Earnings call transcript: Colony Bankcorp Q1 2025 revenue beats forecast

Colony Bankcorp Inc. (CBAN) reported its Q1 2025 earnings, revealing a revenue of $30 million, surpassing the forecasted $28.6 million. The company also met its earnings per share (EPS) forecast of $0.38. Following these results, Colony Bankcorp’s stock rose by 2.07%, closing at $15.46, reflecting positive investor sentiment. According to InvestingPro data, two analysts have recently revised their earnings upwards for the upcoming period, suggesting growing confidence in the company’s prospects. The bank, with a market capitalization of $277 million, has maintained a steady dividend payment track record for nine consecutive years.

Key Takeaways

• Revenue exceeded expectations, coming in at $30 million against a $28.6 million forecast.
• EPS met expectations at $0.38.
• Stock price increased by 2.07% post-earnings.
• Loan growth was robust at an annualized rate of 17%.
• The company launched new products and expanded its insurance division.

Company Performance

Colony Bankcorp demonstrated solid performance in Q1 2025, with revenue surpassing forecasts and robust growth in both loans and deposits. The company expanded its product offerings, launching a credit card program and acquiring an LOB agency for its insurance division. Despite a decline in operating net income, the increase in net interest income and margin reflects improved profitability. InvestingPro analysis shows the company maintains fair financial health with a balanced score of 2.31, while its low beta of 0.55 indicates lower volatility compared to the broader market.

Financial Highlights

• Revenue: $30 million, exceeding the forecast of $28.6 million.
• Earnings per share: $0.38, meeting the forecast.
• Net interest income increased by $480,000.
• Loan growth: 17% annualized.
• Deposit growth: 8.5% annualized.

Earnings vs. Forecast

Colony Bankcorp’s Q1 2025 earnings matched the EPS forecast of $0.38, while revenue exceeded expectations by $1.4 million. This positive revenue surprise highlights the company’s strong sales performance, contributing to the post-earnings stock price increase.

Market Reaction

Following the earnings report, Colony Bankcorp’s stock rose by 2.07%, closing at $15.46. This increase is a positive sign of investor confidence, especially as the stock remains closer to its 52-week high of $18.49. The revenue beat likely contributed to this positive sentiment. Based on InvestingPro’s Fair Value analysis, the stock is currently trading near its fair value. With a P/E ratio of 11.97 and a dividend yield of 2.98%, the company offers an interesting mix of value and income potential. For deeper insights into Colony Bankcorp’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Outlook & Guidance

Looking ahead, Colony Bankcorp expects loan growth to normalize between 8-12% annually and anticipates modest increases in net interest margin throughout 2025. The company is also projecting increased activity in its SPSL and mortgage divisions.

Executive Commentary

"We’re really pleased with our first quarter financial results," said CEO Keith Fountain, emphasizing the company’s strong start to the year. CFO Derek noted, "We feel good about the rates and the credit we are seeing on deals," highlighting confidence in the company’s financial positioning.

Risks and Challenges

• Potential impacts from global trade and tariff policies could affect customer businesses.
• Market volatility remains a concern, potentially impacting future performance.
• Decline in operating net income may raise questions about cost management.

Q&A

During the earnings call, analysts inquired about the potential impacts of trade policies on customers and the company’s net interest margin expectations amidst possible rate cuts. Executives expressed confidence in the resilience of their customer base despite economic uncertainties.

Full transcript - Colony Bankcorp Inc (CBAN) Q1 2025:

Conference Operator: Good morning, ladies and gentlemen, and welcome to the Colony Bank first quarter ’20 ’20 ’5 conference call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call require immediate assistance, please dial 0. This call is being recorded on Thursday, April twenty four of twenty twenty five.

I would now like to turn the conference over to Bradley Collins, communications manager. Please go ahead. Thanks, Chloe. Before we get started, I would like to go through our standard disclosures. Certain statements we make on this call could be con con constituted as forward looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934.

