Colony Bankcorp, Inc., today reported net income available to shareholders of $1,241,000, or $0.15 per diluted share for the fourth quarter of 2013 compared to $203,000, or $0.02 per diluted share for the comparable 2012 period, while net income available to shareholders for twelve months ended December 31, 2013 was $3,120,000, or $0.37 per diluted share compared to $1,206,000, or $0.14 per share for the comparable 2012 period. This increase of 158.71 percent in net income for the comparable twelve month period was primarily driven by an increase in net interest income and noninterest income (excluding securities gains) – along with a reduction in provision for loan losses. "In addition to significant core earnings improvement, Colony again had marked improvement in asset quality. Substandard assets to tier one capital plus loan loss allowance ratio improved to 39.22 percent at December 31, 2013 from 40.94 percent at September 30, 2013 and 55.60 percent at December 31, 2012. Though we were successful in having regulatory agencies lift the memorandum of understanding during 2013 and realized significant improvement in earnings and asset quality, we still are committed to reducing our problem assets to an acceptable level and returning to acceptable earnings," said Ed Loomis, President and Chief Executive Officer. "Momentum carrying over from 2013 initiatives has Colony positioned for a successful and productive year in 2014."      

Capital

Colony continues to maintain a solid capital position to be categorized as "well-capitalized" by regulatory benchmarks. At December 31, 2013, the Company's tier one leverage ratio, tier one and total risk-based capital ratios were 10.29 percent, 15.36 percent and 16.61 percent, respectively, compared to the previous quarter end of 10.40 percent, 15.40 percent  and 16.66 percent, respectively, at September 30, 2013 and to 10.22 percent, 15.22 percent and 16.47 percent, respectively, at December 31 2012. 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 fourth quarter of 2013, the Company reported net interest income of $9.69 million and a net interest margin of 3.68 percent, compared to $9.08 million and 3.49 percent, respectively, for fourth quarter 2012, while net interest income for the twelve months ended December 31, 2013 was $37.69 million and a net interest margin of 3.61 percent compared to $36.27 million and 3.41 percent, respectively, for the twelve months ended December 31 2012.  The improvement is indicative of the Company's focus on balance sheet restructuring and maximizing its net interest margin through deposit and loan pricing guidance.   

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 $53.45 million at December 31, 2013 compared to $55.39 million and $74.57 million, respectively, at September 30, 2013 and December 31, 2012. Substandard assets adjusted for SBA guarantees to tier one capital plus loan loss reserve ratio was 39.22%, 40.94% and 55.60%, respectively, at December 31, 2013, September 30, 2013 and December 31, 2012.   Non-performing assets decreased slightly from the previous quarter end to $39.61 million or 5.17 percent of total loans and other real estate owned as of December 31, 2013. This compares to $40.64 million or 5.32 percent and $46.16 million or 6.05 percent, respectively, as of September 30, 2013 and December 31, 2012.  Loan loss reserve methodology resulted in twelve months ended December 31, 2013 provision for loan losses of $4.49 million compared to $6.79 million for the comparable 2012 period. With continued stabilization in the economy and the housing and real estate market, we expect continued improvement in our substandard assets.    

Other real estate ("OREO") totaled $15.50 million at December 31, 2013 compared to $16.11 million and $15.94 million, respectively, at September 30, 2013 and December 31, 2012. During twelve months ended December 31, 2013, $11.19 million has been added to OREO, thus a reduction from sales and/or write-downs of $11.63 million. 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 fourth quarter of 2013 net charge-offs were $1.43 million, or 0.19 percent of average loans as compared to net charge-offs of $2.81 million, or 0.38 percent of average loans in fourth quarter 2012, while for the twelve months ended December 31, 2013 net charge-offs were $5.42 million, or 0.73 percent of average loans as compared to net charge-offs of $9.70 million, or 1.34 percent of average loans for the comparable 2012 period. The loan loss reserve was $11.81 million on December 31, 2013, or 1.57 percent of total loans compared to $12.95 million, or 1.73 percent on September 30, 2013 and to $12.74 million, or 1.70 percent on December 31, 2012.  Management believes that the 2013 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 December 31, 2013.

Noninterest Income

Total noninterest income decreased in the comparable periods as noninterest income for twelve months ended December 31, 2013 was $8.38 million compared to $9.73 million in the comparable 2012 period, or a decrease of 13.93 percent. Service charge fee income on deposit accounts increased $1.12 million, or 31.29 percent. Mortgage fee income increased $84 thousand, or 21.00 percent and gains on the sale of SBA/USDA loans increased $329 thousand, or 107.52 percent. Offsetting these increases was security gains and losses in which losses were $364 thousand for twelve months ended December 31, 2013 compared to gains of $2.84 million for the comparable 2012 period. The company continues to explore revenue enhancement products and services to improve fee income.      

Noninterest Expense

Total noninterest expense decreased slightly to $34.62 million in twelve months ended December 31, 2013 compared to $35.38 million in the comparable 2012 period, or a decrease of 2.15%. Credit-related expenses continue to be a strain on earnings as write down and losses on OREO property and repossessed assets along with repossession and foreclosure expenses totaled $3.92 million in twelve months ended December 31, 2013 compared to $5.61 million in the comparable 2012 period. Salaries and employee benefit expenses increased to $16.69 million in twelve months ended December 31, 2013 compared to $15.57 million in the comparable 2012 period, or an increase of 7.24 percent. This increase is primarily attributable to an increase in headcount related to additional "back-office" regulatory compliance demands along with merit pay increases. Occupancy expenses remained flat in the comparable periods. Other noninterest expense decreased to $14.13 million compared to $15.93 million, or a decrease of 11.29 percent – primarily due to the decrease in credit-related expenses noted above.

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 central, southern and coastal Georgia cities of Albany, Ashburn, Broxton, Centerville, Chester, Columbus, Cordele, Douglas, Eastman, Fitzgerald, Leesburg, Moultrie, Pitts, Quitman, Rochelle, Savannah, Soperton, Sylvester, Thomaston, Tifton, Valdosta and Warner Robins, Georgia.