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2 0 1 9 A N N U A L R E P O R T T O S H A R E H O L D E R S
MYRICK MARINE
SAVANNAH, GA
When a ship in the Savannah River shipping channel
lost control and had to cut its anchor, impeding navigation,
the port authorities knew who to call: Bob Myrick. His
company, Myrick Marine, raised the massive anchor and
chain so one of America’s largest ports could re-open.
“We still have that anchor chain in the yard,” Mr. Myrick
says. From a small company that built residential docks,
Myrick Marine has grown to become a full-service marine
contractor that owns and operates one of the most
extensive fleets of floating marine construction equipment
in the Southeast. Colony Bank has played a part in that
growth. “In the early days, I didn’t have any waterfront
property or a place to put tugboats,” says Mr. Myrick, a
graduate of the University of Georgia School of Pharmacy
and four-time winner of the “Bulldog 100,” awarded
annually by the university to the 100 fastest growing
Bulldog-owned businesses. “I had the opportunity to buy
some property on an island in the Savannah River and
develop a barge terminal. Colony was there with me to do
the financing of the purchase and the development of the
infrastructure. It was a monumental game-changer for
my business.”
Bob and Jim Myrick together with
Drew Hulsey Colony Bank’s Regional
President/Coastal (front cover, right)
Company Profile
Colony Bankcorp, Inc., with assets of $1.5 billion, is
the bank holding company for Colony Bank. Founded
in 1975 and headquartered in Fitzgerald, Georgia,
Colony operates 33 locations throughout Georgia.
The Homebuilder Finance Division helps the local
construction industry with building and construction
loans, and the Small Business Specialty Lending
Division assists small businesses with government
guaranteed loans. The Bank also helps its customers
achieve their goal of home ownership through Colony
Bank Mortgage. Colony’s common stock is traded
on the NASDAQ Global Market under the symbol
“CBAN.” For more information, please visit
www.Colony.Bank. You can also follow the
Company on Facebook or on Twitter @colony_bank.
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share amounts)
2019
2018
Financial position at December 31,
Total assets
Loans (net of unearned income)
Allowance for loan losses
Deposits
Stockholders’ equity
Common book value per share
Tangible common book value per share
Operations for the year ended December 31,
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Noninterest income
Noninterest expense
Income before income taxes
Income taxes
Net income
Net income available to common shareholders
Basic earnings per share
Diluted earnings per share
Cash dividends per share
Operating ratios
Net interest margin
Return on average assets
Return on average total equity
Efficiency
$ 1,515,313
968,814
6,863
1,293,742
130,506
13.74
11.68
$ 1,251,878
781,526
7,277
1,085,125
95,692
11.33
11.24
$
$
$
$
$
$
47,845
1,104
46,741
14,762
48,894
12,609
2,398
10,211
10,211
1.12
1.12
0.30
$
$
$
$
$
$
40,797
201
40,596
9,621
35,300
14,917
3,000
11,917
11,917
1.41
1.40
0.20
3.59 %
0.72 %
8.73 %
77.93 %
3.56 %
0.99 %
13.32 %
70.05 %
1
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
TO OUR SHAREHOLDERS
We are pleased to report that 2019 was a solid year
for Colony Bankcorp. We saw strong increases in loan
growth, net interest income and non-interest income.
Our assets grew significantly to a record $1.52 billion.
Our new growth course implemented in 2019, Driving
High Performance, has been successful, and we want
to thank all our customers and team members for
their contributions. With significant new hires and a
successful integration of LBC Bancshares, we are on
track for another strong year.
While we reported a decrease in net income available to common shareholders to $10.2
million or $1.12 earnings per share, these results do not adequately represent the work
and investments we have made for long-term profitability and earnings growth. We
acquired PFB Mortgage, the secondary mortgage business of Planters First Bank, and LBC
Bancshares, Inc., and we invested in startup costs for our new division, the Small Business
Specialty Lending Group, with the hiring of two veteran bankers. Further, we have made
substantial progress in business development initiatives by realigning our regional loan
production structure and adding new, experienced bankers. These initiatives will drive our
business model as we begin a new decade and our 45th year in business.
Adjusted net income increased 1% to $12.3 million or $1.35 adjusted earnings per
diluted share, which excludes charges for acquisition related expenses as well as gains
on other real estate owned (“OREO”) property held for sale. Revenues for 2019 were
strong, increasing 24% to a record $62.6 million, attributable to a net interest margin
improvement of five basis points to 3.61% and strong growth in non-interest income
of 53%, a testament to the success of our strategy to diversify our earnings. While
our competitors have been reporting decreases in their net interest margin, primarily
2
We saw strong increases in loan growth, net interest income and
non-interest income. Our assets grew significantly to a record $1.52 billion.
Our new growth course implemented in 2019, Driving High Performance,
has been successful...
attributable to the Federal Reserve Bank cutting interest rates three times in 2019, we are
proud that we are able to report such an increase. Combined, this provided a return on
average assets and average total equity of 0.72% and 8.72%, respectively.
Turning to the balance sheet, total assets grew 21% to $1.52 billion, primarily reflecting
a solid 11% increase in our organic loan portfolio and a 24% increase in our total loan
portfolio, which also reflects our acquisition of LBC Bancshares. Credit quality remained
solid. Non-performing assets
decreased slightly in 2019 to
$11.1 million or 1.15% of total
loans and other real estate owned
(“OREO”) from $11.3 million
or 1.45% at December 31, 2019.
OREO totaled $1.3 million at
December 31, 2019, reflecting a
28% reduction from $1.8 million
at December 31, 2018. Net
charge-offs for the year ended
December 31, 2019, were $1.5
million or 0.17% of average
loans, up from $431 thousand
or 0.06% for 2018. The loan
loss reserve for the year was $6.9
million or 0.71% of total loans,
decreasing from $7.3 million or
0.93% at December 31, 2018.
Our loan loss provision for 2019
was $1.1 million, up from $201
thousand for 2018.
Heath Fountain, President and Chief Executive Officer, left,
and Mark Massee, Chairman
3
CLARY LOGGING
CORDELE, GA
Robert Clary got his start in logging at a time when
timber was still harvested with chain saws and winches.
He’s never looked back. “There’s nothing I’d rather do,”
he says. Now, 54 years later, Clary Logging is a family
operation in the fullest sense of the word, involving
Mr. Clary’s children, grandchildren, in-laws and many
employees who have been with him since they finished
high school. They follow a simple rule: “We take care of the
land so it will take care of us.” It’s a complicated business
that must deal with challenges ranging from weather and
markets to driver training, government regulation, land
investments and equipment financing, “That’s why we
have to have a good bank,” Mr. Clary says. Colony’s Bob
Evans and Terry Ann Brake — Bob is a neighbor and Terry
Ann and Mr. Clary go to church together — are right there
with him. “My daughter, who takes the lead in running the
business, can call Terry Ann and Bob,” says Mr. Clary, “and
whatever it is, 99 percent of the time they can handle it with
one phone call.”
Robery Clary, left, and Bob Evans
Colony Bank’s Regional President/West Central
We know our customers.
4
“THEY HANDLE IT
WITH ONE PHONE
CALL.”
5
1 0
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Capital Management
The Company’s future earnings prospects and its ability to consider strategic
opportunities going forward add to the strong momentum we saw in 2019. Colony
continues to maintain a strong capital position, with ratios that exceed regulatory
minimums required to be classified as “well capitalized.” At December 31, 2019, the
Company’s tier one leverage ratio, tier one ratio, total risk-based capital ratio and
common equity tier one capital ratio were 9.04%, 12.52%, 13.17% and 10.33%,
respectively, compared with 10.24%, 15.00%, 15.86% and 12.22%, respectively, at
December 31, 2018.
With strong 2019 results and a strong pipeline, our Board of Directors voted in January
to increase the Company’s quarterly cash dividend 33% to $0.10 per share, beginning
in 2020, marking the third consecutive year of higher dividend payouts since dividends
were reinstated in 2017. The Board’s decision was based on the ongoing strength of the
Company’s earnings, improvement in asset quality and an outlook for long-term earnings
growth. At a rate of $0.10 per share, the new rate represents an indicated annual rate of
$0.40 per share.
Strategic Initiatives
As part of our growth strategy, Colony is well positioned to consider opportunities to
acquire whole banks as well as sector specific financial services divisions. Geographic
expansion opportunities is also something we consider. With our strong balance sheet,
the repayment of our TARP obligation in 2017, and a strong leadership team in place,
we purchased last year the LBC Bancshares parent company of Calumet Bank and PFB
Mortgage, the secondary market mortgage business of Planters First Bank. Calumet
Bank has two branches, one each in LaGrange and Columbus, and we strategically
expanded our reach in West Georgia. PFB Mortgage, which had originators in Albany,
Athens, Macon, and Warner Robins, was complementary to our 2019 opening of a
mortgage loan origination office in LaGrange. This transaction will add considerable
scale and momentum to our mortgage loan business.
Further, the Small Business Specialty Lending Group expands our services on SBA and
other government guaranteed loans, builds total loan volume and grows fee income. We
expect to use these resources throughout the Bank’s footprint and into new markets to
assist both our current customers and new clients in financing their dreams.
6
EXPANDING REACH—
NOW GEORGIA’S 6TH
LARGEST BANK
With 33 locations in Georgia, we are the sixth largest
bank in the state and the largest community bank
headquartered outside of the Atlanta market,
yet we continue to strive for more. We offer our
customers greater speed and agility then
regional and national banks. Colony will
continue to consider opportunities to
consolidate smaller community banks
and divisions of banks that are
complementary to our business.
Such acquisitions would
Savannah
provide opportunities to
increase the size and
scope of our business and
be the “one-stop” shop for all
our customers.
Macon
Columbus
Albany
Fitzgerald
Valdosta
Branch location
Loan production office
7
“ THEY
BELIEVED
IN US.”
CRITTER FIXER
WARNER ROBINS, GA
When Drs. Vernard Hodges and Terrence
Ferguson opened their veterinary practice in Byron,
Georgia, they did it all. “It was only the two of us,”
Dr. Ferguson recalls with a laugh. “We were the
vets, receptionists, dog walkers, dog bathers and
everything in between.” As the practice grew,
Colony was right there with them, refinancing both
the initial building and a second office in Bonaire
and assisting with capital improvements. “They
believed in us from the start,” Dr. Hodges says.
The relationship with Colony has meant so much
that Dr. Hodges even wrote about Brandi Shipes,
the banker with whom he talks most often, in his
best-selling book, Bet on Yourself. “I make a phone
call,” he says, “and she’s always there.” Besides
being local heroes, now the docs are national TV
presences, too, thanks to the new series, “Critter
Fixer Country Vets,” on National Geographic Wild.
They’re fielding questions on Facebook Live from
viewers as far away as South Africa and Sweden.
How do they find time? “It was just us for 19 years,”
Dr. Hodges says. “Now we’ve hired three other vets.
We couldn’t have done this three years ago.”
Left to right, Dr. Vernard Hodges, Dr. Terrence Ferguson
with Kirk Scott, Colony Bank’s Regional President/
Mid-State
8
“ THEY
BELIEVED
IN US.”
You don’t have to deal with
big bureaucracies at Colony.
9
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
WHERE WE WORK, IS WHERE
WE CALL “HOME.”
#RightHereWithYou
3
2
5
1
4
The Colony Bank Ward Street and Broxton branches show off their socks in support of
1
World Down Syndrome Day. “Colony Cuties” ALL GIRL Skeet team, sponsored by Colony
2
Bank, raise funds at the the Home Builders Association of South Georgia Clay Shoot.
Read United, an initiative of United Way of Central Georgia, addresses the literacy
3
challenges facing Central Georgia. Colony Bank’s Kirk Scott, along with other
members of the Rotary Club of Centerville, volunteer with Read United by
reading to local 3rd graders at Centerville Elementary School. Albany
4
Realtor Jamye Cobb conducts “Unlocking the Doors to Home Ownership”
seminar. The informative session broke down the entire home purchasing
process. Colony Bank’s Patrick Williams discussed the entire loan process,
personal requirements for each type of loan, how to begin the process and how to get
pre-qualified. Colony Bank’s Johnny Bryan, Andy Johnson, and Wes Ehlers donate to
5
Pink Heals, a program that supports partnerships with the public safety officers, medical
professionals, and local businesses.
1 0
More recently, we announced the acquisition of Cadence Bank’s East Georgia
Homebuilder Finance loan portfolio. Coupled with our announcement to enter the
Augusta Market, this acquisition will expand our presence in the Savannah and Augusta
markets, creating a ‘one stop shop’ for homebuilders with our mortgage business.
Increasing our fee income and interest income has been a priority for us as we seek to
further diversify our loan portfolio and utilize our balance sheet to enhance our earnings.
Driving High Performance was undertaken to boost organic growth through increased
accountability and proactive business development. This begins with our bankers by
providing team members with even greater motivation to assist customers with financial
solutions that help them realize their goals and ambitions, without sacrificing customer
service. We needed to realign our balance sheet to increase the return on assets by
capitalizing on investments in higher-yielding loans, while reducing our reliance on
earnings from investment securities. We have seen the results of these strategic initiatives
in our balance sheet growth and margin increases, as well as increases in non-interest
income streams of revenue. We are always striving for excellence and ways to increase
our productivity and reward our shareholders.
Conclusion
Our next phase of growth is an exciting one. We believe that we have assembled a top-
tier management team with best-of-breed team members, but we will not rest. In order
to compete in our regions, we need not only ‘smart’ bankers, but those who are active in
our local communities. With 33 locations in Georgia, we are the sixth largest bank in the
state and the largest community bank headquartered outside of Atlanta. The economic
vibrancy across our footprint remains healthy and supportive of our business. We continue
to diversify our streams of revenue, loan production, net interest income and non interest
income. The 2019 results reflect our emphasis upon the organic growth of our bank and
its revenue streams, alongside continued expansion throughout our footprint. While our
commitment to you, our shareholders, remains steadfast, our business is ever evolving.
We thank you for your continued investment in our company. As always, we remain
grateful for your continued support and confidence in Colony Bankcorp and your
willingness to invest in our future. We look forward to the coming year with great
enthusiasm and are eager to capitalize on the opportunities before us.
Sincerely,
T. Heath Fountain
President and Chief Executive Officer
Mark H. Massee
Chairman of the Board
1 1
“RIGHT THERE
AS OUR
PARTNER.”
We focus on solving
problems for customers.
KIMBLE’S
LAGRANGE, GA
When Kimble Carter launched his business in
1985, preparing food for vending machines in a
manufacturing plant, he could hardly have imagined
how diversified it would become. The vending
segment has mostly given way to micromarkets —
mini-convenience stores located everywhere from
hotel lobbies to workers’ break rooms, stocked
with Kimble’s freshly prepared foods. Simple
commissary services in correctional facilities have
grown into a technologically sophisticated operation
that Mr. Carter describes as “the banker, Amazon
and BellSouth for inmates” – a single source for
everything from a bar of soap, a candy bar, Mother’s
Day cards and email correspondence. Kimble’s Old
School Cornflake Chewies — a Southern confection
like Mr. Carter remembers from elementary school
in LaGrange, Georgia, is shipped all over the country
(orders spiked after QVC featured the candy). Then
there’s Kimble Foods’ catering and special events
business, which serves an area extending from
Middle Georgia down to Columbus and Auburn,
Alabama. Mr. Carter credits Colony Bank with
helping Kimble’s Foods more than double its sales
since 2016. “For everything from capital to help us
grow to anything with banking,” he says, “they’ve
been right there as our partner.”
Left to right, Mike Speight, Colony Bank’s Market
President/LaGrange and Kimble Carter
1 2
1 3
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Board of Directors and Officers
Board of Directors
Mark H. Massee
Chairman
Colony Bankcorp, Inc.
President
Massee Builders, Inc.
Fitzgerald, Georgia
Scott L. Downing
President
SDI Investments
Fitzgerald, Georgia
Michael Frederick
(Freddie) Dwozan, Jr.
Vice Chairman
Colony Bankcorp, Inc.
President/Chief Executive
Officer/Owner
Medical Center Prescription Shop
Eastman, Georgia
T. Heath Fountain
President/Chief Executive
Officer
Colony Bankcorp, Inc.
Terry L. Hester
Retired Executive Vice
President/Chief Financial
Officer
Colony Bankcorp, Inc.
Edward Percy Loomis, Jr.
Retired President/Chief
Executive Officer
Colony Bankcorp, Inc.
Meagan M. Mowry
Co-founder and Co-owner
Simcoe Investments
Savanah, Georgia
Matthew D. Reed
Owner and Chief Executive
Officer of Georgia CEO/South
Carolina CEO
Albany, Georgia
Jonathan W.R. Ross
President
Ross Construction Co., Inc.
