FITZGERALD, Ga.--(BUSINESS WIRE)--Colony Bankcorp, Inc. (Nasdaq: CBAN) today reported net income of $4.9 million, $0.52 per diluted share, for the quarter ended December 31, 2020, compared with $2.8 million, or $0.29 per diluted share, for the quarter ended December 31, 2019. The Company reported operating net income of $4.2 million, or $0.44 per diluted share, for the quarter ended December 31, 2020, compared with $3.0 million, or $0.32 per diluted share for the same period in 2019. Operating net income excludes after-tax acquisition related expenses, gain on sale and write-down of the Thomaston banking center as well as the net income tax expense (benefit) for the adjustments.

For the year-to-date period ended December 31, 2020, the Company reported net income of $11.8 million, or $1.24 per diluted share, compared with $10.2 million, or $1.12 per diluted share for the same period in 2019. The Company reported operating net income of $12.1 million, or $1.28 per diluted share, for the year-ended December 31, 2020, compared with $12.8 million, or $1.35 per diluted share, for the same period in 2019. Operating net income excludes the same items listed above for the Company’s quarter-to-date period.

Fourth Quarter 2020 Financial Highlights:

• Net income of $4.9 million, or $0.52 per diluted share, an increase of $1.8 million, or $0.19 per diluted share, compared to the third quarter of 2020.
• Operating net income of $4.2 million, or $0.44 per diluted share, an increase of $484,000, or $0.05, compared to the third quarter of 2020 (see Non-GAAP reconciliation).
• Growth in total assets of $4.5 million, or 26 basis points, compared to the third quarter of 2020.
• Increase in noninterest income from mortgage banking activity of $827,000 compared to the third quarter of 2020.
• $1.3 million provision for loan losses, an increase of $190,000, or 17.18%, compared to the third quarter 2020.

The Company also announced that on January 21, 2021, the Board of Directors declared a quarterly cash dividend of $0.1025 per share, to be paid on its common stock on February 12, 2021, to shareholders of record as of the close of business on January 31, 2021.

Commenting on the announcement, Heath Fountain, President and Chief Executive Officer, said, “While we continue to operate in a difficult environment due to the ongoing global pandemic, I am pleased to report strong earnings growth for the fourth quarter and full year. Diluted earnings per share increased 78% over the same period last year and 11% for the full year.

“Our efforts in business development and adding talented bankers to our team continues to have positive impacts on our operations. We saw solid growth in our balance sheet metrics for both the fourth quarter and full year, including growth in total loans, total deposits and total assets. Asset quality remained strong throughout the year and we are pleased that most loans for which payments were deferred for borrowers in response to the global pandemic are back to current status. We ended the year with total interest earning assets of $1.6 billion, up $258.0 million, or 19% propelling total assets to $1.8 billion, a record for the Company. Total loans, including acquisition activity and loans from the Small Business Administration Payroll Protection Program (“PPP”), increased 9% year-over-year, while legacy loan growth increased 6%. Furthermore, strong growth in net interest income was partially offset by higher provisions for loan losses due to the global pandemic as well as increases in noninterest expense, such as salaries and employee benefits, as well as occupancy and equipment.

“Net interest margin increased 24 basis points to 3.58% over the sequential quarter primarily driven by increased accretion income on acquired loans and deferred fee income recognized on PPP loans. During the quarter ended December 31, 2020, PPP loans totaling approximately $32.6 million were forgiven through the SBA. Increases to accretion income during the quarter ended December 31, 2020, were primarily driven by higher than expected loan payoffs as well as changes to cash flow projections on remaining loans driven by loan performance during the second half of the year ended 2020. Additionally, our continued efforts to diversify our revenue streams resulted in strong full year increases in our noninterest income of $10.2 million, highlighted by mortgage fee income growth of $6.0 million helping to mitigate declining margins.”

In closing, Fountain added, “We are pleased with the Company’s continued growth during 2020 despite operating in one of the most difficult economic environments experienced in our times. These achievements reaffirm the strategic initiatives we have put in place to grow our business across our markets and also reflect the dedication and hard work of everyone at Colony Bankcorp. While the current economic environment and competitive landscape is intense, we are optimistic based on our loan pipeline, core deposit base growth, diversified streams of earnings and mortgage fee income as we continue to deliver market share gains. Moreover, we will also support our customers and communities by participating in the recently announced new round of the Small Business Administration Payroll Protection Program. While some of our competitors have suspended payments, our Board remains confident in our operational structure and strategic vision as evidenced by the continued dividend payment. We look forward to the coming year with renewed enthusiasm as we seek opportunities to continue to reward our shareholders.”