Current and prospective investors are cautioned that any such forward looking statements are not guarantees of future performance, but involve known and unknown risks and uncertainties. Factors that could cause these differences include, but are not limited to, pandemics, variations of the company’s assets, businesses, cash flows, financial condition, prospects, and other results of operations. I would also like to add that during our call today, we will reference both our earnings release and our quarterly investor presentation, both of which were filed yesterday, so please have those available to reference. And with that, I will now turn the call over to our Chief Executive Officer, Keith Fountain.

Keith Fountain, Chief Executive Officer, Colony Bancorp: Thanks, Brantley, and thank you to everyone for joining our first quarter earnings call today. We’re really pleased with our first quarter financial results and pleased to see continued improvement in both net interest income and margin, Better than expected loan growth in the first quarter, along with growth in lower cost transactional deposit accounts helped drive margin higher. On last quarter’s call, we mentioned we expected to return to normal levels of loan growth in 2025, but felt that we would not see those levels until later in the year. That growth came earlier than we thought and was due to strong loan production, but also fewer payoffs than anticipated. First quarter annualized loan growth was 17%.

And while we feel good about our pipeline for the rest of the year, future quarters are likely to be closer to our our more normal range of 8% to 12% annualized growth. The increase in our deposits was about 8.5% on an annualized basis and close to 55,000,000 for the quarter. We are starting to enter that time of year where we begin to see seasonal outflow, particularly in municipal deposits, but we still have ample loan balance sheet liquidity and cash flow from our bond portfolio to continue to fund lending activity. Derek will touch on that later. We feel good about how the growth in both loans and deposits positions us well for the rest of the year.

Seasonally, the first quarter activity for both mortgage and s b SPFL is generally slower, which we mentioned on last quarter’s call, and that was the driving factor in the decrease in noninterest income. We are seeing indications that activity will pick up this coming quarter, and that’s in line with what is the normal seasonality of this for us. We’re very excited about our recently announced acquisition of the LOB agency. We’re excited to have them as part of the Colony Insurance team. On slide 10 in our investor presentation, we provide some highlights of the deal, which will be EPS accretive.

And we also have a separate presentation with more detail on that acquisition that was filed earlier this month. We’re glad to have Sean Ehlerby joining us as Director of Sales for Colony Insurance and look forward to Sean and his team being part of the growth continued success of our insurance division. Insurance is an important part of our long term desire to grow non interest income, and it’s also an important part along with wealth management or other complementary lines to becoming the primary source of financial services in our branch network, where we have thousands of loyal long time deposit customers. We’re also excited to launch our credit card program for both consumer and commercial credit cards during the quarter. Our team has worked hard to achieve a successful launch, and we are proud to be able to expand our product offering to our customers.

We feel this is a great solution from a service perspective to our customers, but also a great way to generate significant interest income over time through interchange fees. I’d like to take a moment to acknowledge the recent volatility we’ve seen in the markets, both in the equity and and fixed income markets. If you’re all aware, increased uncertainty around global trade and tariff policies contributed to heightened market fluctuations and shifts in rate expectations. While this environment introduced new dynamics, we wanna emphasize that at this point, we’ve not seen any developments that have an impact on our customers or on the health of our loan portfolio. Our team is closely monitoring the evolving landscape, including policy changes and their ripple effects across industries and consumer behavior.

We’re maintaining a regular dialogue with our customers, especially that those in sectors more directly exposed to trade dynamics to ensure we remain proactive and responsive to their needs. We have not seen any indicators that would give us calls for concern about large scale disruptions that could significantly impact the overall credit quality of our portfolio. Many of the customers we’ve spoken with have been proactive in adjusting to the changing environment, taking thoughtful steps to manage their supply chains, pricing strategies, and their businesses accordingly. This disruption in the market and the drop in equity prices in the banking sector certainly play into the m and a environment in banking. As noted in the past, we certainly expect to participate in bank m and a.

