Colony Bank(CBAN) - 2025 Q2 - Quarterly Report

PART I – Financial Information Item 1. Financial Statements Presents Colony Bankcorp's unaudited consolidated financial statements for Q2 2025 and audited balance sheet for YE 2024, including detailed accounting notes Consolidated Balance Sheets Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--------------------------------------- | :-------------------------- | :-------------------------- | | ASSETS | | | | Cash and cash equivalents | $112,145 | $231,034 | | Investment securities available-for-sale | $373,572 | $366,049 | | Investment securities held-to-maturity | $409,634 | $430,077 | | Loans, net | $1,974,427 | $1,824,000 | | Total assets | $3,115,617 | $3,109,782 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Deposits | $2,556,230 | $2,567,943 | | Federal Home Loan Bank advances | $185,000 | $185,000 | | Total liabilities | $2,821,760 | $2,831,107 | | Total stockholders' equity | $293,857 | $278,675 | - Total assets remained stable at $3.1 billion at June 30, 2025, compared to December 31, 2024. Loans, net, increased by $150.4 million (8.2%) from $1.82 billion to $1.97 billion, while cash and cash equivalents decreased by $118.9 million (51.5%) from $231.0 million to $112.1 million[9][72][73] - Total deposits decreased by $11.7 million (0.5%) from $2.57 billion to $2.56 billion, primarily due to seasonality. Stockholders' equity increased by $15.2 million (5.5%) from $278.7 million to $293.9 million[9][295] Consolidated Statements of Income Consolidated Statements of Income (in thousands, except per share) | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net interest income | $22,385 | $18,409 | $43,337 | $37,063 | | Provision for credit losses | $450 | $650 | $1,950 | $1,650 | | Total noninterest income | $10,098 | $9,497 | $19,142 | $18,984 | | Total noninterest expense | $22,004 | $20,330 | $42,225 | $40,727 | | Net income | $7,978 | $5,474 | $14,591 | $10,807 | | Basic EPS | $0.46 | $0.31 | $0.83 | $0.62 | | Diluted EPS | $0.46 | $0.31 | $0.83 | $0.62 | | Dividends declared per share | $0.1150 | $0.1125 | $0.2300 | $0.2250 | - Net income increased by 45.7% to $8.0 million for Q2 2025 compared to $5.5 million for Q2 2024. For the six months ended June 30, 2025, net income increased by 35.0% to $14.6 million from $10.8 million in the prior year[11][227][238] - Basic and diluted EPS increased to $0.46 for Q2 2025 from $0.31 for Q2 2024, and to $0.83 for the six months ended June 30, 2025, from $0.62 for the same period in 2024[11][227][238] Consolidated Statements of Comprehensive Income Consolidated Statements of Comprehensive Income (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $7,978 | $5,474 | $14,591 | $10,807 | | Total other comprehensive income | $1,742 | $1,170 | $5,909 | $2,459 | | Comprehensive income | $9,720 | $6,644 | $20,500 | $13,266 | - Comprehensive income increased by 46.3% to $9.7 million for Q2 2025 from $6.6 million for Q2 2024. For the six months ended June 30, 2025, comprehensive income increased by 54.5% to $20.5 million from $13.3 million in the prior year[13] - Net unrealized gains on securities arising during the period significantly increased to $1.4 million for Q2 2025 from a loss of $0.3 million in Q2 2024, and to $6.3 million for the six months ended June 30, 2025, from a loss of $1.1 million in the prior year[13] Consolidated Statements of Changes in Stockholder's Equity Consolidated Statements of Changes in Stockholder's Equity (in thousands) | Metric (in thousands) | Balance, December 31, 2024 | Balance, June 30, 2025 | | :--------------------- | :------------------------- | :--------------------- | | Common Stock | $17,520 | $17,417 | | Paid-In Capital | $168,353 | $167,160 | | Retained Earnings | $140,369 | $150,938 | | Accumulated Other Comprehensive Income (Loss) | $(47,567) | $(41,658) | | Total Stockholders' Equity | $278,675 | $293,857 | - Total stockholders' equity increased by $15.2 million to $293.9 million at June 30, 2025, from $278.7 million at December 31, 2024. This increase was primarily driven