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Colony Bankcorp Reports Fourth Quarter and Year-End 2019 Results

Company Increases Quarterly Cash Dividend to $0.10 per Share

/EIN News/ -- FITZGERALD, Ga., Jan. 16, 2020 (GLOBE NEWSWIRE) -- Colony Bankcorp, Inc. (Nasdaq: CBAN) (“Colony” or the “Company”) today reported net income of $2.8 million or $0.29 per diluted share for the fourth quarter of 2019 compared with $3.0 million or $0.35 per diluted share for the same quarter last year. The Company reported adjusted net income (a non‑GAAP financial measure) of $3.0 million or $0.32 per diluted share versus $3.1 million or $0.36 per diluted share for the prior-year fourth quarter. For the year ended December 31, 2019, net income was $10.2 million or $1.12 per diluted share compared with $11.9 million or $1.40 per diluted share in the prior year.  Adjusted net income for the year was $12.3 million or $1.35 per diluted share, versus $12.1 million or $1.43 per diluted share for the year ended December 31, 2018. Adjusted net income excludes charges for acquisition‑related expenses as well as gains on other real estate owned (“OREO”) property held for sale. See the unaudited reconciliation of non-GAAP measures later in this release.

Separately, the Company also announced that the Board of Directors has voted to increase its quarterly cash dividend to $0.10 per share from $0.075 per share previously set in January 2019. The Board’s decision was based on the ongoing strength of the Company’s earnings, improvement in asset quality and an outlook for long-term earnings growth. The new rate will apply to the next dividend to be paid on February 18, 2020, to shareholders of record as of the close of business on January 31, 2020.

Commenting on the announcement, Heath Fountain, President and Chief Executive Officer, said, “We are pleased to announce solid results for the fourth quarter and year. While adjusted net income was down $0.03 over the previous quarter and $0.04 over the year-earlier quarter, the main driver was an increase in provision expense, primarily due to our continued loan growth. In addition, current year results reflect startup costs related to our Small Business Specialty Lending Division, which we expect to begin generating revenue in the first quarter of 2020.      

“Our investments in business development initiatives continue to be successful as we increased our loan volume and net interest income both for the fourth quarter and full year. Total loans, including acquisition activity, increased 24% year over year, while legacy loan growth increased 11%. Our net interest margins also showed improvement for both the quarter and the full year. Growth in net interest income was partially offset by acquisition-related expenses associated with our purchases of LBC Bancshares, Inc. and PFB Mortgage, including increases in noninterest expense, such as salaries and employee benefits, as well as occupancy and equipment.

“Net interest margin increased to 3.72%, an increase of eight basis points over the sequential quarter and 17 basis points compared with the year-earlier period. As the Federal Reserve Bank lowered rates three times throughout 2019, we were able to shift assets into loans, improving our earnings mix through loan volume growth and margin improvement. Additionally, our efforts to improve noninterest income contributed to an increase of $1.1 million and $2.5 million in mortgage fee income for the fourth quarter and full year, respectively, versus the same periods last year.”

In closing, Fountain added, “We are pleased with the Company’s prosperity during 2019. These achievements reaffirm the strategies we have in place to grow our business across our markets and also reflect the hard work of everyone at Colony Bancorp. While the competitive landscape is intense, we remain optimistic based on our loan pipeline, mortgage fee income and core deposit base growth, and we continue to deliver market share gains. Our Board is confident with our operational structure and strategic planning as evidenced by the increase in the quarterly dividend. We look forward to the year with enthusiasm, and we see opportunities to continue to reward our shareholders.”

Capital
Colony continues to maintain a strong capital position, with ratios that exceed regulatory minimums required to be classified as “well-capitalized.”  At December 31, 2019, the Company’s tier one leverage ratio, tier one ratio, total risk-based capital ratio and common equity tier one capital ratio were 9.04%, 12.52%, 13.17% and 10.33%, respectively, compared with 10.24%, 15.00%, 15.86% and 12.22%, respectively, at December 31, 2018.

