Colony Bank(US:CBAN)2025-04-24 17:48Financial Data and Key Metrics Changes - Operating net income declined by $1.1 million in the first quarter due to seasonal declines in noninterest income lines, particularly in SBSL [18] - Pre-provision net revenue increased by almost $1.5 million on an operating basis compared to the first quarter of 2024, indicating improvement in core earning fundamentals [19] - Net interest income increased by approximately $480,000 in the first quarter, driven by loan growth and a reduction in the cost of funds [19] - Cost of funds for the quarter was 2.07%, a decline of 12 basis points from the previous quarter and 25 basis points from the third quarter of 2024 [20] - Margin increased by 9 basis points to 2.93%, up from 2.84% in the prior quarter [20] Business Line Data and Key Metrics Changes - First quarter annualized loan growth was 17%, with expectations for future quarters to be in the range of 8% to 12% [7][8] - Operating non-interest income decreased by about $1.7 million, primarily due to decreased activity in the SBSL division [21] - Revenues in the mortgage division were slightly higher, and expenses were slightly lower, resulting in profitability for the division [22] - Non-interest expenses decreased around $1 million, attributed to lower variable expenses and advertising costs [23] Market Data and Key Metrics Changes - Total deposits increased by $54.6 million in the quarter, with a focus on a deposit-first culture [29] - The company is experiencing cooling deposit competition, which is expected to help keep cost pressures minimal [30] - Cash to assets was a little over 7% at the end of the quarter, providing room for continued funding of loan growth [31] Company Strategy and Development Direction - The company is excited about the acquisition of Ellerbee Agency, which is expected to be EPS accretive and enhance the Insurance division [10][11] - A credit card program for both consumer and commercial credit cards was launched, aimed at generating significant noninterest income over time [12] - The company is maintaining a proactive approach to monitor market volatility and its impact on customers, especially in sectors exposed to trade dynamics [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the loan growth pipeline for the rest of the year, despite seasonal fluctuations [9][28] - There are no indicators of large-scale disruptions affecting credit quality, with isolated issues in agricultural production and trucking loans [26] - Management remains optimistic about the M&A environment in banking, with ongoing discussions with potential targets [15] Other Important Information - The effective tax rate for the quarter was a little over 20%, consistent with previous guidance [24] - The company repurchased 38,000 shares at an average price of $16.45 as part of its stock repurchase program [32] - A quarterly cash dividend of $0.115 per share was declared [33] Q&A Session Summary Question: What are the trends and expectations for SBSL, loan growth, and asset quality as well as pricing for the rest of the year? - Management is vigilant about the impact of tariffs and trade policy on customers, noting that many have become more aware of their supply chains post-COVID [36][39] - There is good activity in SBSL, with expectations to return to previous levels of production [43][44] Question: What net interest margin impacts do you expect from a 25 basis point rate cut? - Management feels well-positioned for potential rate cuts, expecting improved margins from repricing of assets and reduced costs [45][46] - The loan portfolio yield is around 6%, with new weighted average rates in the mid- to high-7s, indicating favorable conditions for margin improvement [47][50]