by net income of $14.6 million and other comprehensive income of $5.9 million, partially offset by dividends paid of $4.0 million and share repurchases of $1.6 million[17][9] - The Company repurchased and retired 100,324 shares for $1.6 million during the six months ended June 30, 2025[17] Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $33,788 | $6,149 | | Net cash provided by (used in) investing activities | $(135,276) | $51,852 | | Net cash used in financing activities | $(17,401) | $(59,321) | | Net decrease in cash and cash equivalents | $(118,889) | $(1,320) | | Cash and cash equivalents at end of period | $112,145 | $82,002 | - Net cash provided by operating activities significantly increased to $33.8 million for the six months ended June 30, 2025, from $6.1 million in the prior year, primarily due to higher net income and changes in other assets/liabilities[20] - Investing activities shifted from providing $51.9 million in cash in 2024 to using $135.3 million in 2025, mainly due to a $153.1 million change in loans, net (originations exceeding proceeds from sales)[20] - Financing activities used $17.4 million in cash for the six months ended June 30, 2025, a decrease from $59.3 million used in the prior year, driven by changes in customer deposits and FHLB advances[20] Notes to Consolidated Financial Statements (Unaudited) (1) Summary of Significant Accounting Policies - The Company is a bank holding company based in Fitzgerald, Georgia, offering a full range of retail, commercial, and mortgage banking services, government guaranteed lending, consumer insurance, wealth management, credit cards, and merchant services primarily in Georgia, Alabama, and Florida[25][29] - Key accounting estimates include the allowance for credit losses, valuation of real estate acquired in foreclosures, and fair value of assets/liabilities in business combinations, including goodwill impairment[30] - Approximately 83% of the Company's loan portfolio was concentrated in real estate loans at June 30, 2025, posing a credit risk dependent on the real estate economic sector[33] - The Company adopted ASU No. 2023-07 (Segment Reporting) for interim periods beginning January 1, 2025, with no material impact on financial statements, and is evaluating ASU No. 2023-09 (Income Taxes) for its annual report[59][60] (2) Investment Securities Investment Securities (in thousands) | Metric (in thousands) | June 30, 2025 Amortized Cost | June 30, 2025 Fair Value | December 31, 2024 Amortized Cost | December 31, 2024 Fair Value | | :--------------------- | :--------------------------- | :----------------------- | :------------------------------- | :--------------------------- | | Available-for-Sale | | | | | | Total | $409,912 | $373,572 | $409,380 | $366,049 | | Gross Unrealized Gains | $714 | | $225 | | | Gross Unrealized Losses | $(37,054) | | $(43,556) | | | Held-to-Maturity | | | | | | Total | $409,634 | $369,103 | $430,077 | $383,020 | | Gross Unrealized Gains | $— | | $— | | | Gross Unrealized Losses | $(40,531) | | $(47,057) | | - The fair value of available-for-sale securities increased by $7.5 million to $373.6 million at June 30, 2025, from $366.0 million at December 31, 2024, while held-to-maturity securities decreased by $13.9 million to $369.1 million from $383.0 million[62] - Gross unrealized losses on available-for-sale securities decreased from $(43.6) million to $(37.1) million, and on held-to-maturity securities decreased from $(47.1) million to $(40.5) million, primarily due to increases in market interest rates[62][76] - The Company had no sales of investment securities for the three and six months ended June 30, 2025, compared to gross realized losses of $0.4 million and $1.0 million, respectively, in 2024 from restructuring underperforming assets[67] (3) Loans Loans (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Construction, land & land development | $238,078 | $205,046 | | Other commercial real estate | $1,059,149 | $990,648 | | Residential real estate | $356,515 | $344,167 | | Commercial, financial & agricultural | $212,872 | $213,910 | | Consumer and other | $126,966 | $89,209 | | Total loans | $1,993,580 | $1,842,980 | - Gross loans outstanding increased by $150.6 million (8.2%) to $1.99 billion at June 30, 2025, from $1.84 billion at December 31, 2024. Commercial real estate loans constitute 65.1% of the total loan portfolio[73][74] - Nonaccrual loans decreased slightly to $10.6 million at June 30, 2025, from $10.7 million at December 31, 2024. Total nonperforming assets increased to 0.37% of total assets at June 30, 2025, from 0.36% at December 31, 2024[290][293] - The Company had no loans modified due to financial difficulty during the three and six months ended June 30, 2025[110][294] (4) Allowance for Credit Losses Allowance for Credit Losses (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Allowance for credit losses on loans | $19,153 | $18,980 | | Allowance for credit losses on unfunded commitments | $935 | $813 | | Total ACL | $20,088 | $19,793 | - The allowance for credit losses on loans increased to $19.2 million at June 30, 2025, from $19.0 million at December 31, 2024. As a percentage of total loans, it decreased to 0.96% from 1.03%[120][229][282] - Net charge-offs for the six months ended June 30, 2025, were $1.7 million, up from $1.3 million for the same period in 2024[229][288] - The provision for credit losses for the six months ended June 30, 2025, was $1.95 million, including $1.83 million for loans and $0.1 million for unfunded commitments[250][282] (5) Derivatives - The Company uses interest rate swaps to manage interest rate risk, designating them as cash flow hedges for variable rate liabilities and fair value hedges for fixed rate assets[128][131] - As of June 30, 2025, derivative assets totaled $0.01 million (all cash flow hedges), and derivative liabilities totaled $0.56 million ($0.36 million cash flow hedges, $0.20 million fair value hedges)[132] - Gains on swap transactions recognized as a component of interest expense were $0.08 million for Q2 2025 and $0.16 million for the six months ended June 30, 2025[133] (6) Borrowings Borrowings (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Federal Home Loan Bank advances | $185,000 | $185,000 | | Other borrowings | $63,086 | $63,039 | | Total borrowings | $248,086 | $248,039 | - FHLB advances remained stable at $185.0 million, with maturities ranging from 2025 to 2029 and interest rates from 3.69% to 4.73%. The Company had $605.1 million in remaining credit availability from the FHLB at June 30, 2025[138][305] - Other borrowings include $24.2 million in debentures underlying trust preferred securities (Tier 1 capital) and $38.9 million in fixed-to-floating rate subordinated notes due 2032 (Tier 2 capital)[139][140] - The Company has available federal funds lines of credit totaling $114.5 million and $109.4 million borrowing capacity from the Federal Reserve Bank, with no outstanding balances at June 30, 2025[141][142][306] (7) Earnings Per Share Earnings Per Share (in thousands, except per share) | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income available to common stockholders | $7,978 | $5,474 | $14,591 | $10,807 | | Basic EPS | $0.46 | $0.31 | $0.83 | $0.62 | | Diluted EPS | $0.46 | $0.31 | $0.83 | $0.62 | - Basic and diluted earnings per share increased to $0.46 for the three months ended June 30, 2025, from $0.31 in the prior year, and to $0.83 for the six months ended June 30, 2025, from $0.62 in the prior year[147] (8) Commitments and Contingencies Commitments and Contingencies (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Loan commitments | $384,801 | $329,924 | | Letters of credit | $5,438 | $5,947 | - Loan commitments increased by $54.9 million (16.6%) to $384.8 million at June 30, 2025, from $329.9 million at December 31, 2024[150] - In March 2025, the Company experienced a wire fraud incident, but it did not impact customer accounts or data. The Company recognized a $2.9 million receivable for unrecovered funds, believing it is collectible under insurance policies[156][157] - The Company is subject to various