Short term volatility in stock prices may have an impact on timing, but we continue to have discussions and nurture relationships with potential targets, and we think opportunities still exist for M and A in this environment. In speaking with M and A, we’ve also seen a significant amount of M and A activity in our footprint, and we’re excited about the opportunity that creates for us to grow our customer base and recruit talent. Lastly, I wanna recognize a few changes on our board of directors. This past quarter, Paul Joyner joined the board and brings over two decades of finance and accounting experience to our board. Paul is a valuable addition.

We welcome him and look forward to his meaningful contributions to the company. Additionally, we announced the retirement of Ed Lumis, who’s been part of Colony since 2012. As a director and as a former CEO, Ed played an instrumental role in shaping the duration and strength of our organization, and his insight, leadership, and dedication have left have left a lasting impact. We’re deeply grateful for your contributions and wish him all the best in his full retirement. With that, I’m going turn it over to Derek to go over the financials in more detail.

Thank you, Heath. Operating net income declined by $1,100,000 in the first quarter due largely in part to normal seasonal declines in a few of our noninterest income lines of business, particularly SBSL, which we mentioned on last quarter’s call and was expected and not unusual. Pipelines for both mortgage and SBSL have increased, indicating more revenue opportunity as we move forward into a period with higher seasonal activity. Pre provision net revenue increased almost $1,500,000 on an operating basis when compared to the first quarter of twenty twenty four, and this highlights the continued improvement in our core earning fundamentals. Net interest income increased by approximately $480,000 in the first quarter.

Both loan growth and a reduction in our cost of funds were contributing factors. Our loan growth was primarily in the later half of the quarter, so we should see a positive impact to earning asset yields in the second quarter. Our cost of funds for the quarter was 2.07%, which is about a 12 basis point decline from the previous quarter and a 25 basis point decline from the third quarter of twenty twenty four. The majority of our deposit growth was in low cost transactional DDA accounts, which has been and continues to be a focus area on deposits. Margin increased nine basis points to 2.93.

That’s up from 2.84% in the prior quarter. We still expect to see modest increases in margin throughout the remainder of 2025, given our current rate environment outlook. First quarter operating noninterest income decreased about $1,700,000 and was driven by decreased activity in our SPSL division where revenues fell by 1,600,000.0 The fourth quarter was a great quarter for our SPSL team, and we mentioned that we would see a lot of revenues in the first quarter. Activity has picked up in the SPSL pipeline, so we should see more production and sales revenue in upcoming quarters. Revenues in our mortgage division were slightly higher and expenses slightly lower in the quarter, and the division was profitable.

Deposit service charge related revenue and interchange fees were down about 220,000, and this is due to a shorter quarter with fewer days. Noninterest expenses decreased around a million dollars in the quarter and was related to decreases in variable expenses based on activity as well as lower advertising and donation expenses. As you may remember, we had about 450,000 in community related donations through state tax credit programs during the last quarter, and that was the fourth in the fourth quarter of twenty twenty four. Our net NIE to average assets was 1.44% in the quarter, an increase from 1.35 in the prior quarter. And last quarter, we mentioned that we would likely see an increase and that we were targeting around 1.45% in our forecast.

We expect net NIE to remain around this level, which is still well below our peer median. Our effective tax rate for the quarter was a little over 20%, which was in line with our guidance from last quarter where we mentioned a 21% ETR for 2025. Provision expense totaled 1,500,000.0, and the increase is related to our loan growth. Net charge offs were 606,000, which is consistent with levels observed during the first half of last year. We expect future quarters to remain within this range, although there may be some variability driven by our SPSL division.

