Colony Bankcorp, Inc. Announces Revised First Quarter Results

FITZGERALD, Ga., May 3, 2010 (GLOBE NEWSWIRE) -- Colony Bankcorp, Inc. (Nasdaq:CBAN) today reported revised net income available to shareholders of $334,000, or $0.05 per diluted share for the first quarter of 2010, down from first quarter 2009 net income available to shareholders of $763,000 or $0.11 per diluted share. The Company previously released first quarter results on April 23, 2010 that reported net income available to shareholders of $580,000. The reduction of $246,000 in net income available to shareholders resulted from recognition of FAS 166 accounting standards that is effective for reporting periods on or after January 1, 2010. The Company previously included premiums realized from the transfer (sale) of SBA guaranteed loans into the secondary market of $246,000 net of taxes, however adherence to FAS 166 requires the transfer (sale) of SBA loans not be booked as such until after an obligatory 90-day potential "buy-back" period has passed. After the 90-day period, the premiums will be re-booked and included in second quarter 2010 income.

The continued downturn of the housing and real estate market and the economy in general has contributed to financial results well below our historic standard. "Credit issues and a challenging recessionary period have created an unprecedented operating environment for Colony and the entire banking industry. Though first quarter earnings are below our historic standards, our pre-tax, pre-provision core earnings continue to provide strong support for our loan loss provisions needed to cover the decline in collateral values in the real estate dependent and income producing real estate loans of our loan portfolio.  The pace of problem loan formation has slowed from prior periods and we are beginning to see some slight but positive signs of economic improvement. Although we are encouraged with the early signs of economic recovery, there is much work remaining to reduce our non-performing assets to an acceptable level. We remain committed to an aggressive posture in addressing our problem loans in a timely and prudent manner," said Al D. Ross, President and Chief Executive Officer.  

Colony continues to maintain a favorable capital position to be categorized as "well-capitalized" by regulatory benchmarks. At March 31, 2010, the Company's tier one leverage ratio, tier one and total risk-based capital ratios were 8.44 percent, 12.86 percent and 14.14 percent, respectively, compared to 8.30 percent, 11.79 percent  and 13.07 percent, respectively, at December 31, 2009. Regulatory benchmarks to be categorized as "well-capitalized" for tier one leverage ratio, tier one and total risk-based capital ratios are 5.00 percent, 6.00 percent and 10.00%, respectively.   During first quarter 2010, the Company strengthened its capital position by accepting subscriptions of several accredited investors in a private placement stock offering. The offering was closed on March 30, 2010 with proceeds realized of $5.08 million. 

During the first quarter of 2010, the Company reported net interest income of $9.68 million and a net interest margin of 3.16 percent, compared to $9.06 million and 3.06 percent, respectively, for first quarter 2009. The Company continues to work toward increased net interest income by improving deposit and loan pricing, while at the same time minimizing interest rate risk exposure by extending some liabilities to longer maturities in anticipation of higher interest rates in the future and maintaining higher levels of liquidity for balance sheet structuring. Extending liabilities and maintaining higher liquidity levels will pressure our net interest margin in the near term, but we feel prudent for interest rate risk management in the current low interest rate environment.

The Company continues to closely monitor our real estate dependent loans and focus on asset quality. Non-performing assets increased slightly from December 31, 2009 to $53.7 million, or 5.94 percent of total loans and other real estate owned as of March 31, 2010. This compares to $53.4 million, or 5.62 percent as of December 31, 2009 and $53.1 million, or 5.45 percent as of March 31, 2009. The level of non-performing assets ties directly to the elevated risk in our residential and land development loan portfolio and has resulted in higher than normal loan loss provisions in 2010, 2009 and 2008.  The Company was able to reduce loan loss provisions from the same year ago period as the first quarter 2010 provision for loan losses was $3.25 million compared to $4.23 million for the same 2009 period. Unusually high levels of loan loss provision have been required as company management addresses asset quality deterioration associated with the housing and real estate downturn.  Until we see stabilization in the economy and the housing and real estate market, we expect problem assets and charge-offs to be elevated above historical levels as we work through our problem assets.

In the first quarter of 2010 net charge-offs were $4,955,000, or 0.55 percent of average loans as compared to net charge-offs of $2,245,000, or 0.23 percent of average loans in first quarter 2009. The loan loss reserve was $29.70 million on March 31, 2010, or 3.35 percent of total loans compared to $31.40 million on December 31, 2009, or 3.37 percent of total loans and compared to $19.00 million, or 1.97 percent on March 31, 2009.  Management believes that the first quarter 2010 contributions to Allowance for Loan Losses address the level of non-performing assets and the related level of classified assets to be adequately reserved at March 31, 2010.

Other significant factors negatively impacting first quarter 2010 earnings were FDIC insurance assessments and credit related expenses. While the banking industry has sustained significant bank failures during the past several quarters, the FDIC insurance fund has fallen to levels requiring increased insurance assessments in order to maintain an adequate FDIC insurance reserve level. As a result rates utilized for quarterly insurance assessments have increased. First quarter 2010 FDIC insurance assessments total $527,000 compared to $404,000 for the same 2009 period. Also, the increased activity in non-performing assets resulted in foreclosure and repossession expense increasing to $343,000 for first quarter 2010 compared to $231,000 for the same 2009 period.   In addition, write-downs on OREO property and the loss from sale of OREO property resulted in losses of $780,000 for first quarter 2010 compared to a gain of $9,000 for the same year ago period.  

The Company had total assets of $1,300,527,000, gross loans of $885,281,000, total deposits of $1,056,010,000 and total equity of $94,765,000 at March 31, 2010. Total equity to total assets was 7.29 percent at March 31, 2010 compared to 8.54 percent at March 31, 2009.

Colony Bankcorp, Inc. is a bank holding company headquartered in Fitzgerald, Georgia that consists of one operating subsidiary, Colony Bank. The Company conducts a general full service commercial, consumer and mortgage banking business through thirty offices located in the middle and south Georgia cities of Fitzgerald, Warner Robins, Centerville, Ashburn, Leesburg, Cordele, Albany, Thomaston, Columbus, Sylvester, Tifton, Moultrie, Douglas, Broxton, Savannah, Eastman, Chester, Soperton, Rochelle, Pitts, Quitman and Valdosta, Georgia. 

Colony Bankcorp, Inc. Common Stock is quoted on the Nasdaq Global Market under the symbol "CBAN".

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; (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.

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. 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.