Tifton, Georgia
1 4
Executive Officers
T. Heath Fountain
President/Chief Executive Officer
Edward L. Bagwell, III
Executive Vice President/General
Counsel/Chief Risk Officer
J. Stan Cook
Executive Vice President/
Chief Credit Officer
Kimberly C. Dockery
Executive Vice President/
Chief Administrative Officer
M. Edward Hoyle, Jr.
Executive Vice President/
Chief Banking Officer
Tracie Youngblood
Executive Vice President/
Chief Financial Officer
Market and Division Leaders
Jeffery Alton
Market President/Thomaston
Drew Hulsey
Regional President/Coastal
Stephen Browning
Market President/Eastman
Andy Johnson
Market President/Ashburn
Johnny Bryan
Market President/Sylvester
Jesse Kight
President/Mortgage Division
Wayne ‘Chip’ Carroll,
Market President/Quitman
Scott Miller
Regional President/SE Central
Chris Carter
Market President/Statesboro
Wesley Olliff
Market President/Savannah
Tommy Clark
Market President/Albany
John Roberts
Market President/Columbus
Darren Davis
President/Small Business Specialty
Lending
Kirk Scott
Regional President/Mid-State
Eddie Smith
Regional President/South
Mike Smith
Market President/Fitzgerald
Mike Speight
Market President/LaGrange
Nic Worthy
Market President/Rochelle
Mike Davis
Market President/Tifton
Bob Evans
Regional President/West Central
Cindy Griffin
Regional President/Southwest
Mike Harris
Market President/Moultrie
Hugh Hollar
President/Home Builder Finance
Bagwell
Cook
Dockery
Fountain
Hoyle
Youngblood
Alton
Browning
Bryan
Carroll
Carter
Clark
D. Davis
M. Davis
Evans
Griffin
Harris
Hollar
Hulsey
Johnson
Kight
Miller
Olliff
Roberts
Scott
E. Smith
M. Smith
Speight
Worthy
1 5
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Locations, as March 31, 2020
Albany
2609 Ledo Rd
Albany, GA 31707
(229) 430-8080
Loan Production Office
113 North Westover Blvd
Albany, GA 31707
(229) 317-2157
Ashburn
515 E Washington Ave
Ashburn, GA 31714
(229) 567-4383
Augusta
Loan Production Office
1201 Town Park Lane
Evans, GA 30809
(706) 294-4682
Broxton
401 Alabama St North
Broxton, GA 31519
(912) 359-2351
Centerville
200 Gunn Rd
Centerville, GA 31028
(478) 953-1010
Columbus
2921 Airport Thruway
Columbus, GA 31909
(706) 256-4650
1581 Bradley Park Dr
Columbus, GA 31904
(706) 571-6419
Conyers
Small Business Specialty Lending -
Loan Production Office
620 Sigman Road, NE
Suite 300
Conyers, GA 30013
(470) 207-3376
Cordele
1031 E 24th Ave
Cordele, GA 31015
(229) 271-2100
Douglas
1351A SE Bowens Mill Rd
Douglas, GA 31533
(912) 384-3131
625 Ward St W
Douglas, GA 31533
(912) 384-3100
Eastman
5510 Oak St
Eastman, GA 31023
(478) 374-4739
Fitzgerald
Corporate Office
115 South Grant St
Fitzgerald, GA 31750
(229) 426-6000
Hwy 129 South
Fitzgerald, GA 31750
(229) 426-6073
302 South Main St
Fitzgerald, GA 31750
(229) 423-5446
LaGrange
101 Calumet Center Rd
LaGrange, GA 30241
(706) 884-6000
Leesburg
137 Robert B Lee Dr
Leesburg, GA 31763
(229) 759-2800
Macon
Loan Production Office
1515 Bass Road Suite E
Macon, GA 31210
(478) 845-4430
Moultrie
621 Veterans Pkwy N
Moultrie, GA 31788
(229) 985-1380
Quitman
602 E Screven St
Quitman, GA 31643
(229) 263-7538
Rochelle
920 1st Ave
Rochelle, GA 31079
(229) 365-7871
1 6
Savannah
241 Drayton St
Savannah, GA 31401
(912) 454-2479
Hwy 17 Office
5987 Ogeechee Rd
Savannah, GA 31419
(912) 927-1277
7011 Hodgson Memorial Dr
Savannah, GA 31406
(912) 303-9449
Soperton
4313 West Main St
Soperton, GA 30457
(912) 529-5000
Statesboro
104 Springhill Drive
Statesboro, GA 30458
(912) 225-1460
Sylvester
601 N Main St
Sylvester, GA 31791
(229) 776-7641
Thomaston
206 N Church St
Thomaston, GA 30286
(706) 647-6601
Tifton
104 2nd St W
Tifton, GA 31794
(229) 386-2265
Valdosta
2910 N Ashley St, Suite N
Valdosta, GA 31602
(229) 242-2037
3774 Old US Highway 41 N
Valdosta, GA 31602
(229) 241-9900
Warner Robins
1290 South Houston Lake Rd
Warner Robins, GA 31088
(478) 987-1009
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
FINANCIAL SECTION
Colony Bankcorp, Inc.
17
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Selected Financial Data
(Dollars in thousands, except per share data)
Selected balance sheet data
Total assets
Total loans, net of unearned
interest and fees
Total deposits
Investment securities
Federal Home Loan Bank stock
Stockholders’ equity
Selected income statement data
Interest income
Interest expense
Net interest income
Provision for loan losses
Other income
Other expense
Income before tax
Income tax expense
Net income
Preferred stock dividends
Net income available to
common stockholders
Weighted average
basic shares outstanding
Weighted average
diluted shares outstanding
Common shares outstanding
Intangible assets
Dividends declared
Average assets
Average stockholders’ equity
Net charge-offs
Reserve for loan losses
OREO
Nonperforming loans
Nonperforming assets
Average interest-earning assets
Noninterest-bearing deposits
2019
Years Ended December 31,
2017
2018
2016
2015
$ 1,515,313
$ 1,251,878
$ 1,232,755
$ 1,210,442
$ 1,174,149
968,814
1,293,742
347,332
4,288
130,506
781,526
1,085,125
353,066
2,978
95,692
764,788
1,067,985
354,247
3,043
90,323
753,922
1,044,357
323,658
3,010
93,388
758,279
1,011,554
296,149
2,731
95,457
60,483
12,638
47,845
1,104
14,762
48,894
12,609
2,398
10,211
–
49,022
8,225
40,797
201
9,621
35,300
14,917
3,000
11,917
–
45,916
6,873
39,043
390
9,735
33,860
14,528
6,777
7,751
211
44,589
6,483
38,106
1,062
9,553
34,073
12,524
3,851
8,673
1,493
44,275
6,569
37,706
866
9,045
33,724
12,161
3,788
8,373
2,375
$
10,211
$
11,917
$
7,540
$
7,180
$
5,998
9,130
8,439
8,439
8,439
8,439
$
9,130
9,499
19,533
2,692
1,413,758
117,118
1,518
6,863
1,320
9,826
1,320
1,336,676
232,635
$
8,539
8,445
758
1,688
1,201,874
89,478
431
7,277
1,841
9,482
11,323
1,149,036
192,847
$
8,634
8,439
45
844
1,200,631
91,045
1,805
7,508
4,256
7,503
11,759
1,133,700
190,928
$
8,513
8,439
81
–
1,163,863
100,114
743
8,923
6,439
12,350
18,789
1,090,967
159,059
$
8,458
8,439
116
–
1,146,984
101,710
1,064
8,604
8,839
14,416
23,255
1,074,556
133,886
1 8
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Selected Financial Data
(Dollars in thousands, except per share data)
Per share data:
Net income per
common share (diluted)
Common book value per share
Tangible common book
value per share(2)
Dividends per common share
2019
Years Ended December 31,
2017
2018
2016
2015
$
1.12 $
13.74
11.68
0.30
$
1.40
11.33
11.24
0.20
$
0.87
10.70
10.69
0.10
0.84
9.96
9.95
0.00
$
0.71
9.18
9.16
0.00
Profitability ratios:
Net income to average assets
Net income to average stockholders’ equity
Net interest margin
0.72%
8.72
3.59
0.99%
13.32
3.56
0.63%
8.28
3.46
0.62%
7.17
3.51
0.52%
5.90
3.52
Loan quality ratios:
Net charge-offs to total loans
Allowance for loan losses to
total loans and OREO
Nonperforming assets to
total loans and OREO
Allowance for loan losses to
nonperforming loans
Allowance for loan losses to
nonperforming assets
0.16
0.71
1.15
0.06
0.93
1.44
0.24
0.98
1.53
69.85
76.74
100.06
61.57
64.27
63.85
Liquidity ratios:
Loans to total deposits(1)
Loans to average interest-earning assets(1)
Noninterest-bearing deposits
to total deposits
Capital adequacy ratios:
Common stockholders’ equity to total assets
Total stockholders’ equity to total assets
Dividend payout ratio
74.88
72.48
17.98
8.61
8.61
24.36
1. Total loans, net of unearned interest and fees.
72.02
68.02
71.61
67.46
17.77
17.88
7.64
7.64
14.16
7.33
7.33
11.24
0.10
1.17
2.47
72.25
47.49
72.19
69.11
15.23
6.94
7.72
0.00
0.14
1.12
3.03
59.68
37.00
74.96
70.57
13.24
6.60
8.13
0.00
2 Non-GAAP measure - see “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for more information
and a reconciliation to GAAP.
1 9
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be
read in conjunction with “Item 6. - Selected Financial Data” and our consolidated financial statements and
related notes included elsewhere in this Annual Report on Form 10-K. This discussion and analysis contains
forward-looking statements that involve risk, uncertainties and, assumptions. Certain risks, uncertainties
and other factors, including but not limited to those set forth under “Cautionary Note Regarding Forward-
Looking Statements,” “Risk Factors,” and elsewhere in this Annual Report on Form 10-K, may cause actual
results to differ materially from those projected in the forward looking statements. We assume no obligation
to update any of these forward-looking statements.
The Company
Colony Bankcorp, Inc. is a bank holding company headquartered in Fitzgerald, Georgia that provides,
through its wholly-owned subsidiary Colony Bank (collectively referred to as the Company), a broad array
of products and services throughout central, south and coastal Georgia markets. The Company offers
commercial, consumer and mortgage banking services.
Recent Developments
In May 2019, the Company opened its first full service banking office in Statesboro, Georgia. In
October 2018, the Bank purchased a vacant lot of real estate in Albany, Georgia from the branch acquisition
transaction with Planters First Bank. The Bank intends to build a new branch office in the future.
On May 1, 2019, the Bank completed its purchase of the mortgage division from Planters First Bank,
PFB Mortgage, which added several mortgage originators within the following markets in Georgia: Albany,
Athens, Macon and Warner Robins. In addition, the Bank established a new mortgage loan origination
office in LaGrange, Georgia in March 2019.
On May 1, 2019, the Company completed its acquisition of LBC Bancshares, Inc. and its banking
subsidiary, Calumet Bank, which has merged with and into the Company and the Bank, respectively. The
acquisition expanded the Company’s market presence in LaGrange, Georgia and Columbus, Georgia, as
well as adding a loan production office in Atlanta, Georgia. The Company issued 1,053,875 common shares
at a fair value of $18.7 million and paid $15.3 million in cash to the former shareholders of LBC as merger
consideration.
On May 20, 2019, the Company announced the retirement of Terry L. Hester, Executive Vice President
and Chief Financial Officer of the Company, and announced the hiring of Tracie Youngblood as the new
Executive Vice President and Chief Financial Officer. Ms. Youngblood joined the Company on June 24,
2019. In addition, the Company announced the realignment of roles within the senior management team
with M. Eddie Hoyle being appointed to Chief Banking Officer, Edward Lee Bagwell being appointed to
Chief Risk Officer and General Counsel, J. Stan Cook being appointed to Chief Credit Officer, and the
addition of Lance Whitley as Chief People Officer.
In July 2019, the Bank announced the startup of a Small Business Specialty Lending Group and
the hiring of two veteran bankers to lead the group. This new unit will expand the Bank’s participation
in government guaranteed loans and expand its footprint into new markets, provide the Bank with an
opportunity to service new clients and provide additional fee income.
2 0
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
In July 2019, a new subsidiary of the Company was incorporated under the name Colony Risk
Management, Inc. Colony Risk Management, Inc. is a captive insurance subsidiary which insures
various liability and property damage policies for the Company and its related subsidiaries. Colony Risk
Management is located in Las Vegas, Nevada and is regulated by the State of Nevada Division of Insurance.
The Company reinstated dividend payments during the first quarter of 2017 and has continued to pay
dividends to its shareholders throughout 2018 and 2019 on a quarterly basis. In 2019, we had a quarterly
dividend of $0.075 per common stock and in 2018, we paid a quarterly dividend of $0.05 per common stock.
GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures
Our accounting and reporting policies conform to generally accepted accounting principles (GAAP) in
the United States and prevailing practices in the banking industry. However, certain non-GAAP measures
are used by management to supplement the evaluation of our performance. These include the fully-taxable
equivalent measures: tax-equivalent net interest income, tax-equivalent net interest margin and tax-
equivalent net interest spread, which include the effects of taxable-equivalent adjustments using a federal
income tax rate of 21% in 2018 and 34% in prior years to increase tax-exempt interest income to a tax-
equivalent basis. Tax-equivalent adjustments are reported in Notes 1 and 2 to the Average Balances with
Average Yields and Rates table under Rate/Volume Analysis. Tangible common book value per common
share is also a non-GAAP measure used in the Selected Financial Data section.
Tax-equivalent net interest income, net interest margin and net interest spread. Net interest income on a tax-
equivalent basis is a non-GAAP measure that adjusts for the tax-favored status of net interest income from
loans and investments. We believe this measure to be the preferred industry measurement of net interest
income and it enhances comparability of net interest income arising from taxable and tax-exempt sources.
The most directly comparable financial measure calculated in accordance with GAAP is our net interest
income. Net interest margin on a tax-equivalent basis is net interest income on a tax-equivalent basis divided
by average interest-earning assets on a tax-equivalent basis. The most directly comparable financial measure
calculated in accordance with GAAP is our net interest margin. Net interest spread on a tax-equivalent
basis is the difference in the average yield on average interest-earning assets on a tax equivalent basis and
the average rate paid on average interest-bearing liabilities. The most directly comparable financial measure
calculated in accordance with GAAP is our net interest spread.
These non-GAAP financial measures should not be considered alternatives to GAAP-basis financial
statements, and other bank holding companies may define or calculate these non-GAAP measures or similar
measures differently.
2 1
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
A reconciliation of these performance measures to GAAP performance measures is included in the
tables below.
Non-GAAP Performance Measures Reconciliation
(Dollars in thousands, except per share data)
Interest income reconciliation
Interest income –
taxable equivalent
Tax equivalent adjustment
Interest income (GAAP)
2019
Years Ended December 31,
2017
2018
2016
2015
$ 60,494
(11)
$ 60,483
$ 49,034
(12)
$ 49,022
$ 45,943
(27)
$ 45,916
$ 44,762
(173)
$ 44,589
$ 44,407
(132)
$ 44,275
Net interest income reconciliation
Net interest income –
taxable equivalent
Tax equivalent adjustment
Net interest income (GAAP)
$ 47,856
(11)
$ 47,845
$ 40,809
(12)
$ 40,797
$ 39,070
(27)
$ 39,043
$ 38,279
(173)
$ 38,106
$ 37,838
(132)
$ 37,706
Net interest margin reconciliation
Net interest margin –
taxable equivalent
Tax equivalent adjustment
Net interest margin (GAAP)
Interest rate spread reconciliation
Interest rate spread –
taxable equivalent
Tax equivalent adjustment
Interest rate spread (GAAP)
3.59%
(0.01)
3.58%
3.37%
–
3.37%
3.56%
(0.01)
3.55%
3.39%
–
3.39%
3.46%
(0.02)
3.44%
3.51%
(0.02)
3.49%
3.34%
(0.02)
3.32%
3.40%
(0.02)
3.38%
3.52%
(0.01)
3.51%
3.41%
(0.01)
3.40%
Selected financial data
Tangible common book value
per common share
Effect of other intangible assets
Common book value
per common share (GAAP)
Overview
$ 11.68
2.06
$
11.24
0.09
$
10.69
0.01
$
9.95
0.01
$
9.16
0.02
$
13.74
$
11.33
$
10.70
$
9.96
$
9.18
The following discussion and analysis presents the more significant factors affecting the Company’s
financial condition as of December 31, 2019 and 2018, and results of operations for each of the three year-
periods ended December 31, 2019. This discussion and analysis should be read in conjunction with the
Company’s consolidated financial statements, notes thereto and other financial information appearing
elsewhere in this report.
Taxable-equivalent adjustments are the result of increasing income from tax-free loans and investments
by an amount equal to the taxes that would be paid if the income were fully taxable based on a 21% federal
tax rate for 2019 and 2018 and 34% federal tax rate for 2017, thus making tax-exempt yields comparable to
taxable asset yields.
Dollar amounts in tables are stated in thousands, except for per share amounts.
2 2
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
The Company’s results of operations are determined by its ability to effectively manage interest income
and expense, to minimize loan and investment losses, to generate noninterest income and to control
noninterest expense. Since market forces and economic conditions beyond the control of the Company
determine interest rates, the ability to generate net interest income is dependent upon the Company’s ability
to obtain an adequate spread between the rate earned on interest-earning assets and the rate paid on interest-
bearing liabilities. Thus, the key performance for net interest income is the interest margin or net yield, which
is taxable-equivalent net interest income divided by average interest-earning assets. Net income available to
common shareholders totaled $10.2 million, or $1.12 per diluted shares in 2019, compared to $11.9 million, or
$1.40 per diluted shares in 2018 and compared to $7.54 million, or $0.87 per diluted common share in 2017.
Selected income statement data, returns on average assets and average equity and dividends per share
for the comparable periods were as follows:
(Dollars in thousands, except per share data)
Taxable-equivalent
net interest income (1)
Taxable-equivalent adjustment
Net interest income
Provision for loan losses
Noninterest income
Noninterest expense
Income before income taxes
Income Taxes
Net income
Preferred stock dividends
Net income available to
common shareholders
Net income available to
common shareholders:
Basic
Diluted
Return on average assets
Return on average common equity (1)
2019
2018 Variance Variance
2018
2017
Variance Variance
$
%
$
%
$ 47,856 $ 40,809
(12)
(11)
40,797
47,845
201
1,104
9,621
14,762
35,300
48,894
$ 12,609 $ 14,917
3,000
$ 10,211 $ 11,917
– $
$
2,398
$ 7,048
–
7,048
903
5,141
13,594
$ (2,308)
(602)
$ (1,706)
–
– $
$ 39,070 $ 1,739
17.27% $ 40,809
15
0.00%
(12)
1,754
40,797
17.28%
(189)
449.25%
201
(114)
9,621
53.44%
1,440
35,300
38.51%
389
$ 14,917
-15.47%
-20.07%
(3,777)
3,000
-14.32% $ 11,917 $ 7,751 $ 4,166
– $
0.00% $
(27)
39,043
390
9,735
33,860
$ 14,528 $
6,777
4.09%
-55.56%
4.49%
-48.46%
-1.17%
4.25%
2.68%
-55.73%
53.75%
(211) -100.00%
211 $
$ 10,211 $ 11,917
$ (1,706)
-14.32% $ 11,917
$ 7,540 $ 4,377
58.05%
$
$
1.41
1.12 $
1.40
1.12 $
0.72%
0.99%
8.73% 13.32%
-20.57% $
-20.00% $
$ (0.29)
$ (0.28)
-0.27% -27.04%
-4.59% -34.46%
1.41 $ 0.89 $
1.40 $ 0.87 $
0.99%
58.05%
0.52
60.92%
0.53
0.63% 0.36% 0.57%
13.32% 8.28% 5.04% 60.87%
(1) Non-GAAP measure - see “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for more information and a reconciliation to GAAP.