legal proceedings in the ordinary course of business, but management believes the aggregate liabilities would not have a material adverse effect on its financial position[155][320] (9) Fair Value of Financial Instruments and Fair Value Measurements - Fair value measurements are categorized into a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[159] Fair Value of Financial Instruments and Fair Value Measurements (in thousands) | Metric (in thousands) | June 30, 2025 Fair Value | Level 1 | Level 2 | Level 3 | | :--------------------- | :----------------------- | :------ | :------ | :------ | | Assets | | | | | | Cash and short-term investments | $112,145 | $112,145 | $— | $— | | Investment securities available-for-sale | $373,572 | $— | $366,761 | $6,811 | | Loans, net | $1,876,358 | $— | $— | $1,876,358 | | Liabilities | | | | | | Deposits | $2,552,984 | $— | $2,552,984 | $— | | Federal Home Loan Bank advances | $184,233 | $— | $184,233 | $— | - Collateral-dependent loans and other real estate owned are classified as Level 3 fair values, with a 10% discount rate applied to appraised values to reflect estimated selling costs and market conditions[178][179][186] (10) Segment Information - The Company operates in three reportable segments: Banking (full-service financial services), Mortgage Banking (residential mortgage loan origination and sales), and Small Business Specialty Lending Division (SBA and government guaranteed loans)[192] Segment Profit (Q2 2025, in thousands) | Metric (in thousands) | Bank Segment Profit (Q2 2025) | Mortgage Banking Segment Profit (Q2 2025) | Small Business Specialty Lending Division Profit (Q2 2025) | Total Segment Profit (Q2 2025) | | :--------------------- | :---------------------------- | :---------------------------------------- | :--------------------------------------------------------- | :----------------------------- | | Net Interest Income | $21,319 | $44 | $1,022 | $22,385 | | Total Noninterest Income | $5,969 | $1,984 | $2,145 | $10,098 | | Total Noninterest Expense | $18,269 | $1,710 | $2,025 | $22,004 | | Segment Profit | $7,441 | $249 | $288 | $7,978 | - For the six months ended June 30, 2025, the Bank segment generated $13.6 million in profit, Mortgage Banking $0.3 million, and Small Business Specialty Lending Division $0.7 million, totaling $14.6 million[197] - As of June 30, 2025, the Bank segment held $3.01 billion in assets, Mortgage Banking $14.3 million, and Small Business Specialty Lending Division $90.9 million, totaling $3.12 billion[197] (11) Regulatory Capital Matters - As of June 30, 2025, the Company and Colony Bank were categorized as 'well-capitalized' under regulatory frameworks, exceeding all minimum requirements[206][309] Regulatory Capital Ratios (in thousands) | Metric (in thousands) | Actual Amount (Consolidated) | Actual Ratio (Consolidated) | Well Capitalized Ratio | | :--------------------- | :--------------------------- | :-------------------------- | :--------------------- | | Total Capital to Risk-Weighted Assets | $358,717 | 16.06% | 10.00% | | Tier 1 Capital to Risk-Weighted Assets | $299,773 | 13.42% | 8.00% | | Common Equity Tier 1 Capital to Risk-Weighted Assets | $275,544 | 12.34% | 6.50% | | Tier 1 Capital to Average Assets | $299,773 | 9.61% | 5.00% | - Consolidated Common Equity Tier 1 (CET1) risk-based capital ratio was 12.34% at June 30, 2025, down from 13.08% at December 31, 2024, but still well above the 6.50% well-capitalized threshold[208][311] (12) Subsequent Events - On July 22, 2025, the Board declared a quarterly cash dividend of $0.1150 per share, payable on August 20, 2025[211] - On July 23, 2025, the Company announced an agreement to acquire TC Bancshares, Inc. for approximately $86.1 million in a combined stock-and-cash transaction. The acquisition is expected to close in Q4 2025, subject to regulatory and shareholder approvals[212][213][222] - Upon completion, the combined organization is projected to have approximately $3.8 billion in total assets, $2.4 billion in total loans, and $3.1 billion in total deposits, and is