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Press Release

Colony Bankcorp Reports Fourth Quarter 2018 Results and Record Earnings For the Year

Company Raises Its Quarterly Cash Dividend 50% to $0.075 Per Share

Company Release - 1/17/2019 4:05 PM ET

FITZGERALD, Ga., Jan. 17, 2019 (GLOBE NEWSWIRE) -- Colony Bankcorp, Inc. (Nasdaq: CBAN) today reported net income available to shareholders of $2.97 million or $0.35 per diluted share for the fourth quarter of 2018 compared with $579 thousand or $0.07 per diluted share for the same quarter last year.  Net income available to shareholders for 2018 was $11.92 million or $1.40 per diluted share compared with $7.54 million or $0.87 per share for 2017.

Both prior-year periods referenced included a charge to income tax expense to remeasure the Company's deferred tax assets, caused by tax reform in December 2017.  Excluding this charge and other less significant items in both years, adjusted net income (a non-GAPP financial measure) would have been $3.10 million or $0.37 per diluted share and $12.14 million or $1.42 per diluted share, respectively, for fourth quarter and year ended December 31, 2018, versus $2.62 million or $0.30 per diluted share and $9.57 million or $1.11 per diluted share, respectively, for the fourth quarter and year ended December 31, 2017.  Accordingly, adjusted net income per diluted share for the fourth quarter and year ended December 31, 2018, increased 23% and 28%, respectively, compared with the year-earlier periods.  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 $0.075 per share from $0.05 per share previously.  The Board's decision was based on the ongoing strength of the Company's earnings and capital position and an outlook for continued attractive growth.  The new dividend rate will apply to the next dividend to be paid on February 15, 2019, to stockholders of record as of January 30, 2019.

Commenting on the announcement, Heath Fountain, President and Chief Executive Officer, said, "We are pleased to report record earnings for 2018, which along with ongoing solid credit quality and capital strength, position us to extend our growth and expand our reach.  This success also reflects a building momentum in our business as many of the initiatives and disciplines we put in place recently are beginning to gain traction.  This progress, in turn, has allowed the Company to increase its cash dividend to stockholders significantly in 2019, marking the second consecutive year of higher dividend payouts.

"Clearly, this past year has been eventful and exciting for all of us at Colony Bank," Fountain continued.  "Loan portfolio and deposit growth for the year along with higher net interest margins underscore our solid core fundamentals, while new opportunities like our branch acquisition in Albany and our recently announced acquisition of Calumet Bank highlight additional pathways for future expansion.  These internal and external factors continue to strengthen what I see as Colony Bank's unique position in this regional market, with greater size and capabilities compared with most community banks and greater speed and agility than regional and national banks.  All of this bodes well for Colony, its customers and our stockholders, and we remain enthusiastic about our prospects for future growth and business enhancements as we move into 2019."

In December 2018, the Company announced the pending acquisition of LBC Bancshares, Inc. ("LBC"), parent company of Calumet Bank, a Georgia state-chartered bank, in a combined stock-and-cash transaction valued at approximately $34.1 million.  Calumet Bank has two branches – one each in LaGrange and Columbus – as well as a loan production office in Atlanta.  As of September 30, 2018, LBC had approximately $228 million in assets, $130 million in loans, $204 million in deposits and $19 million in tangible common equity.  Upon completion of the transaction, Colony is expected to have approximately $1.4 billion in assets, $930 million in loans, and $1.2 billion in deposits.  The transaction, which is expected to close in the first half of 2019, remains subject to customary conditions, including regulatory approval and approval by the shareholders of LBC.

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, 2018, the Company's tier one leverage ratio, tier one ratio, total risk-based capital ratio and common equity tier one capital ratio were 10.24%, 15.00%, 15.86% and 12.22%, respectively, compared with 9.89%, 14.64%, 15.56% and 11.78%, respectively, at December 31, 2017.

