Colony Bankcorp, Inc.

Colony Bank reported Q2 operating net income of $11 million, operating pre-provision net revenue of over $16 million, and operating net interest income up approximately $700,000 quarter over quarter. Operating non-interest income was $11.6 million, up from $10.1 million a year ago, and operating non-interest expense declined about $550,000 from Q1. Operating ROA reached 1.20%, margin was 3.52% last quarter, cost of funds was 1.95%, and weighted average new/renewed loan pricing was 7.14% versus 7.11% in Q1. Loans held for investment increased $51.4 million, or about 8.5% annualized, deposits declined $76.2 million including a $13.4 million brokered deposit payoff, provision expense was $1.9 million, TCE rose to 8.99% from 8.49%, and tangible book value per share increased to $15.12 from $14.65. The board declared a quarterly cash dividend of $0.12 per share. Forward, management expects modest margin increases of a few basis points per quarter, expense levels around Q2’s run-rate in Q3 before rising after the First Reliance legal close in Q4, and loan growth that could land slightly below 8% near term if pricing discipline is maintained.

Heath Fountain framed the quarter as evidence that the post-TC Federal integration is delivering the targeted operating benefits, saying the company reached its 1.20% operating ROA objective and is now positioned to improve further. His tone was optimistic but disciplined: he emphasized that Colony is willing to sacrifice some near-term loan growth to protect pricing, margins, and balance sheet strength. He also highlighted the First Reliance merger, saying integration planning is underway, the legal close remains targeted for Q4, and the combined company should create more opportunity for organic growth across a larger footprint.

Derek Shelnutt focused on the hard numbers behind the quarter’s improvement: operating net income of $11 million, operating PPNR over $16 million, net interest income up about $700,000, and operating non-interest income of $11.6 million versus $10.1 million a year ago. He said margin expansion continued as the earning asset yield improved by six basis points, with new/renewed loan pricing at 7.14% and cost of funds at 1.95%, and he still expects modest margin gains over the next several quarters if funding costs stay stable. He also cited $1.9 million of provision expense, a $700,000 BOLI death benefit adjustment, a $550,000 decline in operating expense from Q1, TCE of 8.99%, TBVPS of $15.12, and a $0.12 quarterly dividend, while noting buybacks were paused this quarter but remain an active capital management tool.

Analysts pressed management on deposit priorities, the sources of further profitability gains, and how much upside First Reliance and merchant services could add. Heath said deposits are “priority one,” but he also pointed to more asset repricing, fee-income growth, and seasonal strength in mortgage as organic drivers of higher ROA. On First Reliance, he said the combined balance sheet could support larger lending limits and that there is upside versus the initial forecast; on merchant services, he called it a recurring-revenue and deposit-gathering tool with room to penetrate First Reliance’s base.