Colony Bankcorp, Inc. Announces Second Quarter Results

FITZGERALD, Ga., July 20, 2012 (GLOBE NEWSWIRE) -- Colony Bankcorp, Inc. (Nasdaq:CBAN), today reported net income available to shareholders of $403,000, or $0.05 per diluted share for the second quarter of 2012 compared to net income available to shareholders of $189,000, or $0.02 per diluted share for the comparable 2011 period, while net income available to shareholders for six months ended June 30, 2012 was $592,000, or $0.07 per diluted share compared to $895,000, or $0.11 per share for the comparable 2011 period. This decrease of 33.85 percent in net income for the comparable six month period was primarily driven by a decrease in securities gains and a reduction in other noninterest income. This was partially offset by an increase in net interest income as Colony's loan and deposit pricing guidance resulted in Colony realizing an increase in net interest income compared to the prior year comparable periods for the second consecutive quarter. "Our pre-tax, pre-provision core earnings continue to provide solid support for the credit-related expenses needed to address our problem assets. We remain cautiously optimistic about recent signs of improvement in the economy and housing and real estate market. Of significance during the second quarter was continued improvement in problem assets as nonperforming assets decreased to $53.97 million at June 30, 2012 from $60.72 million at March 31, 2012, or a decrease of 11.12 percent, while the substandard assets to tier one equity plus loan loss allowance ratio improved to 67.97% at June 30, 2012 from 72.25% at March 31, 2012. Though much improvement was realized this quarter, we still have much work ahead to meet our goals of reducing our problem assets to an acceptable level and returning to our accustomed earnings standards. Our board, management and staff remain committed to making incremental progress toward these goals during 2012 and we were able to accomplish that this quarter," said Ed Loomis, President and Chief Executive Officer.

Capital

Colony continues to maintain a strong capital position to be categorized as "well-capitalized" by regulatory benchmarks. At June 30, 2012, the Company's tier one leverage ratio, tier one and total risk-based capital ratios were 9.71 percent, 15.67 percent and 16.94 percent, respectively, compared to the previous quarter end of 9.38 percent, 15.73 percent  and 16.99 percent, respectively, at March 31, 2012 and to 8.73 percent, 14.57 percent and 15.83 percent, respectively, at June 30, 2011. 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 percent, respectively.

Net Interest Margin

During the second quarter of 2012, the Company reported net interest income of $9.09 million and a net interest margin of 3.39 percent, compared to $8.58 million and 2.97 percent, respectively, for second quarter 2011, while net interest income for first half 2012 was $17.98 million with a net interest margin of 3.31 percent, compared to $17.40 million with a net interest margin of 2.98 percent for first half 2011. The improvement is indicative of the Company's focus on maximizing its net interest margin through deposit and loan pricing guidance. Anticipated loan growth along with pricing discipline should result in continued net interest margin improvement the balance of 2012.   

Asset Quality

The Company continues to closely monitor our substandard and non-performing assets and focus on problem asset resolution. Substandard assets that include non-performing assets totaled $85.08 million at June 30, 2012 compared to $90.19 million and $108.51 million, respectively, at March 31, 2012 and June 30, 2011. Substandard assets to tier one capital plus loan loss reserve ratio was 67.97%, 72.25% and 90.93%, respectively, at June 30, 2012, March 31, 2012 and June 30, 2011. Though much work remains to reduce substandard assets, improvement in these ratios reflects solid work in addressing and bringing resolution to substandard assets. Non-performing assets decreased significantly from the previous quarter end to $53.97 million or 7.35 percent of total loans and other real estate owned as of June 30, 2012. This compares to $60.72 million or 8.35 percent and $65.82 million or 8.44 percent, respectively, as of March 31, 2012 and June 30, 2011. Loan loss reserve methodology resulted in first half 2012 provision for loan losses of $3.89 million compared to $3.75 million for the comparable 2011 period. As we begin to see stabilization in the economy and the housing and real estate market, we expect continued improvement in our substandard assets.

Though other real estate balances appear to be basically flat over the past ten quarters, much resolution has taken place in liquidating these properties. Other real estate totaled $19.71 million at year end December 31, 2009 compared to $17.92 at June 30, 2012. During this period, $29.91 million has been added to other real estate, thus a reduction from sales and/or write-downs of $31.70 million. This significant movement of properties in a challenging real estate market is indicative of the commitment by Colony management to address its problem assets in a timely and prudent manner. Colony has established a target of twelve months to liquidate improved properties due to the high carrying cost of taxes, insurance, maintenance and repairs associated with holding these properties on our books.

In the second quarter of 2012 net charge-offs were $2.56 million, or 0.36 percent of average loans as compared to net charge-offs of $9.33 million, or 1.20 percent of average loans in second quarter 2011, while first half 2012 net charge-offs were $4.24 million, or 0.60% of average loans as compared to net charge-offs of $16.64 million, or 2.12% of average loans in first half 2011. The loan loss reserve was $15.29 million on June 30, 2012, or 2.13 percent of total loans compared to $15.91 million and $15.39 million, or 2.25 percent and 2.03 percent, respectively, at March 31, 2012 and June 30, 2011. Management believes that the 2012 contributions to Allowance for Loan Losses address the level of non-performing assets and the related level of substandard assets to be adequately reserved at June 30, 2012.

Noninterest Income

Total noninterest income decreased in the comparable periods as noninterest income for six months ended June 30, 2012 was $4.19 million compared to $4.78 million in the comparable 2011 period. Gains realized from the sale of securities totaled $880 thousand in six months ended June 30, 2012 compared to gains recorded during the comparable period in 2011 of $1.13 million and fee income from the sale of  SBA loans decreased to $207 thousand in first half 2012 compared to $750 thousand in the comparable period in 2011 to primarily account for the decrease. On a positive note, service charge on deposits increased 3.47% and mortgage fee income increased 85.58% over the prior comparable period. The Company began an initiative during 2012 to enhance our secondary mortgage lending operations. Mortgage lending training was provided to several current employees to boost our secondary market loan originators. This has resulted in better penetration in the markets that Colony serves and resulted in increased mortgage fee income.      

Noninterest Expense

Total noninterest expense increased to $16.39 million in six months ended June 30, 2012 compared to $16.16 million in the comparable 2011 period, or an increase of 1.42 percent. Credit-related expenses continue to be a strain on earnings as write down and losses on OREO property and repossession and foreclosure expenses totaled $1.83 million in six months ended June 30, 2012 compared to $1.92 million in the comparable 2011 period. Salaries and employee benefit expenses increased to $7.65 million in six months ended June 30, 2012 compared to $7.14 million in the comparable 2011 period, or an increase of 7.20 percent. This increase is primarily attributable to an increase in headcount related to additional "back-office" regulatory compliance demands. Occupancy expenses decreased to $1.90 million in six months ended June 30, 2012 compared to $2.04 million in the same comparable 2011 period, or a decrease of 6.86 percent. The decrease was primarily attributable to less depreciation expense for the comparable periods.

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 twenty nine 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.