Net Interest Margin

During the fourth quarter of 2018, the Company reported net interest income of $10.40 million compared with $9.92 million for the comparable 2017 period.  For the year ended December 31, 2018, net interest income was $40.80 million compared with $39.04 million for the comparable 2017 period.  Net interest margin for the fourth quarter of 2018 was 3.55%, down two basis points on a sequential quarter basis, but up five basis points from 3.50% for the year-earlier quarter.  Net interest margin for the year was 3.56%, reflecting an increase of 10 basis points from 3.46% for 2017.  Given the recent surge in deposit rates, the Company continues to focus on loan and deposit pricing, along with loan growth, to maintain or improve its net interest margin.

Asset Quality

Asset quality remains solid with continued improvement from a year ago.  Substandard assets, which include non-performing assets, totaled $24.63 million at December 31, 2018, compared with $26.19 million at December 31, 2017.  Substandard assets adjusted for SBA guarantees to tier one capital plus loan loss reserve ratio was 17.38% and 20.18%, respectively, at December 31, 2018 and December 31, 2017.  Non‑performing assets decreased slightly to $11.32 million or 1.45% of total loans and other real estate owned ("OREO") from $11.76 million or 1.53% at December 31, 2017.  OREO totaled $1.84 million at December 31, 2018, reflecting a 57% reduction from $4.26 million at December 31, 2017.

In the fourth quarter of 2018, net charge-offs (recoveries) were ($53) thousand or (0.01)% of average loans compared with net charge-offs of $525 thousand or 0.07% of average loans in the fourth quarter of 2017, while net charge-offs for year ended December 31, 2018, were $431 thousand or 0.06% of average loans compared with $1.81 million or 0.24% for 2017.  The loan loss reserve was $7.28 million or 0.93% of total loans on December 31, 2018, compared with $7.51 million or 0.98% at December 31, 2017.  Loan loss reserve methodology resulted in a $70 thousand loan loss provision for the three months ended December 31, 2018, compared with $55 thousand for the comparable 2017 period and a $201 thousand loan loss provision for the year ended December 31, 2018, compared with $390 thousand for 2017.

Noninterest Income

Total noninterest income declined 1% to $9.62 million for the year ended December 31, 2018, from $9.73 million in 2017.  Service charges on deposits for the year decreased $93 thousand or 2% and secondary mortgage fee income decreased $207 thousand or 24%.  In 2018, gain on the sale of securities was $116 thousand; there was no gain in 2017.

Noninterest Expense

Total noninterest expense increased 4% to $35.30 million for the year ended December 31, 2018, from $33.86 million for 2017.  Salaries and employee benefit expenses increased 5%, occupancy expense increased 6% and other noninterest expense increased 3% for the comparable years.  The efficiency ratio increased slightly to 70.05% for the year ended December 31, 2018, from 69.19% for 2017.  The Company continues to explore opportunities to improve its operating efficiency.

About Colony Bankcorp

Colony Bankcorp, Inc. is the bank holding company for Colony Bank.  Founded in 1975 and headquartered in Fitzgerald, Georgia, Colony operates 27 full-service branches throughout Central, Southern and Coastal Georgia, as well as a full-service website at www.colonybank.com. Colony's common stock is traded on the NASDAQ Global Market under the symbol CBAN.  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 and the proposed acquisition of LBC Bancshares, Inc.; (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, including, among others, the Company's ability to implement its various strategic initiatives, which may 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, and the risks related to the proposed acquisition of LBC Bancshares, Inc., including the risk that the proposed acquisition does not close when expected or at all because of required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all, the terms of the proposed transaction may need to be modified to satisfy such approvals or conditions, and the risk that anticipated benefits from the proposed transaction are not realized in the time frame anticipated or at all as a result of changes in general economic and market conditions.  Forward-looking statements are based on the information known to, and current beliefs and expectations of, the Company's management and are subject to significant risks and uncertainties.  Actual results may differ materially from those contemplated by such forward-looking statements.  A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this press release.  Many of these factors are beyond the Company's ability to control or predict.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements.  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, 2017, 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.

