Colony Bankcorp, Inc. (Nasdaq: CBAN) (“Colony” or the “Company”) recently stated net income of $2.50(M) or $0.270 for each diluted share for the third quarter of 2K19 contrast with $2.70(M) or $0.320 for each diluted share for the same quarter last year. For the nine months ended September 30, 2K19, net income was $7.50(M) or $0.830 for each diluted share contrast with $9.00(M) or $1.040 for each diluted share for the same period in the prior year.
Results for the third quarter and nine months ended September 30, 2K19, included charges for acquisition‑related expenses in addition to gains on other real estate owned (“OREO”) property held for sale. Apart From these and other less noteworthyitems in both periods, adjusted net income (a non‑GAAP financial measure) for the third quarter and nine months ended September 30, 2K19, would have been $3.20(M) or $0.350 for each diluted share and $9.30(M) or $1.030 for each diluted share, respectively, as compared to $2.90(M) or $0.340 for each diluted share and $9.10(M) or $1.060 for each diluted share, respectively, for the third quarter and nine months ended September 30, 2018. See the unaudited reconciliation of non-GAAP measures later in this release.
Separately, the Company also declared that the Board of Directors has declared a quarterly cash dividend of $0.0750 for each share, to be paid on its common stock on November 15, 2K19, to shareholders of record as of the close of business on October 31, 2K19.
Commenting on the declarement, Heath Fountain, President and Chief Executive Officer, said, “We are happy to declare improved adjusted results both on a sequential quarter basis and contrast with the same period last year. These results reflect our efforts to improve our earning asset mix through organic loan growth and to grow our noninterest income through deposit account growth and our secondary market mortgage business. We recruited three business development officers to the new Small Business Specialty Lending Group that we opened last quarter, and we are very optimistic about our loan pipeline.
“Our business development programs have raised our loan volume and net interest income, both on a sequential quarterly basis in addition to the nine-months year to date. This growth in net interest income was partially offset by acquisition-related expenses related to our purchases of LBC Bancshares, Inc. and PFB Mortgage, in addition to increases in noninterest expense, mainly salaries and benefits, in connection with acquisitions. Further, I am happy to declare that we successfully accomplished the conversion of Calumet Bank’s core systems during the third quarter and anticipate a return to normalized technology expenses.
“We continue to see solid results from our programs to grow loan volume. Organic loan growth in the third quarter totaled $23.50(M), or 10.00 percent annualized, and are up $46.90(M), or 6.00 percent over the same period last year, apart from loans attained through acquisitions.
“Net interest margin raised seven basis points to 3.640 percent on both a sequential quarterly basis and contrast with the year-earlier period. As the Federal Reserve Bank (FRB) lowered rates twice during the third quarter, the Company followed suit by lowering stated rates on most types of interest‑bearing deposit and certificates of deposit account types. However, as we believe we can opportunistically shift assets into loans, we anticipate margin improvement through loan volume growth.”
In closing, Fountain added, “While the competitive landscape remains intense, we continue to be optimistic about opportunities to continue the Company’s legacy of growth and performance. Our Board is confident with our operational structure and planned planning as evidenced by the higher quarterly dividend set in January 2K19. We look forward to the remainder of the year with enthusiasm based on our strong credit metrics, a strong loan production pipeline and the opportunities we see to continue to reward our shareholders.”
Colony continues to maintain a strong capital position, with ratios that exceed regulatory minimums required to be classified as “well-capitalized.” At September 30, 2K19, the Company’s tier one leverage ratio, tier one ratio, total risk-based capital ratio and common equity tier one capital ratio were 8.98 percent, 12.540 percent, 13.160 percent and 10.310 percent, respectively, contrast with 10.450 percent, 15.020 percent, 15.880 percent and 12.190 percent, respectively, at September 30, 2018.
Net Interest Margin
During the third quarter of 2K19, the Company stated net interest income of $12.60(M) contrast with $10.10(M) for the comparable 2018 quarter. For the nine months ended September 30, 2K19, net interest income was $34.80(M) contrast with $30.40(M) for the comparable 2018 period. Net interest margin for the third quarter of 2K19 was 3.640 percent, up seven basis points on both a sequential quarter basis and contrast with the year-earlier quarter. Net interest margin for the nine months ended September 30, 2K19, was flat at 3.560 percent contrast with the first nine months of 2018. Net interest margin, apart from purchase accounting from the acquisition of LBC Bancshares, Inc., was 3.510 percent, up two basis points on a sequential quarter basis.
Asset quality remained solid with continued improvement from a year ago. Substandard assets, which include non-performing assets, totaled $20.90(M) at September 30, 2K19, contrast with $23.80(M) at September 30, 2018. Substandard assets adjusted for SBA guarantees to tier one capital plus loan loss reserve ratio was 12.860 percent and 17.00 percent at September 30, 2K19 and September 30, 2018, respectively. Non‑performing assets raised to $10.90(M), or 1.140 percent of total loans and OREO, from $10.30(M) or 1.320 percent at September 30, 2018. OREO totaled $776.00 thousand at September 30, 2K19, reflecting a 64.30 percent reduction from $2.20(M) at September 30, 2018.
In the third quarter of 2K19, net loan charge-offs were $403.00 thousand or 0.050 percent of average loans contrast with net loan charge‑offs of $65.00 thousand or 0.010 percent of average loans in the third quarter of 2018, while net loan charge-offs for the first nine months of 2K19 were $1.20(M) or 0.140 percent of average loans contrast with $484.00 thousand or 0.060 percent of average loans for the same period in 2018. The loan loss reserve was $6.60(M) or 0.690 percent of total loans on September 30, 2K19, contrast with $7.20(M) or 0.920 percent of total loans at September 30, 2018. Loan loss reserve methodology resulted in a $214.00 thousand loan loss provision for the three months ended September 30, 2K19, contrast with $61.00 thousand for the comparable 2018 period and a $524.00 thousand loan loss provision for the first nine months of 2K19 contrast with $131.00 thousand for the same comparable period in 2018.
Total noninterest income raised 44.810 percent to $10.40(M) for the nine months ended September 30, 2K19, from $7.20(M) in the comparable 2018 period. Gain on the sale of OREO property for the year raised $828.00 thousand and secondary mortgage fee income raised $1.4(M).
Total noninterest expense raised 35.030 percent to $35.40(M) for the nine months ended September 30, 2K19, from $26.20(M) in the comparable 2018 period. Salaries and employee benefit expenses raised 25.390 percent, occupancy expense raised 12.410 percent and other noninterest expense raised 61.490 percent from the comparable 2018 period. The efficiency ratio raised to 78.190 percent for the nine months ended September 30, 2K19, from 69.900 percent in the comparable 2018 period. The increase is attributable to a boost in salary and benefits of $2.30(M) connected with the Calumet merger and additional headcount with Colony Bank Mortgage, or 60.20 percent of the overall salary and benefit increase. Also, acquisition expenses raised noninterest expense by $2.90(M) or 31.780 percent of the overall other noninterest expense increase. Accounting for non‑GAAP items revealed later in this release, the adjusted efficiency ratio (a non‑GAAP financial measure) would have been 72.470 percent and 69.160 percent for the first nine months ended September 30, 2K19 and 2018, respectively.