Net Interest Income
Net interest income is the difference between interest income on earning assets, such as loans and
securities, and interest expense on liabilities, such as deposits and borrowings, which are used to fund those
assets. Net interest income is the Company’s largest source of revenue, representing 76.4% of total revenue
during 2019, 80.9% of total revenue during 2018 and 80.0% of total revenue during 2017.
Net interest margin is the taxable-equivalent net interest income as a percentage of average interest-
earning assets for the period. The level of interest rates and the volume and mix of interest-earning assets and
interest-bearing liabilities impact net interest income and net interest margin.
2 3
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The Company’s loan portfolio is significantly affected by changes in the prime interest rate. The prime
interest rate, which is the rate offered on loans to borrowers with strong credit, was 4.75% and 5.25% as of
December 31, 2019 and 2018, respectively. The Federal Reserve Board sets general market rates of interest,
including the deposit and loan rates offered by many financial institutions. During 2017, the prime interest
rate increased overall by 75 basis points. During 2018, the prime interest rate increased overall by 100 basis
points. During 2019, the prime interest rate decreased overall by 50 basis points.
The following table presents the changes in taxable-equivalent net interest income and identifies the
changes due to differences in the average volume of interest-earning assets and interest-bearing liabilities
and the changes due to changes in the average interest rate on those assets and liabilities. The changes in
net interest income due to changes in both average volume and average interest rate have been allocated
to the average volume change or the average interest rate change in proportion to the absolute amounts of
the change in each. The Company’s consolidated average balance sheets along with an analysis of taxable-
equivalent net interest earnings are presented in the Rate/Volume Analysis
Rate/Volume Analysis
The rate/volume analysis presented hereafter illustrates the change from year to year for each
component of the taxable equivalent net interest income separated into the amount generated through
volume changes and the amount generated by changes in the yields/rates.
(Dollars in thousands)
Interest income
Loans, net of unearned fees
Investment securities, taxable
Investment securities, exempt
Interest-bearing deposits
Federal funds sold
Interest-bearing other assets
Total interest income
Interest expense
Interest-bearing demand
and savings deposits
Time deposits
FHLB advances
Other borrowed money
Subordinated debentures
Total interest expense
Net interest income
Changes From 2018 to 2019 (a)
Total
Rate
Volume
Changes From 2017 to 2018 (a)
Total
Rate
Volume
$ 6,945
719
(10)
496
64
6
$ 8,220
703
561
(107)
494
–
1,651
$ 6,569
$ 2,651
454
10
86
–
39
$ 3,240
$ 9,596
1,173
–
582
64
45
$ 11,460
802
1,927
(42)
(954)
1,029
2,762
$ 478
1,505
2,488
(149)
(460)
1,029
4,413
$ 7,047
$ 515
(9)
(7)
93
–
39
$ 552
88
(276)
(37)
2
–
(223)
$ 854
$ 1,554
841
(18)
85
–
(2)
$ 2,461
785
702
(153)
–
241
1,575
$ 885
$ 2,069
832
(25)
178
–
37
$ 3,091
873
426
(190)
2
241
1,352
$ 1,739
(a) Changes in net interest income for the periods, based on either changes in average balances or changes in average rates for interest-earning assets and interest-
bearing liabilities, are shown on this table. During each year there are numerous and simultaneous balance and rate changes; therefore, it is not possible
to precisely allocate the changes between balances and rates. For the purpose of this table, changes that are not exclusively due to balance changes or rate
changes have been attributed to rates.
2 4
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The Company maintains about 20.1% of its loan portfolio in adjustable rate loans that reprice with prime
rate changes, while the bulk of its other loans mature within 3 years. The liabilities to fund assets are primarily
in non-maturing core deposits and short term certificates of deposit that mature within one year. The Federal
Reserve rates increased 75 basis points in 2017 followed by a 100 basis point increase during 2018. During 2019
Federal Reserve rates decreased 50 basis points. We have seen the net interest margin change to 3.59% for 2019,
compared to 3.55% for 2018 and 3.45% for 2017.
Taxable-equivalent net interest income for 2019 increased by $7.0 million, or 17.3%, compared to 2018
while taxable-equivalent net interest income for 2018 increased by $1.7 million, or 4.5% compared to 2017. The
average volume of interest-earning assets during 2019 increased $183.7 million compared to 2018 while over the
same period the net interest margin increased to 3.59% from 3.55%. The average volume of interest-earning
assets during 2018 increased $16.1 million compared to 2017 while over the same period the net interest margin
increased to 3.55% from 3.45%. The change in the net interest margin in 2019 and 2018 was primarily driven
by a higher level of low yielding assets offset by an increase in the cost of funds. Growth in average earning
assets during 2019 was primarily in loans, investments and interest-bearing deposits in other banks. These
increases mostly stem from the acquisition of LBC Bancshares, Inc. that occurred in the second quarter of 2019.
The average volume of loans increased $123.8 million in 2019 compared to 2018 and $9.77 million in 2018
compared to 2017. The average yield on loans increased 34 basis points in 2019 compared to 2018 and increased
21 basis points in 2018 compared to 2017. The average volume of deposits increased $178.4 million in 2019
compared to 2018. The average volume of deposits increased $4.1 million in 2018 compared to 2017. Demand
deposits made up $38.0 million of the increase in average deposits in 2019 compared to $14.5 million of the
increase in average deposits in 2018.
Accordingly, the ratio of average interest-bearing deposits to total average deposits was 82.6% in 2019,
83.2% in 2018 and 84.6% in 2017. For 2019, this deposit mix, combined with a general increase in interest rates,
had the effect of (i) increasing the average cost of total deposits by 30 basis points in 2019 compared to 2018 and
(ii) offset a portion of the impact of increasing yields on interest-earning assets on the Company’s net interest
income. For 2018, this deposit mix, combined with a general increase in interest rates, had the effect of (i)
increasing the average cost of total deposits by 15 basis points in 2018 compared to 2017 and (ii) offset a portion
of the impact of increasing yields on interest-earning assets on the Company’s net interest income.
The Company’s net interest spread, which represents the difference between the average rate earned on
interest-earning assets and the average rate paid on interest-bearing liabilities, was 3.37% in 2019 compared to
3.39% in 2018 and 3.32% in 2017. The net interest spread, as well as the net interest margin, will be impacted
by future changes in short-term and long-term interest rate levels, as well as the impact from the competitive
environment. A discussion of the effects of changing interest rates on net interest income is set forth in “Market
Risk and Interest Rate Sensitivity” included elsewhere in this report.
2 5
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Average Balance Sheets
(Dollars in thousands)
Assets:
Loans, net of unearned fees (1) (2)
Investment securities, taxable
Investment securities, exempt (3)
Interest-bearing deposits
Federal funds sold
Other investments
Total interest-earning assets
Total noninterest-earning assets
Total assets
Liabilities and
Stockholders’ Equity
Interest-bearing liabilities:
Savings and interest-bearing
demand deposits
Time deposits
Total interest-bearing deposits
FHLB advances
Other borrowings
Subordinated deferrable
interest debentures
Total interest-bearing liabilities
Noninterest-bearing demand deposits
Other liabilities
Stockholders’ equity
Total liabilities and
2019
2018
2017
Average
Balances
Income/ Yields/
Expense Rates
Average
Balances
Income/ Yields/
Expense Rates
Average
Balances
Income/ Yields/
Expense Rates
$ 50,278
8,872
56
992
64
232
$ 60,494
$ 896,098
374,718
1,737
54,166
2,725
4,064
$ 1,333,508
80,251
$ 1,413,759
772,327
5.61% $
344,369
2.37%
2,046
3.22%
27,072
1.83%
–
2.35%
5.71%
3,951
4.54% $ 1,149,765
51,784
$ 1,201,549
$ 40,682
7,699
56
410
–
187
$ 49,034
5.27% $ 762,554
344,790
2.24%
2,310
3.18%
20,920
.51%
0.00%
–
4.73%
3,126
4.27% $ 1,133,700
66,931
$ 1,200,631
$ 38,613
6,867
5.06%
1.99%
81 3.51%
232 1.11%
0.00%
150 4.80%
$ 45,943 4.05%
–
$ 640,180
361,319
1,001,499
45,233
9,930
$ 4,274
5,776
10,050
1,046
508
0.67% $
1.60%
1.00%
2.31%
5.12%
534,887
326,243
861,130
49,845
275
$
2,769
3,288
6,057
1,195
5
0.52% $
1.01%
0.70%
2.40%
1.82%
517,974
353,587
871,561
51,388
178
$
1,034
12,638
4.27%
1.17%
24,229
1,080,891
211,462
4,437
116,969
968
8,225
4.00%
0.88%
24,229
935,479
173,442
3,222
89,406
24,229
75,795
158,924
3,306
91,045
1,896
2,862
4,758
1,385
0.37%
0.81%
0.55%
2.70%
3 1.69%
727
6,873
2.79%
0.73%
stockholders’ equity
$ 1,413,759
$ 1,201,549
$ 1,200,631
Interest rate spread
Net interest income
Net interest margin
$ 47,856
3.37%
3.59%
3.39%
$ 40,809
3.55%
3.32%
$ 39,070
3.45%
(1) Includes loans held for sale.
(2) Included in the average balance of loans outstanding are loans where the accrual of interest has been discontinued.
(3) Taxable-equivalent adjustments totaling $11,000 for 2019, $12,000 for 2018 and $27,000 for 2017, respectively, are included in tax-exempt interest
on investment securities. The adjustments are based on a federal tax rate of 21% for 2019 and 2018 and 34% for 2017 with appropriate reductions
for the effect of disallowed interest expense incurred in carrying tax-exempt obligations.
Provision for Loan Losses
The provision for loan losses is determined by management as the amount to be added to the allowance
for loan losses after net charge-offs have been deducted to bring the allowance to a level which, in
management’s best estimate, is necessary to absorb probable losses within the existing loan portfolio. The
provision for loan losses totaled $1.1 million in 2019 compared to $201,000 in 2018 and $390,000 in 2017.
See the section captioned “Allowance for Loan Losses” elsewhere in this discussion for further analysis of the
provision for loan losses.
2 6
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Noninterest Income
The components of noninterest income were as follows:
(Dollars in thousands)
Service charges on deposit accounts
Other charges, commissions and fees
Mortgage fee income
Securities gains (losses)
Other
Total
2019
$ 4,783 $ 4,374
3,254
4,263
652
3,199
116
97
1,225
2,420
$ 14,762 $ 9,621
%
$
2018 Variance Variance
$
409
1,009
2,547
31.01%
390.64%
(19) -16.38%
2018
2017
9.35% $ 4,374 $ 4,467 $
3,254
652
116
97.55% 1,225
53.44% $ 9,621 $ 9,735 $
3,049
859
–
1,360
$
%
Variance Variance
(93)
-2.08%
205 6.72%
(207) -24.10%
116 100.00%
-9.93%
(135)
-1.17%
(114)
1,195
$ 5,141
Other charges, commissions and fees. Significant amounts impacting the comparable periods was primarily
attributed to ATM and debit card interchange fees which increased $978,000 in 2019 compared to 2018 and
$219,000 in 2018 compared to 2017.
Mortgage fee income. The increase in 2019 was primarily attributed to the acquisition of the PFB Mortgage
division in May 2019. In addition, the Bank opened a new mortgage location in LaGrange in March 2019.
The decrease in mortgage fee income in 2018 compared to the same period in 2017 was due to a decrease in
the volume of mortgage loans.
Other. The increase in 2019 was primarily attributed to the gain on sale of other real estate owned.
During the second quarter of 2019, the Bank realized a gain of approximately $1.0 million from the sale of
several other real estate owned properties within one relationship. The decrease in other income in 2018
was attributable to a decrease in revenue from cash surrender life insurance policies which decreased $124
thousand in 2018 compared to 2017.
Noninterest Expense
The components of noninterest expense were as follows:
(Dollars in thousands)
Salaries and employee benefits
Occupancy and equipment
Acquisition related expenses
Deposit intangible expenses
Other
Total
2019
$
2018 Variance Variance
%
2018
2017
Variance Variance
$
%
$ 26,218 $ 20,123
4,180
224
48
10,725
$ 48,894 $ 35,300
4,850
2,733
600
14,493
$ 6,095
670
30.29% $ 20,123 $ 19,223 $
16.03%
2,509 1120.09%
552 1150.00%
35.13%
38.51%
4.68%
900
232 5.88%
4,180
224 100.00%
224
48 100.00%
48
36 0.34%
10,725
$ 35,300 $ 33,860 $ 1,440 4.25%
3,948
–
–
10,689
3,768
$ 13,594
Salaries and employee benefits. The increase in 2019 was primarily attributable to merit pay increases and
increase in head count mostly from the two acquisitions completed in May 2019 of LBC Bancshares, Inc and
PFB Mortgage. In addition, the Company hired several key employees during the second quarter of 2019
as part of the strategic changes that are being made to enhance its profitability in line with the Company’s
growth initiatives. The increase in salary and employee benefits for 2018 was due to merit pay increases and
an increase in number of employees.
Occupancy and equipment. The increase in 2019 was primarily attributable to the new locations stemming
from the acquisitions of LBC Bancshares, Inc. and PFB Mortgage. The increase in 2018 was primarily
attributable to an increase in depreciation expense in 2018 and an increase in maintenance on equipment
and building in 2018 when compared to 2017.
2 7
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Acquisition related eexpenses. The increase in 2019 was primarily attributable to the acquisition of LBC
Bancshares, Inc. The largest expense the Company has incurred from the acquisition relates to the contract
buyout of Calumet’s data processing system which was approximately $1.08 million. Other expenses incurred
relating to the acquisition were legal expenses and broker expenses. The increase in 2018 was primarily
attributable to conversion expenses of $224,000 related to the 2018 purchase of a branch in Albany, Georgia
from Planters First Bank.
Deposit intangible expenses. The Bank recognized a core deposit intangible related to the Planters First Bank
Albany branch acquisition in October 2018 and the LBC Bancshares, Inc. acquisition in May 2019. The
deposit intangible expense increased to account for the amortization of the core deposit intangibles that is
being amortized over the average remaining life of each acquired customers’ deposits.
Other. The increase in 2019 was primarily attributable to legal, business development and data processing
expenses. The increase in 2018 was primarily attributable to software and data processing as the Bank
changed its information technology processes from an in-house approach to outsourcing with our core
processing provider during the first quarter of 2018. With this change, the Company showed a decrease of
$400,000 in software expense in 2018 that was offset by an increase of $629,000 in data processing expense
in 2018 compared to 2017.
Sources and Uses of Funds
The following table illustrates, during the years presented, the mix of the Company’s funding sources
and the assets in which those funds are invested as a percentage of the Company’s average total assets for the
period indicated. Average assets totaled $1.4 billion in 2019 compared to $1.2 billion in 2018 and $1.2 billion
in 2017.
(Dollars in thousands)
Sources of funds:
Noninterest-bearing deposits
Interest-bearing deposits
FHLB advances
Other borrowings
Subordinated debentures
Other noninterest-bearing liabilities
Equity capital
Total
Uses of funds:
Loans (net of allowance)
Investment securities
Federal funds sold
Interest-bearing deposits
Other interest-earning assets
Other noninterest-earning assets
Total
2019
2018
2017
$ 211,462
1,001,499
45,233
9,930
24,229
4,437
116,969
$ 1,413,759
$ 173,422
14.96%
861,130
70.84%
49,845
3.20%
275
0.70%
24,229
1.71%
3,222
0.31%
8.28%
89,406
100.00% $ 1,201,549
14.43%
71.67%
4.15%
0.02%
2.02%
0.27%
7.44%
100.00%
$ 158,924
871,561
13.24%
72.59%
– 0.00%
0.01%
6.30%
0.28%
7.58%
$ 1,200,631 100.00%
178
75,617
3,306
91,045
$ 896,098
376,455
2,725
54,166
4,064
80,251
$ 1,413,759
63.38%
26.63%
0.19%
3.83%
0.29%
5.68%
$ 772,327
346,415
–
27,072
3,951
51,784
100.00% $ 1,201,549
64.28%
28.83
0.00%
2.25%
0.33%
4.31%
100.00%
$ 762,554
347,100
–
20,920
3,126
66,931
$ 1,200,631
63.51%
28.91%
0.00%
1.75%
0.26%
5.57%
100.00%
Deposits continue to be the Company’s primary source of funding. Over the comparable periods, interest-
bearing deposits continues to be the largest component of the Company’s mix of deposits. Interest-bearing
deposits totaled 82.6% of total average deposits in 2019 compared to 83.2% in 2018 and 84.6% in 2017.
The Company primarily invests funds in loans and securities. Loans continue to be the largest
component of the Company’s mix of invested assets. The Company acquired $130.6 million of loans as
part of the acquisition of LBC Bancshares, Inc. in May 2019. This acquisition combined with increases
2 8
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
in organic loan growth resulted in loans of $968.8 million at December 31, 2019, up 24.0%, compared to
loans of $781.5 million at December 31, 2018, which increased 2.2%, compared to loans of $764.8 million
at December 31, 2017. See additional discussion regarding the Company’s loan portfolio in the section
captioned “Loans” on the following page. The majority of funds provided by deposits have been invested in
loans and securities.
Loans
The following table presents the composition of the Company’s loan portfolio as of December 31 for the
past five years.
(Dollars in thousands)
Construction, land and
land development
Other commercial real estate
Total commercial real estate
Residential real estate
Commercial, financial,
and agricultural
Consumer and other
Total loans, net of unearned fees
Allowance for loan losses
Loans, net
2019
2018
2017
2016
2015
$ 96,097
540,239
636,336
194,796
114,360
23,322
968,814
(6,863)
$ 961,951
$
60,310
435,961
496,271
187,592
74,166
23,497
781,526
(7,277)
$ 774,249
$ 53,762
418,669
472,431
193,924
64,523
33,911
764,789
(7,508)
$ 757,281
$ 42,168
415,768
457,936
195,486
64,074
36,426
753,922
(8,923)
$ 744,999
$ 49,497
407,850
457,347
196,909
66,943
37,080
758,279
(8,604)
$ 749,675
The following table presents total loans as of December 31, 2019 according to maturity distribution and/
or repricing opportunity on adjustable rate loans.
