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CB

COLONY BANKCORP INC (CBAN)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a clean beat: diluted EPS of $0.46 versus Wall Street consensus of $0.405; total income (net interest income before provision + noninterest income) of $32.48M versus $32.30M consensus. Bold beat driven by margin expansion, lower provision, and stronger fee lines. The beat is notable given only 2 EPS and 1 revenue estimates were published, limiting breadth but still signaling outperformance . EPS/Revenue estimates from S&P Global.*
  • Net interest margin expanded to 3.12% (+19 bps QoQ; +44 bps YoY), with CEO citing “well‑positioned balance sheet and stable funding costs.” Provision fell to $0.45M from $1.50M in Q1, and ROA improved to 1.02% .
  • Loans grew +$72.3M QoQ to $1.99B; deposits dipped seasonally by $66.3M QoQ but are up $96M YoY. Mortgage production accelerated to $94.9M and SBSL sales to $17.9M, supporting noninterest income .
  • Strategic catalyst: definitive merger agreement to acquire TC Bancshares (valued at ~$86.1M), expected to close in Q4 2025; management guides to double‑digit EPS accretion by year two and a pro forma ~$3.8B asset base, enhancing scale and efficiency. Near‑term stock narrative: margin expansion + estimate beat + accretive M&A setup .

What Went Well and What Went Wrong

What Went Well

  • Margin and ROA inflection: NIM reached 3.12% (+19 bps QoQ), ROA hit 1.02%. CEO: “Net interest margin expanded meaningfully… return on assets improved as we maintained strong operating leverage.” CFO added cost of funds declined to ~2.04% in Q2 and stabilized .
  • Broad-based fee momentum: Noninterest income rose to $10.10M, helped by mortgage fees and stronger SBSL sales; mortgage production/sales jumped to $94.9M/$65.3M respectively .
  • Credit metrics improved: NPAs fell to $11.42M from $13.01M QoQ; criticized/classified loans edged lower. CEO: “Credit quality remains solid, with improvements in several key metrics” .

What Went Wrong

  • Seasonal deposit runoff: Total deposits decreased $66.3M QoQ (to $2.56B), concentrated in interest-bearing demand and savings/money market; CFO expects seasonal return late Q3/Q4 .
  • Higher operating costs: Noninterest expense increased to $22.0M (+$1.8M QoQ) on variable comp tied to activity and a ~$340k valuation adjustment to SBA servicing assets; net noninterest expense/avg assets rose to 1.52% .
  • Elevated net charge-offs: Net charge-offs rose to $1.0M, largely in SBSL (~$0.78M), with management guiding for continued higher charge-offs in SBA due to older loans repricing at higher rates .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Net interest income ($USD Thousands)$18,409 $20,952 $22,385
Noninterest income ($USD Thousands)$9,497 $9,044 $10,098
Total income (“revenue proxy”) ($USD Thousands)$27,906 $29,996 $32,483
Provision for credit losses ($USD Thousands)$650 $1,500 $450
Noninterest expense ($USD Thousands)$20,330 $20,221 $22,004
Net income ($USD Thousands)$5,474 $6,613 $7,978
Diluted EPS ($USD)$0.31 $0.38 $0.46
Key Ratios/KPIsQ2 2024Q1 2025Q2 2025
Net interest margin (%)2.68% 2.93% 3.12%
ROA (%)0.73 0.85 1.02
Efficiency ratio (%)72.85 67.41 67.74
Loans, net ($USD Billions)$1.866 $1.921 $1.994
Deposits ($USD Billions)$2.460 $2.623 $2.556
NPAs ($USD Millions)$7.305 $13.006 $11.422
NPLs ($USD Millions)$6.710 $12.478 $10.691
Allowance for credit losses / loans (%)1.01 1.04 0.96
CET1 capital ratio (%)12.3 12.62 12.34
Segment income ($USD Thousands)Q2 2024Q1 2025Q2 2025
Banking division$4,012 $6,201 $7,441
Mortgage banking$138 $21 $249
Small Business Specialty Lending (SBSL)$1,324 $391 $288
Actuals vs S&P Global Wall Street ConsensusQ2 2024Q1 2025Q2 2025
Diluted EPS ($USD)Actual: $0.31 / Consensus: 0.305*Actual: $0.38 / Consensus: 0.375*Actual: $0.46 / Consensus: 0.405*
Total income (“revenue proxy”) ($USD Millions)Actual: $27.91 / Consensus: 27.80*Actual: $30.00 / Consensus: 29.90*Actual: $32.48 / Consensus: 32.30*
Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Loan growth (organic)2H 2025“Stronger in latter half of 2025” (qualitative, no range) 10–12% for rest of year (pipeline healthy) Clarified/raised specificity
Net interest margin2H 2025Continue to increase (qualitative) Expect margin to increase, with softer expansion vs Q2 Maintained
Cost of fundsNear termNot explicitly guidedStabilized around ~2.04% in Q2; expected stable barring rate changes New detail
Noninterest expense run-rateQ3–Q4 2025Not provided~$21–$22M per quarter; activity may cause variability New
DividendOngoing$0.1150 per share (Q1) $0.1150 per share (Q2 declaration) Maintained
TC Bancshares mergerTimeline & accretionN/AClose in Q4 2025; double-digit EPS accretion by year two; pro forma assets ~$3.8B New strategic guidance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Net interest marginMargin improvement noted; +20 bps QoQ in Q4 2024; ongoing improvement in Q1 2025 NIM 3.12%; guided for further increase in 2H albeit softer expansion Improving, pace moderating
Deposit costsLower cost of funds in Q4 2024; core deposit growth in Q1 2025 Cost of funds ~2.04%; expected flat barring rate changes Stabilizing
Loan growthExpected to resume in 2025, stronger in H2 +$72.3M QoQ; 10–12% rest-of-year guide Strong, normalizing
Asset repricing runwayNot detailedNew/renewed loans at ~7.78%; continued repricing opportunity even if rates cut modestly Positive runway
Credit quality (SBA)Elevated variability flagged Higher charge-offs in older SBA loans; expect somewhat elevated going forward Manageable, still elevated
Technology/data initiativesCRM, nCino, RPA, data warehouse investments Continues; part of efficiency and customer experience plan Ongoing execution
Regional trendsBroad Georgia footprint; liquidity strength Florida core deposits up >$75M YoY; Chattanooga expansion hires Expanding presence
M&A strategyStated acquirer-of-choice ambition TC Bancshares merger announced; EPS accretion modeled; closing Q4 Executing consolidation strategy

