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CB

COLONY BANKCORP INC (CBAN)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 diluted EPS was $0.38, slightly above Wall Street consensus of $0.375*, while “revenue” (net interest income after provision + noninterest income) was $28.5M, modestly below the $29.9M consensus*. Net interest margin rose 9 bps QoQ to 2.93% on stronger loan growth and lower cost of funds .
  • Loans grew $78.3M (+4.25% QoQ) and deposits rose $54.6M, with mix shifting toward low-cost DDA; management expects modest margin increases through 2025, aided by cooling deposit competition and favorable new loan pricing .
  • Noninterest income was seasonally soft (SBSL sales down QoQ), but management cited improving pipelines in SBSL and mortgage for coming quarters; Q1 provision increased to $1.5M, consistent with growth and stable credit trends .
  • Strategic updates: credit card program launched; Ellerbee Agency acquired (EPS-accretive), KBRA affirmed ratings with Stable outlook—supporting confidence in diversified noninterest income and durable deposit franchise .
  • Potential catalysts: earlier-than-expected loan growth and margin inflection; incremental noninterest revenue from new products and insurance; possible resumption of investment securities sales to fund growth; ongoing buybacks and dividend support .

What Went Well and What Went Wrong

  • What Went Well

    • Net interest margin improved to 2.93% from 2.84% QoQ, driven by loan growth and lower cost of funds; management expects modest NIM increases in 2025 .
    • Loans +$78.3M QoQ on strong production and fewer payoffs; deposits +$54.6M with growth concentrated in low-cost transactional accounts .
    • Strategic execution: launched consumer/commercial credit cards to build interchange income; acquired Ellerbee Agency (EPS-accretive, expands insurance footprint) .

  • What Went Wrong

    • Noninterest income fell to $9.0M (−$1.3M QoQ) largely on seasonal SBSL sales; deposit service charges and interchange also down due to fewer days in the quarter .
    • Provision for credit losses increased to $1.5M (vs. $0.65M in Q4) to support portfolio growth; NPLs rose to $12.5M from $10.8M QoQ, though management sees no systemic issues .
    • “Revenue” missed consensus as higher provision and seasonal fee softness offset stronger NII; SBSL revenues fell by ~$1.6M QoQ within normal first-quarter seasonality .

Financial Results

MetricQ1 2024Q4 2024Q1 2025Q1 2025 Consensus
Revenue ($USD Millions)$27.141 $30.131 $28.496 $29.900*
Diluted EPS ($USD)$0.30 $0.42 $0.38 $0.375*
Net Interest Margin %2.69% 2.84% 2.93% —
Net Interest Income ($USD Millions)$18.654 $20.472 $20.952 —
Noninterest Income ($USD Millions)$9.487 $10.309 $9.044 —
Provision for Credit Losses ($USD Millions)$1.000 $0.650 $1.500 —

Segment Income ($USD Millions)

SegmentQ1 2024Q4 2024Q1 2025
Banking Division$4.482 $5.791 $6.201
Mortgage Banking$(0.014) $(0.089) $0.021
Small Business Specialty Lending (SBSL)$0.865 $1.730 $0.391

Key Performance Indicators

KPIQ1 2024Q4 2024Q1 2025
Loans, net of unearned income ($USD Millions)$1,859.018 $1,842.980 $1,921.263
Deposits ($USD Millions)$2,522.748 $2,567.943 $2,622.531
Nonperforming Loans (NPLs) ($USD Millions)$6.431 $10.812 $12.478
Nonperforming Assets (NPAs) ($USD Millions)$6.993 $11.342 $13.006
Net Charge-offs ($USD Millions)$0.664 $1.534 $0.606
Efficiency Ratio (GAAP) %72.48% 69.11% 67.41%
Dividend per share ($)$0.1125 $0.1125 $0.1150
Cost of Funds % (mgmt disclosed)——2.07%

Notes: Revenue shown equals Net interest income after provision + Noninterest income (bank convention) .