Maturity and Repricing Opportunity
(Dollars in thousands)
Construction, land and
land development
Other commercial real estate
Total commercial real estate
Residential real estate
Commercial, financial,
and agricultural
Consumer and other
Total loans, net of unearned fees
After One
Year
Through
Three Years
After Three
Years
Through
Five years
$ 21,767
198,078
219,845
54,361
23,828
10,222
$ 308,256
$ 14,553
77,461
92,014
29,453
23,565
6,023
$ 151,055
One Year
or Less
$ 51,215
99,384
150,599
32,823
37,406
5,200
$ 226,028
Over
Five Years
$
8,562
165,316
173,878
78,159
29,561
1,877
$ 283,475
Total
$ 96,097
540,239
636,336
194,796
114,360
23,322
$ 968,814
Overview. Loans totaled $968.8 million at December 31, 2019 up 24.0% from $781.5 million at December 31,
2018. The majority of the Company’s loan portfolio is comprised of the real estate loans. Commercial and
residential real estate which is primarily 1-4 family residential properties, nonfarm nonresidential properties
and real estate construction loans made up 85.8% and 87.5% of total loans at December 31, 2019 and
December 31, 2018, respectively.
2 9
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Loan origination/risk management. In accordance with the Company’s decentralized banking model, loan
decisions are made at the local bank level. The Company utilizes both an Executive Loan Committee and
a Director Loan Committee to assist lenders with the decision making and underwriting process of larger
loan requests. Due to the diverse economic markets served by the Company, evaluation and underwriting
criterion may vary slightly by market. Overall, loans are extended after a review of the borrower’s repayment
ability, collateral adequacy, and overall credit worthiness.
Commercial purpose, commercial real estate, and agricultural loans are underwritten similarly to how
other loans are underwritten throughout the Company. The properties securing the Company’s commercial
real estate portfolio are diverse in terms of type and geographic location. In addition, the Company restricts
total loans to $10 million per borrower, subject to exception and approval by the Director Loan Committee.
This diversity helps reduce the Company’s exposure to adverse economic events that affect any single market
or industry. Management monitors and evaluates commercial real estate loans monthly based on collateral,
geography, and risk grade criteria. The Company also utilizes information provided by third-party agencies to
provide additional insight and guidance about economic conditions and trends affecting the markets it serves.
The Company extends loans to builders and developers that are secured by non-owner occupied
properties. In such cases, the Company reviews the overall economic conditions and trends for each market
to determine the desirability of loans to be extended for residential construction and development. Sources of
repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders,
sales of developed property or an interim mini-perm loan commitment from the Company until permanent
financing is obtained. In some cases, loans are extended for residential loan construction for speculative
purposes and are based on the perceived present and future demand for housing in a particular market served
by the Company. These loans are monitored by on-site inspections and are considered to have higher risks than
other real estate loans due to their ultimate repayment being sensitive to interest rate changes, general economic
conditions and trends, the demand for the properties, and the availability of long-term financing.
The Company originates consumer loans at the bank level. Due to the diverse economic markets served
by the Company, underwriting criterion may vary slightly by market. The Company is committed to serving
the borrowing needs of all markets served and, in some cases, adjusts certain evaluation methods to meet the
overall credit demographics of each market. Consumer loans represent relatively small loan amounts that are
spread across many individual borrowers to help minimize risk. Additionally, consumer trends and outlook
reports are reviewed by management on a regular basis.
The Company utilizes an independent third party company for loan review and validation of the credit
risk program on an ongoing quarterly basis. Results of these reviews are presented to management and the
audit committee. The loan review process complements and reinforces the risk identification and assessment
decisions made by lenders and credit personnel, as well as the Company’s policies and procedures.
Commercial, financial and agricultural. Commercial and agricultural loans at December 31, 2019 increased
54.2% to $114.4 million from December 31, 2018 at $74.2 million. This increase was primarily attributable
to the acquisition of LBC Bancshares, Inc. in May 2019. The Company’s commercial and agricultural loans
are a diverse group of loans to small, medium and large businesses. The purpose of these loans varies from
supporting seasonal working capital needs to term financing of equipment. While some short-term loans may
be made on an unsecured basis, most are secured by the assets being financed with collateral margins that are
consistent with the Company’s loan policy guidelines.
Construction, land and land development. Construction, land and land development loans increased by $35.8
million, or 59.3%, at December 31, 2019 to $96.1 million from $60.3 million at December 31, 2018. This
increase was primarily attributable to the acquisition of LBC Bancshares, Inc. in May 2019 and partially due to
new construction loans being financed during the year that were not completed by the end of the year.
Other commercial real estate. Other commercial real estate loans increased by $104.3 million, or 23.9%, at
December 31, 2019 to $540.2 million from $436.0 million at December 31, 2018. This increase was primarily
attributable to the acquisition of LBC Bancshares, Inc. in May 2019. This portion of our loan portfolio consists
primarily of loans secured by farmland, multi-family residential properties and nonfarm, nonresidential real
estate properties.
3 0
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Residential real estate loans. Residential real estate loans increased by $7.2 million, or 3.8%, at December 31,
2019 to $194.8 million from $187.6 million at December 31, 2018. This increase was primarily attributable to
the acquisition of LBC Bancshares, Inc. in May 2019. Residential real estate loans consist of revolving, open-
end and closed-end loans as well as those secured by closed-end first and junior liens.
Consumer and other. Consumer and other loans include loans to individuals for personal and household
purposes, including secured and unsecured installment loans and revolving lines of credit. Consumer and other
loans at December 31, 2019 decreased 0.7% to $23.3 million from $23.5 million at December 31, 2018.
Industry concentrations. As of December 31, 2019 and December 31, 2018, there were no concentrations
of loans within any single industry in excess of 10% of total loans, as segregated by Standard Industrial
Classification code (“SIC code”). The SIC code is a federally designed standard industrial numbering system
used by the Company to categorize loans by the borrower’s type of business. The Company has established
industry-specific guidelines with respect to maximum loans permitted for each industry with which the
Company does business.
Collateral concentrations. Concentrations of credit risk can exist in relation to individual borrowers or groups
of borrowers, certain types of collateral, certain types of industries, or certain geographic regions. The
Company has a concentration in real estate loans as well as a geographic concentration that could pose an
adverse credit risk, particularly with the current economic downturn in the real estate market. At December 31,
2019, approximately 85.8% of the Company’s loan portfolio was concentrated in loans secured by real estate. A
substantial portion of borrowers’ ability to honor their contractual obligations is dependent upon the viability of
the real estate economic sector. In addition, a large portion of the Company’s foreclosed assets are also located
in these same geographic markets, making the recovery of the carrying amount of foreclosed assets susceptible
to changes in market conditions. Management continues to monitor these concentrations and has considered
these concentrations in its allowance for loan loss analysis. In recent years, we have seen real estate values
stabilizing in our markets. The stabilization of rates has resulted in a decrease in the number of loans being
classified as impaired over the past several years.
Large credit relationships. The Company is currently in eighteen counties in central, south and coastal Georgia
and includes metropolitan markets in Dougherty, Lowndes, Houston, Chatham and Muscogee counties. As
a result, the Company originates and maintains large credit relationships with several commercial customers
in the ordinary course of business. The Company considers large credit relationships to be those with
commitments equal to or in excess of $5.0 million prior to any portion being sold. Large relationships also
include loan participations purchased if the credit relationship with the agent is equal to or in excess of $5.0
million. In addition to the Company’s normal policies and procedures related to the origination of large credits,
the Company’s Executive Loan Committee and Director Loan Committee must approve all new and renewed
credit facilities which are part of large credit relationships. The following table provides additional information
on the Company’s large credit relationships outstanding at December 31, 2019 and December 31, 2018.
(Dollars in thousands)
Large credit relationships:
$10 million or greater
$5 million to $9.9 million
December 31, 2019
Number of Period End Balances
December 31, 2018
Number of Period End Balances
Relationships Committed Outstanding Relationships
Committed Outstanding
7
13
$ 77,391
$ 97,366
$ 70,006
$ 86,215
3
24
$ 35,394
$ 123,331
$ 32,445
$ 103,124
Maturities and sensitivities of loans to changes in interest rates. The following table presents the maturity
distribution of the Company’s loans at December 31, 2019. The table also presents the portion of loans that
have fixed interest rates or variable interest rates that fluctuate over the life of the loans in accordance with
changes in an interest rate index such as the prime rate.
31
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
(Dollars in thousands)
Loans with fixed interest rates
Loans with floating interest rates
Total
After One, After Three,
but Within
Due in One
but Within
Five Years
Year or Less Three Years
$ 144,577
6,426
$ 151,003
$ 282,123
25,948
$ 308,071
$ 186,391
39,709
$ 226,100
After Five
Years
$ 161,230
122,410
$ 283,640
Total
$ 774,321
194,493
$ 968,814
The Company may renew loans at maturity when requested by a customer whose financial strength
appears to support such renewal or when such renewal appears to be in the Company’s best interest. In such
instances, the Company generally requires payment of accrued interest and may adjust the rate of interest,
require a principal reduction or modify other terms of the loan at the time of renewal.
Nonperforming Assets and Potential Problem Loans
Year-end nonperforming assets and accruing past due loans were as follows:
(Dollars in thousands)
Loans accounted for on nonaccrual
Loans accruing past due 90 days or more
Other real estate foreclosed
Total nonperforming assets
Nonperforming loans by segment
Construction, land and land development
Commercial real estate
Residential real estate
Commercial, financial and agricultural
Consumer and other
Total nonperforming loans
2019
$
9,827
–
1,320
$ 11,146
$
$
128
3,772
3,728
2,061
138
9,827
2018
$
9,482
–
1,841
$ 11,323
$
883
5,874
3,299
1,051
216
$ 11,323
2017
7,503
–
4,256
11,759
2,630
4,635
3,309
997
188
11,759
$
$
$
$
2016
$ 12,350
–
6,439
$ 18,789
2015
$ 14,408
8
8,839
$ 23,255
$
3,376
9,982
4,375
844
212
$ 18,789
$
7,106
11,011
4,197
762
179
$ 23,255
Nonperforming assets as a percentage of:
Total loans and foreclosed assets
Total assets
Nonperforming loans as a percentage of:
Total loans
Supplemental data:
Trouble debt restructured loans
1.15%
0.74%
1.01%
1.44%
0.90%
1.53%
0.95%
2.47%
1.55%
3.03%
1.98%
1.21%
0.98%
1.64%
1.90%
in compliance with modified terms
$ 12,337
$ 14,128
$ 18,363
$ 17,992
$ 19,375
Trouble debt restructured loans
Past due 30-89 days
Accruing past due loans:
30-89 days past due
90 or more days past due
Total accruing past due loans
Allowance for loan losses
Allowance for loan losses as a percentage of:
Total loans
Nonperforming loans
–
1,914
–
1,914
6,863
$
$
$
864
8,234
–
8,234
7,277
$
$
$
131
4,558
–
4,558
7,508
$
$
$
319
344
$
$
$
4,469
–
4,469
$ 10,959
8
$ 10,967
8,923
$
8,604
0.71%
69.85%
0.93%
76.74%
0.98%
100.06%
1.18%
72.25%
1.13%
59.68%
3 2
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Nonperforming assets include nonaccrual loans, loans past due 90 days or more, foreclosed real estate
and nonaccrual securities. Nonperforming assets at December 31, 2019 decreased 1.56% from December 31,
2018, primarily due to the sale of other real estate owned property. Nonperforming assets at December 31,
2018 decreased 3.71% from December 31, 2017.
Generally, loans are placed on nonaccrual status if principal or interest payments become 90 days past
due and/or management deems the collectability of the principal and/or interest to be in question, as well as
when required by regulatory requirements. Loans to a customer whose financial condition has deteriorated
are considered for nonaccrual status whether or not the loan is 90 days or more past due. For consumer
loans, collectability and loss are generally determined before the loan reaches 90 days past due. Accordingly,
losses on consumer loans are recorded at the time they are determined. Consumer loans that are 90 days
or more past due are generally either in liquidation/payment status or bankruptcy awaiting confirmation of
a plan. Once interest accruals are discontinued, accrued but uncollected interest is charged to current year
operations. Subsequent receipts on nonaccrual loans are recorded as a reduction of principal, and interest
income is recorded only after principal recovery is reasonably assured. Classification of a loan as nonaccrual
does not preclude the ultimate collection of loan principal or interest.
Troubled debt restructured loans are loans on which, due to deterioration in the borrower’s financial
condition, the original terms have been modified in favor of the borrower or either principal or interest has
been forgiven.
Foreclosed assets represent property acquired as the result of borrower defaults on loans. Foreclosed
assets are recorded at estimated fair value, less estimated selling costs, at the time of foreclosure. Write-downs
occurring at foreclosure are charged against the allowance for loan losses. On an ongoing basis, properties
are appraised as required by market indications and applicable regulations. Write-downs are provided for
subsequent declines in value and are included in other non-interest expense along with other expenses related
to maintaining the properties.
Allowance for Loan Losses
The allowance for loan losses is a reserve established through a provision for loan losses charged to
expense, which represents management’s best estimate of probable losses that have been incurred within
the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve
for estimated loan losses and risks inherent in the loan portfolio. The allowance for loan losses includes
allowance allocations calculated in accordance with current U.S. accounting standards. The level of the
allowance reflects management’s continuing evaluation of industry concentrations, specific credit risks, loan
loss experience, current loan portfolio quality, present economic, political and regulatory conditions and
unidentified losses inherent in the current loan portfolio. Portions of the allowance may be allocated for
specific credits; however, the entire allowance is available for any credit that, in management’s judgment,
should be charged off. While management utilizes its best judgment and information available, the ultimate
adequacy of the allowance is dependent upon a variety of factors beyond the Company’s control, including
the performance of the Company’s loan portfolio, the economy, changes in interest rates and the view of the
regulatory authorities toward loan classifications.
The Company’s allowance for loan losses consists of specific valuation allowances established
for probable losses on specific loans and historical valuation allowances for other loans with similar
risk characteristics. The allowances established for probable losses on specific loans are the result of
management’s quarterly review of substandard loans with an outstanding balance of $250,000 or more.
This review process usually involves regional credit officers along with local lending officers reviewing the
loans for impairment. Specific valuation allowances are determined after considering the borrower’s financial
condition, collateral deficiencies, and economic conditions affecting the borrower’s industry, among other
things. In the case of collateral dependent loans, collateral shortfall is most often based upon local market
real estate value estimates. This review process is performed at the subsidiary bank level and is reviewed at
the parent Company level.
3 3
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Once the loan becomes impaired, it is removed from the pool of loans covered by the general reserve
and reviewed individually for exposure as described above. In cases where the individual review reveals no
exposure, no reserve is recorded for that loan, either through an individual reserve or through a general
reserve. If, however, the individual review of the loan does indicate some exposure, management often
charges off this exposure, rather than recording a specific reserve. In these instances, a loan which becomes
nonperforming could actually reduce the allowance for loan losses. Those loans deemed uncollectible are
transferred to our problem loan department for workout, foreclosure and/or liquidation. The problem loan
department obtains a current appraisal on the property in order to record the fair market value (less selling
expenses) when the property is foreclosed on and moved into other real estate.
The allowances established for the remainder of the loan portfolio are based on historical loss factors,
adjusted for certain qualitative factors, which are applied to groups of loans with similar risk characteristics.
Loans are segregated into fifteen separate groups based on call codes. Most of the Company’s charge-offs
during the past two years have been real estate dependent loans. The historical loss ratios applied to these
groups of loans are updated quarterly based on actual charge-off experience. The historical loss ratios are
further adjusted by qualitative factors.
Management evaluates the adequacy of the allowance for each of these components on a quarterly basis.
Peer comparisons, industry comparisons, and regulatory guidelines are also used in the determination of the
general valuation allowance. Loans identified as losses by management, internal loan review, and/or bank
examiners are charged off. Additional information about the Company’s allowance for loan losses is provided
in the Notes to the Consolidated Financial Statements for Allowance for Loan Losses.
The following table sets forth the breakdown of the allowance for loan losses by loan category for the
periods indicated. The allocation of the allowance to each category is subjective and is not necessarily
indicative of future losses and does not restrict the use of the allowance to absorb losses in any other category.
(Dollars in thousands)
Construction, land
and land development
Commercial real estate
Residential real estate
Commercial, financial,
and agricultural
Consumer and other
2019
2018
December 31,
2017
2016
Reserve %*
Reserve %*
Reserve %*
Reserve
%*
2015
Reserve %*
$
215
3,908
980
9.9%
55.8%
20.1%
$ 131
7.7%
5,251 55.8%
1,181 24.0%
$ 1,216
4,654
968
7.0% $
54.7%
25.4%
336
6,473
1,396
5.6%
55.2%
25.9%
$
711 6.5%
4,763 53.8%
1,990 26.0%
1,657
103
11.8%
2.4%
$ 6,863 100.0%
618 9.5%
3.0%
96
$ 7,277 100.0%
633
37
$ 7,508
624
8.5%
4.4%
94
100.0% $ 8,923
8.5%
4.8%
100.0%
1,058 8.8%
82 4.9%
$ 8,604 100.0%
* Percentage represents the loan balance in each category expressed as a percentage of total end of period loans.
3 4
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following table presents an analysis of the Company’s loan loss experience for the periods indicated.
(Dollars in thousands)
Allowance for loan losses at beginning of year
Charge-offs
Construction, land
and land development
Commercial real estate
Residential real estate
Commercial, financial, and agricultural
Consumer and other
Total charge-offs
Recoveries
Construction, land
and land development
Commercial real estate
Residential real estate
Commercial financial, and agricultural
Consumer and other
Total recoveries
Net charge-offs
Provision for loans losses
Allowance for loan losses at end of year
Ratio of net charge-offs to average loans
2019
$ 7,277
2018
$ 7,508
2017
$ 8,923
2016
$ 8,604
2015
$ 8,802
29
119
758
403
784
$ 2,093
82
218
174
36
65
575
1,518
1,104
$ 6,863
0.17%
–
257
162
247
299
965
$
155
52
91
161
74
533
432
201
$ 7,277
0.06%
52
1,027
1,048
458
330
$ 2,915
266
544
82
141
77
1,110
1,805
390
$ 7,508
0.24%
25
1,112
362
324
265
$ 2,088
814
351
50
71
59
1,345
743
1,062
$ 8,923
98
315
930
460
280
$ 2,083
486
290
110
55
62
1,003
1,080
866
$ 8,588
0.10%
0.14%
The allowance for loan losses decreased from $7.3 million, or 0.93% of total loans at December 31, 2018
to $6.9 million, or 0.71% of total loans at December 31, 2019. The provision for loan losses reflects loan
quality trends, including the level of net charge-offs or recoveries, among other factors. The decline in 2019
was primarily due to the acquisitions of LBC Bancshares, Inc, which had over $130 million in total loans.