Unaudited Reconciliation of Non-GAAP Measures

(Dollars in thousands, except per share data)Three Months Ended
December 31,
 Year Ended
December 31,
  2018   2017   2018   2017 
     
Total Noninterest Income$2,458  $2,516  $9,621  $9,734 
Securities (Gains) Losses -   -   (116)  - 
Adjusted Noninterest Income$2,458  $2,516  $9,505  $9,734 
     
Total Noninterest Expense$9,085  $8,452  $35,300  $33,860 
Acquisition-related Expenses (172)  -   (225)  - 
Impairment Loss on Assets Held for Sale (2)  -   (172)  - 
Realized Gains (Losses) on Assets Held for Sale 1   -   -  $11 
Adjusted Noninterest Expense$8,912  $8,452  $34,903  $33,871 
     
Income Taxes$736  $3,353  $3,000  $6,777 
Charge to Remeasure Deferred Tax Assets -   (2,041)  -   (2,041)
Adjusted Income Taxes$736  $1,312  $3,000  $4,736 
     
Net Income Available to Common Shareholders$2,965  $579  $11,917  $7,540 
Total Adjustments, Net of Tax* 137   2,041   222   2,034 
Adjusted Net Income$3,102  $2,620  $12,139  $9,574 
     
Diluted Earnings Per Share$0.35  $0.07  $1.40  $0.87 
Total Adjustments, Net of Tax* 0.02   0.23   0.02   0.24 
Adjusted Diluted Earnings Per Share$0.37  $0.30  $1.42  $1.11 
                

* 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 and Adjusted Diluted Earnings Per Share 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.
Consolidated Balance Sheets
(in thousands)

 Dec. 31, 2018
 Dec. 31, 2017
 Dec. 31, 2016
 (unaudited) (audited) (audited)
ASSETS   
Cash and Cash Equivalents     
Cash and Due from Banks$10,377  $23,145  $28,822 
Interest-Bearing Deposits 49,778   34,668   46,345 
Investment Securities  
Available for Sale, at Fair Value 353,066   354,247   323,658 
Federal Home Loan Bank Stock, at Cost 2,978   3,043   3,010 
Loans 782,027   765,284   754,283 
Allowance for Loan Losses (7,277)  (7,507)  (8,923)
Unearned Interest and Fees (501)  (495)  (361)
  774,249   757,282   744,999 
Premises and Equipment 29,494   27,639   27,969 
Other Real Estate 1,841   4,256   6,439 
Other Intangible Assets 759   45   81 
Other Assets 29,336   28,430   29,119 
Total Assets$1,251,878  $1,232,755  $1,210,442 
    
LIABILITIES AND STOCKHOLDERS' EQUITY        
    
Deposits   
Noninterest-Bearing$192,847  $190,929  $159,059 
Interest-Bearing 892,278   877,057   885,298 
  1,085,125   1,067,986   1,044,357 
Borrowed Money   
Subordinated Debentures 24,229   24,229   24,229 
Other Borrowed Money 44,000   47,500   46,000 
  68,229   71,729   70,229 
    
Other Liabilities 2,832   2,717   2,468 
    
Stockholders' Equity     
Preferred Stock, Stated Value $1,000 a Share; Authorized 10,000,000 Shares, Issued 0 Shares as of Dec. 31, 2018 and Dec. 31, 2017 and 9,360 as of Dec. 31, 2016, Respectively -   -   9,360 
Common Stock, Par Value $1 a share; Authorized 20,000,000 Shares, Issued 8,444,908 Shares as of Dec. 31, 2018, and 8,439,258 as of Dec. 31, 2017 and Dec. 31, 2016, Respectively 8,445   8,439   8,439 
Paid in Capital 26,064   29,145   29,145 
Retained Earnings 69,459   59,231   51,466 
Restricted Stock - Unearned Compensation (86)  -   - 
Accumulated Other Comprehensive Loss, Net of Tax (8,190)  (6,492)  (5,022)
  95,692   90,323   93,388 
Total Liabilities and Stockholders' Equity$1,251,878  $1,232,755  $1,210,442 
            

COLONY BANKCORP, INC.
Consolidated Statements of Income
(in thousands, except per share data)