Net Interest Margin
During the fourth quarter of 2019, the Company reported net interest income of $13.0 million compared with $10.4 million for the comparable 2018 quarter. For the year ended December 31, 2019, net interest income was $47.8 million compared with $40.8 million for the comparable 2018 period. Net interest margin for the fourth quarter of 2019 was 3.72%, up eight basis points on a sequential quarter basis and up 17 basis points compared with the year-earlier quarter. Net interest margin for the year ended December 31, 2019, was 3.61% compared with 3.56% for 2018. Net interest margin, excluding purchase accounting from the acquisition of LBC Bancshares, Inc., was 3.60%, up nine basis points on a sequential quarter basis.

Asset Quality
Asset quality remained solid with continued improvement from a year ago. Substandard assets, which include non-performing assets, totaled $21.5 million at December 31, 2019, compared with $24.6 million at December 31, 2018. Substandard assets adjusted for SBA guarantees to tier one capital plus loan loss reserve ratio was 14.22% and 17.38% at December 31, 2019 and December 31, 2018, respectively. Non‑performing assets decreased to $11.1 million, or 1.15% of total loans and OREO, from $11.3 million or 1.45% at December 31, 2018. OREO totaled $1.3 million at December 31, 2019, reflecting a 28.3% reduction from $1.8 million at December 31, 2018.

In the fourth quarter of 2019, net loan charge-offs were $317 thousand or 0.13% of average loans compared with net loan recoveries of $53 thousand or 0.01% of average loans in the fourth quarter of 2018, while net loan charge-offs for the year ended December 31, 2019, were $1.5 million or 0.17% of average loans compared with $431 thousand or 0.06% of average loans for 2018. The loan loss reserve was $6.9 million or 0.71% of total loans on December 31, 2019, compared with $7.3 million or 0.93% of total loans at December 31, 2018. Loan loss reserve methodology resulted in a $581 thousand loan loss provision for the three months ended December 31, 2019, compared with $70 thousand for the comparable 2018 period and a $1.1 million loan loss provision for the year ended December 31, 2019, compared with $201 thousand for 2018.

Noninterest Income
Total noninterest income increased 53.7% to $14.8 million for the year ended December 31, 2019, from $9.6 million in the comparable 2018 period. Gain on the sale of OREO property for the year increased $739 thousand and secondary mortgage fee income increased $2.5 million.

Noninterest Expense
Total noninterest expense increased 38.5% to $48.9 million for the year ended December 31, 2019, from $35.3 million in the comparable 2018 period. Salaries and employee benefit expenses increased 30.3%, occupancy expense increased 16.0% and other noninterest expense increased 62.1% from the comparable 2018 period. The efficiency ratio increased to 77.93% for the year ended December 31, 2019, from 70.05% in the comparable 2018 period. The increase is attributable to an increase in salary and benefits of $3.4 million connected with the Calumet merger and additional headcount with Colony Bank Mortgage, or 13.0% of the overall salary and benefit increase. Also, acquisition expenses increased noninterest expense by $3.1 million or 42.63% of the overall other noninterest expense increase. Accounting for non‑GAAP items disclosed later in this release, the adjusted efficiency ratio (a non‑GAAP financial measure) would have been 73.26% and 69.23% for the year ended December 31, 2019 and 2018, respectively. See the unaudited reconciliation of non-GAAP measures later in this release.

About Colony Bankcorp
Colony Bankcorp, Inc. is the bank holding company for Colony Bank. Founded in 1975 and headquartered in Fitzgerald, Georgia, Colony operates 28 full-service branches throughout Central, Southern and Coastal Georgia. The Bank also helps its customers achieve their goal of home ownership through Colony Bank Mortgage. Colony’s common stock is traded on the NASDAQ Global Market under the symbol “CBAN.” For more information, please visit www.colony.bank. You can also follow the Company on Facebook or on Twitter @colony_bank.