Applicable accounting guidance did not allow us to record an allowance for loan losses upon the acquisition
of loans – instead the acquired loans were recorded at their discounted fair value, which included the
consideration of any expected losses. No allowance for loan losses will be recorded for the acquired loans until
the expected credit losses exceed the remaining unamortized discounts – based on an individual basis for
purchased credit impaired loans and on a pooled basis for performing acquired loans. Significant changes in
the allowance during 2018 was the reduction in the net charge-offs in 2018 to $432,000 from $1.8 million in
2017, or a decrease of $1.4 million. Significant changes in the allowance during 2017 was the increase in the
net charge-offs in 2017 to $1.8 million from $743,000 in 2016. The Company believes that collection efforts
have reduced impaired loans and the reduction in net charge-offs runs parallel with the improvement in the
substandard assets. During 2019, we have continued to see stabilization in the economy, housing and the real
estate market, as such we expect continued improvement in our substandard assets, including net charge-offs.
There were no charge-offs or recoveries related to foreign loans during any of the periods presented.
3 5
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Investment Portfolio
The following table presents carrying values of investment securities held by the Company as of
December 31, 2019, 2018 and 2017.
(Dollars in thousands)
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
Total debt securities
$
2019
5,115
2806
339,411
$ 347,332
2018
$
3,989
2,872
346,205
$ 353,066
2017
$
4,493
2,060
347,694
$ 354,247
The following table represents expected maturities and weighted-average yields of investment securities
held by the Company as of December 31, 2019 (mortgage-backed securities are based on the average life at
the projected speed, while State and Political Subdivisions reflect anticipated calls being exercised).
(Dollars in thousands)
State, county and
municipal securities
Corporate debt securities
Mortgage-backed securities
Total debt securities
After 1 Year But After 5 Years But
Within 1 Year Within 5 Years Within 10 Years After 10 Years
Amount
Yield
Amount Yield
Amount
Yield
Amount Yield
$
$
150
–
–
150
2.03% $
–
–
2.03% $
1,193
2,022
1,935
5,150
744
2.38% $
–
4.03
3.35
61,933
3.39% $ 62,677
3.15% $ 3,028
784
–
2.70
275,543
2.71% $ 279,355
2.57%
3.12
2.17
2.18%
Securities are classified as held to maturity and carried at amortized cost when management has the
positive intent and ability to hold them to maturity. Securities are classified as available for sale when they
might be sold before maturity. Securities available for sale are carried at fair value, with unrealized holding
gains and losses reported in other comprehensive income. The Company has 100% of its portfolio classified
as available for sale.
At December 31, 2019, there were no holdings of any one issuer, other than the U.S. government and its
agencies, in an amount greater than 10% of the Company’s stockholders’ equity.
The average yield of the securities portfolio was 2.37% in 2019 compared to 2.24% in 2018 and 2.00%
in 2017. The increase in the average yield from 2018 to 2019 and from 2017 to 2018 was primarily attributed
to the purchase of new securities which have a higher yield.
Deposits
The following table presents the average amount outstanding and the average rate paid on deposits by
the Company for the years 2019, 2018 and 2017.
(Dollars in thousands)
Noninterest-bearing
demand deposits
Interest-bearing demand
and savings deposits
Time deposits
Total deposits
2019
Average
Amount
Average
Rate
2018 2017
Average
Rate
Average
Amount
Average
Amount
Average
Rate
$ 211,462
–
$ 173,442
–
$ 158,924
–
640,180
361,319
$ 1,212,961
0.67%
1.60%
0.83%
534,887
326,243
$ 1,034,572
0.52%
1.01%
0.59%
517,974
353,587
$ 1,030,485
0.37%
0.81%
0.46%
3 6
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following table presents the maturities of the Company’s time deposits as of December 31, 2019.
(Dollars in thousands)
Months to maturity
3 or Less
Over 3 through 6
Over 6 through 12
Over 12 months
Time
Time
Deposits Deposits
$250,000 Less Than
$250,000
or Greater
Total
$ 8,179
12,212
17,675
17,611
$ 55,677
$ 61,724
88,926
58,542
82,610
$ 291,802
$ 69,903
101,138
76,217
100,221
$ 347,479
Average deposits increased $178.4 million in 2019 compared to 2018 and increased $4.1 million in 2018
compared to 2017. The increase in 2019 included $105.3 million, or 19.7% in interest-bearing demand and
savings deposits while, at the same time noninterest bearing deposits increased $38.0 million, or 21.9%
and time deposits increased $35.1 million, or 10.8%. The 2019 increases were primarily attributable to
the acquisition of LBC Bancshares, Inc. in May 2019. The increase in 2018 included $16.9 million, or
3.3% in interest-bearing demand and savings deposits while, at the same time noninterest bearing deposits
increased $14.5 million, or 9.1% and time deposits decreased $27.3 million, or 7.7%. Accordingly, the ratio
of average noninterest-bearing deposits to total average deposits was 17.4% in 2019, 16.8% in 2018 and
15.4% in 2017. The general increase in market rates in 2019 had the effect of (i) increasing the average cost
of interest-bearing deposits by 30 basis points in 2019 compared to 2018 and (ii) offset a portion of the impact
of increasing yields on interest-earning assets on the Company’s net interest income in 2018. The general
increase in market rates in 2018 had the effect of (i) increasing the average cost of interest-bearing deposits
by 15 basis points in 2018 compared to 2017 and (ii) offset a portion of the impact of increasing yields on
interest-earning assets on the Company’s net interest income in 2018.
Total average interest-bearing deposits increased $140.4 million, or 16.3% in 2019 compared to 2018 and
decreased $10.4 million, or 1.20% in 2018 compared to 2017. The increase in 2019 was primarily attributable
to the acquisition of LBC Bancshares, Inc. in May 2019 The decrease in 2018 was primarily attributable to
the decrease in time deposits, and for 2017, the increase was primarily attributable to the increase in interest-
bearing demand and savings accounts.
The Company supplements deposit sources with brokered deposits. As of December 31, 2019, the
Company had $2.0 million, or 0.2% of total deposits, in brokered certificates of deposit attracted by
external third parties. Additional information is provided in the Notes to Consolidated Financial Statements
for Deposits.
Off-Balance-Sheet Arrangements, Commitments, Guarantees, and Contractual Obligations
In the ordinary course of business, our Bank has granted commitments to extend credit to approved
customers. Generally, these commitments to extend credit have been granted on a temporary basis for
seasonal or inventory requirements or for construction period financing and have been approved within
the Bank’s credit guidelines. Our Bank has also granted commitments to approved customers for financial
standby letters of credit. These commitments are recorded in the financial statements when funds are
disbursed or the financial instruments become payable. The Bank uses the same credit policies for these
off-balance-sheet commitments as it does for financial instruments that are recorded in the consolidated
financial statements. Commitments generally have fixed expiration dates or other termination clauses and
may require payment of a fee. Since many of the commitment amounts expire without being drawn upon,
the total commitment amounts do not necessarily represent future cash requirements.
3 7
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following table summarizes commitments and contractual obligations outstanding at December 31, 2019.
(Dollars in thousands)
Contractual obligations:
Subordinated debentures
Other borrowed money
Operating lease liabilities
Time deposits
Other commitments:
Loan commitments
Standby letters of credit
Total contractual obligations and
other commitments
Payments Due by Period
Total
Less Than
1 Year
1 – 3 Years 3 – 5 Years
More Than
5 Years
$ 24,229
61,563
587
347,479
433,858
$
–
3,500
186
246,342
250,028
–
$
23,313
183
87,068
110,564
–
$
3,000
90
13,702
16,792
$ 24,229
31,750
128
367
56,474
102,890
1,576
104,466
102,890
1,576
104,466
–
–
–
–
–
–
–
–
–
$ 538,324
$ 354,494
$ 110,564
$ 16,792
$ 56,474
In the ordinary course of business, the Company has entered into off-balance sheet financial instruments
which are not reflected in the consolidated financial statements. These instruments include commitments
to extend credit, standby letters of credit, performance letters of credit, guarantees and liability for assets
held in trust.
Such financial instruments are recorded in the financial statements when funds are disbursed or the
instruments become payable. The Company uses the same credit policies for these off-balance sheet financial
instruments as they do for instruments that are recorded in the consolidated financial statements.
Loan commitments. The Company enters into contractual commitments to extend credit, normally with
fixed expiration dates or termination clauses, at specified rates and for specific purposes. Substantially
all of the Company’s commitments to extend credit are contingent upon customers maintaining specific
credit standards at the time of loan funding. The Company minimizes its exposure to loss under these
commitments by subjecting them to credit approval and monitoring procedures. Management assesses the
credit risk associated with certain commitments to extend credit in determining the level of the allowance for
loan losses. Loan commitments outstanding at December 31, 2019 are included in the preceding table.
Standby letters of credit. Letters of credit are written conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. In the event the customer does not perform in
accordance with the terms of the agreement with the third party, the Company would be required to fund the
commitment. The maximum potential amount of future payments the Company could be required to make is
represented by the contractual amount of the commitment. If the commitment is funded, the Company would
be entitled to seek recovery from the customer. The Company’s policies generally require that standby letters
of credit arrangements contain security and debt covenants similar to those contained in loan agreements.
Standby letters of credit outstanding at December 31, 2019 are included in the preceding table.
Capital Requirements
The Bank is required under federal law to maintain certain minimum capital levels based on ratios of
capital to total assets and capital to risk-weighted assets. The required capital ratios are minimums, and the
federal banking agencies may determine that a banking organization, based on its size, complexity or risk
profile, must maintain a higher level of capital in order to operate in a safe and sound manner. Risks such
as concentration of credit risks and the risk arising from non-traditional activities, as well as the institution’s
exposure to a decline in the economic value of its capital due to changes in interest rates, and an institution’s
3 8
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
ability to manage those risks are important factors that are to be taken into account by the federal banking
agencies in assessing an institution’s overall capital adequacy. For more information, see “Item 1. Business –
Supervision and Regulation – Regulation of the Company – Capital Requirements.”
At December 31, 2019, shareholders’ equity totaled $130.5 million compared to $95.7 million at
December 31, 2018. In addition to net income of $10.2 million, other significant changes in shareholders’
equity during 2019 included $2.7 million of dividends declared on common stock and $18.7 million of
common stock issued as part of the LBC Bancshares, Inc. acquisition. The accumulated other comprehensive
loss component of stockholders’ equity totaled $362,000 at December 31, 2019 compared to $(8.2) million
at December 31, 2018. This fluctuation was mostly related to the after-tax effect of changes in the fair value
of securities available for sale. Under regulatory requirements, the unrealized gain or loss on securities
available for sale does not increase or reduce regulatory capital and is not included in the calculation of risk-
based capital and leverage ratios. Regulatory agencies for banks and bank holding companies utilize capital
guidelines designed to measure Tier 1 and total capital and take into consideration the risk inherent in both
on-balance sheet and off-balance sheet items.
Tier 1 capital consists of common stock and qualifying preferred stockholders’ equity less goodwill
and disallowed deferred tax assets. Tier 2 capital consists of certain convertible, subordinated and other
qualifying debt and the allowance for loan losses up to 1.25% of risk-weighted assets. The Company has no
Tier 2 capital other than the allowance for loan losses.
Using the capital requirements presently in effect, the Tier 1 ratio as of December 31, 2019 was 12.52%
and total Tier 1 and 2 risk-based capital was 13.17%. Both of these measures compare favorably with the
regulatory minimum of 6% for Tier 1 and 8% for total risk-based capital. The Company’s common equity
Tier 1 ratio as of December 31, 2019 was 10.33%, which exceeds the regulatory minimum of 4.50%. The
Company’s Tier 1 leverage ratio as of December 31, 2019 was 8.92%, which exceeds the required ratio
standard of 4%.
For 2019, average capital was $117.0 million, representing 8.3% of average assets for the year. This
compares to average capital of 89.4 million, representing 7.4% of average assets for 2018.
For 2019, the Company did not have any material commitments for capital expenditures.
On August 23, 2018, the Company granted 5,650 restricted shares of common stock to T. Heath
Fountain, President and Chief Executive Officer, as part of his employment agreement. The restricted shares
will vest over a three year period.
The Company reinstated payment of common stock dividends in 2017. A cash dividend of $2.7 million
was paid in 2019 and a cash dividend of $1.69 million was paid in 2018.
The Company redeemed the remaining $9.36 million in preferred stock in 2017. In 2018, the Company
repurchased $3.17 million of warrants. Additional information is provided in the Notes to the Consolidated
Financial Statements for Preferred Stock and Warrants.
Liquidity
The Company, primarily through the actions of its subsidiary bank, engages in liquidity management to
ensure adequate cash flow for deposit withdrawals, credit commitments and repayments of borrowed funds.
Needs are met through loan repayments, net interest and fee income and the sale or maturity of existing
assets. In addition, liquidity is continuously provided through the acquisition of new deposits, the renewal of
maturing deposits and external borrowings.
Management monitors deposit flow and evaluates alternate pricing structures to retain and grow deposits.
To the extent needed to fund loan demand, traditional local deposit funding sources are supplemented by
the use of FHLB borrowings, brokered deposits and other wholesale deposit sources outside the immediate
market area. Internal policies have been updated to monitor the use of various core and non-core funding
sources, and to balance ready access with risk and cost. Through various asset/liability management
strategies, a balance is maintained among goals of liquidity, safety and earnings potential. Internal policies
that are consistent with regulatory liquidity guidelines are monitored and enforced by the Bank.
3 9
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The investment portfolio provides a ready means to raise cash if liquidity needs arise. As of December 31,
2019, the available for sale bond portfolio totaled $347.3 million. At December 31, 2018, the available
for sale bond portfolio totaled $353.1 million. Only marketable investment grade bonds are purchased.
Although approximately half of the Bank’s bond portfolio is encumbered as pledges to secure various public
funds deposits, repurchase agreements, and for other purposes, management can restructure and free up
investment securities for sale if required to meet liquidity needs.
Management continually monitors the relationship of loans to deposits as it primarily determines the
Company’s liquidity posture. Colony had ratios of loans to deposits of 74.9% as of December 31, 2019 and
72.0% as of December 31, 2018. Management employs alternative funding sources when deposit balances
will not meet loan demands. The ratios of loans to all funding sources (excluding Subordinated Debentures)
at December 31, 2019 and December 31, 2018 were 71.5% and 69.2%, respectively. Management
continues to emphasize programs to generate local core deposits as our Company’s primary funding
sources. The stability of the Banks’ core deposit base is an important factor in Colony’s liquidity position.
A heavy percentage of the deposit base is comprised of accounts of individuals and small businesses with
comprehensive banking relationships and limited volatility. At December 31, 2019 and December 31, 2018,
the Bank had $55.7 million and $53.9 million, respectively, in certificates of deposit of $250,000 or more.
These larger deposits represented 4.3% and 5.0% of total deposits as of December 31, 2019 and 2018,
respectively. Management seeks to monitor and control the use of these larger certificates, which tend to be
more volatile in nature, to ensure an adequate supply of funds as needed. Relative interest costs to attract
local core relationships are compared to market rates of interest on various external deposit sources to help
minimize the Company’s overall cost of funds.
The Company supplemented deposit sources with brokered deposits. As of December 31, 2019, the
Company had $2.0 million or 0.2% of total deposits in CDARS. Additional information is provided in
the Notes to the Consolidated Financial Statements regarding these brokered deposits. Additionally, the
Company uses external deposit listing services to obtain out-of-market certificates of deposit at competitive
interest rates when funding is needed. The deposits obtained from listing services are often referred to
as wholesale or internet CDs. As of December 31, 2019, the Company had $6.0 million, or 0.5% of total
deposits, in internet certificates of deposit obtained through deposit listing services.
To plan for contingent sources of funding not satisfied by both local and out-of-market deposit balances,
Colony and its subsidiary have established multiple borrowing sources to augment their funds management.
The Company has borrowing capacity through membership of the Federal Home Loan Bank program. The
Bank has also established overnight borrowing for Federal Funds Purchased through various correspondent
banks. Management believes the various funding sources discussed above are adequate to meet the
Company’s liquidity needs in the future without any material adverse impact on operating results.
Liquidity measures the ability to meet current and future cash flow needs as they become due. The
liquidity of a financial institution reflects its ability to meet loan requests, to accommodate possible outflows
in deposits and to take advantage of interest rate market opportunities. The ability of a financial institution
to meet its current financial obligations is a function of balance sheet structure, the ability to liquidate assets,
and the availability of alternative sources of funds. The Company seeks to ensure its funding needs are met
by maintaining a level of liquid funds through asset/liability management.
Asset liquidity is provided by liquid assets which are readily marketable or pledgeable or which will
mature in the near future. Liquid assets include cash, interest-bearing deposits in banks, securities available
for sale and federal funds sold and securities purchased under resale agreements.
Liability liquidity is provided by access to funding sources which include core deposits. Should the need
arise, the Company also maintains relationships with the Federal Home Loan Bank, Federal Reserve Bank,
two correspondent banks and repurchase agreement lines that can provide funds on short notice.
4 0
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Since Colony is a bank holding Company and does not conduct operations, its primary sources of
liquidity are dividends up streamed from the subsidiary bank and borrowings from outside sources.
The liquidity position of the Company is continuously monitored and adjustments are made to the
balance between sources and uses of funds as deemed appropriate. Management is not aware of any events
that are reasonably likely to have a material adverse effect on the Company’s liquidity, capital resources or
operations. In addition, management is not aware of any regulatory recommendations regarding liquidity,
which if implemented, would have a material adverse effect on the Company.
