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CB

COLONY BANKCORP INC (CBAN)·Q3 2025 Earnings Summary

Executive Summary

  • Operating EPS was $0.47, matching S&P Global consensus, while GAAP diluted EPS was $0.33; revenue came in below consensus, as S&P’s “revenue” measure was $31.89M vs a $33.70M estimate; company-reported “Total income” was $32.79M. Bold: EPS matched; revenue missed. Values retrieved from S&P Global.*
  • Net interest margin expanded to 3.17% from 3.12% in Q2 and 2.64% YoY, with management expecting continued, modest single‑digit NIM expansion helped by recent Fed cuts.
  • Loan growth moderated to ~9% annualized (up $43.5M QoQ to $2.04B), deposits rose $28.1M QoQ to $2.58B, and tangible book value per share increased to $14.20.
  • Asset quality mixed: NPAs increased to $15.24M (from $11.42M), with elevated SBSL charge‑offs; management said Q3 represents the peak for SBSL charge‑offs and does not expect further increases.
  • TC Bancshares merger tracking on plan for Q4 close and Q1 systems conversion, with targeted cost saves beginning in Q2 next year; dividend of $0.115 declared.

What Went Well and What Went Wrong

What Went Well

  • Continued NIM expansion and core earnings momentum: “We continue to see improvement in operating earnings driven by net interest margin expansion… operating pre‑provision net revenue improved.”
  • Disciplined asset repricing and deposit cost control: CFO noted cost of funds at 2.03% (2.04% prior quarter), with expected decline from September Fed cut and further cuts.
  • Strategic progress and talent additions supporting growth (e.g., Columbus GA banker), plus TBVPS increased to $14.20; CET1/Tier 1/Total RBC at 12.37%/13.44%/16.00% reflect strong capital.

What Went Wrong

  • Revenue below consensus and higher noninterest expense: noninterest expense rose to $24.6M (from $22.0M), including $0.7M merger costs and a $1.25M wire fraud loss. Bold: Revenue miss; elevated expenses.
  • Asset quality headwinds: NPAs increased to $15.24M (from $11.42M), NCOs rose to $1.83M (0.36% of average loans), driven by SBSL variability.
  • Mortgage and SBSL volumes softer than earlier in the year; mortgage production and sales declined vs Q2; SBSL charge‑offs elevated (though management expects improvement as rates decline).

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Total income ($USD Millions)$28.62 $29.996 $32.483 $32.790
Diluted EPS (GAAP) ($)$0.32 $0.38 $0.46 $0.33
Adjusted EPS ($)$0.35 $0.38 $0.46 $0.47
Net Interest Margin (%)2.64% 2.93% 3.12% 3.17%
Pre‑Provision Net Revenue ($MM)$7.79 $9.78 $10.48 $8.18
Noninterest Expense ($MM)$20.84 $20.22 $22.00 $24.61

Actual vs S&P Global consensus (Q3 2025):

MetricConsensusActual
Primary EPS ($)$0.47*$0.47*
Revenue ($USD Millions)$33.70*$31.89*

Values retrieved from S&P Global.*

Segment income

Segment Income ($USD Millions)Q3 2024Q1 2025Q2 2025Q3 2025
Banking$3.86 $6.20 $7.44 $5.66
Mortgage Banking$0.28 $0.02 $0.25 $(0.13)
SBSL$1.50 $0.39 $0.29 $0.29
Total Consolidated$5.63 $6.61 $7.98 $5.82

Key KPIs

KPIQ3 2024Q1 2025Q2 2025Q3 2025
Loans (net of unearned) ($MM)$1,886.0 $1,921.3 $1,993.6 $2,037.1
Deposits ($MM)$2,525.0 $2,622.5 $2,556.2 $2,584.3
Non‑Performing Assets ($MM)$12.50 $13.01 $11.42 $15.24
Net Charge‑offs ($000)$139 $606 $1,049 $1,827
ACL to Total Loans (%)1.04% 1.04% 0.96% 0.89%
Tangible BVPS ($)$12.76 $13.46 $13.73 $14.20
Efficiency Ratio (GAAP) (%)72.79 67.41 67.74 75.06

Guidance Changes

MetricPeriodPrevious Guidance (Q2 2025)Current Guidance (Q3 2025)Change
Net interest marginQ4 2025 and forwardExpect continued NIM increase, more moderate vs Q2 surge Expect modest single‑digit NIM growth; benefit from September Fed cut and potential further cuts Maintained/modestly reinforced
Cost of fundsQ4 2025~2.04%, stabilizing (Q2 actual), flat near‑term 2.03% in Q3; expect decline from Fed cuts in Q4 Lowered trajectory
Noninterest expensesQ4 2025Target net NIE/avg assets ~1.45%, near‑term $21–$22M/quarter Operating net NIE/avg assets improved to 1.48%; Q4 will include at least one month of TC Federal expenses post‑close; cost saves begin Q2 next year Near‑term higher from merger timing; cost saves affirmed
Loan growthFY 2025Moderate to ~10–12% in 2H (pipeline healthy) Q3 ~9% annualized; expect lower in Q4, placing FY near 8–12% long‑term target Moderated to long‑term range
DividendOngoing$0.115 per share (declared Q2) $0.115 per share (declared 10/22/25) Maintained
TC Bancshares mergerClose/conversionAnnounced Q2; target Q4 close, Q1 conversion On track: anticipate Q4 close; Q1 conversion; cost saves targeted Q2 onward Maintained timeline