Forward-Looking Statements
Certain statements contained in the preceding release that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”), notwithstanding that such statements are not specifically identified. In addition, certain statements may be contained in the Company’s future filings with the SEC, in press releases, and in oral and written statements made by or with the approval of the Company that are not statements of historical fact and constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statement of plans and objectives of Colony Bankcorp, Inc. or its management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties. Factors that might cause such differences include, but are not limited to: the Company’s ability to implement its various strategic initiatives; competitive pressures among financial institutions increasing significantly; economic conditions, either nationally or locally, in areas in which the Company conducts operations being less favorable than expected; interest rate risk; legislation or regulatory changes which adversely affect the ability of the consolidated Company to conduct business combinations or new operations; and risks that the anticipated benefits from the transactions with LBC Bancshares, Inc. and PFB Mortgage are not realized in the time frame anticipated or at all as a result of changes in general economic and market conditions or other unexpected factors or events. These and other factors, risks and uncertainties could cause the actual results, performance or achievements of the Company to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Many of these factors are beyond the Company’s ability to control or predict.

Forward-looking statements speak only as of the date on which such statements are made. These forward-looking statements are based upon information presently known to the Company’s management and are inherently subjective, uncertain and subject to change due to any number of risks and uncertainties, including, without limitation, the risks and other factors set forth in the Company’s filings with the Securities and Exchange Commission, the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, under the captions “Forward-Looking Statements and Factors that Could Affect Future Results” and “Risk Factors,” and in the Company’s quarterly reports on Form 10‑Q and current reports on Form 8-K. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on these forward-looking statements.

 
 
COLONY BANKCORP, INC.
Unaudited Reconciliation of Non-GAAP Measures
(in thousands, except per share data)
         
    Three Months Ended
December 31,
  Year Ended
December 31,
      2019       2018       2019       2018  
Total noninterest income   $ 4,389     $ 2,458     $ 14,762     $ 9,621  
Securities gains     2       -       (97 )     (116 )
Realized (gains) losses on                                 
OREO property held for sale     10       (80 )     (780 )     (41 )
Adjusted noninterest income   $ 4,401     $ 2,378     $ 13,885     $ 9,464  
                                 
Total noninterest expense   $ 13,496     $ 9,085     $ 48,894     $ 35,300  
Acquisition-related expenses     (335 )     (193 )     (3,333 )     (273 )
Impairment loss on assets held for sale     -       (2 )     (151 )     (172 )
Realized gains (losses) on assets held for sale     1       1       (14 )     -  
Adjusted noninterest expense   $ 13,162     $ 8,891     $ 45,396     $ 34,855  
                                 
Net income available to common shareholders   $ 2,756     $ 2,965     $ 10,211     $ 11,917  
Total adjustments, net of tax*     273       90       2,071       228  
Adjusted net income   $ 3,029     $ 3,055     $ 12,282     $ 12,145  
                                 
Diluted earnings per share   $ 0.29     $ 0.35     $ 1.12     $ 1.40  
Total adjustments, net of tax*     0.03       0.01       0.23       0.03  
Adjusted diluted earnings per share   $ 0.32     $ 0.36     $ 1.35     $ 1.43  
                                 
Efficiency ratio     77.24 %     71.62 %     77.93 %     70.05 %
Total adjustments     (1.95 )%     (1.09 )%     (4.67 )%     (0.82 )%
Adjusted efficiency ratio     75.29 %     70.53 %     73.26 %     69.23 %

* The effective tax rate for the period presented is used to determine net of tax amounts.

Net Income and Diluted Earnings Per Share represented in accordance with Generally Accepted Accounting Principles (“GAAP”). Adjusted Noninterest Income, Adjusted Noninterest Expense, Adjusted Income Taxes, Adjusted Net Income, Adjusted Diluted Earnings Per Share and Adjusted Efficiency Ratio are non‑GAAP financial measures. The Company believes that these non-GAAP measures aid in understanding and comparing current-year and prior-year results, both of which include unusual items of different natures. These non-GAAP measures should be viewed in addition to, and not as a substitute for, the Company’s reported results.