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024 call)Current Guidance (Q1 2025 call)Change
Net Interest Margin2025Modest increases in 2025; Q4 inflection to 2.84% Expect modest increases through 2025; reached 2.93% in Q1 Maintained (execution ahead of pace)
Loan Growth2025~4–6% for 2025, skewed to 2H; early Q1/Q2 slower Annualized 17% in Q1; future quarters likely 8–12% run rate later in 2025 Raised near-term trajectory
Noninterest Expense2025~$21M per quarter; target net NIE/avg assets ≈1.40–1.45% Net NIE/avg assets ~1.44% in Q1; targeting ~1.45% going forward Maintained (in range)
Effective Tax Rate2025~21% Q1 ETR a little over 20%; ~21% for 2025 Maintained
Investment Securities SalesNear termPause quarterly sales near-term May resume sales in upcoming quarters to fund growth; levels similar to 2024 Loosened (conditional resumption)
Capital ReturnOngoingRepurchase program extended through 2025; dividend increased to $0.115 Repurchased 38,307 shares at $16.45; declared $0.115 dividend Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Margin pathMargin trough in Q3; anticipated improvement as funding costs ease NIM rose 20 bps to 2.84%; expect modest increases NIM 2.93%; management still sees modest increases Improving, steady
Loan growthPicked up modestly; pipelines strong Expect growth resuming, more in 2H 2025 Q1 annualized 17% growth; expect 8–12% run rate later Accelerated near term
Deposit competition/costsElevated costs impacting margin Cooling competition; cost of funds down 13 bps QoQ Cost of funds ~2.07%; continued cooling expected Easing
SBSL & mortgage seasonalityActive; gains on SBA sales rising Strong SBSL Q4; mortgage softer on rates Seasonally lighter; pipelines improving for coming quarters Seasonal dip, improving outlook
Technology & data (CRM, nCino, RPA)Digital platform rollout Focus on efficiency, scaling through tech RPA projects mid-year; CRM and nCino fully implemented Executing, scaling
Tariffs/supply chain macro——Monitoring tariff impacts; customers more resilient post-COVID supply lessons New external watch item
Liquidity & securities strategyHigher unrealized losses; active portfolio management Paused securities sales near-term May resume sales to fund growth; strong liquidity sources Flexible

Management Commentary

  • “We’re really pleased with our first quarter financial results… Better-than-expected loan growth in the first quarter, along with growth in lower-cost transactional deposit accounts helped drive margin higher.” — CEO, Heath Fountain .
  • “Noninterest income came in lighter during the first quarter, which is consistent with the seasonal trends we typically see early in the year… we remain optimistic… expecting revenue to strengthen in the coming quarters.” — Q1 release .
  • “Our cost of funds for the quarter was 2.07%,… The majority of our deposit growth was in low-cost transactional DDA accounts…” — CFO, Derek Shelnutt .
  • “We’re also excited to have launched our credit card program… a great way to generate significant noninterest income over time through interchange fees.” — CEO .
  • “We may resume [investment] sales in upcoming quarters… similar to the transactions we did each quarter in 2024.” — CFO .

Q&A Highlights

  • Macro tariffs/supply chain: Management is monitoring tariff developments; customers are better positioned due to post-COVID supply-chain adjustments; expects limited disruption but potential short-term adjustments .
  • SBSL cadence: Q1 softness was expected after a banner Q4; pipelines are rebuilding with expectation to return to prior levels as the year progresses .
  • Margin sensitivity: New/renewed loan rates in mid-to-high 7s vs ~6% portfolio yield; with deposit cost reductions and bond cash flows, even small Fed cuts should be NIM-accretive .
  • Liquidity and capital: Cash-to-assets a little over 7%; bond portfolio projected $80–90M cash flow for remainder of 2025; shelf registration to maintain optionality; buybacks opportunistic .

Estimates Context

  • Q1 2025 results vs consensus: EPS $0.38 vs $0.375* (beat), Revenue $28.5M vs $29.9M* (miss). Seasonally lower SBSL sales and higher provision offset stronger NII, while margin improvement and deposit mix were positives .
  • Prior periods vs consensus: Q4 2024 EPS $0.44 vs $0.345* (beat); revenue $30.1M vs $28.9M* (beat)—benefited from NIM inflection and strong SBSL . Q1 2024 EPS $0.33 vs $0.31* (beat); revenue $27.1M vs $27.6M* (slight miss) .
  • Estimate implications: Modest upward bias to NIM assumptions and loan growth trajectory for 2025; revenue trajectories should reflect seasonal noninterest income recovery and provision normalization tied to growth .

Key Takeaways for Investors

  • Margin inflection intact: NIM up to 2.93% with room for modest gains as deposit costs cool and new loan yields reprice higher .
  • Growth earlier than expected: Loans +$78.3M QoQ; 2025 run rate likely 8–12% later in the year—supports NII trajectory .
  • Noninterest levers building: Credit card launch and insurance acquisition add durable fee streams; SBSL/mortgage seasonality should reverse as pipelines improve .
  • Credit stable amid higher activity: Provision reflects growth; NPL/NPAs higher but described as isolated issues, not systemic .
  • Balance sheet flexibility: Strong liquidity and potential securities sales resumption to fund growth; buybacks and $0.115 dividend continue .
  • Near-term trading: Expect narrative focus on margin progression and loan/deposit growth mix; watch seasonal recovery in SBSL/mortgage to offset Q1 fee softness .
  • Medium-term thesis: Scaling via technology (CRM, nCino, RPA) and M&A optionality in footprint underpins efficiency and diversified revenue growth .

Footnote: *Values retrieved from S&P Global.