Balance Sheet

• Total assets totaled $1.8 billion at December 31, 2020, an increase of $248.7 million, or 16%, compared to the same period in 2019.
• Interest-bearing deposits in banks at December 31, 2020, totaled $166.3 million, an increase of $77.8 million, or 87.8% compared to the same period in 2019. The increase is primarily attributable to the funding of approximately 1,700 PPP loans during 2020, which also generated much higher balances in our interest-bearing deposits in banks as of December 31, 2020.
• Total loans, including loans held for sale, totaled $1.11 billion at December 31, 2020, an increase of $133.0 million, or 14%, from the same period in 2019. Growth in core loans was primarily attributable to PPP loan originations, while mortgage demand substantially increased during 2020 as a result of declining interest rates.
• Total deposits totaled $1.45 billion at December 31, 2020, an increase of $151.3 million, or 12%, compared to the same period in 2019. The increase in deposits was primarily in noninterest-bearing deposits as a result of the PPP loan activity during 2020.
• Total borrowings at December 31, 2020, totaled $167.1 million, an increase of $81.3 million or 94.8% compared to the same period in 2019. While the Company prepaid $24.5 million in FHLB advances, funding of PPP loans through the Payroll Protection Program Liquidity Facility (“PPPLF”) increased outstanding borrowings substantially during 2020. At December 31, 2020, the PPPLF totaled $106.8 million with comparison to prior year not applicable.

Capital

• Colony continues to maintain a strong capital position, with ratios that exceed regulatory minimums required to be classified as “well-capitalized.”
• Preliminary tier one leverage ratio, tier one capital ratio, total risk-based capital ratio and common equity tier one capital ratio were 9.55%, 14.29%, 15.37%, and 12.21%, respectively.

Fourth Quarter Results of Operations

• Net interest income on a tax-equivalent basis for the fourth quarter 2020 totaled $15.2 million, compared to $13.9 million for the third quarter 2020. The increase during the quarter is primarily attributable to increases in accretion income on acquired loans and loan fee income recognized on PPP loans forgiven which was only partially offset by a decrease in the cost of interest-bearing liabilities.
• Net interest margin was up 24 basis points over the sequential quarter primarily driven by increased accretion income on acquired loans and deferred fee income recognized on PPP loans. During the quarter ended December 31, 2020, PPP loans totaling approximately $32.6 million were forgiven through the SBA. Accretion income increased $384,000 for the quarter ended December 31, 2020, which was primarily driven by higher than expected loan payoffs as well as changes to cash flow projections on remaining loans driven by loan performance during the second half of the year ended 2020. These positive impacts to the margin were primarily offset by increases in lower-yielding, highly-liquid assets, combined with the reduction by the Federal Reserve of interest rates during 2020.
• Noninterest income totaled $8.0 million for the fourth quarter ended December 31, 2020, an increase of $485,000, or 6.4%, compared to the same period in 2019. The increase was primarily attributable to growth in mortgage production income as a result of increased loan demand resulting from a historically low interest rate environment. Also, during the fourth quarter 2020, the Thomaston banking center was sold resulting in a gain on sale.
• Noninterest expense totaled $16.0 million for the fourth quarter ended December 31, 2020, compared to $16.3 million for the sequential quarter ended 2019. The decrease in noninterest expense during the fourth quarter 2020 was primarily attributable FHLB prepayment penalties only during the third quarter 2020.

Asset Quality

• Nonperforming assets totaled $10.2 million and $10.5 million at December 31, 2020 and 2019, respectively.
• OREO and repossessed assets totaled $1.0 million at December 31, 2020, a decrease of $297,000, or 22.3%, compared to the same quarter in 2019.
• Net loan charge-offs were $189,000, or 0.07% of average loans, compared to $317,000 in the fourth quarter of 2019.
• The loan loss reserve was $12.1 million, or 1.14% of total loans, on December 31, 2020, compared $6.9 million, or 0.71% of total loans, at December 31, 2019.

While nonperforming assets have increased year-over-year primarily as a result of increased traditional loan production, asset quality remains strong with overall improvement as of the fourth quarter 2020 compared to previous quarter and year-over-year comparisons. The increase in the provision for loan losses was directly impacted by the current economic disruptions resulting from the continued COVID-19 pandemic crisis.

About Colony Bankcorp

Colony Bankcorp, Inc. is the bank holding company for Colony Bank. Founded in 1975 and headquartered in Fitzgerald, Georgia, Colony operates 32 locations throughout Georgia. The Homebuilder Finance Division helps the local construction industry with building and construction loans, and the Small Business Specialty Lending Division assists small businesses with government guaranteed loans. The Bank also helps its customers achieve their goal of home ownership through Colony Bank Mortgage. Colony’s common stock is traded on the NASDAQ Global Market under the symbol “CBAN.” For more information, please visit www.colony.bank. You can also follow the Company on Facebook or on Twitter @colony_bank.