Colony Bank(US:CBAN)2020-08-10 20:40PART I Financial Statements This section presents Colony Bankcorp, Inc.'s unaudited consolidated financial statements for the periods ended June 30, 2020, with comparative prior period data Consolidated Balance Sheets Total assets increased to $1.78 billion by June 30, 2020, driven by net loan growth from the Paycheck Protection Program and corresponding increases in deposits and PPP Liquidity Facility borrowings Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2020 (Unaudited) | December 31, 2019 (Audited) | | :--- | :--- | :--- | | Total Assets | $1,777,568 | $1,515,313 | | Cash and cash equivalents | $191,046 | $104,092 | | Loans, net | $1,103,688 | $961,951 | | Total Liabilities | $1,638,974 | $1,384,807 | | Total deposits | $1,421,758 | $1,293,742 | | Paycheck Protection Program Liquidity Facility | $134,500 | $0 | | Total Stockholders' Equity | $138,594 | $130,506 | Consolidated Statements of Income Net income for Q2 2020 was stable at $2.2 million, while H1 2020 net income decreased to $3.8 million due to a significant increase in the provision for loan losses Income Statement Summary (in thousands, except per share data) | Metric | Q2 2020 | Q2 2019 | H1 2020 | H1 2019 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $13,541 | $11,825 | $26,245 | $22,182 | | Provision for Loan Losses | $2,200 | $179 | $4,156 | $310 | | Noninterest Income | $4,843 | $4,000 | $9,404 | $6,334 | | Noninterest Expense | $13,375 | $13,014 | $26,753 | $22,040 | | Net Income | $2,214 | $2,101 | $3,817 | $4,936 | | Diluted EPS | $0.23 | $0.23 | $0.40 | $0.56 | Consolidated Statements of Comprehensive Income Comprehensive income decreased to $3.9 million in Q2 2020 and $10.5 million in H1 2020, primarily due to smaller unrealized gains on securities Comprehensive Income (in thousands) | Metric | Q2 2020 | Q2 2019 | H1 2020 | H1 2019 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $2,214 | $2,101 | $3,817 | $4,936 | | Other Comprehensive Income, net of tax | $1,734 | $5,258 | $6,639 | $8,421 | | Comprehensive Income | $3,948 | $7,359 | $10,456 | $13,357 | Consolidated Statements of Changes in Stockholders' Equity Total stockholders' equity increased to $138.6 million by June 30, 2020, driven by net income and increased accumulated other comprehensive income, partially offset by dividends Reconciliation of Stockholders' Equity - H1 2020 (in thousands) | Description | Amount | | :--- | :--- | | Balance, December 31, 2019 | $130,506 | | Net Income | $3,817 | | Change in AOCI, net of tax | $6,639 | | Dividends on common shares | ($1,900) | | Other adjustments | ($468) | | Balance, June 30, 2020 | $138,594 | Consolidated Statements of Cash Flows Cash and cash equivalents increased by $87.0 million in H1 2020, primarily from financing activities driven by deposits and PPP Liquidity Facility borrowings, offset by investing activities for loan growth Cash Flow Summary - Six Months Ended June 30 (in thousands) | Cash Flow Category | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,391 | $3,953 | | Net cash (used in) investing activities | ($166,053) | ($20,239) | | Net cash provided by financing activities | $249,616 | $31,542 | | Net increase in cash and cash equivalents | $86,954 | $15,256 | Notes to Consolidated Financial Statements The notes detail accounting policies and financial items, highlighting the impact of COVID-19, PPP participation, loan modifications, CECL adoption delay, and changes in loan loss allowance and borrowings - The company is participating in the Paycheck Protection Program (PPP), originating approximately 1,630 loans for over $137.8 million as of June 30, 2020, and has provided payment deferrals on approximately $113.2 million of loans to customers impacted by COVID-1943110224 - The allowance for loan losses increased to $10.3 million (0.92% of total loans) at June 30, 2020, from $6.9 million (0.71%) at year-end 2019, driven by a $4.2 million provision in the first half of 2020 due to economic uncertainty from the COVID-19 pandemic115229283 - The company has delayed the adoption of the Current Expected Credit Loss (CECL) standard until fiscal years beginning after December 15, 202238 - The company utilized the Paycheck Protection Program Liquidity Facility (PPPLF), with an outstanding balance of $134.5 million as of June 30, 2020, to fund its PPP loans131135 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the significant impact of the COVID-19 pandemic on financial condition and operations, including PPP-driven growth, increased loan loss provisions, and changes in net interest margin, noninterest income, and expenses Results of Operations Net income for Q2 2020 remained stable, while H1 2020 