Earnings Call Themes & Trends

TopicQ1 2025 (prior)Q2 2025 (prior)Q3 2025 (current)Trend
Net interest marginNIM +9 bps QoQ to 2.93%; expect modest increases through 2025 NIM 3.12%; expect further increase, more moderate NIM 3.17%; modest single‑digit growth, aided by Fed cuts Improving, pace moderating
Deposit costsCost of funds down to 2.07%; easing competition 2.04%; stabilize/flat near‑term 2.03%; expected to decline in Q4 post‑cuts Gradual decline
Loan growth trajectory17% annualized; normalize later in year 15% annualized; anticipate 10–12% 2H ~9% annualized; Q4 lower; 8–12% LT target Normalizing
SBSL dynamicsSeasonal softness; pipelines improving Variability in charge‑offs; revenues improved QoQ Charge‑offs peaked; expect relief as rates decline Stabilizing expected
Mortgage activitySlightly higher Q1 revenues; profitable Improved QoQ Slower in Q3; strategic hires to drive growth Mixed; rebuilding
Macro/policy (tariffs/shutdown)Monitoring tariff impacts; limited portfolio effect —Monitoring federal shutdown; minimal expected impact; SBSL approvals pre‑shutdown Watchful, contained
M&A (TC Bancshares)—Announced; accretive, Q4 close/Q1 conversion Progressing as planned; employment decisions set; cost saves Q2 next year Advancing

Management Commentary

  • CEO: “We continue to see improvement in operating earnings driven by net interest margin expansion… operating pre‑provision net revenue [improved]… [and] a strong increase in tangible book value for the quarter.”
  • CEO on growth: “Loan growth has been especially strong… now seeing that momentum moderate to a more normalized pace… positions us well for balanced, sustainable performance.”
  • CFO: “Our cost of funds for the quarter was 2.03%… The Fed cut late in the quarter will have more impact in the fourth quarter, and we expect to see that cost of funds number decline.”
  • CFO on SBSL: “This quarter represents the peak for charge‑offs… We do not expect them to increase from here… a declining rate environment should provide some relief going forward.”
  • CEO on TC merger: “We continue to anticipate closing the transaction in the fourth quarter and completing the systems conversion in the first quarter of next year.”

Q&A Highlights

  • Government shutdown impact: Management expects minimal impact on borrowers and local economy; SBSL final approvals/sales could be delayed if shutdown prolonged, but pre‑approvals obtained and Q4 impact should be limited.
  • Loan repricing and NIM outlook: Roll‑off yields ~5% vs new/renewed rate 7.83%, supporting NIM growth from asset repricing and lower cost of funds; modest single‑digit NIM expansion expected.
  • Exposure checks: No meaningful NDFI exposure; emphasis on relationship‑based, locally originated credits.
  • Deposit seasonality: Municipal funds expected to return in Q4; brokered funding used tactically to bridge seasonal outflows.

Estimates Context

  • EPS met consensus: Primary EPS $0.47 matched actual $0.47. Bold: EPS met. Values retrieved from S&P Global.*
  • Revenue missed consensus: S&P “revenue” actual $31.89M vs $33.70M estimate. Bold: Revenue missed. Values retrieved from S&P Global.*
  • Note on definitions: Company‑reported “Total income” (net interest income before provision + noninterest income) was $32.79M, which differs from S&P’s revenue construct; investors should align comparisons by measure used.

Key Takeaways for Investors

  • Margin expansion remains the primary earnings lever; asset repricing vs portfolio yields plus lower funding costs from recent Fed cuts should support modest NIM growth into Q4/Q1.
  • Watch SBSL credit normalization: Q3 likely peak charge‑offs per management; declining rates should alleviate pressure—monitor follow‑through in Q4.
  • Revenue construct matters: On S&P’s basis, revenue missed; on company “Total income,” Q/Q growth continued—model estimates consistently to avoid definitional drift. Values retrieved from S&P Global.*
  • Expense outlook: Near‑term elevated from merger timing and growth investments; cost saves guided to begin in Q2 next year—track net NIE/avg assets toward ~1.45% target.
  • Balance sheet growth normalized: Loans up $43.5M QoQ to $2.04B; deposits up $28.1M to $2.58B—expect Q4 loan growth below Q3, in LT 8–12% range.
  • Capital and TBVPS strengthening: TBVPS $14.20, TCE 8.00%; dividend maintained at $0.115—supportive for valuation and capital flexibility.
  • Merger with TC Bancshares is a 2026/2027 earnings catalyst; closing in Q4, conversion Q1, cost saves Q2 onward—track integration and synergy realization.