Nonperforming assets were 12,400,000.0, classified loans were 26,400,000.0 and criticized loans were 55,800,000.0. We feel that these are still at historically low levels and balances are not driven by any systemic credit issues that cause concern. We’ve had a few isolated issues in agricultural production lines and trucking loans, but they represent a small portion of our portfolio and balances are relatively low compared to loans as a whole. Committed ag production lines represent around 1.5% of the portfolio with 0.8% outstanding, and trucking is about 0.63% of the loan portfolio. Our CRE loans and other loan types are still performing well from a credit perspective, and past dues have remained at low levels.

We had two CRE past dues at the end of the quarter totaling less than $200,000. Loans held for investment increased 78,300,000.0. We mentioned last quarter that we expected to see loan growth in 2025, and that started earlier than we were forecasting. Fewer expected payoffs also contributed to that growth. Our pipeline is still strong, and we expect to see continued loan growth this year, but it may not be at the same levels that we saw this quarter.

We feel good about the rates and the credit we are seeing on deals, and loan production is expected to drive an increase in our loan yields this year. Our new and renewed loan weighted average rate is highlighted on five twenty seven, and that was 7.72% for the quarter. Total deposits increased 54,600,000.0 in the quarter as we remain focused on the deposit first culture. Slide 22 in the investor presentation outlines our deposit mix and illustrates the decline we’ve seen in our cost of interest bearing deposits over the last two quarters. We’re still seeing cooling deposit competition across our footprint, which we think will help keep cost pressures minimal.

As previously discussed, we typically experience seasonal fluctuations in our deposit base with runoff beginning around this time of year, particularly within our municipal and agricultural related deposits. This may slow the rate of decrease on our cost of funds and could have an impact on how much increase in margin we see. Our cash to assets was a little over 7% at the end of the quarter, which gives us room to continue funding loan growth. Our cash flow from the bond portfolio is expected to be around 80,000,000 to $90,000,000 for the remainder of the year based on our base case modeling. This is this is about any investment sales.

We mentioned last quarter a pause on investment sales, but given our loan growth and outlook, we may resume sales in upcoming quarters. Those would be at levels similar to the transactions we did each quarter in 2024. During the quarter, we repurchased 38,000 shares at an average price of $16.45 as part of our stock repurchase program. Additional repurchases could be likely going forward as market conditions and volatility could provide us with the opportunity to purchase shares at attractive levels. Additionally, yesterday, the board declared a quarterly cash dividend of 11.5¢ per share.

Our previous shelf registration from 2021 has expired, and we plan on going through the process to have an active shelf in place for future flexibility and capital management. Slide 13 provides a breakdown of pretax income for our complementary lines of business. Again, it was a seasonally lighter quarter for many of our lines, but we anticipate activity to pick up. We’re still seeing good progress on referrals and pipelines, and so we’re optimistic about the future performance in our complementary lines of business. That concludes my overview.

And now I’ll turn it back over to Heath for any final comments before we take questions. Thanks, Derek. That wraps up our prepared comments. And with that, I’ll call on Troy to open up the lines for questions.

Conference Operator: Thank you. Ladies and gentlemen, we will now conduct a question and answer session. If you have a question, please press star key followed by one on your touch tone phone. You will hear a one tone pump acknowledging your request. Your questions will will be pulled in the order they are received.

And if you would like to decline from the calling process, please press the pound key. Please ensure you’ll lift the handset if you are using a speakerphone before pressing any keys. One moment for your questions. We have a question on behalf What are the trends and expectations for SPSL, loan growth and asset quality, as well as pricing for the rest of the year, and any impact from recent actions from the current administration?

Keith Fountain, Chief Executive Officer, Colony Bancorp: Okay. Thanks for that question. Been that day. I guess, first off, let me just address as I did in the prepared comments about, you know, the recent actions we’ve seen related to tariffs and trade policy. You know, we are being very vigilant of what impact they may that may have on our customers, as I mentioned, especially those that could be more heavily impacted by import and export trade.