Impact of Inflation and Changing Prices
The Company’s financial statements included herein have been prepared in accordance with accounting
principles generally accepted in the United States (GAAP). GAAP presently requires the Company to
measure financial position and operating results primarily in terms of historic dollars. Changes in the
relative value of money due to inflation or recession are generally not considered. The primary effect of
inflation on the operations of the Company is reflected in increased operating costs, though given recent
economic conditions, the Company has not experienced any material effects of inflation during the last
three fiscal years. In management’s opinion, changes in interest rates affect the financial condition of a
financial institution to a far greater degree than changes in the inflation rate. While interest rates are greatly
influenced by changes in the inflation rate, they do not necessarily change at the same rate or in the same
magnitude as the inflation rate. Interest rates are highly sensitive to many factors that are beyond the control
of the Company, including changes in the expected rate of inflation, the influence of general and local
economic conditions and the monetary and fiscal policies of the United States government, its agencies
and various other governmental regulatory authorities, among other things, as further discussed in the
next section.
Regulatory and Economic Policies
The Company’s business and earnings are affected by general and local economic conditions and by the
monetary and fiscal policies of the United States government, its agencies and various other governmental
regulatory authorities, among other things. The Federal Reserve Board regulates the supply of money in
order to influence general economic conditions. Among the instruments of monetary policy available to the
Federal Reserve Board are (i) conducting open market operations in United States government obligations,
(ii) changing the discount rate on financial institution borrowings, (iii) imposing or changing reserve
requirements against financial institution deposits, and (iv) restricting certain borrowings and imposing or
changing reserve requirements against certain borrowings by financial institutions and their affiliates. These
methods are used in varying degrees and combinations to affect directly the availability of bank loans and
deposits, as well as the interest rates charged on loans and paid on deposits. For that reason alone, the policies
of the Federal Reserve Board have a material effect on the earnings of the Company.
Governmental policies have had a significant effect on the operating results of commercial banks in the
past and are expected to continue to do so in the future; however, the Company cannot accurately predict
the nature, timing or extent of any effect such policies may have on its future business and earnings.
Recently Issued Accounting Pronouncements
See Note 1 - Summary of Significant Accounting Policies included in the Notes to the Consolidated
Financial Statements.
41
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Market Risk and Interest Rate Sensitivity
Our financial performance is impacted by, among other factors, interest rate risk and credit risk. We do
not utilize derivatives to mitigate our credit risk, relying instead on an extensive loan review process and our
allowance for loan losses.
Interest rate risk is the change in value due to changes in interest rates. The Company is exposed only
to U.S. dollar interest rate changes and, accordingly, the Company manages exposure by considering the
possible changes in the net interest margin. The Company does not have any trading instruments nor does
it classify any portion of its investment portfolio as held for trading. The Company does not engage in any
hedging activity or utilize any derivatives. The Company has no exposure to foreign currency exchange rate
risk, commodity price risk and other market risks. Interest rate risk is addressed by our Risk Management
Committee which includes senior management representatives. The Risk Management Committee monitors
interest rate risk by analyzing the potential impact to the net portfolio of equity value and net interest income
from potential changes to interest rates and considers the impact of alternative strategies or changes in
balance sheet structure.
Interest rates play a major part in the net interest income of financial institutions. The repricing of
interest earnings assets and interest-bearing liabilities can influence the changes in net interest income. The
timing of repriced assets and liabilities is Gap management and our Company has established its policy to
maintain a Gap ratio in the one-year time horizon of .80 to 1.20.
Our exposure to interest rate risk is reviewed at least quarterly by our Board of Directors and by our
Risk Management Committee. Interest rate risk exposure is measured using interest rate sensitivity analysis
to determine our change in net portfolio value in the event of assumed changes in interest rates. In order
to reduce the exposure to interest rate fluctuations, we have implemented strategies to more closely match
our balance sheet composition. The Company has engaged FTN Financial to run a quarterly asset/liability
model for interest rate risk analysis. We are generally focusing our investment activities on securities with
terms or average lives in the 3½ - 5½ year range.
Market risk reflects the risk of economic loss resulting from adverse changes in market prices and interest
rates. This risk of loss can be reflected in either reduced current market values or reduced current and
potential net income. Colony’s most significant market risk is interest rate risk. This risk arises primarily from
Colony’s extension of loans and acceptance of deposits.
Managing interest rate risk is a primary goal of the asset liability management function. Colony
attempts to achieve stability in net interest income while limiting volatility arising from changes in interest
rates. Colony seeks to achieve this goal by balancing the maturity and repricing characteristics of assets and
liabilities. Colony manages its exposure to fluctuations in interest rates through policies established by the
Risk Management Committee and approved by the Board of Directors. The Risk Management Committee
meets at least quarterly and has responsibility for developing asset liability management policies, reviewing
the interest rate sensitivity of Colony, and developing and implementing strategies to improve balance sheet
structure and interest rate risk positioning.
Colony measures the sensitivity of net interest income to changes in market interest rates through the
utilization of Asset/Liability simulation modeling. On at least a quarterly basis, the following twenty-four
month time period is simulated to determine a baseline net interest income forecast and the sensitivity of this
forecast to changes in interest rates. These simulations include all of Colony’s earning assets and liabilities.
Forecasted balance sheet changes, primarily reflecting loan and deposit growth and forecasts, are included
in the periods modeled. Projected rates for loans and deposits are based on management’s outlook and local
market conditions.
The magnitude and velocity of rate changes among the various asset and liability groups exhibit different
characteristics for each possible interest rate scenario; additionally, customer loan and deposit preferences
can vary in response to changing interest rates. Simulation modeling enables Colony to capture the expected
effect of these differences. Assumptions utilized in the model are updated on an ongoing basis and are
reviewed and approved by the Risk Management Committee of the Board of Directors.
4 2
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Colony has modeled its baseline net interest income forecast assuming a flat interest rate environment
with the federal funds rate at the Federal Reserve’s targeted range of 1.50% to 1.75% and the prime rate of
4.75% at December 31, 2019. Colony has modeled the impact of a gradual increase in short-term rates of 100
and 200 basis points and a decline of 100 basis points to determine the sensitivity of net interest income for
the next twelve months. As illustrated in the table below, the net interest income sensitivity model indicates
that, compared with a net interest income forecast assuming stable rates, net interest income is projected to
increase by 2.54% and 3.87% if interest rates increased by 100 and 200 basis points, respectively. Net interest
income is projected to decline by 4.12% if interest rates decreased by 100 basis points. These changes were
within Colony’s policy limit of a maximum 15% negative change.
Twelve Month Net Interest Income Sensitivity
Change in short-term interest rates (in basis points)
+200
+100
Flat
-100
Estimated Change in Net Interest Income
As of December 31,
2019
3.87%
2.54%
–%
-4.12%
2018
2.36%
1.46%
–%
-2.86%
The measured interest rate sensitivity indicates an asset sensitive position over the next year, which could
serve to improve net interest income in a rising interest rate environment. The actual realized change in net
interest income would depend on several factors, some of which could serve to reduce or eliminate the asset
sensitivity noted above. These factors include a higher than projected level of deposit customer migration
to higher cost deposits, such as certificates of deposit, which would increase total interest expense and serve
to reduce the realized level of asset sensitivity. Another factor which could impact the realized interest rate
sensitivity in a rising rate environment is the repricing behavior of interest bearing non-maturity deposits.
Assumptions for repricing are expressed as a beta relative to the change in the prime rate. For instance, a
25% beta would correspond to a deposit rate that would increase 0.25% for every 1% increase in the prime
rate. Projected betas for interest bearing non-maturity deposit repricing are a key component of determining
the Company’s interest rate risk position. Should realized betas be higher than projected betas, the expected
benefit from higher interest rates would be reduced.
Colony is also subject to market risk in certain of its fee income business lines. Mortgage banking income
is subject to market risk. Mortgage loan originations are sensitive to levels of mortgage interest rates and
therefore, mortgage banking income could be negatively impacted during a period of rising interest rates.
The extension of commitments to customers to fund mortgage loans also subjects Colony to market risk. This
risk is primarily created by the time period between making the commitment and closing and delivering
the loan. Colony seeks to minimize this exposure by utilizing various risk management tools, the primary of
which are forward sales commitments and best efforts commitments.
Return on Assets and Stockholders’ Equity
The following table presents selected financial ratios for each of the periods indicated.
Return on average assets (1)
Return on average equity (1)
Equity to assets
Common stock dividends declared
(1) Computed using net income available to common shareholders.
4 3
Years Ended December 31,
2018
0.99%
13.32%
7.64%
2017
0.63%
8.28%
7.33%
2019
0.72%
8.73%
8.61%
$ 0.30
$ 0.20
$ 0.10
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Colony Bankcorp, Inc.
Opinions on the Financial Statements and Internal Control Over Financial Reporting
Opinions on the Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Colony Bankcorp, Inc. and its subsidiaries (the
Company) as of December 31, 2019 and 2018, and the related consolidated statements of operations, comprehensive income,
stockholders’ equity and cash flows for each of the two years ended December 31, 2019, and the related notes (collectively,
the financial statements). We also have audited the Company’s internal control over financial reporting as of December
31, 2019, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission in 2013.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position
of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years
in the two-year period ended December 31, 2019, in conformity with accounting principles generally accepted in the United
States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control
over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in
the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an
opinion on the Company’s financial statements and an opinion on the company’s internal control over financial reporting
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was
maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement
of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our
audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
McNAIR, McLEMORE, MIDDLEBROOKS & CO., LLC
We have served as the Company’s auditor since 1995.
Macon, Georgia
March 30, 2020
4 4
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Consolidated Balance Sheets
(Dollars in thousands)
Assets
Cash and due from banks
Fed funds sold and interest-bearing deposits in banks
Cash and cash equivalents
Investment securities available for sale, at fair value
Other investments, at cost
Loans held for sale
Loans
Allowance for loan losses
Net loans
Premises and equipment
Other real estate owned
Goodwill
Other intangible assets
Bank-owned life insurance
Deferred income taxes, net
Other assets
Total assets
Liabilities and stockholders’ equity
Deposits
Noninterest-bearing
Interest-bearing
Total deposits
Subordinated debentures
Other borrowed money
Other liabilities
Total liabilities
Commitments and contingencies (Note 16)
Stockholders’ equity
Preferred stock, stated value $1,000; 10,000,000 shares authorized,
0 shares issued and outstanding as of December 31, 2019 and 2018
Common stock, par value $1; 20,000,000 shares authorized, 9,498,783
and 8,444,908 shares issued and outstanding as of December 31, 2019
and 2018, respectively
Paid-in capital
Retained earnings
Accumulated other comprehensive income/(loss), net of tax
Total stockholders’ equity
Total liabilities and stockholders’ equity
See accompanying notes which are an integral part of these financial statements.
4 5
December 31,
$
2019
15,570
88,522
104,092
347,332
4,288
10,076
968,814
(6,863)
961,951
32,482
1,320
16,477
3,056
21,629
1,505
11,105
$ 1,515,313
232,635
$
1,061,107
1,293,742
24,229
61,563
5,273
1,384,807
$
2018
10,377
49,779
60,156
353,066
2,978
–
781,526
(7,277)
774,249
28,831
1,841
202
556
17,598
3,472
8,929
$ 1,251,878
$ 192,847
892,278
1,085,125
24,229
44,000
2,832
1,156,186
–
–
9,499
43,667
76,978
362
130,506
$ 1,515,313
8,445
25,978
69,459
(8,190)
95,692
$ 1,251,878
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Consolidated Statements of Income
For The Years Ended
December 31,
(Dollars in thousands, except per share data)
Interest income
Loans, including fees
Deposits with other banks
Investment securities
Federal funds sold
Dividends on other investments
Total interest income
Interest expense
Deposits
Federal funds purchased
Borrowed money
Total interest expense
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Noninterest income
Service charges on deposits
Other service charges, commissions and fees
Mortgage fee income
Securities gains
Other
Total noninterest income
Noninterest expenses
Salaries and employee benefits
Occupancy and equipment
Acquisition related expenses
Deposit intangible expenses
Other
Total noninterest expense
Income before income taxes
Income taxes
Net income
2019
50,278
992
8,917
64
232
60,483
10,050
1
2,587
12,638
47,845
1,104
46,741
4,783
4,263
3,199
97
2,420
14,762
26,218
4,850
2,733
600
14,493
48,894
12,609
2,398
10,211
$
$
2018
40,682
410
7,743
–
187
49,022
6,057
5
2,163
8,225
40,797
201
40,596
4,374
3,254
652
116
1,225
9,621
20,123
4,180
224
48
10,725
35,300
14,917
3,000
11,917
$
$
Net income per share of common stock
Basic
Diluted
Cash dividends declared per share of common stock
Weighted average shares outstanding, basic
Weighted average shares outstanding, diluted
See accompanying notes which are an integral part of these financial statements.
1.12
$
1.12
$
0.30
$
9,129,705
9,129,705
1.41
$
1.40
$
$
0.20
8,439,454
8,538,608
4 6
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Consolidated Statements of Comprehensive Income
(Dollars in thousands)
Net income
For The Years Ended
December 31,
2019
10,211
$
2018
11,917
$
Other comprehensive income:
Gains (losses) on securities arising during the year
Tax effect
Realized (gains) losses on sale of securities available for sale
Tax effect
Change in unrealized gains (losses) on securities available for sale,
net of reclassification adjustment and tax effects
Comprehensive income
See accompanying notes which are an integral part of these financial statements.
10,922
(2,293)
(97)
20
(2,033)
427
(116)
24
8,552
18,763
$
(1,698)
10,219
$
4 7
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Consolidated Statements of Changes in Stockholders’ Equity
(Dollars in thousands)
Balance, December 31, 2017
Other comprehensive income
Dividends on
Preferred Stock Common Stock
Amount
–
$
–
Shares
8,439,258
–
Share
–
–
Amount
$ 8,439
–
Accumulated
Other
Paid-In
Capital
$ 29,145
–
Retained Comprehensive
Income (Loss)
Earnings
$ (6,492)
$ 59,230
(1,698)
–
Total
$
90,322
(1,698)
common shares
Issuance of restricted stock
Stock-based compensation expense
Repurchase of warrants
Net income
Balance, December 31, 2018
Other comprehensive income
Dividends on
common shares
Issuance of common stock
Stock-based compensation expense
Net income
Balance, December 31, 2019
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
$
–
5,650
–
–
–
–
6
–
–
–
–
(6)
14
(3,175)
–
(1,688)
–
–
–
11,917
–
–
–
–
–
(1,688)
–
14
(3,175)
11,917
8,444,908
–
$ 8,445
–
$ 25,978
–
$ 69,459
–
$ (8,190)
8,552
$
95,692
8,552
–
1,053,875
–
–
–
1,054
–
–
–
17,655
34
–
(2,692)
–
–
10,211
–
–
–
–
(2,692)
18,709
34
10,211
9,498,783
$ 9,499
$ 43,667
$ 76,978
$
362
$ 130,506
See accompanying notes which are an integral part of these financial statements.
4 8
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Consolidated Statements of Cash Flows
For The Years Ended
(Dollars in thousands)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses
Loan discount accretion
Other purchase accounting accretion and amortization, net
Accretion and amortization of securities discounts and premiums, net
Depreciation
Amortization of intangible assets
(Gains) losses on securities available for sale
Share-based compensation expense
Increase (decrease) in unearned loan fees
(Gain) on sale of other real estate and repossessions and write-downs
(Gain) loss on sale of premises & equipment
(Increase) in bank-owned life insurance
Gain on sale of loans held for sale
Origination of loans held for sale
Proceeds from sale of loans held for sale
(Increase) decrease in other assets
Increase (decrease) in other liabilities
Net cash provided by operating activities
Cash flows from investing activities
Purchases of investment securities available for sale
Proceeds from maturities, calls, and paydowns of investment securities available for sale
Proceeds from sale of investment securities available for sale
Net loans to customers
Purchase of premises and equipment
Proceeds from sale of other real estate and repossessions
Proceeds from bank-owned life insurance
Redemption (purchase of) Federal Home Loan Bank stock
Proceeds from sale of premises and equipment
Net cash and cash equivalents paid in acquisition
Net cash (used in) provided by investing activities
Cash flows from financing activities
Noninterest-bearing customer deposits
Interest-bearing customer deposits
Dividends paid for common stock
Repurchase of warrants
Net increase (decrease) in Federal Home Loan Bank advances
Net increase (decrease) in other borrowed money
Net cash (used in) provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental disclosures of cash flow information
Cash paid during the period for interest
Cash paid during the period for income taxes
Noncash investing and financing activities
Change in unrealized (gains) losses on securities available for sale
Acquisition of real estate through foreclosure
Change in goodwill due to acquisition
Initial recognition of operating lease right-of-use assets and lease liability
See accompanying notes which are an integral part of these financial statements.
4 9
December 31,
2019
2018
$
10,211
$
11,917
1,104
(763)
(254)
1,250
2,063
600
(97)
34
109
(780)
168
(588)
(1,823)
(69,576)
61,323
573
379
3,933
(72,482)
73,313
65,513
(58,593)
(3,485)
2,553
535
(831)
690
(467)
6,746
8,753
10,633
(2,692)
–
2,000
14,563
33,257
43,936
60,156
$ 104,092
$
$
12,245
2,000
10,825
1,009
16,275
676
201
27
–
1,149
1,787
48
(116)
14
6
(42)
173
(509)
–
–
–
271
(9)
14,917
(63,683)
50,422
11,268
2,390
(2,763)
3,002
–
65
23
(10,043)
(9,319)
5,553
(445)
(1,688)
(3,175)
(3,500)
–
(3,255)
2,343
57,813
$ 60,156
$
$
8,197
2,695
(2,149)
792
202
–
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Colony Bankcorp, Inc. and subsidiaries (the “Company”) is a financial holding company headquartered
in Fitzgerald, Georgia, whose primary business is presently conducted by Colony Bank, its wholly owned
banking subsidiary (the “Bank”). Through the Bank, the Company offers a broad range of retail and
commercial banking services to its customers concentrated in central, south and coastal Georgia. The Bank
also engages in mortgage banking and SBA lending, and, as such originates, acquires, sells and services one-
to-four family residential mortgage loans and SBA loans in the Southeast. The Company is subject to the
regulations of certain state and federal agencies and are periodically examined by those regulatory agencies.
