Colony Bankcorp, Inc. today reported financial results for the first quarter of 2023. Financial highlights are shown below.

Financial Highlights:

Net income decreased to $5.0 million, or $0.29 per diluted share, for the first quarter of 2023, compared to $5.6 million, or $0.31 per diluted share, for the fourth quarter of 2022, and $5.3 million, or $0.34 per diluted share, for the first quarter of 2022.

Operating net income decreased to $5.5 million, or $0.31 of adjusted earnings per diluted share, for the first quarter of 2023, compared to $5.6 million, or $0.31 of adjusted earnings per diluted share, for the fourth quarter of 2022, and an increase from $5.4 million, or $0.37 of adjusted earnings per diluted share, for the first quarter of 2022. (See Reconciliation of Non-GAAP Measures).

Strong liquidity with available sources of funding of approximately $1.3 billion at March 31, 2023. No overnight borrowings utilized or Federal Reserve Bank Term Funding program used as of March 31, 2023.

Estimated uninsured deposits of $790.7 million, or 30.96% of total Bank deposits at March 31, 2023. Adjusted uninsured deposit estimate (excluding deposits collateralized by public funds or internal accounts) of $444.6 million, or 17.41% of total Bank deposits at March 31, 2023.

Provision for credit losses of $900,000 was recorded in first quarter of 2023 and fourth quarter of 2022, and $50,000 in first quarter of 2022.

Total loans were $1.80 billion at March 31, 2023, an increase of $62.7 million, or 3.61% from the prior quarter.

Total deposits were $2.52 billion and $2.49 billion at March 31, 2023 and December 31, 2022, respectively, an increase of $25.1 million.

Mortgage production was $62.0 million, and mortgage sales totaled $37.6 million in the first quarter of 2023 compared to $92.6 million and $38.1 million, respectively, for the fourth quarter of 2022.

Small Business Specialty Lending (“SBSL”) closed $19.6 million in Small Business Administration (“SBA”) loans and sold $11.5 million in SBA loans in the first quarter of 2023 compared to $29.0 million and $18.0 million, respectively, for the fourth quarter of 2022.

The Company also announced that on April 27, 2023, the Board of Directors declared a quarterly cash dividend of $0.11 per share, to be paid on its common stock on May 24, 2023, to shareholders of record as of the close of business on May 10, 2023. The Company had 17,593,879 shares of its common stock outstanding as of April 26, 2023.

“Despite the recent stress in the banking industry, Colony continues to remain resilient and adapt to the changing landscape. We remain committed to delivering value to our shareholders, while also ensuring that we are meeting the needs of our customers and the communities we serve” said Heath Fountain, Chief Executive Officer and Acting Chief Financial Officer.

“Our long customer relationships and diversified core deposit base provide consistent funding for our operations, and our liquidity remains strong. Adjusted uninsured deposits represent a small percentage of our overall deposits, which increases the stability of our deposit base and lowers our overall funding risk.”

“The loan loss reserve methodology for Current Expected Credit Losses (CECL) was implemented on January 1, 2023, with an initial increase of $1.2 million only resulting from the newly required reserve on unfunded commitments. The provision for credit losses for the quarter of $900,000 was primarily related to the loan growth of $62.7 million, or 3.6%, from the prior quarter. Asset quality remains strong and well managed in the first quarter with a small increase in non performing loans, and criticized and classified loans remain stable.”

“Quarter over quarter non-interest expenses declined as growth slowed during the first quarter. By focusing on managing expenses in a lower growth environment, we can improve profitability and eliminate unnecessary costs. This disciplined approach to expense management will allow us to weather any economic challenges and position ourselves for long-term success.”

Balance Sheet

Total assets were $3.00 billion at March 31, 2023, an increase of $60.4 million from December 31, 2022.
Total loans, including loans held for sale, were at $1.81 billion at March 31, 2023, an increase of $58.6 million from the quarter ended December 31, 2022.

Total deposits were $2.52 billion and $2.49 billion at March 31, 2023 and December 31, 2022, respectively, an increase of $25.1 million. Time deposits increased $128.2 million, which was offset by decreases in other interest bearing deposits and noninterest bearing deposits of $103.1 million from December 31, 2022 to March 31, 2023.

Total borrowings at March 31, 2023 totaled $228.4 million, an increase of $25.0 million or, 12.3%, compared to December 31, 2022 related to additional Federal Home Loan Bank advances, offset by payback of borrowings from the Federal Reserve Bank.

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 8.90%, 12.14%, 14.80%, and 11.01%, respectively, at March 31, 2023.

First Quarter Results of Operations

Net interest income, on a tax-equivalent basis, for the first quarter of 2023 totaled $20.7 million , compared to $19.3 million for the first quarter of 2022. The increase during the first quarter of 2023 compared to the same period in 2022 is primarily attributable to increases in loan volume and purchases of investment securities, offset by increases in deposit rates and increases in borrowings to fund loan growth.

Net interest margin for the first quarter of 2023 decreased five basis points from the first quarter of 2022. The decrease is the result of an increase in deposit rates along with an increase in borrowings, offset by higher yielding investment securities, an increase in rates paid on deposits with the Federal Reserve and an increase in loan rates.

Noninterest income totaled $7.7 million for the first quarter ended March 31, 2023, a decrease of $1.5 million, or 16.3%, compared to the same period in 2022. The decrease was primarily attributable to decreases in mortgage fee income and SBSL loan sales.

Noninterest expense totaled $21.2 million for the first quarter ended March 31, 2023, compared to $21.8 million for the same period in 2022. This was a result of overall decreases in the salaries and employee benefits related to lower commissions and bonus expenses, offset by severance and acquisition related vendor contract buyouts in the first quarter 2023 compared to the same period in 2022.

Asset Quality

Nonperforming assets totaled $7.8 million and $6.4 million at March 31, 2023 and December 31, 2022, respectively, an increase of $1.5 million.

Other real estate owned and repossessed assets remained stable at $651,000 for March 31, 2023 and December 31, 2022.

Net loans charged-off were $237,000, or 0.05% of average loans for the first quarter of 2023, compared to net charge-offs of $154,000 or 0.04% for the fourth quarter of 2022.

The credit loss reserve was $16.6 million, or 0.92% of total loans, at March 31, 2023, compared to $16.1 million, or 0.93% of total loans at December 31, 2022.