expected to be immediately accretive to the Company's earnings per share (excluding transaction costs)[212][222] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Analyzes Colony Bankcorp's financial condition and results of operations for Q2 2025 and YE 2024, focusing on performance drivers, accounting policies, liquidity, and capital Forward-looking Statements - The report contains forward-looking statements regarding future events, financial performance, and the proposed merger with TC Bancshares, Inc., which are subject to various risks and uncertainties[217] - Key risk factors include economic and market conditions (inflation, interest rates), geopolitical events, compliance with capital/liquidity requirements, credit quality of the loan portfolio (real estate concentration), and the ability to manage growth and operational efficiency[218][219] - Risks related to the proposed TCBC merger include integration challenges, potential litigation, and the realization of expected cost savings and revenue synergies[220] Proposed Acquisition of TC Bancshares, Inc. and TC Federal Bank - Colony Bankcorp, Inc. announced the acquisition of TC Bancshares, Inc. for approximately $86.1 million in a combined stock-and-cash transaction, expected to close in Q4 2025[212][222] - The combined entity is projected to have $3.8 billion in total assets, $2.4 billion in total loans, and $3.1 billion in total deposits, with the transaction expected to be immediately accretive to EPS (excluding transaction costs)[212][222] - TCBC shareholders will receive either $21.25 in cash or 1.25 shares of Colony's common stock per share, subject to proration (20% cash, 80% stock)[214][225] Overview Overview - Balance Sheet | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Total consolidated assets | $3.1 billion | $3.1 billion | | Total loans, net | $2.0 billion | $1.8 billion | | Total deposits | $2.6 billion | $2.6 billion | | Stockholders' equity | $293.9 million | $278.7 million | Overview - Income Statement | Metric | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :----- | :------ | :------ | :---------- | :---------- | | Net income | $8.0 million | $5.5 million | $14.6 million | $10.8 million | | Diluted EPS | $0.46 | $0.31 | $0.83 | $0.62 | - The increase in net income for both the three and six months ended June 30, 2025, was primarily driven by higher interest income (loans, investments, deposits in banks) and noninterest income, coupled with a slight decrease in interest expense, partially offset by increased noninterest expense[227] Critical Accounting Policies - Critical accounting policies include business combinations, allowance for credit losses (ACL), and income taxes, which require significant judgment and complex estimates[233] - The Company adopted ASU No. 2016-13 (CECL) on January 1, 2023, which changed the methodology for estimating credit losses from an 'incurred loss' to an 'expected loss' approach, considering past events, current conditions, and reasonable forecasts[235] - Management's evaluation of the ACL is a critical estimate, relying on credit risk ratings, expected future cash flows, historical loss rates, and qualitative/quantitative economic factors[236] Results of Operations Net Interest Income Net Interest Income | Metric | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :----- | :------ | :------ | :---------- | :---------- | | Fully taxable equivalent net interest income | $22.6 million | $18.6 million | $43.7 million | $37.4 million | | Net interest margin | 3.12% | 2.68% | 3.02% | 2.69% | - Net interest income (FTE) increased by $4.0 million (21.5%) for Q2 2025 and $6.3 million (16.8%) for YTD Q2 2025, driven by higher income on interest-earning assets and decreased expense on interest-bearing liabilities[228][241] - The net interest margin improved to 3.12% for Q2 2025 and 3.02% for YTD Q2 2025, primarily due to increased rates on loans and taxable investment securities, and decreased rates paid on deposits and other borrowings[241] - The yield on total interest-bearing liabilities decreased from 