 
COLONY BANKCORP, INC.
Unaudited Segment Information
(in thousands, except per share data)
 
Total Loans Segmented By Legacy and Purchased
    Dec. 31,
2019
  Sept. 30,
2019
  June 30,
2019
  March 31,
2019
  Dec. 31,
2018
Legacy   $ 848,443   $ 826,309   $ 796,045   $ 763,462   $ 763,640
Purchased     120,726     132,414     139,226     16,529     18,387
Total   $ 969,169   $ 958,723   $ 935,271   $ 779,991   $ 782,027
                               

Income Statement Segmented by Division

    Three Months Ended December 31, 2019
   
Bank
 
Mortgage
Banking
  Small
Business
Specialty
Lending
Division
   
 Holding
Company
   
 Totals
Net interest income   $ 13,331   $ 64   $ -     $ (403 )   $ 12,992
Provision for loan losses     581     -     -       -       581
Noninterest income     2,811     1,251     -       350       4,412
Noninterest expenses     11,325     1,220     652       299       13,496
Income taxes     831     20     (136 )     (144 )     571
Segment profit (loss)   $ 3,405   $ 75   $ (516 )   $ (208 )   $ 2,756
           
Segment assets at                                   
December 31, 2019   $ 1,499,347   $ 11,624   $ 405     $ 3,937     $ 1,515,313
           
    Year Ended December 31, 2019
   
 Bank
 
 Mortgage
Banking
  Small
Business
Specialty
Lending
Division
   
 Holding
Company
   
 Totals
Net interest income   $ 49,180   $ 164   $ -     $ (1,499 )   $ 47,845
Provision for loan losses     1,104     -     -       -       1,104
Noninterest income     11,224     3,139     -       399       14,762
Noninterest expenses     42,786     3,258     1,213       1,637       48,894
Income taxes     3,279     10     (254 )     (637 )     2,398
Segment profit (loss)   $ 13,235   $ 35   $ (959 )   $ (2,100 )   $ 10,211
           
Segment assets at                                   
December 31, 2019   $ 1,499,347   $ 11,624   $ 405     $ 3,937     $ 1,515,313
                                   
                                   


COLONY BANKCORP, INC.
Consolidated Balance Sheets
(in thousands)
             
    Dec. 31, 2019
  Dec. 31, 2018
  Dec. 31, 2017
    (unaudited)
  (audited)
  (audited)
ASSETS                        
Cash and cash equivalents                        
Cash and due from banks   $ 15,214     $ 10,377     $ 23,145  
Interest-bearing deposits     87,300       49,778       34,668  
Federal funds sold     1,578       -       -  
Investment securities                        
Available for sale, at fair value     347,332       353,066       354,247  
Other investments, at cost     3,559       2,978       3,043  
Loans held for sale     10,330       -       -  
Loans     969,169       782,027       765,284  
Allowance for loan losses     (6,863 )     (7,277 )     (7,507 )
Unearned interest and fees     (610 )     (501 )     (495 )
      961,696       774,249       757,282  
Premises and equipment     32,482       29,494       27,639  
Other real estate     1,320       1,841       4,256  
Other intangible assets     19,533       759       45  
Other assets     34,969       29,336       28,430  
Total Assets   $ 1,515,313     $ 1,251,878     $ 1,232,755  
                         
LIABILITIES AND STOCKHOLDERS’ EQUITY                        
Deposits                        
Noninterest-bearing   $ 232,991     $ 192,847     $ 190,929  
Interest-bearing     1,061,231       892,278       877,057  
      1,294,222       1,085,125       1,067,986  
Borrowed money                        
Subordinated debentures     24,229       24,229       24,229  
Other borrowed money     61,563       44,000       47,500  
      85,792       68,229       71,729  
                         
