Colony Bankcorp, Inc., reported net income available to shareholders of $3,069,000, or $0.36 per diluted share for the second quarter of 2018 compared to $2,433,000, or $0.28 per diluted share for the comparable 2017 period, while net income available to shareholders for the six month period ended June 30, 2018 was $6,257,000, or $0.72 per diluted share compared to $4,339,000, or $0.50 per share for the comparable 2017 period.  This represents an increase year to date of 44.20 percent.  Earnings were positively impacted by an increase in net interest income, a reduction in provision for loan losses and a reduction in income tax expense.  “We are pleased to report another solid quarter, said Ed Loomis, President and Chief Executive Officer.  Colony’s strong earnings and capital position resulted in the board maintaining its quarterly dividend payout of $0.05.  During the quarter, Colony was successful in repurchasing stock warrants for 500,000 shares and eliminating the final remnant remaining from the 2009 TARP transaction.   We continue to move forward with our Statesboro, Georgia branch expansion and anticipate opening during first quarter 2019.  While loan activity continues to be slow and challenging,  economic activity continues to be positive and hopefully will instill consumer confidence for increased loan demand the last half of this year.  As always, we continue to explore opportunities to improve operating efficiencies which will further enhance shareholder value.”

Capital

Colony continues to maintain a strong regulatory capital position to be categorized as “well-capitalized” by regulatory benchmarks.  At June 30, 2018, the Company’s tier one leverage ratio, tier one ratio, total risk-based capital ratio and common equity tier one capital ratio were 10.17 percent, 14.87 percent,15.74 percent and 12.02 percent, respectively, compared to10.14 percent, 14.97 percent, 15.88 percent  and 12.11  percent, respectively, at March 31, 2018.  The Company’s capital ratios were all in excess of regulatory minimums required to be classified as “well-capitalized.”

Net Interest Margin 

During the second quarter of 2018, the Company reported net interest income of $10.17 million and a net interest margin of 3.57 percent compared to $9.82 million and 3.49 percent, respectively, for the comparable 2017 period, while net interest income for first half 2018 was $20.29 million and a net interest margin of 3.56 percent compared to $19.28 million and 3.42 percent, respectively, for first half 2017.  Given the recent surge in deposit pricing, our focus is on loan and deposit pricing along with loan growth to maintain or improve its’ net interest margin.

Asset Quality

Asset quality remains solid with significant improvement from a year ago.  Substandard assets that include non-performing assets totaled $24.54 million at June 30, 2018 compared to $26.19 million and $30.68 million, respectively, at December 31, 2017 and June 30, 2017.  Substandard assets adjusted for SBA guarantees to tier one capital plus loan loss reserve ratio was 17.58 percent, 20.18 percent and 23.77 percent, respectively, at June 30, 2018, December 31, 2017 and June 30, 2017.  Non-performing assets decreased significantly from the year ago period to $9.23 million or 1.20 percent of total loans and other real estate owned as of June 30, 2018.  This compares to $12.70 million or 1.63 percent at June 30, 2017.       

Other real estate totaled $3.60 million at June 30, 2018 compared to $4.26 million and $4.53 million, respectively, at December 31, 2017 and June 30, 2017.   There are several contracts that we anticipate closing in the last half of 2018 to further reduce our OREO holdings.

In the second quarter of 2018 net charge-offs were $353 thousand, or 0.05 percent of average loans as compared to net charge-offs of $821 thousand, or 0.11 percent of average loans in second quarter 2017, while first half 2018 net charge-offs were $419 thousand or 0.05 percent of average loans compared to $1.22 million or 0.16 percent for the comparable 2017 period.  The loan loss reserve was $7.16 million or 0.93 percent of total loans on June 30, 2018 compared to $7.51 million or 0.98 percent and $8.04 million or 1.04 percent, respectively, at December 31, 2017 and June 30, 2017.  Loan loss reserve methodology resulted in $46 thousand  loan loss provision for three months ended June 30, 2018  compared to $0 for the comparable 2017 period and $70 thousand loan loss provision for first half 2018 compared to 335 thousand for the same comparable period in 2017.

Noninterest Income

Total noninterest income was flat in the comparable periods as noninterest income for six months ended June 30, 2018 was $4.76 million compared to $4.79 million in the comparable 2017 period, or a decrease of 0.75 percent.  Service charges on deposits decreased $14 thousand, or 0.65 percent and secondary mortgage fee income decreased $57 thousand or 14.69 percent.  Gain on the sale of securities was $116 thousand compared to no gain in the comparable 2017 period.    

Noninterest Expense

Total noninterest expense increased in the comparable periods as noninterest expense for six months ended June 30, 2018 was $17.14 million compared to $17.03 million for the comparable 2017 period, or an increase of 0.64 percent.  Salaries and employee benefit expenses increased 2.66 percent, occupancy expense increased 3.79 percent and other noninterest expense decreased 4.10 percent for the comparable periods.  The efficiency ratio improved to 68.63 percent for six months ended June 30, 2018 compared to 70.52 percent for the comparable 2017 period.   The company continues to explore opportunities to improve its’ operating efficiency.