Basis of Presentation and Accounting Estimates
The consolidated financial statements include the accounts of the Company and Colony Bank. All
significant intercompany transactions and balances have been eliminated in consolidation.
In preparing the consolidated financial statements in conformity with generally accepted accounting
principles in the United States, management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the balance sheet and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates.
Acquisition Accounting
Acquisitions are accounted for under the acquisition method of accounting. Purchased assets and
assumed liabilities are recorded at their estimated fair values as of the purchase date. Any identifiable
intangible assets are also recorded at fair value. When the consideration given is less than the fair value of the
net assets received, the acquisition results in a “bargain purchase gain”. If the consideration given exceeds
the fair value of the net assets received, goodwill is recognized. Fair values are subject to refinement for up
to one year after the closing date of an acquisition as additional information regarding the closing date fair
values becomes available.
All identifiable intangible assets that are acquired in a business combination are recognized at fair value
on the acquisition date. Identifiable intangible assets are recognized separately if they arise from contractual
or other legal rights or if they are separable (i.e., capable of being sold, transferred, licensed, rented, or
exchanged separately from the entity).
Purchased loans acquired in a business combination are recorded at estimated fair value on their
purchase date and carryover of the seller’s related allowance for loan losses is prohibited. When the loans
have evidence of credit deterioration since origination and it is probable at the date of acquisition that the
Company will not collect all contractually required principal and interest payments, the difference between
contractually required payments at acquisition and the cash flows expected to be collected at acquisition
is referred to as the non-accretable difference. The Company must estimate expected cash flows at each
reporting date. Subsequent decreases to the expected cash flows will generally result in a provision for loan
losses. Subsequent increases in expected cash flows result in a reversal of the provision for loan losses to the
extent of prior provisions and adjust accretable discount if no prior provisions have been made or have been
fully reversed. This increase in accretable discount will have a positive impact on future interest income.
Transfer of Financial Assets
Transfers of financial assets are accounted for as sales, when control over the assets has been
relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated
from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage
of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective
control over the transferred assets through an agreement to repurchase them before their maturity.
5 0
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
Cash and Cash Equivalents
For purposes of reporting cash flow, cash and cash equivalents include cash on hand, cash items in
process of collection, amounts due from banks, interest-bearing deposits in banks and federal funds sold.
The bank is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank.
The reserve requirement as of December 31, 2019 and 2018 was $2.7 million and $1.9 million, respectively,
and was met by cash on hand which is reported on the Company’s consolidated balance sheets in cash and
due from banks.
Investment Securities
The Company classifies its investment securities in one of three categories: (i) trading, (ii) held to
maturity or (iii) available for sale. Trading securities are bought and held principally for the purpose of
selling them in the near term. Held to maturity securities are those securities for which the Company has the
ability and intent to hold until maturity. All other investment securities are classified as available for sale. At
December 31, 2019 and 2018, all securities were classified as available for sale.
Trading securities are carried at fair value. Unrealized gains and losses on trading securities are recorded
in earnings as a component of other noninterest income. Held to maturity securities are recorded initially at
cost and subsequently adjusted for paydowns and amortization of purchase premium or accretion of purchase
discount. Available for sale securities are carried at fair value. Unrealized holding gains and losses, net of
the related deferred tax effect, on available for sale securities are excluded from earnings and are reported
in other comprehensive income as a separate component of shareholders’ equity until realized. Transfers
of securities between categories are recorded at fair value at the date of transfer. Unrealized holding gains
or losses associated with transfers of securities from held to maturity to available for sale are recorded as a
separate component of shareholders’ equity. These unrealized holding gains or losses are amortized into
income over the remaining life of the security as an adjustment to the yield in a manner consistent with the
amortization or accretion of the original purchase premium or discount on the associated security.
The amortization of premiums and accretion of discounts are recognized in interest income using
methods approximating the interest method over the expected life of the securities. Realized gains and losses,
determined on the basis of the cost of specific securities sold, are included in earnings on the trade date. A
decline in the market value of any available for sale or held to maturity investment below cost that is deemed
other than temporary establishes a new cost basis for the security. Other than temporary impairment deemed
to be credit related is charged to earnings. Other than temporary impairment attributed to non-credit
related factors is recognized in other comprehensive income.
In determining whether other-than-temporary impairment losses exist, management considers (i) the
length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and
near-term prospects of the issuer or underlying collateral of the security and (iii) the Company’s intent and
ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any
anticipated recovery in fair value.
Other Investments
Other investments include Federal Home Loan Bank (“FHLB”) stock. These investments do not have a
readily determinable market value due to restrictions placed on transferability and therefore are carried at
cost. These investments are periodically evaluated for impairment based on ultimate recovery of par value or
cost basis. Both cash and stock dividends are reported as income.
51
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
Loans
Loans are reported at their outstanding principal balances less unearned income, net of deferred fees and
origination costs. Interest income is accrued on the outstanding principal balance. For all classes of loans,
the accrual of interest on loans is discontinued when, in management’s opinion, the borrower may be unable
to make payments as they become due, unless the loan is well secured and in the process of collection. Non-
accrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans
that are collectively evaluated for impairment and individually classified impaired loans. All interest accrued,
but not collected for loans that are placed on nonaccrual or charged off, is reversed against interest income.
Interest income on nonaccrual loans is applied against principal until the loans are returned to accrual
status. Loans are returned to accrual status when all the principal and interest amounts contractually due are
brought current and future payments are reasonably assured.
Loans Modified in a Troubled Debt Restructuring (TDR)
Loans are considered to have been modified in a TDR when, due to a borrower’s financial difficulty,
the Company makes certain concessions to the borrower that it would not otherwise consider for new debt
with similar risk characteristics. Modifications may include interest rate reductions, principal or interest
forgiveness, forbearance, and other actions intended to minimize economic loss and to avoid foreclosure or
repossession of the collateral. Generally, a nonaccrual loan that has been modified in a TDR remains on
nonaccrual status for a period of six months to demonstrate that the borrower is able to meet the terms of the
modified loan. However, performance prior to the modification, or significant events that coincide with the
modification, are included in assessing whether the borrower can meet the new terms and may result in the
loan being returned to accrual status at the time of loan modification or after a shorter performance period.
If the borrower’s ability to meet the revised payment schedule is uncertain, the loan remains on nonaccrual
status. Once a loan is modified in a troubled debt restructuring, it is accounted for as an impaired loan,
regardless of its accrual status, until the loan is paid in full, sold or charged off.
Allowance for Loan Losses
The allowance for loan losses is established as losses are estimated to have occurred through a provision
for loan losses charged to earnings. Loan losses are charged against the allowance when management
believes the loan balance to be uncollectable. Subsequent recoveries, if any, are credited to the allowance.
The allowance for loan losses is evaluated on a regular basis by management and is based upon
management’s periodic review of the collectability of the loans in light of historical experience, the
nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay,
estimated value of any underlying collateral and prevailing economic conditions. This evaluation is
inherently subjective, as it requires estimates that are susceptible to significant revisions as more information
becomes available.
The allowance consists of specific, historical and general components. The specific component relates
to loans that are classified as either doubtful, substandard or special mention. For such loans that are also
classified as impaired, an allowance is established when the discounted cash flows (or collateral value or
observable market price) of the impaired loan are lower than the carrying value of that loan. The historical
component covers nonclassified loans and is based on historical loss experience adjusted for qualitative
factors. A general component is maintained to cover uncertainties that could affect management’s estimate of
probable losses. The general component of the allowance reflects the margin of imprecision inherent in the
underlying assumptions used in the methodologies for estimating specific and historical losses in the portfolio.
General valuation allowances are based on internal and external qualitative risk factors such as (1) changes
in lending policies and procedures, including changes in underwriting standards and collections, charge offs,
and recovery practices, (2) changes in international, national, regional, and local conditions, (3) changes in
the nature and volume of the portfolio and terms of loans, (4) changes in the experience, depth, and ability of
lending management, (5) changes in the volume and severity of past due loans and other similar conditions,
5 2
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
(6) changes in the quality of the organization’s loan review system, (7) changes in the value of underlying
collateral for collateral dependent loans, (8) the existence and effect of any concentrations of credit and
changes in the levels of such concentrations, and (9) the effect of other external factors (i.e. competition, legal
and regulatory requirements) on the level of estimated credit losses.
Loans identified as losses by management, internal loan review and/or Bank examiners are charged
off. A loan is considered impaired when, based on current information and events, it is probable that the
Company will be unable to collect the scheduled payments of principal or interest when due according to
the contractual terms of the loan agreement. Factors considered by management in determining impairment
include payment status, collateral value and the probability of collecting scheduled principal and interest
payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are
not classified as impaired. Management determines the significance of payment delays and payment shortfalls
on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the
borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and
the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-
by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest
rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent.
A significant portion of the Company’s impaired loans are deemed to be collateral dependent.
Management therefore measures impairment on these loans based on the fair value of the collateral.
Collateral values are determined based on appraisals performed by qualified licensed appraisers hired by the
Company . The decision whether to obtain an external third-party appraisal usually depends on the type
of property being evaluated. External appraisals are usually obtained on more complex, income producing
properties such as hotels, shopping centers and businesses. Less complex properties such as residential lots,
farm land and single family houses may be evaluated internally by senior credit administration staff. When
the Company does obtain appraisals from external third-parties, the values utilized in the impairment
calculation are “as is” or current market values. The appraisals, whether prepared internally or externally,
may utilize a single valuation approach or a combination of approaches including the comparable sales,
income and cost approach. Appraised amounts used in the impairment calculation are typically discounted 10
percent to account for selling and marketing costs, if the repayment of the loan is to come from the sale of the
collateral. Although appraisals may not be obtained each year on all impaired loans, the collateral values used
in the impairment calculations are evaluated quarterly by management. Based on management’s knowledge
of the collateral and the current real estate market conditions, appraised values may be further discounted to
reflect facts and circumstances known to management since the initial appraisal was performed.
Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences
between the comparable sales and income data available. Such adjustments are typically significant and
result in a level 3 classification of the inputs for determining fair value. Because of the high degree of
judgment required in estimating the fair value of collateral underlying impaired loans and because of the
relationship between fair value and general economic conditions, we consider the fair value of impaired loans
to be highly sensitive to changes in market conditions.
The restructuring of a loan is considered a “troubled debt restructuring” if both (i) the borrower
is experiencing financial difficulties and (ii) the Company has granted a concession. Concessions may
include interest rate reductions to below market interest rates, principal forgiveness, restructuring
amortization schedules and other actions intended to minimize potential losses. The Company’s policy
requires a restructure request to be supported by a current, well-documented credit evaluation of the
borrower’s financial condition and a collateral evaluation that is no older than six months from the date
of the restructure. The Company’s policy states in the event a loan has been identified as a troubled debt
restructuring, it should be assigned a grade of substandard and placed on nonaccrual status until such time
that the borrower has demonstrated the ability to service the loan payments based on the restructured terms
– generally defined as six months of satisfactory payment history. The Company’s loan policy states that
a nonaccrual loan may be returned to accrual status when (i) none of its principal and interest is due and
5 3
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
unpaid, and the Company expects repayment of the remaining contractual principal and interest, or (ii) it
otherwise becomes well secured and in the process of collection. Restoration to accrual status on any given
loan must be supported by a well-documented credit evaluation of the borrower’s financial condition and
the prospects for full repayment, approved by the Company’s Chief Credit Officer. In the normal course of
business, the Company renews loans with a modification of the interest rate or terms that are not deemed as
troubled debt restructurings because the borrower is not experiencing financial difficulty.
Loan Commitments and Financial Instruments
Financial instruments include off-balance sheet credit instruments, such as commitments to make loans
and standby letters of credit, issued to meet customer financing needs. The face amount for these items
represents the exposure to loss, before considering customer collateral or ability to repay. Such financial
instruments are recorded when they are funded.
Premises and Equipment
Land is carried at cost. Other premises and equipment are carried at cost, less accumulated depreciation
computed on the straight-line method over the estimated useful lives of the assets. In general, estimated lives
for buildings are up to 40 years, furniture and equipment useful lives range from five to 10 years and the
lives of software and computer related equipment range from three to five years. Leasehold improvements
are amortized over the life of the related lease, or the related assets, whichever is shorter. Expenditures for
major improvements of the Company’s premises and equipment are capitalized and depreciated over their
estimated useful lives. Minor repairs, maintenance and improvements are charged to operations as incurred.
When assets are sold or disposed of, their cost and related accumulated depreciation are removed from the
accounts and any gain or loss is reflected in earnings.
Goodwill and Intangible Assets
Goodwill represents the excess of the cost of businesses acquired over the fair value of the net assets
acquired. Goodwill is assigned to reporting units and tested for impairment at least annually, or on an
interim basis if an event occurs or circumstances change that would more likely than not reduce the fair
value of the reporting unit below its carrying value.
Intangible assets consist of core deposit intangibles acquired in connection with a business combination.
The core deposit intangible is initially recognized based on an independent valuation performed as of the
acquisition date. The core deposit intangible is amortized by the straight-line method over the average
remaining life of the acquired customer deposits.
Cash Value of Bank Owned Life Insurance
The Company has purchased life insurance policies on certain officers. The life insurance is recorded
at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash
surrender value adjusted for other charges or other amounts due that are probable at settlement.
Other Real Estate
Other real estate generally represents real estate acquired through foreclosure and is initially recorded
at estimated fair value at the date of acquisition less the cost of disposal. Losses from the acquisition of
property in full or partial satisfaction of debt are recorded as loan losses. Properties are evaluated regularly
to ensure the recorded amounts are supported by current fair values, and valuation allowances are recorded
as necessary to reduce the carrying amount to fair value less estimated cost of disposal. Routine holding costs
and gains or losses upon disposition are included in foreclosed property expense.
5 4
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
Income Taxes
The provision for income taxes is based upon income for financial statement purposes, adjusted for
nontaxable income and nondeductible expenses. Deferred income taxes have been provided when different
accounting methods have been used in determining income for income tax purposes and for financial
reporting purposes.
Deferred tax assets and liabilities are recognized based on future tax consequences attributable to
differences arising from the financial statement carrying values of assets and liabilities and their tax basis.
The differences relate primarily to depreciable assets (use of different depreciation methods for financial
statement and income tax purposes) and allowance for loan losses (use of the allowance method for financial
statement purposes and the direct write-off method for tax purposes). In the event of changes in the tax laws,
deferred tax assets and liabilities are adjusted in the period of the enactment of those changes, with effects
included in the income tax provision. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not
be realized. The Company and its subsidiary file a consolidated federal income tax return. The subsidiary
pays its proportional share of federal income taxes to the Company based on its taxable income.
The Company’s federal and state income tax returns for tax years 2019, 2018, 2017 and 2016 are subject
to examination by the Internal Revenue Service (IRS) and the Georgia Department of Revenue, generally
for three years after filing.
The Company believes that its income tax filing positions taken or expected to be taken on its tax
returns will more likely than not be sustained upon audit by the taxing authorities and does not anticipate
any adjustments that will result in a material adverse impact on the Company’s financial condition, results of
operations, or cash flow. Therefore, no reserves for uncertain income tax positions have been recorded.
Earnings Per Share
Basic earnings per share are computed by dividing net income allocated to common shareholders by the
weighted-average number of shares of common stock outstanding during the period. Diluted earnings per
common share are computed by dividing net income allocated to common shareholders by the sum of the
weighted-average number of shares of common stock outstanding and the effect of the issuance of potential
common shares that are dilutive. Potential common shares consist of stock warrants and restricted shares
for the years ended December 31, 2019 and 2018, and are determined using the treasury stock method. The
Company has determined that its outstanding non-vested stock awards are participating securities, and all
dividends on these awards are paid similar to other dividends.
Comprehensive Income
Accounting principles generally require that recognized revenue, expenses, gains and losses be included
in net income. Certain changes in assets and liabilities, such as unrealized gains and losses on securities
available for sale, represent equity changes from economic events of the period other than transactions with
owners. Such items are considered components of other comprehensive income (loss). Accounting standards
codification requires the presentation in the consolidated financial statements of net income and all items of
other comprehensive income (loss) as total comprehensive income (loss).
Fair Value Measures
Fair values of assets and liabilities are estimated using relevant market information and other
assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters
of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in
the absence of broad markets for particular items. Changes in assumptions or in market conditions could
significantly affect these estimates.
5 5
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
Operating Segments
The Company has three reportable segments, the Banking Division, the Retail Mortgage Division
and the Small Business Specialty Lending Division. The Banking Division derives its revenues from the
delivery of full service financial services to include commercial loans, consumer loans and deposit accounts.
The Retail Mortgage Division derives its revenues from the origination, sales and servicing of one-to-four
family residential mortgage loans. The Small Business Specialty Lending Division derives its revenues from
origination, sales and servicing of SBA and USDA government guaranteed loans.
The Banking, Retail Mortgage and Small Business Specialty Lending Divisions are managed as
separate business units because of the different products and services they provide. The Company evaluates
performance and allocates resources based on profit or loss from operations. There are no material
intersegment sales or transfers.
Reclassifications
Certain amounts, previously reported, have been reclassified to state all periods on a comparable basis
and had no effect on stockholders’ equity or net income.
Accounting Standards Adopted in 2019
ASU 2016-02, Leases (Topic 842). This ASU amends the existing standards for lease accounting
effectively requiring that most leases be carried on the balance sheets of the related lessees by requiring
them to recognize a right-of-use asset and a corresponding lease liability. This includes qualitative and
quantitative disclosure requirements intended to provide greater insight into the nature of the Company’s
leasing activities. This ASU may be adopted using a modified retrospective transition method with a
cumulative effect adjustment to equity as of the beginning of the period in which it is adopted. Alternatively,
this ASU may be adopted using an optional transition method where initial application of the provisions of
this standard are applied as of the date of adoption, resulting in no adjustment to amounts reported in prior
periods. For public business entities, this ASU is effective for annual periods beginning after December 15,
2018, and interim periods therein. ASU 2016-02 was effective for the Company on January 1, 2019 with the
optional transition method elected. The Company also elected the package of practical expedients provided
in the guidance which permits the Company to not reassess under the new standard the prior conclusions
about lease identification, lease classification and initial direct costs. The adoption of this standard resulted
in the recognition of a right-of-use asset of $483 thousand and a lease liability of $483 thousand in 2019. The
right-of-use asset and lease liability are recorded in the consolidated balance sheets in other assets and other
liabilities, respectively.
