Colony Bank(US:CBAN)2025-11-07 18:31Merger and Acquisition - The Company announced a proposed merger with TC Bancshares, Inc. valued at approximately $86.1 million, expected to create a combined organization with total assets of approximately $3.8 billion[220]. - Upon completion of the merger, the combined entity is projected to have total loans of $2.4 billion and total deposits of $3.1 billion[222]. - Each TCBC shareholder can elect to receive either $21.25 in cash or 1.25 shares of the Company's common stock for each share of TCBC common stock, with approximately 20% of shares converted to cash and 80% to stock[223]. - The merger is anticipated to be immediately accretive to the Company's earnings per share, excluding transaction costs[222]. - The transaction is subject to customary conditions, including regulatory approval and shareholder approval, with closing expected in the fourth quarter of 2025[222]. Financial Performance - Net income for the third quarter of 2025 was $5.8 million, or $0.33 per diluted share, compared to $5.6 million, or $0.32 per diluted share for the same period in 2024, representing a year-over-year increase of 3.57% in net income[237]. - Net interest income on a tax equivalent basis increased to $22.9 million for the third quarter of 2025, up from $18.7 million in the third quarter of 2024, marking a 22.45% increase[226]. - The net interest margin improved to 3.17% for the third quarter of 2025, compared to 2.64% for the same period in 2024, reflecting better loan rates and lower deposit costs[240]. - Noninterest income for the third quarter of 2025 was $10.1 million, a slight increase of 0.09% from the same period in 2024[228]. - For the nine months ended September 30, 2025, net interest income was $66,600, an increase from $56,114 in the same period of 2024[245]. Credit Risk and Allowance - The Company is focused on managing credit risk and maintaining adequate reserves for credit losses, which are critical for financial stability[217]. - Provision for credit losses for the three months ended September 30, 2025, was $900,000, compared to $750,000 for the same period in 2024, indicating a rise in credit loss provisions[227]. - The allowance for credit losses on loans was $18.1 million, or 0.89% of total loans, as of September 30, 2025, down from $19.0 million, or 1.03% of total loans, at December 31, 2024[227]. - Nonaccrual loans increased to $14.3 million at September 30, 2025, a rise of $3.6 million or 33.8% from $10.7 million at December 31, 2024[292]. - The allowance for credit losses on loans decreased to $18.1 million at September 30, 2025, down from $19.7 million at September 30, 2024, representing an 8.0% decline[283]. Deposits and Liquidity - The Company's uninsured deposits represented 31.52% of total bank deposits at September 30, 2025, down from 33.03% at December 31, 2024[236]. - The Company maintained strong liquidity with available funding sources of approximately $1.3 billion as of September 30, 2025[236]. - Total deposits rose by $16.4 million to $2.58 billion at September 30, 2025, compared to $2.57 billion at December 31, 2024[297]. - Brokered deposits increased significantly to $130.0 million at September 30, 2025, up from $59.5 million at December 31, 2024[298]. - Cash and cash equivalents decreased to $200.0 million at September 30, 2025, from $231.0 million at December 31, 2024, primarily due to increases in loans[306]. Capital Ratios - CET1 risk-based capital ratio was 12.37% as of September 30, 2025, down from 13.08% at December 31, 2024[313]. - Total risk-based capital ratio decreased to 16.00% at September 30, 2025, from 17.10% at December 31, 2024[313]. - The Company exceeded all regulatory capital requirements and was considered "well-capitalized" as of September 30, 2025[311]. Economic and Competitive Environment - The Company faces risks from economic conditions, including inflation, interest rate changes, and potential economic downturns that could impact financial performance[216]. - The Company emphasizes the importance of attracting and retaining experienced bankers to support its operations and growth strategies[218]. - The Company is navigating challenges related to competition from fintech companies and other financial institutions, which may affect market positioning[218]. Noninterest Expenses - Noninterest expense for the third quarter of 2025 was $24.6 million, an increase of 18.13% from the same period in 2024, driven by higher salaries, employee benefits, and technology expenses[230]. - Total noninterest expense for the three months ended September 30, 2025, was $24,612 thousand, an increase of 18.1% from $20,835 thousand in 2024[261]. - Salaries and employee benefits increased by 7.4% for the three months ended September 30, 2025, totaling $13,532 thousand compared to $12,594 thousand in 2024[261]. Interest Rate Sensitivity - A 200 basis point increase in interest rates would result in a 6.93% increase in net interest income as of September 30, 2025[317].