverage ratio of 4% for all banking organizations.
 
If a financial institution’s capital conservation

buffer falls below 2.5% (e.g., if the institution’s
 
Common Equity Tier 1 Capital to Risk-Weighted
 
Assets is less than 7.0%), then

capital distributions and discretionary payments will be limited
 
or prohibited based on the size of the institution’s
 
buffer. The

types of payments subject to this limitation include dividends, share buybacks,
 
discretionary payments on Tier 1 instruments, and

discretionary bonus payments.

The capital regulations may also impact the treatment of accumulated
 
other comprehensive income (“AOCI”) for regulatory

capital purposes. AOCI generally flows through to regulatory capital;
 
however, community banks and their holding
 
companies

were allowed a one-time irrevocable opt-out election to continue
 
to treat AOCI the same as under the old regulations for

regulatory capital purposes. This election was required to be made on the
 
first call report or bank holding company annual report

(on form FR Y-9C)
 
filed after January 1, 2015.

We

made the opt-out election. Additionally,
 
the rules also permitted community

banks with less than $15 billion in total assets to continue to count certain
 
non-qualifying capital instruments issued prior to May

19, 2010, as Tier 1 capital, including trust preferred
 
securities and cumulative perpetual preferred stock (subject to a limit of 25%

of Tier 1 capital). However,
 
non-qualifying capital instruments issued on or after May 19, 2010, would
 
not qualify for Tier 1

capital treatment.

Commercial Real Estate Concentration Guidelines

The federal banking regulators have implemented guidelines to address
 
increased concentrations in commercial real estate loans.

These guidelines describe the criteria regulatory agencies will use as indicators
 
to identify institutions potentially exposed to

commercial real estate concentration risk. An institution that has (i) experienced
 
rapid growth in commercial real estate lending,

(ii) notable exposure to a specific type of
 
commercial real estate, (iii) total reported loans for construction, land development,
 
and

other land representing 100% or more of total risk-based capital, or (iv)
 
total commercial real estate (including construction) loans

representing 300% or more of total risk-based capital and the outstanding
 
balance of the institutions commercial real estate

portfolio has increased by 50% or more in the prior 36 months, may be identified
 
for further supervisory analysis of a potential

concentration risk.

At December 31, 2024, CCB’s ratio
 
of construction, land development and other land loans to total risk-based
 
capital was 78%,

its ratio of total commercial real estate loans to total risk-based capital was 212%
 
and, therefore, CCB was under the 100% and

300% thresholds, respectively,
 
set forth in clauses (iii) and (iv) above.
 
As a result, we are not deemed to have a concentration in

commercial real estate lending under applicable regulatory guidelines.

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Prompt Corrective Action

The federal banking agencies are required to take “prompt corrective
 
action” with respect to financial institutions that do not meet

minimum capital requirements. The law establishes five categories
 
for this purpose: “well-capitalized,” “adequately capitalized,”

“undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.”
 
To be considered “well-capitalized,”
 
an

insured depository institution must maintain minimum capital ratios and
 
must not be subject to any order or written directive to

meet and maintain a specific capital level for any capital measure. An institution
 
that fails to remain well-capitalized becomes

subject to a series of restrictions that increase in severity as its capital condition weakens.
 
Such restrictions may include a

prohibition on capital distributions, restrictions on asset growth or
 
restrictions on the ability to receive regulatory approval of

applications. The regulations apply only to banks and not to BHCs. However,
 
the Federal Reserve is authorized to take

appropriate action at the holding company level based on the undercapitalized
 
status of the holding company’s
 
subsidiary banking

institutions. In certain instances relating to an undercapitalized banking
 
institution, the BHC would be required to guarantee the

performance of the undercapitalized subsidiary’s
 
capital restoration plan and could be liable for civil money damages for failure

to fulfill those guarantee commitments.

In addition, failure to meet capital requirements may cause an institution
 
to be directed to raise additional capital. Federal law

further mandates that the agencies adopt safety and soundness standards generally
 
relating to operations and management, asset

quality and executive compensation, and authorizes administrative action
 
against an institution that fails to meet such standards.

Failure to meet capital guidelines may subject a banking organization
 
to a variety of other enforcement remedies, including

additional substantial restrictions on its operations and activities, termination
 
of deposit insurance by the FDIC and, under certain

conditions, the appointment of a conservator or receiver.