Other liabilities     4,794       2,832       2,717  
                         
Stockholders’ equity                        
Common stock, par value $1 a share; authorized                        
20,000,000 shares, issued 9,498,783 shares as of
Dec. 31, 2019, 8,444,908 as of Dec. 31, 2018, and
8,439,258 as of Dec. 31, 2017
    9,499       8,445       8,439  
Paid in capital     43,719       26,064       29,145  
Retained earnings     76,978       69,459       59,231  
Restricted stock - unearned compensation     (53 )     (86 )     -  
Accumulated other comprehensive income (loss), net of tax     362       (8,190 )     (6,492 )
      130,505       95,692       90,323  
Total Liabilities and Stockholders’ Equity   $ 1,515,313     $ 1,251,878     $ 1,232,755  
                         
                         


COLONY BANKCORP, INC.
Consolidated Statements of Income
(in thousands, except per share data)
     
    Three Months Ended
December 31,
  Year Ended
December 31,
    2019   2018   2019   2018
      (unaudited)       (audited)     (unaudited)     (audited)
Interest income                          
Loans, including fees   $ 13,842     $ 10,634   $ 50,278   $ 40,682
Deposits with other banks     242       218     992     410
Federal funds sold     4       -     64     -
Investment securities                          
U.S. Treasury     0       0     1     0
U. S. Government agencies     1963       1,894     8,701     7,529
State, county and municipal     22       25     104     102
Corporate debt     27       28     111     112
Dividends on other investments     59       53     232     187
      16,159       12,852     60,483     49,022
Interest expense                          
Deposits     2,480       1,892     10,050     6,057
Federal funds purchased     0       1     1     5
Borrowed money     687       561     2,587     2,163
      3,167       2,454     12,638     8,225
Net interest income     12,992       10,398     47,845     40,797
Provision for loan losses     581       70     1,104     201
Net interest income after provision                           
for loan losses     12,411       10,328     46,741     40,596
                           
Noninterest income                          
Service charges on deposits     1,423       1,108     4,783     4,374
Other service charges, commissions and fees     1,153       840     4,263     3,254
Mortgage fee income     1,257       145     3,199     652
Securities gains     (2 )     -     97     116
Other     581       365     2,420     1,225
      4,412       2,458     14,762     9,621
Noninterest expense                          
Salaries and employee benefits     7,370       5,091     26,218     20,123
Occupancy and equipment     1,391       1,103     4,850     4,180
Other     4,735       2,891     17,826     10,997
      13,496       9,085     48,894     35,300
                           
Income before income taxes     3,327       3,701     12,609     14,917
Income taxes     571       736     2,398     3,000
Net income   $ 2,756     $ 2,965   $ 10,211   $ 11,917
                           
Basic   $ 0.29     $ 0.35   $ 1.12   $ 1.41
Diluted   $ 0.29     $ 0.35   $ 1.12   $ 1.40
Cash dividends declared per share   $ 0.075     $ 0.05   $ 0.30   $ 0.20
Weighted average basic shares outstanding     9,494,859       8,439,886     9,129,705     8,439,454
Weighted average diluted shares outstanding     9,494,859       8,439,886     9,129,705     8,538,608
                           
                           


COLONY BANKCORP, INC.
Unaudited Financial Highlights
(in thousands, except per share data)
         
    Three Months Ended
December 31,

  Year Ended
December 31,
      2019       2018       2019       2018  
EARNINGS SUMMARY                                
Net interest income   $ 12,985     $ 10,398     $ 47,814     $ 40,797  
Provision for loan losses     581       70       1,104       201  
Non-interest income     4,419       2,458       14,792       9,621  
Non-interest expense     13,496       9,085       48,893       35,300  
Income taxes     571       736       2,398       3,000  
Net income     2,756       2,965       10,211       11,917  
                                 
PER COMMON SHARE SUMMARY                                
Common shares outstanding     9,498,783       8,444,908       9,498,783       8,444,908  
Weighted average basic shares     9,494,859       8,439,886       9,129,705       8,439,454  
Weighted average diluted shares     9,4948,859       8,439,886       9,129,705       8,538,608  
Earnings per basic share   $ 0.29     $ 0.35     $ 1.12     $ 1.41  
Earnings per diluted share   $ 0.29     $ 0.35     $ 1.12     $ 1.40  
Cash dividends declared per share   $ 0.075     $ 0.05     $ 0.30     $ 0.20  
Common book value per share   $ 13.74     $ 11.33     $ 13.74     $ 11.33  
Tangible common book value per share   $ 11.72     $ 11.33     $ 11.72     $ 11.33  
                                 