net income decreased due to a higher provision for loan losses, despite growth in net interest income and noninterest income Key Performance Metrics | Metric | Q2 2020 | Q2 2019 | H1 2020 | H1 2019 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $2.2M | $2.1M | $3.8M | $4.9M | | Diluted EPS | $0.23 | $0.23 | $0.40 | $0.56 | | Provision for Loan Losses | $2.2M | $0.2M | $4.2M | $0.3M | | Net Interest Margin | 3.41% | 3.61% | 3.51% | 3.51% | - The primary driver for the decrease in H1 2020 net income was the significant increase in the provision for loan losses, reflecting the economic uncertainty from the COVID-19 pandemic226229 - Noninterest income growth was primarily driven by mortgage fee income, which increased by $1.3 million (235.8%) in Q2 and $2.4 million (349.6%) in H1 2020 compared to the same periods in 2019261266 Financial Condition Total assets grew to $1.8 billion by June 30, 2020, driven by PPP loans, with increased allowance for loan losses, higher nonperforming assets, and strong liquidity and capital positions - Gross loans increased by $145.2 million (15.0%) from December 31, 2019, primarily due to $137.8 million in PPP loan production275 - The allowance for loan losses increased to $10.3 million at June 30, 2020, from $6.8 million at year-end 2019, an increase of 50.0% due to additional qualitative measures related to the COVID-19 pandemic283 - Nonperforming assets increased to $13.2 million (0.75% of total assets) at June 30, 2020, compared to $10.5 million (0.69%) at December 31, 2019229290 - The Bank remained "well-capitalized" with a Total risk-based capital ratio of 13.92% and a Tier 1 leverage ratio of 9.70% as of June 30, 2020314315 Quantitative and Qualitative Disclosures About Market Risk The company manages credit, interest rate, and liquidity risks, which are amplified by COVID-19, and an interest rate sensitivity analysis indicates asset-sensitivity with projected net interest income increases from rate hikes - The company's primary market risks are credit, interest rate, and liquidity, with the COVID-19 pandemic heightening these exposures317318 Interest Rate Sensitivity Analysis (at June 30, 2020) | Change in Rates | Increase (Decrease) in Net Interest Income | | :--- | :--- | | +200 basis points | 13.83% | | +100 basis points | 7.57% | | -100 basis points | 0.68% | Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2020, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2020321 - No material changes were identified in the company's internal control over financial reporting during the quarter ended June 30, 2020322 PART II – Other Information Legal Proceedings The company is involved in ordinary course legal proceedings, which management believes will not materially adversely affect its consolidated financial position - In the opinion of management, aggregate liabilities from pending legal proceedings are not expected to have a material adverse effect on the Company's consolidated financial position325 Risk Factors The COVID-19 pandemic significantly heightens risk factors, potentially impacting business, financial condition, and operations through increased credit losses, masked credit deterioration, and reduced net interest income from low rates - The COVID-19 pandemic and the resulting adverse economic conditions are identified as a significant risk that has already adversely impacted and could have a more material adverse impact on the company's business, financial condition, and results of operations327 - Specific pandemic-related risks include increased credit losses, delinquencies, and charge-offs, as well as the potential for loan payment deferment programs to mask underlying credit deterioration in the loan portfolio329 - A prolonged period of very low interest rates, driven by the Federal Reserve's response to the pandemic, could reduce the company's net interest income and materially impact cash flows330 Unregistered Sale of Equity Securities and Use of Proceeds The company did not conduct any unregistered sales of its common stock during the three-month period ended June 30, 2020 - There were no shares of the Company's common stock sold during the three-month period ended June 30, 2020337 Defaults Upon Senior Securities The company reported no defaults on its senior securities during the period - None338 Mine Safety Disclosures This item is not applicable to the company - Not applicable338 Other Information The company reported no other information for this item - None338 Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and interactive data files - The report lists filed exhibits, including CEO and CFO certifications pursuant to the Sarbanes-Oxley Act and interactive data files (Inline XBRL)338