2.64% in Q2 2024 to 2.42% in Q2 2025, and from 2.61% to 2.44% for the six-month periods, attributed to a 100 basis point decrease in federal funds interest rate and low-cost deposit growth[243] Provision for Credit Losses Provision for Credit Losses (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :--------------------- | :------ | :------ | :---------- | :---------- | | Provision for credit losses | $450 | $650 | $2,000 | $1,700 | | - on loans | $205 | $816 | $1,830 | $1,800 | | - on unfunded commitments | $245 | $(166) | $122 | $(116) | - The provision for credit losses decreased for Q2 2025 to $0.45 million from $0.65 million in Q2 2024, but increased for YTD Q2 2025 to $2.0 million from $1.7 million in YTD Q2 2024[250] - The Q2 2025 provision included $0.25 million for unfunded commitments, compared to a release of $0.17 million in Q2 2024[250] Noninterest Income Noninterest Income (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | Change (Amount, in thousands) | Change (%) | YTD Q2 2025 | YTD Q2 2024 | Change (Amount, in thousands) | Change (%) | | :--------------------- | :------ | :------ | :-------------- | :--------- | :---------- | :---------- | :-------------- | :--------- | | Total noninterest income | $10,098 | $9,497 | $601 | 6.3% | $19,142 | $18,984 | $158 | 0.8% | | Mortgage fee income | $1,984 | $1,442 | $542 | 37.6% | $3,563 | $2,691 | $872 | 32.4% | | Gain on sales of SBA loans | $1,550 | $2,347 | $(797) | (34.0)% | $2,585 | $4,393 | $(1,808) | (41.2)% | | Loss on sales of securities | $— | $(425) | $425 | 100.0% | $— | $(980) | $980 | (100.0)% | | Insurance commissions | $766 | $420 | $346 | 82.4% | $1,235 | $885 | $350 | 39.5% | - Noninterest income increased by $0.6 million (6.3%) for Q2 2025 and $0.16 million (0.8%) for YTD Q2 2025, primarily due to higher mortgage fee income and insurance commissions, and reduced losses on securities sales[230][252] - Mortgage fee income increased significantly by 37.6% for Q2 2025 and 32.4% for YTD Q2 2025 due to higher mortgage production. Gains on sales of SBA loans decreased by 34.0% and 41.2% respectively, due to decreased production and sales[254][255] - Insurance commissions increased by 82.4% for Q2 2025 and 39.5% for YTD Q2 2025, driven by volume and the acquisition of Ellerbee Insurance Agency[258] Noninterest Expense Noninterest Expense (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | Change (Amount, in thousands) | Change (%) | YTD Q2 2025 | YTD Q2 2024 | Change (Amount, in thousands) | Change (%) | | :--------------------- | :------ | :------ | :-------------- | :--------- | :---------- | :---------- | :-------------- | :--------- | | Total noninterest expense | $22,004 | $20,330 | $1,674 | 8.2% | $42,225 | $40,727 | $1,498 | 3.7% | | Salaries and employee benefits | $12,865 | $12,278 | $587 | 4.8% | $24,770 | $24,296 | $474 | 2.0% | | Information technology expenses | $2,592 | $2,227 | $365 | 16.4% | $5,069 | $4,337 | $732 | 16.9% | - Noninterest expense increased by $1.7 million (8.2%) for Q2 2025 and $1.5 million (3.7%) for YTD Q2 2025[231][263] - Salaries and employee benefits increased due to the Ellerbee Insurance Agency acquisition, partially offset by decreased stock award expense and increased FAS91-deferred costs[264] - Information technology expenses rose by 16.4% for Q2 2025 and 16.9% for YTD Q2 2025, mainly due to increased software expenses[266] Income Tax Expense Income Tax Expense (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :--------------------- | :------ | :------ | :---------- | :---------- | | Income tax expense | $2,100 | $1,500 | $3,700 | $2,900 | | Effective tax rate | 20.5% | 21.0% | 20.3% | 20.9% | - Income tax expense increased for both periods, with effective tax rates of 20.5% for Q2 2025 and 20.3% for YTD Q2 2025, slightly lower than the prior year due to tax-exempt income from BOLI and tax-exempt interest[270][271] Balance Sheet Review Loans and Allowance for Credit Losses Loans and Allowance for Credit Losses (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Gross loans outstanding | $1,993,580 | $1,842,980 | | Allowance for credit losses on loans | $19,153 | $18,980 | | ACL as % of total loans | 0.96% | 1.03% | - Gross loans outstanding increased by $150.6 million (8.2%) to $1.99 billion at June 30, 2025, with commercial real estate loans comprising 65.1% of the portfolio[73][74] - The allowance for credit losses on loans increased to $19.2 million at June 30, 2025, from $19.0 million at December 31, 2024, but decreased as a percentage of total loans to 0.96% from 1.03%[229][282] - Net charge-offs to average loans (annualized) for the six months ended June 30, 2025, was 0.17%, up from 0.14% in the prior year[288] Nonperforming Assets Nonperforming Assets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Nonaccrual loans | $10,584 | $10,660 | | Loans past due 90 days and accruing | $107 | $152 | | Other real estate owned | $710 | $202 | | Repossessed assets | $21 | $328 | | Total nonperforming assets | $11,422 | $11,342 | | NPAs as a percentage of total assets | 0.37% | 0.36% | - Total nonperforming assets increased slightly to $11.4 million at June 30, 2025, from $11.3 million at December 31, 2024, representing 0.37% of total assets (up from 0.36%)[290][293] - Nonaccrual loans decreased by $0.08 million (0.7%) to $10.6 million, while Other Real Estate Owned (OREO) increased to $0.71 million from $0.20 million[290][293] Deposits Deposits (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------- | :------------ | :---------------- | | Noninterest-bearing deposits | $434,785 | $462,283 | | Interest-bearing deposits | $2,121,445 | $2,105,660 | | Total deposits | $2,556,230 | $2,567,943 | - Total deposits decreased by $11.7 million (0.5%) to $2.56 billion at June 30, 2025, from $2.57 billion at December 31, 2024, primarily due to seasonality[295] - Noninterest-bearing deposits comprised 17.0% of total deposits at June 30, 2025, down from 18.0% at December 31, 2024[295] - Estimated uninsured deposits were $839.8 million (32.42%) of total Bank deposits at June 30, 2025, slightly down from $857.6 million (33.03%) at December 31, 2024[297] Off-Balance Sheet Arrangements - The Company is party to credit-related financial instruments with off-balance sheet risk, including commitments to extend credit and letters of credit, to meet customer financing needs[298] - The exposure to credit loss is represented by the contractual amount of these commitments, with collateral obtained based on management's credit evaluation[299] Liquidity - The Company maintains strong liquidity with approximately $1.3 billion in available funding sources at June 30, 2025[237] - Primary liquidity sources include customer deposits, FHLB advances, and federal funds lines of credit. Cash and cash equivalents decreased to $112.1 million at June 30, 2025, from $231.0 million at December 31, 2024, mainly due to loan growth[302][304] - At June 30, 2025, the Company had $605.1 million of additional borrowing availability with the FHLB and $109.4 million from the Federal Reserve Discount Window, with no outstanding balances[305][306] Capital Resources - The Company and Colony Bank are required to maintain minimum capital levels and were considered 'well-capitalized' as of June 30, 2025, exceeding all regulatory requirements[308][309] Capital Ratios | Capital Ratio | Company (June 30, 2025) | Company (December 31, 2024) | Colony Bank (June 30, 2025) | Colony Bank (December 31, 2024) | | :------------ | :---------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | CET1 risk-based capital ratio | 12.34% | 13.08% | 13.24% | 14.33% | | Tier 1 risk-based capital ratio | 13.42% | 14.26% | 13.24% | 14.33% | | Total risk-based capital ratio | 16.06% | 17.10% | 14.14% | 15.29% | | Leverage ratio | 9.61% | 9.50% | 9.48% | 9.55% | - Consolidated Common Equity Tier 1 (CET1) and total capital ratios were 12.34% and 16.06%, respectively, at June 30, 2025, indicating strong capital adequacy[237][311] Item 3. Quantitative and Qualitative Disclosures About Market Risk Outlines the Company's primary market risk exposures, including credit, interest rate, and