OPERATING RATIOS (ANNUALIZED)                                
Net interest margin (a)     3.72 %     3.55 %     3.61 %     3.56 %
Return on average assets     0.73 %     0.97 %     0.72 %     0.99 %
Return on average total equity     8.47 %     13.18 %     8.72 %     13.32 %
Efficiency (b)     77.24 %     71.62 %     77.93 %     70.05 %
                                 
(a)  Computed using fully taxable-equivalent net income.
(b)  Computed by dividing non-interest expense by the sum of fully taxable-equivalent net interest income and non-interest income and excluding security gains/losses.
 
 


COLONY BANKCORP, INC.
Unaudited Financial Highlights (Continued)
(in thousands, except per share data)
     
    Three Months Ended
December 31,
  Year Ended 
December 31,
      2019       2018       2019       2018  
AVERAGE BALANCES                                
Total assets   $ 1,503,521     $ 1,225,442     $ 1,413,759     $ 1,201,874  
Loans, net of reserves     961,756       780,814       884,595       764,992  
Deposits     1,278,987       1,057,485       1,212,961       1,034,818  
Total equity     130,217       90,012       117,118       89,478  
                                 
ASSET QUALITY                                
Nonperforming loans   $ 9,814     $ 9,482     $ 9,814     $ 9,482  
Nonperforming assets     11,134       11,323       11,134       11,323  
Substandard assets     21,529       24,629       21,529       24,629  
Net loan charge-offs     317       (53 )     1,518       431  
Reserve for loan loss to total loans     0.71 %     0.93 %     0.71 %     0.93 %
Reserve for loan loss to non- performing loans     69.93 %     76.75 %     69.93 %     76.75 %
Reserve for loan loss to non-performing assets     61.64 %     64.27 %     61.64 %     64.27 %
                                 
Net loan charge-offs to average total loans     0.13 %     (0.01 )%     0.17 %     0.06 %
Nonperforming loans to total loans     1.01 %     1.21 %     1.01 %     1.21 %
Nonperforming assets to total assets     0.73 %     0.90 %     0.73 %     0.90 %
                                 
Nonperforming assets to total loans                                
and other real estate     1.15 %     1.45 %     1.15 %     1.45 %
Substandard assets to tier one capital                                
and allowance for loan losses     14.228 %     17.38 %     14.22 %     17.38 %


Quarterly Comparative Data (in thousands, except per share data)
                                         
    4Q2019
  3Q2019
  2Q2019
  1Q2019
  4Q2018
Assets   $ 1,515,313     $ 1,477,682     $ 1,506,972     $ 1,279,077     $ 1,251,878  
Loans     961,696       951,559       927,917       772,889       774,249  
Deposits     1,294,222       1,251,273       1,297,723       1,111,678       1,085,125  
Total Equity     130,505       129,651       126,509       101,066       95,692  
Net Income     2,756       2,518       2,101       2,835       2,965  
Net Income Per Basic Share     0.29       0.27       0.23       0.34       0.35  
                                         
Key Performance Ratios                                        
Return on Average Assets     0.73 %     0.67 %     0.60 %     0.90 %     0.97 %
Return on Average Total Equity     8.47 %     7.86 %     7.43 %     11.76 %     13.18 %
Total Equity to Total Assets     8.61 %     8.77 %     8.39 %     7.90 %     7.64 %
Tangible Equity to                                         
Tangible Assets     7.42 %     7.56 %     7.19 %     7.85 %     7.59 %
Net Interest Margin     3.72 %     3.64 %     3.57 %     3.46 %     3.55 %
                                         

For additional information, contact:
Tracie Youngblood
EVP & Chief Financial Officer
(229) 426-6000 (Ext 6003)

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