At December 31, 2024, we exceeded the requirements contained in the
 
applicable regulations, policies and directives pertaining to

capital adequacy to be classified as “well capitalized” and are unaware
 
of any material violation or alleged violation of these

regulations, policies or directives (see table below). Rapid growth, poor
 
loan portfolio performance, or poor earnings

performance, or a combination of these factors, could change our
 
capital position in a relatively short period of time, making

additional capital infusions necessary.
 
Our capital ratios can be found in Note 17 to the Notes to our Consolidated
 
Financial

Statements.

Interstate Banking and Branching

The Dodd-Frank Act relaxed interstate branching restrictions by modifying
 
the federal statute governing de novo interstate

branching by state member banks. Consequently,
 
a state member bank may open its initial branch in a state outside of the bank’s

home state by way of an interstate bank branch, so long as a bank chartered under
 
the laws of that state would be permitted to

open a branch at that location.

Anti-money Laundering

The Uniting and Strengthening America by Providing Appropriate Tools
 
Required to Intercept and Obstruct Terrorism
 
Act of

2001 (the “USA Patriot Act”), provides the federal government with additional
 
powers to address terrorist threats through

enhanced domestic security measures, expanded surveillance powers,
 
increased information sharing and broadened anti-money

laundering requirements. By way of amendments to the Bank Secrecy
 
Act (the “BSA”), the USA Patriot Act puts in place

measures intended to encourage information sharing among bank regulatory
 
and law enforcement agencies. In addition, certain

provisions of the USA Patriot Act impose affirmative obligations
 
on a broad range of financial institutions.

The USA Patriot Act, BSA, and the related federal regulations require
 
banks to establish anti-money laundering programs that

include policies, procedures and controls to detect, prevent and report
 
money laundering and terrorist financing and to verify the

identity of their customers and of beneficial owners of their legal entity customers.

The Anti-Money Laundering Act (“AMLA”), which amends the BSA, was enacted
 
in early 2021. The AMLA is intended to be a

comprehensive reform and modernization of U.S. bank secrecy and
 
anti-money laundering laws. In particular, it codifies a risk-

based approach to anti-money laundering compliance for financial
 
institutions, requires the U.S. Department of the Treasury
 
to

promulgate priorities for anti-money laundering and countering the
 
financing of terrorism policy,
 
requires the development of

standards for testing technology and internal processes for BSA compliance,
 
expands enforcement-
 
and investigation-related

authority (including increasing available sanctions for certain BSA violations),
 
and expands BSA whistleblower incentives and

protections.

Many AMLA provisions require additional rulemakings, reports,
 
and other measures, and the impact of the AMLA will depend

on, among other things, rulemaking and implementation
 
guidance. In June 2021, the Financial Crimes Enforcement Network, a

bureau of the U.S. Department of the Treasury,
 
issued the priorities for anti-money laundering and countering the financing of

terrorism policy required under the AMLA. The priorities include corruption,
 
cybercrime, terrorist financing, fraud, transnational

crime, drug trafficking, human trafficking
 
and proliferation financing.

19

There is also increased scrutiny of compliance with the sanctions programs
 
and rules administered and enforced by the Office of

Foreign Assets Control of the U.S. Department of Treasury,
 
or “OFAC.” OFAC
 
administers and enforces economic and trade

sanctions against targeted foreign countries and regimes,
 
terrorists, international narcotics traffickers, those engaged
 
in activities

related to the proliferation of weapons of mass destruction, and other threats
 
to the national security, foreign
 
policy or economy of

the United States, based on U.S. foreign policy and national security
 
goals. OFAC issues regulations
 
that restrict transactions by

U.S. persons or entities (including banks), located in the U.S. or abroad,
 
with certain foreign countries, their nationals or

“specially designated nationals.” OFAC
 
regularly publishes listings of foreign countries and designated
 
nationals that are

prohibited from conducting business with any U.S. entity or individual.
 
While OFAC is responsible
 
for promulgating, developing

and administering these controls and sanctions, all of the bank regulatory
 
agencies are responsible for ensuring that financial

institutions comply with these regulations.

Privacy

A variety of federal and state privacy laws govern the collection, safeguarding,
 
sharing and use of customer information, and

require that financial institutions have policies regarding information
 
privacy and security. The GLBA
 
and related regulations

require banks and their affiliated companies to adopt and
 
disclose privacy policies, including policies regarding the sharing of

personal information with third parties. Some state laws also protect the privacy
 
of information of state residents and require

adequate security of such data, and certain state laws may require us
 
to notify affected individuals of security breaches of

computer databases that contain their personal information. These
 
laws may also require us to notify law enforcement, regulators

or consumer reporting agencies in the event of a data breach, as well as businesses
 
and governmental agencies that own data.