I think that, overall, you know, we’ve been very pleased with the comments we’ve been having, the the discussions we’ve been having with customers. You know, I think a lot of our customers going through the COVID cycle really became very aware of their supply chains, maybe more so than they have been in the past if they came to a grinding halt during COVID and started looking for contingency supply plans, different ways to purchase inventory, different sources, different countries. So I think having gone through that COVID experience where the supply chain stopped has really been beneficial and made our customers more aware of what they’re seeing in supply chains, where their supply chains come from, that they may have taken for granted before. And so, you know, I think customers should become more flexible in how they acquire inventory, items for production, resale, whatever it may be. So I think the the discussions we’ve had have made us feel, you know, a lot better about some of that.

A lot of comments that, you know, they they don’t expect supplies to be halted like they were before, but, obviously, costs may change, and they may need to look for different supply sources if they if they’re unable to pass some of the higher tariff items, those costs, on to their end consumer. So way less disruption, I think, than than they saw during COVID. But, obviously, it is gonna require some adjustments and operating models for some customers. But we we feel good so far, and, you know, I think many of our customers also feel this will be short lived, that it’s tariff negotiation isn’t gonna be permanent, and that things will settle down in a quarter or two. So, you know, again, as we mentioned, long term, we feel good about it.

In the short term, we might see disruption, and we kinda stand by ready to work with our customers to work through any short term issues they may they may encounter. As far as SPSL, again, as Derek mentioned, you know, we had a banner fourth quarter that we knew was not gonna repeat due to just the the nature of that high level historically high level of production in that quarter, plus the seasonality of the first quarter where we generally see it come down. But we do see good activity in SPSL, good billing of our pipelines, and expect to return to levels we’ve seen in previous years. So we’ll see, I think, good activity and pickup in the remainder of the year from our SPSL group and feel good about, you know, the historical margins we’ve had in that that business as well. So feel good about the the outlook for FBSL.

Conference Operator: Okay. Second questions question from Dave Bishop. What net interest margin impact do you expect from a 25 basis point rate cut?

Keith Fountain, Chief Executive Officer, Colony Bancorp: I’ll let Eric kinda give some more guidance on that. But but we do feel, in general, well positioned for the current rate cut expectations that are in the marketplace. We’re still in a place where small cuts, I think, will help us improve margin. But if we don’t see those, we’ll still see improved margin from, you know, just from the repricing of of assets. So, Derek, do wanna add a little more color to that?

Yeah. Sure. And I’ll kinda start with the impact to our earning asset yield. So right now, you know, our our loan portfolio yield is around 6%, but our new and with the new weighted average rate is in the the mid to high sevens. And so if we do see a quarter point cut or even two four quarter point cuts, you know, and some loan production, we’ll still see pricing at a level that’s favorable to the loan portfolio yields and would increase those yields.

In addition to that, you know, we still have cash flow from the bond portfolio that’s that’s coming in just naturally, and those yields are at a lot lower rate. So there’s opportunity there to pick up, redeploy that cash into loans or, you know, other investments or cash and get a and get a pickup there on overall earning asset yield. On the cost side, you know, we’ve been able to achieve some some cuts to our higher rate money market accounts and CDs that are at or more than the cuts from the Fed. And so we’ve been able to achieve that. I think that’s evidence evident by the reduction of cost of funds.

And so we think we can continue to achieve that just with the overall cooling deposit competition environment that we’re seeing. And so there there’s a lot of opportunity to see earning asset yields increase and our cost of funds decrease with a 25 basis point cut from the Fed. And so that’s gonna have a positive overall impact to margin. And so that that should continue to help us along our path in seeing margin increase.

Conference Operator: Ladies and gentlemen, if there are any additional questions at this time, please press star followed by one. As a reminder, if you are using a speaker phone, please leave the handset before pressing any keys. There are no further questions at this time. Please continue.

Keith Fountain, Chief Executive Officer, Colony Bancorp: Alright. Well, thanks again, everyone, for being on the call today. Thanks for your support of Colony Bancorp, and we appreciate you being on the call and look forward to speaking with you again in the future.

Conference Operator: Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.