Colony Bankcorp, Inc. (Nasdaq: CBAN) (“Colony” or the “Company”) today reported financial results for the first quarter of 2024. Financial highlights are shown below.

Financial Highlights:

• Net income decreased to $5.3 million, or $0.30 per diluted share, for the first quarter of 2024, compared to $5.6 million, or $0.32 per diluted share, for the fourth quarter of 2023, but increased from the first quarter of 2023 net income of $5.0 million, or $0.29 per diluted share.

• Operating net income increased to $5.8 million, or $0.33 of adjusted earnings per diluted share, for the first quarter of 2024, compared to $5.4 million, or $0.31 of adjusted earnings per diluted share, for the fourth quarter of 2023, and $5.5 million, or $0.31 of adjusted earnings per diluted share, for the first quarter of 2023. (See Reconciliation of Non-GAAP Measures).

• Strong liquidity with available sources of funding of approximately $1.3 billion at March 31, 2024. No overnight borrowings utilized as of March 31, 2024.

• Estimated uninsured deposits of $785.6 million, or 30.82% of total Bank deposits at March 31, 2024. Adjusted uninsured deposit estimate (excluding deposits collateralized by public funds or internal accounts) of $459.9 million, or 18.04% of total Bank deposits at March 31, 2024.

• Provision for credit losses of $1.0 million was recorded in first quarter of 2024 compared to $1.5 million in fourth quarter of 2023, and $900,000 in first quarter of 2023.

• Total loans were $1.86 billion at March 31, 2024, a decrease of $24.5 million, or 1.30%, from the prior quarter.

• Total deposits were $2.52 billion and $2.54 billion at March 31, 2024 and December 31, 2023, respectively, a decrease of $22.0 million.

• Mortgage production was $50.1 million, and mortgage sales totaled $36.6 million in the first quarter of 2024 compared to $45.3 million and $40.1 million, respectively, for the fourth quarter of 2023.

• Small Business Specialty Lending (“SBSL”) closed $35.6 million in Small Business Administration (“SBA”) loans and sold $24.0 million in SBA loans in the first quarter of 2024 compared to $24.0 million and $18.0 million, respectively, for the fourth quarter of 2023.

The Company also announced that on April 24, 2024, the Board of Directors declared a quarterly cash dividend of $0.1125 per share, to be paid on its common stock on May 22, 2024, to shareholders of record as of the close of business on May 8, 2024. The Company had 17,558,611 shares of its common stock outstanding as of April 23, 2024.

“We are pleased with the announcement of our improved operating results for the first quarter, including the continued improvement in our complementary lines of business which have contributed to our increased noninterest income. Although margin declined slightly during the first quarter, the decline was less than anticipated as we begin to see some stability in our increasing funding costs,” said Heath Fountain, Chief Executive Officer.

“Total loans declined in the first quarter, largely due to the sale of portfolio mortgages for a gain and credit related payoffs of a limited number of loans, along with the general slowdown in loan production we’ve seen over the past few quarters. Looking ahead, based on our current pipeline projections we do expect to see modest loan growth for the rest of the year.

“While our total deposits experienced a decline due to wholesale deposit payoffs in the first quarter, we are pleased to report that customer deposits increased by $12.5 million and is a result of our commitment to growing customer relationships. Also during the quarter, we strategically sold underperforming securities for a loss which enables us to reinvest those proceeds into higher performing assets and improve our overall earnings.

"We saw an improvement in nonperforming loans and maintain confidence in overall credit quality. Following a period of historically low charge-offs, the few charge-offs observed in recent quarters have not raised any concerns regarding the quality of our portfolio.

“We are proud of the effort and progress our team has made towards achieving our performance objectives and we expect that we will see continued improvement as we move forward.”

Balance Sheet

• Total assets were $3.02 billion at March 31, 2024, a decrease of $37.9 million from December 31, 2023.

• Total loans, including loans held for sale, were at $1.89 billion at March 31, 2024, a decrease of $21.3 million from the quarter ended December 31, 2023.

• Total deposits were $2.52 billion and $2.54 billion at March 31, 2024 and December 31, 2023, respectively, a decrease of $22.0 million. Interest bearing demand deposits increased $43.3 million which was offset by decreases in savings and money market deposits of $10.1 million and time deposits of $32.6 million from December 31, 2023 to March 31, 2024.

• Total borrowings at March 31, 2024 totaled $218.0 million, a decrease of $20.5 million or, 8.6%, compared to December 31, 2023, related to decreases in Federal Home Loan Bank advances.

Capital

• Colony continues to maintain a strong capital position, with ratios that exceed regulatory minimums required to be considered as “well-capitalized.”

• Preliminary tier one leverage ratio, tier one capital ratio, total risk-based capital ratio and common equity tier one capital ratio were 9.19%, 13.04%, 15.79%, and 11.90%, respectively, at March 31, 2024.

First Quarter and March 31, 2024 Year to Date Results of Operations

• Net interest income, on a tax-equivalent basis, totaled $18.8 million for the first quarter ended March 31, 2024 compared to $20.7 million for the same period in 2023. Increases can be seen in income on interest earning assets which is more than offset by increases in expenses on interest bearing liabilities due to the significant rise in interest rates period over period along with increases in FHLB advances. Income on interest earning assets increased $5.0 million, to $33.5 million for the first quarter of 2024 compared to the respective period in 2023. Expense on interest bearing liabilities increased $6.9 million, to $14.7 million for the first quarter of 2024 compared to the respective period in 2023.

• Net interest margin for the first quarter of 2024 was 2.69% compared to 3.08% for the first quarter of 2023. The decrease is the result of rate increases in interest bearing liabilities outpacing the rate increases in interest earning assets.

• Noninterest income totaled $9.5 million for the first quarter ended March 31, 2024, an increase of $1.8 million, or 23.87%, compared to the same period in 2023. This increase was primarily related to increases in service charges on deposit accounts, mortgage fee income, gains on sales of SBA loans and income on wealth advisory services which is included in other noninterest income which were partially offset by decreases in interchange fee income and losses on the sales of investment securities.

• Noninterest expense totaled $20.4 million for the first quarter ended March 31, 2024, compared to $21.2 million for the same period in 2023. This decrease was a result of overall decreases in salaries and employee benefits primarily related to the expense initiative in 2023 which lowered total number of employees period over period as well as a decrease in data processing expense as a result of cost savings upon renewal of the core processing contract in second quarter of 2023.

Asset Quality

• Nonperforming assets totaled $7.0 million and $10.7 million at March 31, 2024 and December 31, 2023, respectively, a decrease of $3.7 million.

• Other real estate owned and repossessed assets totaled $562,000 at March 31, 2024 and $448,000 at December 31, 2023.

• Net loans charged-off were $664,000, or 0.14% of average loans for the first quarter of 2024, compared to $692,000 or 0.15% for the fourth quarter of 2023.

• The credit loss reserve was $18.7 million, or 1.00% of total loans, at March 31, 2024, compared to $18.4 million, or 0.98% of total loans at December 31, 2023.

Earnings call information

The Company will host an earnings conference call at 9:00 a.m. ET on Thursday, April 25, 2024, to discuss the recent results and answer appropriate questions. The conference call can be accessed by dialing 800-274-8461 and using the Conference ID: COLONY1Q. A replay of the call will be available until Thursday, May 2, 2024. To listen to the replay, dial 800-757-4761.