 Three Months Ended
December 31,
 Year Ended
December 31,
 2018 2017 2018 2017
 (unaudited) (audited) (unaudited) (audited)
Interest Income    
Loans, Including Fees$10,634 $9,730 $40,682 $38,614
Deposits with Other Banks 218  66  410  232
Investment Securities    
U. S. Government Agencies 1,894  1,786  7,529  6,718
State, County and Municipal  25  28  102  115
Corporate Debt 28  29  112  88
Dividends on Other Investments 53  41  187  150
  12,852  11,680  49,022  45,917
Interest Expense    
Deposits  1,892  1,199  6,057  4,758
Federal Funds Purchased 1  -  5  3
Borrowed Money 561  558  2,163  2,112
  2,454  1,757  8,225  6,873
Net Interest Income 10,398  9,923  40,797  39,044
Provision for Loan Losses 70  55  201  390
Net Interest Income After Provision for Loan Losses 10,328  9,868  40,596  38,654
     
Noninterest Income    
Service Charges on Deposits 1,108  1,152  4,374  4,467
Other Service Charges, Commissions and Fees 840  740  3,254  3,040
Mortgage Fee Income 145  230  652  859
Securities Gains (Losses) -  -  116  -
Other  365  394  1,225  1,368
  2,458  2,516  9,621  9,734
Noninterest Expense    
Salaries and Employee Benefits 5,091  4,756  20,123  19,223
Occupancy and Equipment 1,103  983  4,180  3,948
Other 2,891  2,713  10,997  10,689
  9,085  8,452  35,300  33,860
     
Income Before Income Taxes 3,701  3,932  14,917  14,528
Income Taxes 736  3,353  3,000  6,777
Net Income 2,965  579  11,917  7,751
 
Preferred Stock Dividends -  -  -  211
            
Net Income Available to Common Shareholders$2,965 $579 $11,917 $7,540
Net Income Per Share of Common Stock   
Basic$0.35 $0.07 $1.41 $0.89
Diluted$0.35 $0.07 $1.40 $0.87
Cash Dividends Declared Per Share $0.05 $0.025
 $0.20 $0.10
Weighted Average Basic Shares Outstanding 8,439,886  8,439,258  8,439,454  8,439,258
Weighted Average Diluted Shares Outstanding 8,439,886  8,639,258  8,538,608  8,633,581
            

 COLONY BANKCORP, INC.
Unaudited Financial Highlights
(in thousands, except per share data)

 Three Months Ended
December 31,
 Year Ended
December 31,
 2018 2017 2018 2017
EARNINGS SUMMARY               
Net Interest Income$  10,398  $  9,923  $  40,797  $  39,044 
Provision for Loan Losses 70   55   201   390 
Non-interest Income 2,458   2,516   9,621   9,734 
Non-interest Expense 9,085   8,452   35,300   33,860 
Income Taxes 736   3,353   3,000   6,777 
Net Income 2,965   579   11,917   7,751 
Preferred Stock Dividend -   -   -   211 
Net Income Available to Common Shareholders 2,965   579   11,917   7,540 
 
 
PER COMMON SHARE SUMMARY    
Common Shares Outstanding 8,444,908   8,439,258   8,444,908   8,439,258 
Weighted Average Basic Shares 8,439,886   8,439,258   8,439,454   8,439,258 
Weighted Average Diluted Shares 8,439,886   8,639,258   8,538,608   8,633,581 
Earnings Per Basic Share (b)$  0.35  $  0.07  $  1.41  $  0.89 
Earnings Per Diluted Share (b)$  0.35  $  0.07  $  1.40  $  0.87 
Cash Dividends Declared Per Share$  0.05  $  0.025  $  0.20  $  0.10 
Common Book Value Per Share$  11.33  $  10.70  $  11.33  $  10.70 
Tangible Common Book Value Per Share$  11.33  $  10.70  $  11.33  $  10.70 
 
OPERATING RATIOS (ANNUALIZED)    
Net Interest Margin (a) 3.55%  3.50%  3.56%  3.46%
Return on Average Assets (b)** 0.97%  0.19%  0.99%  0.63%
Return on Average Total Equity (b)** 13.18%  2.52%  13.32%  8.28%
Efficiency (c) 70.50%  67.71%  70.05%  69.19%
     
**  Excluding one-time tax adjustment for deferred taxes, return on average assets would have been 0.87% and 0.80%, respectively for fourth quarter 2017 and YTD 2017.  Return on average total equity would have been 11.41% and 10.52%, respectively, for fourth quarter 2017 and YTD 2017.
(a)  Computed using fully taxable-equivalent net income.
(b)  Computed using net income available to shareholders.
(c)  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.
 