Cybersecurity

The federal banking regulators regularly issue new guidance and standards,
 
and update existing guidance and standards, regarding

cybersecurity intended to enhance cyber risk management among financial
 
institutions. Financial institutions are expected to

comply with such guidance and standards and to accordingly develop appropriate
 
security controls and risk management

processes. If we fail to observe such regulatory guidance or standards, we
 
could be subject to various regulatory sanctions,

including financial penalties. In 2023, the SEC issued a final rule that requires
 
disclosure of material cybersecurity incidents, as

well as cybersecurity risk management, strategy and governance. Under
 
this rule, banking organizations that are SEC registrants

must generally disclose information about a material cybersecurity incident
 
within four business days of determining it is material

with periodic updates as to the status of the incident in subsequent filings,
 
as necessary.

Banking organizations are also required to notify their primary
 
banking regulator within 36 hours of determining that a

“computer-security incident” has materially disrupted or degraded,
 
or is reasonably likely to materially disrupt or degrade, the

banking organization’s
 
ability to carry out banking operations or deliver banking products and services
 
to a material portion of its

customer base, its businesses and operations that would result in material loss, or its operations
 
that would impact the stability of

the United States.

State regulators have also been increasingly active in implementing privacy
 
and cybersecurity standards and regulations.

Recently, several states have
 
adopted regulations requiring certain financial institutions to implement
 
cybersecurity programs and

many states have also recently implemented or modified their data breach
 
notification, information security and data privacy

requirements. We
 
expect this trend of state-level activity in those areas to continue and are continually
 
monitoring developments

in the states in which our customers are located.

Risks and exposures related to cybersecurity attacks, including litigation
 
and enforcement risks, are expected to be elevated for

the foreseeable future due to the rapidly evolving nature and sophistication of
 
these threats, as well as due to the expanding use of

internet banking, mobile banking, and other technology-based products
 
and services by us and our customers.

See Item 1A. Risk Factors for a further discussion of risks related to cybersecurity
 
and Item 1C. Cybersecurity for a further

discussion of risk management strategies and governance processes related to
 
cybersecurity.

20

Consumer Laws and Regulations

CCB is also subject to other federal and state consumer laws and regulations that
 
are designed to protect consumers in

transactions with banks. These laws and regulations, among other things, mandate
 
certain disclosures and regulate the manner in

which financial institutions must deal with clients when taking deposits or making
 
loans to clients, provide substantive consumer

rights, prohibit discrimination in credit transactions, regulate the use of
 
credit report information, provide financial privacy

protections, prohibit unfair, deceptive and
 
abusive practices, restrict our ability to raise interest rates, and subject us to
 
substantial

regulatory oversight. CCB must comply with these consumer protection
 
laws and regulations as part of its ongoing client

relations. Violations of
 
applicable consumer protection laws can result in significant potential liability from
 
litigation brought by

customers, including actual damages, restitution and attorneys’ fees. Federal
 
bank regulators, state attorneys general and state and

local consumer protection agencies may also seek to enforce consumer protection
 
requirements and obtain these and other

remedies, including regulatory sanctions, customer rescission rights,
 
action by the state and local attorneys general in each

jurisdiction in which we operate and civil money penalties. Failure to
 
comply with consumer protection requirements may also

result in our failure to obtain any required bank regulatory approval
 
for merger or acquisition transactions we may wish to pursue

or our prohibition from engaging in such transactions even if approval is not required.

In addition, the Consumer Financial Protection Bureau (“CFPB”) issues regulations
 
and standards under these federal consumer

protection laws that affect our consumer businesses. Although
 
the CFPB has jurisdiction over banks with $10 billion or greater in

assets, the regulations and standards issued by the CFPB may also impact
 
CCB or its subsidiaries by virtue of the adoption of the

same or similar regulations and standards by the Federal Reserve or FDIC.
 
These include regulations setting “ability to repay”

standards for residential mortgage loans and mortgage loan servicing
 
and originator compensation standards, which generally

require creditors to make a reasonable, good faith determination of
 
a consumer’s ability to repay any consumer credit transaction

secured by a dwelling (excluding an open-end credit plan, timeshare
 
plan, reverse mortgage, or temporary loan) and establishes

certain protections from liability under this requirement for loans that meet the
 
requirements of the “qualified mortgage” safe

harbor. Also, the TILA-RESPA
 
Integrated Disclosure, or TRID, rules for mortgage closings have impacted
 
our loan applications.