Management Commentary

  • CEO Heath Fountain: “Net interest margin expanded meaningfully, supported by a well‑positioned balance sheet and stable funding costs, while return on assets improved… sustained loan growth demonstrates healthy demand across our markets” .
  • CFO Derek Shelnutt: “Margin increased 19 basis points… cost of funds for the quarter were down three basis points to 2.04%… Noninterest expenses increased… largely due to variable-based compensation and a ~$340k valuation adjustment on our SBA servicing assets” .
  • On TC Bancshares: “We expect the transaction to be immediately accretive to earnings (excluding one-time costs)… close in Q4 2025 and complete core conversion early next year” .

Q&A Highlights

  • Organic growth and deposits: Management expects loan growth to moderate to 10–12% in H2; deposit costs to remain flat absent rate changes .
  • SBA portfolio: Elevated charge-offs tied to older loans repricing at higher rates; expect some continued elevation, but premium revenue remains strong and buybacks of guaranteed portions limit loss severity .
  • Merger accretion and timing: EPS accretion ramps from ~8.4% in 2026 to ~11.9% in 2027; core conversion targeted for early next year after Q4 close .

Estimates Context

  • EPS beat: $0.46 actual vs $0.405 consensus (beat of ~$0.055), reflecting margin expansion and lower provision; only 2 EPS estimates published, but signal remains positive . EPS estimates from S&P Global.*
  • “Revenue” (total income) slight beat: $32.48M actual vs $32.30M consensus; only 1 revenue estimate, limiting breadth but confirming direction . Revenue estimates from S&P Global.*
  • Setup for revisions: Given NIM trajectory and lower provision, forward EPS estimates may drift higher; noninterest expense guidance at $21–22M caps upside if activity-driven costs persist . Estimates from S&P Global.*

Key Takeaways for Investors

  • Colony delivered a broad-based beat with EPS $0.46 and total income $32.48M, underpinned by 19 bps QoQ NIM expansion and lower provision; this improving ROA/efficiency story is intact .
  • Loan growth remains robust (+$72.3M QoQ), but management prudently guides to 10–12% H2 pace; margin expansion should continue even if rates modestly decline due to asset repricing runway .
  • Operating leverage is improving, but watch expense discipline: noninterest expense stepped up to $22.0M on variable comp and SBA servicing valuation; management targets $21–22M quarterly run-rate .
  • Credit quality trends are favorable (NPAs/NPLs down QoQ), though SBA charge-offs remain elevated in older vintages; allowance coverage remains solid (ACL/loans 0.96%) .
  • Strategic M&A (TC Bancshares) is a tangible catalyst: Q4 close, targeted double-digit EPS accretion by year two, expanded footprint and scale—potentially supportive of multiple expansion on execution .
  • Capital remains strong (CET1 ~12.34%); dividend maintained at $0.115/share and modest buybacks executed, providing optionality for capital deployment .
  • Near-term trading lens: positive estimate revision risk + merger narrative + NIM trajectory; monitor deposit flows in Q3/Q4 for seasonal return and expense run-rate adherence .

Additional Q2 2025 Press Releases

  • TC Bancshares merger announced; ~$86.1M consideration, mixed cash/stock, expected Q4 close; accretive EPS profile and pro forma ~$3.8B assets .

Notes:

  • “Total income” presented as revenue proxy aligns with company’s pre-provision “Total income” (net interest income before provision + noninterest income) .
  • All company figures and quotes are sourced from Q2 2025 8‑K/press release and the earnings call transcript as cited above. EPS and revenue consensus figures are from S&P Global.*