 December 31,
 2018 2017
ENDING BALANCES       
Total Assets$1,251,878  $1,232,755 
Loans, Net of Reserves 774,249   757,282 
Allowance for Loan Losses 7,277   7,507 
Intangible Assets 759   45 
Deposits 1,085,125   1,067,986 
Common Shareholders' Equity 95,692   90,323 
Total Equity 95,692   90,323 
Total Equity to Total Assets 7.64%  7.33%
        

COLONY BANKCORP, INC.
Unaudited Financial Highlights (Continued)
(in thousands, except per share data)

 Three Months Ended
December 31,
 Year Ended
December 31,
  2018   2017   2018   2017 
AVERAGE BALANCES    
Total Assets$1,225,442  $1,211,440  $1,201,874  $1,200,631 
Loans, Net of Reserves 780,814   760,830   764,992   754,112 
Deposits 1,057,485   1,040,208   1,034,818   1,030,485 
Common Shareholders' Equity 90,012   91,884   89,478   91,045 
Total Equity 90,012   91,884   89,478   91,045 
     
ASSET QUALITY    
Nonperforming Loans$  9,482  $  7,503  $  9,482  $  7,503 
Nonperforming Assets 11,323   11,759   11,323   11,759 
Substandard Assets 24,629   26,189   24,629   26,189 
Net Loan Charge-offs (Recoveries) (53)  525   431   1,806 
Reserve for Loan Loss to Total Loans 0.93%  0.98%  0.93%  0.98%
Reserve for Loan Loss to Non- performing Loans 76.75%  100.07%  76.75%  100.07%
Reserve for Loan Loss to Non-performing Assets 64.27%  63.85%  64.27%  63.85%
    
Net Loan Charge-offs (Recoveries) to Average Total Loans (0.01)  0.07%  0.06%  0.24%
Nonperforming Loans to Total Loans 1.21%  0.98%  1.21%  0.98%
Nonperforming Assets to Total Assets 0.90%  0.95%  0.90%  0.95%
   
Nonperforming Assets to Total Loans and Other Real Estate 1.45%  1.53%  1.45%  1.53%
Substandard Assets to Tier One Capital and Allowance for Loan Losses 17.38%  20.18%  17.38%  20.18%
                

Quarterly Comparative Data (in thousands, except per share data)

  4Q2018   3Q2018   2Q2018   1Q2018   4Q2017 
Assets$1,251,878  $1,186,196  $1,204,472  $1,218,420  $1,232,755 
Loans 774,249   771,773   759,096   760,459   757,282 
Deposits 1,085,125   1,011,059   1,035,886   1,052,353   1,067,986 
Total Equity 95,692   88,988   88,246   89,966   90,323 
Net Income 2,965   2,695   3,069   3,188   579 
Net Income Available to Common Shareholders 2,965   2,695   3,069   3,188   579 
Net Income Per Basic Share 0.35   0.32   0.36   0.38   0.07 
      
Key Performance Ratios     
Return on Average Assets (1) 0.97%  0.90%  1.03%  1.06%  0.19%
Return on Average Total Equity (1) 13.18%  12.10%  13.82%  14.18%  2.52%
Total Equity to Total Assets 7.64%  7.50%  7.33%  7.38%  7.33%
Net Interest Margin 3.55%  3.57%  3.57%  3.57%  3.50%
      
(1) Computed using net income available to shareholders.   
 

For additional information, contact:
Terry L. Hester
Chief Financial Officer
(229) 426-6000 (Ext 6002)

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Source: Colony Bankcorp, Inc.