These rules, including the required loan forms, generally increased the time it takes to
 
approve mortgage loans.

In 2022, certain members of Congress and the leadership of the CFPB expressed a heightened
 
interest in bank consumer overdraft

protection programs. In 2022, the CFPB piloted a supervision effort
 
to collect key metrics from some supervised institutions

regarding the consumer impact of their overdraft and non-sufficient
 
fund practices, with the intent of using this information to

identify institutions for further examination and review.
 
The CFPB indicated, at the time, that it intended to pursue enforcement

actions against banking organizations, and their executives,
 
that oversee overdraft practices that were deemed to be unlawful, and

indeed took action against a large bank for charging “surprise”
 
overdraft fees known as authorized positive fees. In October
 
of

2022, the CFPB issued guidance to help banks avoid charging
 
illegal surprise overdraft fees. In addition, the Comptroller of the

Currency has identified potential options for reform of national bank overdraft protection
 
practices, including providing a grace

period before the imposition of a fee, refraining from charging multiple
 
fees in a single day and eliminating fees altogether.

In December 2024, the CFPB issued a final rule that, among other things, will require
 
financial institutions with more than $10

billion in assets to offer overdraft protection services to
 
either provide customers that receive such services with loan disclosures

required under the TILA and Regulation Z, or cap any charges associated with the
 
provision of such services at $5 or an amount

that would allow the institution to cover its costs and losses with respect to the overdraft
 
credit transaction. The CFPB’s final
 
rule

on overdraft credit is currently scheduled to take effect on October
 
1, 2025. However, the rule is subject to legal challenges
 
and

continued implementation of the final rule under the new leadership
 
of the CFPB is uncertain. While this new rule would not

impose direct obligations on CCB, it would directly impact some of CCB’s
 
competitors and therefore may influence CCB’s

policies and practices relating to overdraft protection services.

See Item 1A. Risk Factors under the section captioned “Fee revenues from overdraft
 
protection programs constitute a significant

portion of our noninterest income and may continue to be subject to increased
 
supervisory scrutiny” for further discussion related

to the impacts of increased scrutiny of overdraft fees on us.

Future Legislative Developments

Various
 
bills are from time to time introduced in the U.S. Congress and the Florida legislature.
 
This legislation may change

banking and tax statutes and the environment in which our banking subsidiary
 
and we operate in substantial and unpredictable

ways. We cannot
 
determine the ultimate effect that potential legislation, if enacted, or
 
implementing regulations with respect

thereto, would have upon our financial condition or results of operations or
 
that of our banking subsidiary.

21

Effect of Governmental Monetary Policies

The commercial banking business is affected not only by general
 
economic conditions, but also by the monetary policies of the

Federal Reserve. Changes in the discount rate on member bank borrowing,
 
availability of borrowing at the “discount window,”

open market operations, changes in the Fed Funds target
 
interest rate, changes in interest rates payable on reserve accounts, the

imposition of changes in reserve requirements against member banks’ deposits
 
and assets of foreign banking centers and the

imposition of and changes in reserve requirements against certain borrowings
 
by banks and their affiliates are some of the

instruments of monetary policy available to the Federal Reserve. These monetary
 
policies are used in varying combinations to

influence overall growth and distributions of bank loans, investments and deposits,
 
which may affect interest rates charged on

loans or paid on deposits. The monetary policies of the Federal Reserve have
 
had a significant effect on the operating results of

commercial banks and are expected to continue to do so in the future. The
 
Federal Reserve’s policies are primarily
 
influenced by

its dual mandate of price stability and full employment, and, to a lesser degree by
 
short-term and long-term changes in the

international trade balance and in the fiscal policies of the U.S. Government. Future
 
changes in monetary policy and the effect of

such changes on our business and earnings in the future cannot be predicted.

Website Access to Company’s
 
Reports

Our Internet website is www.ccbg.com.
 
Our annual reports on Form 10-K, quarterly reports on Form 10-Q,
 
current reports on

Form 8-K, including any amendments to those reports filed or furnished pursuant
 
to section 13(a) or 15(d), and reports filed

pursuant to Section 16, 13(d), and 13(g) of the Exchange Act are available
 
free of charge through our website as soon as

reasonably practicable after they are electronically filed with, or furnished
 
to, the SEC.
 
The information on our website is not

incorporated by reference into this report.

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