liquidity risks, managed via Asset Liability Management Policy and simulation models - The Company's primary market risk exposures are credit risk, interest rate risk, and liquidity risk, managed through an Asset Liability Management Policy and simulation models[313] Impact of Interest Rate Changes on Net Interest Income | Changes in rates | Increase (Decrease) in Net Interest Income from Base Scenario at June 30, 2025 | | :--------------- | :-------------------------------------------------------------------------- | | 200 basis point increase | 4.89% | | 100 basis point increase | 2.50% | | 100 basis point decrease | (0.25)% | | 200 basis point decrease | (0.57)% | - There were no material changes to market and interest rate risk disclosures during the period covered by this report compared to the 2024 Form 10-K[316] Item 4. Controls and Procedures Confirms effective disclosure controls and procedures as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025, ensuring timely and accurate reporting[317] - No material changes in internal control over financial reporting were identified during the quarter ended June 30, 2025[318] PART II – Other Information Item 1. Legal Proceedings Details the Company's ordinary course legal proceedings, with management assessing no material adverse effect on financial position - Various legal proceedings are pending against the Company and the Bank in the ordinary course of business[320] - Management's opinion is that any aggregate liabilities from these proceedings would not materially adversely affect the Company's consolidated financial position[320] Item 1A. Risk Factors Refers to 2024 Form 10-K risk factors, confirming no material changes during the current reporting period - Readers should consider the risk factors discussed in the Company's 2024 Form 10-K[321] - No material changes to the previously disclosed risk factors occurred during the period covered by this report[322] Item 2. Unregistered Sale of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities Reports no unregistered common stock sales in Q2 2025 and details share repurchase activity under the extended buyback program - No unregistered shares of common stock were sold during the three-month period ended June 30, 2025[323] Issuer Purchases of Equity Securities | Period | Total Number of Shares Repurchased | Average Price Paid per Share | Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) | | :----- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------------------- | | May 1, 2025 to May 31, 2025 | 38,134 | $15.63 | $8,525 | | June 1, 2025 to June 30, 2025 | 23,883 | $15.20 | $8,162 | | Total | 62,017 | $15.46 | $8,162 | - The Board of Directors extended the stock buyback program on December 18, 2024, authorizing repurchases of up to $9.8 million of outstanding common stock until the end of 2025[324] Item 3. Defaults Upon Senior Securities Confirms no defaults upon senior securities occurred during the reporting period - There were no defaults upon senior securities[325] Item 4. Mine Safety Disclosures States that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable to the Company[326] Item 5. Other Information Confirms no directors or executive officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q2 2025 - No directors or executive officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[327] Item 6. Exhibits Lists Form 10-Q exhibits, including the Merger Agreement, corporate governance documents, CEO/CFO certifications, and Interactive Data Files - Exhibits include the Agreement and Plan of Merger with TC Bancshares, Inc., corporate governance documents (Articles of Incorporation, Bylaws), CEO and CFO certifications (Sections 302 and 906 of Sarbanes-Oxley Act), and Interactive Data Files (Inline XBRL)[329] Signatures Contains the duly authorized signatures of Colony Bankcorp's CEO and CFO, certifying the report's submission - The report is signed by T. Heath Fountain, Chief Executive Officer, and Derek Shelnutt, Executive Vice President and Chief Financial Officer, on August 8, 2025[332]