Colony Bankcorp, Inc. (Nasdaq:CBAN), today reported net income available to shareholders of $1,606,000, or $0.19 per diluted share for the third quarter of 2015 compared to $1,384,000, or $0.16 per diluted share for the comparable 2014 period, while net income available to shareholders for nine month period ended September 30, 2015 was $4,414,000, or $0.52 per diluted share compared to $3,533,000, or $0.42 per share for the comparable 2014 period. This increase of 24.94 percent in net income for the comparable nine month period was primarily driven by a reduction in provision for loan losses, an increase in noninterest income and a reduction in noninterest expense. "In addition to solid earnings, we also are pleased to report asset quality improvement and continued loan growth. Total non-performing assets were $24.57 million at September 30, 2015 which is a reduction of 6.09 percent from the prior quarter end. Though economic recovery has been less than robust, we have seen our loans increase for the fifth consecutive quarter. Total loans, net of reserves increased to $763.85 million at September 30, 2015 compared to $742.93 a year ago," said Ed Loomis, President and Chief Executive Officer. "Noteworthy during the quarter was approval by regulatory agencies to redeem 4,833 shares of preferred stock at par. This redemption of $4.833 million reduces our preferred stock 17.26 percent and on an annual basis reduces our dividend payment by $435 thousand. It is our intent to redeem additional shares of preferred stock prior to year end."

Capital

Colony continues to maintain a strong regulatory capital position to be categorized as "well-capitalized" by regulatory benchmarks. At September 30, 2015, the Company's tier one leverage ratio, tier one and total risk-based capital ratios were 11.14 percent, 15.36 percent and 17.01 percent, respectively, compared to 11.18 percent, 16.78 percent  and 17.95 percent, respectively, at December 31, 2014 and to 11.01 percent, 16.51 percent and 17.76 percent, respectively, at September 30, 2014. Effective January 1, 2015, new regulatory regulations (commonly referred to as Basel III capital regulation) required new risk-weighting of certain assets and an additional capital ratio to be calculated. The common equity tier one capital ratio at September 30, 2015 of 10.09 percent exceeded the minimum requirement of 4.50 percent.   The Company's capital ratios were all in excess of regulatory minimums required to be classified as "well-capitalized".

Net Interest Margin

During the third quarter of 2015, the Company reported net interest income of $9.50 million and a net interest margin of 3.58 percent compared to $9.74 million and 3.73 percent, respectively, for third quarter 2014, while net interest income for nine months ended September 30, 2015 was $27.95 million and a net interest margin of 3.48 percent compared to $28.46 million and 3.60 percent, respectively, for the comparable 2014 period.   The low interest rate environment continues to be challenging for the banking industry. The company continues to focus on maximizing its net interest margin through deposit and loan pricing and balance sheet restructuring.  We await Federal Reserve action to modestly begin the process of increasing interest rates from their record lows though this appears to be pushed back into 2016. 

Asset Quality

The Company continues to monitor our substandard and non-performing assets and focus on problem asset resolution. Substandard assets that include non-performing assets totaled $43.02 million at September 30, 2015 compared to $43.29 million and $43.49 million, respectively, at December 31, 2014 and September 30, 2014. Substandard assets adjusted for SBA guarantees to tier one capital plus loan loss reserve ratio was 31.73%, 32.39% and 30.23%, respectively, at September 30, 2015, December 31, 2014 and September 30, 2014. The current quarter was slightly impacted due to the reduction in capital associated with the $4.833 million preferred stock redemption. Non-performing assets decreased from the previous quarter end to $24.57 million or 3.17 percent of total loans and other real estate owned as of September 30, 2015. This compares to $28.74 million or 3.80 percent and $24.01 million or 3.18 percent, respectively, as of December 31, 2014 and September 30, 2014.   With continued economic recovery and stabilization, we anticipate further reduction in our substandard assets.    

Other real estate ("OREO") totaled $11.00 million at September 30, 2015 compared to $10.40 million and $10.83 million, respectively, at December 31, 2014 and September 30, 2014.   Activity during the third quarter  reflects a decrease of $1.03 million, or 8.56 percent reduction from the previous quarter end. 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 third quarter of 2015 net charge-offs were $328 thousand, or 0.04 percent of average loans as compared to net charge-offs of $1.18 million, or 0.16 percent of average loans in third quarter 2014, while year to date 2015 net charge-offs were $1.14 million, or 0.15 percent of average loans as compared to net charge-offs of $3.33 million, or 0.45 percent of average loans for the comparable 2014 period. The loan loss reserve was $8.40 million or 1.10 percent of total loans on September 30, 2015 compared to $8.80 million or 1.18 percent and $9.79 million or 1.32 percent, respectively, at December 31, 2014 and September 30, 2014. Loan loss reserve methodology resulted in three months ended September 30, 2015 provision for loan losses of $250 thousand compared to $500 thousand for the comparable 2014 period, while year to date 2015 provision for loan losses was $741 thousand compared to $1.31 million for the comparable 2014 period.

Noninterest Income

Total noninterest income increased modestly in the comparable periods as noninterest income for nine months ended September 30, 2015 was $6.80 million compared to $6.72 million in the comparable 2014 period, or an increase of 1.27 percent.  Mortgage fee income was primarily attributable for the increase with an increase of $74 thousand or 23.79 percent.       

Noninterest Expense

Total noninterest expense decreased in the comparable periods as noninterest expense for nine months ended September 30, 2015 was $24.94 million compared to $25.69 million for the comparable 2014 period, or a decrease of 2.92 percent.  Improved asset quality is attributable for much of the reduction with a significant decrease in credit-related expenses. Repossession and foreclosure expense decreased from $711 thousand to $516 thousand for the comparable periods and loss on sale of OREO properties decreased from $1.12 million to $365 thousand. Salaries and employee benefit expenses remained relatively flat with an increase of 0.92 percent. Occupancy expense was also relatively flat with a decrease of 1.08 percent.  The efficiency ratio improved to 71.61 percent for nine months ended September 30, 2015 compared to 72.85 percent for the comparable 2014 period, or a decrease of 1.70 percent.   The company continues to explore opportunities to further improve its' operating efficiency.

Colony Bankcorp, Inc. is a bank holding company headquartered in Fitzgerald, Georgia that consists of one operating subsidiary, Colony Bank. Colony Bank conducts a general full service commercial, consumer and mortgage banking business through twenty-nine 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.