ASU 2019-07, Codification Updates to SEC Sections – Amendments to SEC Paragraphs Pursuant to
SEC final rule releases No. 33-10532, disclosure update and simplification, and nos. 33-10231 and 33-10442,
investment company reporting modernization, and miscellaneous updates. This standard updates various
SEC financial statement disclosure requirements, including disclosures related to bank holding companies.
The standard was effective immediately, and did not have a material impact on disclosures.
ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities. This update shortens
the amortization period for certain callable debt securities held at a premium. Specifically, the amendments
require the premium to be amortized to the earliest call date. For securities held at a discount, the discount
will continue to be amortized to maturity. For public entities, this update is effective for fiscal years
beginning after December 15, 2018, with modified retrospective application. The adoption of this update on
January 1, 2019 did not have a material impact on the consolidated financial statements.
5 6
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
Accounting Standards Updates Pending Adoption
ASU 2016-13, Financial Instruments – Credit Losses (Topic 326). This ASU sets forth a “current
expected credit loss” (CECL) model which requires the Company to measure all expected credit losses
for financial instruments held at the reporting date based on historical experience, current conditions
and reasonable supported forecasts. This replaces the existing incurred loss model and is applicable to the
measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance
sheet credit exposures. The Company is currently assessing the impact of the adoption of this ASU on
its consolidated financial statements. In November 2019, the ASU 2019-10 was issued which delayed the
effective date of CECL for smaller reporting companies. The new effective date is for fiscal years beginning
after December 15, 2022.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting
for Income Taxes. This update removes several exceptions related to intraperiod tax allocation when there is a
loss from continuing operations and income from other items, foreign subsidiaries becoming equity method
investments and vice versa, and calculating income taxes in an interim period when a year-to-date loss
exceeds the anticipated loss for the year. The guidance also amends requirements related to franchise tax that
is partially based on income, a step up in the tax basis of goodwill, allocation of consolidated tax expense to
a legal entity not subject to tax in its separate financial statements, the effects of enacted changes in tax laws
and other minor codification improvements regarding employee stock ownership plans and investments in
qualified affordable housing projects. For public entities, this guidance is effective for fiscal years beginning
after December 15, 2020. The Company does not expect the new guidance to have a material impact on the
consolidated financial statements.
In January 2020, the FASB issued ASU No. 2020-01, Investments—Equity Securities (Topic 321),
Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—
Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues
Task Force). This update clarifies whether an entity should consider observable transactions that require it to
either apply or discontinue the equity method of accounting for the purposes of applying the measurement
alternative and how to account for certain forward contracts and purchased options to purchase securities. For
public entities, this guidance is effective for fiscal years beginning after December 15, 2020. The Company
does not expect the new guidance to have a material impact on the consolidated financial statements.
2. BUSINESS COMBINATIONS
Acquisition of Albany, Georgia Branch from Planters First Bank
On October 22, 2018, the Bank completed its acquisition of one branch office and a vacant lot from
Planters First Bank (“PFB”) located in Albany, Georgia for a total cash consideration of $10.2 million. The
assets and liabilities as of the effective date of the transaction were recorded at their respective estimated fair
values. The excess of the purchase price over the net estimated fair values of the acquired assets and liabilities
was allocated to identifiable intangible assets with the remaining excess allocated to goodwill. In the periods
following the acquisition, the financial statements will include the results attributable to the Albany branch
purchase beginning on the date of purchase.
5 7
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
The following table presents assets acquired and liabilities assumed of PFB as of October 22, 2018 and
their fair value estimates. The fair value estimates were subject to refinement for up to one year after the
closing date of the acquisition for new information obtained about the facts and circumstances that existed at
the acquisition date. The Company finalized its fair value adjustments during the third quarter of 2019.
(Dollars in thousands)
Purchase price consideration:
Cash consideration
Total purchase price for PFB branch acquisition
Assets acquired at fair value:
Cash and cash equivalents
Loans
Premises and equipment, net
Core deposit intangible
Other assets
Total fair value of assets acquired
Liabilities assumed at fair value:
Deposits
Other liabilities
Total fair value of liabilities assumed
Net assets acquired at fair value:
Amount of goodwill resulting from acquisition
$ 10,238
$ 10,238
195
$
20,430
773
560
123
$ 22,081
$ 12,032
13
$ 12,045
$ 10,036
202
$
Goodwill of $202,000, which is the excess of the purchase price over the fair value of the net assets
acquired, was recorded in the PFB acquisition and is expected to be deductible for tax purposes.
Acquired Loans
The table below summarizes the total contractually required principal and interest cash payments,
management’s estimate of expected total cash payments and the fair value of the loans. Of the total loans
acquired, there were no loans acquired considered to be credit impaired and accounted for under ASC 310-30.
(Dollars in thousands)
Performing loans acquired
Contractually
Required
Cash Flows
Principal and Expected to
be Collected
20,749
Interest
$ 20,749
Fair Value
of Acquired
Loans at
Nonaccretable Acquisition
Adjustments
319
Date
$ 20,430
Acquisition of LBC Bancshares, Inc.
On May 1, 2019, the Company completed its acquisition of LBC Bancshares, Inc. (“LBC”), a bank
holding company headquartered in LaGrange, Georgia. Upon consummation of the acquisition, LBC was
merged with and into the Company, with Colony as the surviving entity in the merger. At that time, LBC’s
wholly owned bank subsidiary, Calumet Bank, was also merged with and into the Bank. The acquisition
expanded the Company’s market presence, as Calumet Bank had two full-service banking locations, one
each in LaGrange, Georgia and Columbus, Georgia, as well as a loan production office in Atlanta, Georgia.
Under the terms of the Agreement and Plan of Merger, each LBC shareholder had the option to receive
either $23.50 in cash or 1.3239 shares of the Company’s common stock in exchange for each share of LBC
common stock, such that 55 percent of LBC shares of common stock received the stock consideration and
45 percent received the cash consideration, with at least 50 percent of the merger consideration paid in the
Company’s common stock. As a result, the Company issued 1,053,875 common shares at a fair value of
$18.7 million and paid $15.3 million in cash to the former shareholders of LBC as merger consideration.
5 8
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
The merger was effected by the issuance of shares of the Company’s common stock along with cash
consideration to shareholders to LBC. The assets and liabilities of LBC as of the effective date of the merger
were recorded at their respective estimated fair values and combined with those of the Company. The excess
of the purchase price over the net estimated fair values of the acquired assets and liabilities was allocated to
identifiable intangible assets with the remaining excess allocated to goodwill. Goodwill of $15.7 million was
recorded as part of the LBC acquisition and is not expected to be deductible for income tax purposes.
The following table presents the assets acquired and liabilities assumed of LBC as of May 1, 2019, and
their fair value estimates. The fair value estimates were subject to refinement for up to one year after the
closing date of the acquisition for new information obtained about facts and circumstances that existed at the
acquisition date. The Company continues its evaluation of the facts and circumstances available as of May 1,
2019, to assign fair values to assets acquired and liabilities assumed, which could result in further adjustments
to the fair values presented below.
(Dollars in thousands)
Purchase price consideration:
Shares of CBAN common stock issued to LBC shareholders as of May 1, 2019
Market price of CBAN common stock on May 1, 2019
Estimated fair value of CBAN common stock issued
Cash consideration paid
Total consideration
Assets acquired at fair value:
Cash and cash equivalents
Investments securities available for sale
Investments securities held to maturity
Restricted investments
Loans
Premises and equipment
Core deposit intangible
Other real owned
Prepaid and other assets
Total fair value of assets acquired
Liabilities assumed at fair value:
Deposits
FHLB advances
Payables and other liabilities
Total fair value of liabilities assumed
Net assets acquired at fair value:
Amount of goodwill resulting from acquisition
1,053,875
17.75
$
18,706
15,315
34,021
$
$
15,678
49,172
1,766
479
130,568
3,009
3,100
243
6,143
$ 210,158
$
$
$
$
(189,896)
(1,000)
(975)
(191,871)
18,287
15,734
In the acquisition, the Company purchased $130.6 million of loans at fair value, net of $2.2 million, or
1.63%, estimated discount to the outstanding principal balance. Of the total loans acquired, management
identified $176,000 that were considered to be credit impaired and are accounted for under ASC Topic
310-30. The table below summarizes the total contractually required principal and interest cash payments,
management’s estimate of expected total cash payments and fair value of the loans as of the acquisition
date for purchased credit impaired loans. Contractually required principal and interest payments have been
adjusted for estimated prepayments.
5 9
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
Dollars in thousands)
Contractually required principal and interest
Non-accretable difference
Cash flows expected to be collected
Accretable yield
Total purchased credit-impaired loans acquired
$
$
695
(519)
176
–
176
The following table presents the acquired loan data for the LBC acquisition.
(Dollars in thousands)
Acquired receivables subject to ASC 310-30
Acquired receivables not subject to ASC 310-30
Fair Value of
Acquired Loans at
Acquisition Date
$
176
$ 130,392
Contractually
Required
Principal and
Interest Payments
$
695
$ 132,381
Nonaccretable
Difference
(519)
$
–
$
Acquisition of PFB Mortgage from Planters First Bank
On May 1, 2019, the Bank completed its asset acquisition of PFB Mortgage, the secondary market
mortgage business of Planters First Bank for a total cash consideration of $833,000. The assets acquired
included premises and equipment as well as all pipeline loans. The assets acquired were recorded at their
respective estimated fair values as of the effective date of the transaction. The excess of the purchase price
over fair value of net assets acquired was allocated to goodwill.
The following table presents the assets acquired as of May 1, 2019, and their fair value estimates. The
fair value estimates were subject to refinement for up to one year after the closing date of the acquisition for
new information obtained about facts and circumstances that existed at the acquisition date. The Company
continues its evaluation of the facts and circumstances available as of May 1, 2019, to assign fair values to
assets acquired and liabilities assumed, which could result in further adjustments to the fair values presented
below.
Dollars in thousands)
Purchase price consideration:
Cash consideration paid
Total consideration
Assets acquired at fair value:
Premises and equipment
Premium on loan commitments
Other assets
Total fair value of assets acquired
Liabilities assumed at fair value:
Total fair value of liabilities assumed
Net assets acquired at fair value:
Amount of goodwill resulting from acquisition
$
$
$
$
$
$
$
833
833
78
209
5
292
–
292
541
6 0
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
3. INVESTMENT SECURITIES
The amortized cost and estimated fair value of securities available for sale along with gross unrealized
gains and losses are summarized as follows:
(Dollars in thousands)
December 31, 2019
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
Total debt securities
December 31, 2018
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
Total debt securities
Amortized
Cost
$
5,133
2,811
338,930
$ 346,874
Gross
Unrealized
Gains
Gross
Unrealized
Losses
$
36
11
2,669
$ 2,716
$
(54)
(16)
(2,188)
(2,258)
$
Fair
Value
$
5,115
2,806
339,411
$ 347,332
$
4,008
2,927
356,498
$ 363,433
$
$
18
–
303
321
$
(37)
(55)
(10,596)
$ (10,688)
$
3,989
2,872
346,205
$ 353,066
The gross unrealized losses and estimated fair value of securities aggregated by category and length of
time that securities have been in a continuous unrealized loss position are summarized as follows:
Less Than 12 Months
12 Months or Greater
Total
Estimated
Fair
Value
Unrealized
Losses
Estimated
Fair
Value
Unrealized
Losses
Estimated
Fair
Value
Unrealized
Losses
$
3,257
–
60,860
$ 64,117
$
612
2,009
39,083
$ 41,704
$
$
$
$
(54)
–
(277)
(331)
$
–
784
119,110
$ 119,894
(3)
(21)
(504)
(528)
$
1,882
863
255,747
$ 258,492
$
$
$
$
–
(16)
(1,911)
(1,927)
$
3,257
784
179,970
$ 184,011
(34)
(34)
(10,092)
(10,160)
$
2,494
2,872
294,830
$ 300,196
$
$
$
$
(54)
(16)
(2,188)
(2,258)
(37)
(55)
(10,596)
(10,688)
(Dollars in thousands)
December 31, 2019
State, county and
municipal securities
Corporate debt securities
Mortgage-backed securities
Total debt securities
December 31, 2018
State, county and
municipal securities
Corporate debt securities
Mortgage-backed securities
Total debt securities
Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and
more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1)
the length of time and the extent to which the fair value has been less than cost, (2) the financial condition
and near-term prospects of the issuer and (3) the intent and ability of the Company to retain its investment in
the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.
At December 31, 2019, ninety-eight securities have unrealized losses which have depreciated 1.2 percent
from the Company’s amortized cost basis. These securities are guaranteed by either the U.S. Government,
other governments or U.S. corporations. In analyzing an issuer’s financial condition, management considers
whether the securities are issued by the federal government or its agencies, whether downgrades by bond
6 1
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
rating agencies have occurred and the results of reviews of the issuer’s financial condition. The unrealized
losses are largely due to increases in market interest rates over the yields available at the time the underlying
securities were purchased. As management has the ability to hold debt securities until maturity, or for the
foreseeable future if classified as available-for-sale, no declines are deemed to be other than temporary.
However, the Company owns one asset-backed security at December 31, 2019 which was completely written
off during prior years. This investment is comprised of one issuance of a trust preferred security and has no
book value.
The amortized cost and fair value of investment securities as of December 31, 2019, by contractual
maturity, are shown hereafter. Expected maturities may differ from contractual maturities for certain
investments because issuers may have the right to call or prepay obligations with or without call or
prepayment penalties. This is often the case with mortgage-backed securities, which are disclosed separately
in the table below.
(Dollars in thousands)
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Mortgage-backed securities
Securities Available for Sale
Amortized
Cost
$
150
3,195
723
3,876
$
7,944
338,930
$ 346,874
Fair
Value
$
150
3,215
744
3,812
$
7,921
339,411
$ 347,332
Proceeds from sales of investments available for sale were $65.5 million in 2019 and $11.3 million in
2018. Gross realized gains totaled $416,000 in 2019 and $116,000 in 2018. Gross realized losses totaled
$322,000 in 2019 and $0 in 2018.
Investment securities having a carrying value totaling $122.3 million and $179.0 million as of
December 31, 2019 and 2018, respectively, were pledged to secure public deposits and for other purposes.
4. LOANS
The following table presents the composition of loans, segregated by class of loans, as of December 31:
(Dollars in thousands)
Construction, land and land development
Other commercial real estate
Total commercial real estate
Residential real estate
Commercial, financial, and agricultural
Consumer and other
Total loans
Legacy
Loans
$ 83,036
481,943
564,979
171,341
91,535
19,245
$ 847,100
December 31, 2019
Purchased
Loans
$
13,061
58,296
71,357
23,455
22,825
4,077
$ 121,714
Total
$ 96,097
540,239
636,336
194,796
114,360
23,322
$ 968,814
6 2
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
(Dollars in thousands)
Construction, land and land development
Other commercial real estate
Total commercial real estate
Residential real estate
Commercial, financial, and agricultural
Consumer and other
Total loans
Legacy
Loans
$ 58,812
429,184
487,996
185,577
66,131
23,435
$ 763,139
December 31, 2018
Purchased
Loans
$
$
1,498
6,777
8,275
2,015
8,035
62
18,387
Total
$
60,310
435,961
496,271
187,592
74,166
23,497
$ 781,526
Commercial and agricultural loans are extended to a diverse group of businesses within the Company’s
market area. These loans are often underwritten based on the borrower’s ability to service the debt from
income from the business. Real estate construction loans often require loan funds to be advanced prior to
completion of the project. Due to uncertainties inherent in estimating construction costs, changes in interest
rates and other economic conditions, these loans often pose a higher risk than other types of loans. Consumer
loans are originated at the bank level. These loans are generally smaller loan amounts spread across many
individual borrowers to help minimize risk.
Credit quality indicators. As part of the ongoing monitoring of the credit quality of the loan portfolio,
management tracks certain credit quality indicators including trends related to (1) the risk grade assigned
to commercial and consumer loans, (2) the level of classified commercial loans, (3) net charge-offs, (4)
nonperforming loans, and (5) the general economic conditions in the Company’s geographic markets.
The Company uses a risk grading matrix to assign a risk grade to each of its loans. Loans are graded on
a scale of 1 to 8. A description of the general characteristics of the grades is as follows:
• Grades 1 and 2 - Borrowers with these assigned grades range in risk from virtual absence of risk to
minimal risk. Such loans may be secured by Company-issued and controlled certificates of deposit
or properly margined equity securities or bonds. Other loans comprising these grades are made
to companies that have been in existence for a long period of time with many years of consecutive
profits and strong equity, good liquidity, excellent debt service ability and unblemished past
performance, or to exceptionally strong individuals with collateral of unquestioned value that fully
secures the loans. Loans in this category fall into the “pass” classification.
• Grades 3 and 4 - Loans assigned these “pass” risk grades are made to borrowers with acceptable
credit quality and risk. The risk ranges from loans with no significant weaknesses in repayment
capacity and collateral protection to acceptable loans with one or more risk factors considered to be
more than average.
• Grade 5 - This grade includes “special mention” loans on management’s watch list and is intended
to be used on a temporary basis for pass grade loans where risk-modifying action is intended in the
short-term.
• Grade 6 - This grade includes “substandard” loans in accordance with regulatory guidelines. This
category includes borrowers with well-defined weaknesses that jeopardize the payment of the debt
in accordance with the agreed terms. Loans considered to be impaired are assigned this grade, and
these loans often have assigned loss allocations as part of the allowance for loan and lease losses.
Generally, loans on which interest accrual has been stopped would be included in this grade.
6 3
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
• Grades 7 and 8 - These grades correspond to regulatory classification definitions of “doubtful” and
“loss,” respectively. In practice, any loan with these grades would be for a very short period of time,
and generally the Company has no loans with these assigned grades. Management manages the
Company’s problem loans in such a way that uncollectible loans or uncollectible portions of loans
are charged off immediately with any residual, collectible amounts assigned a risk grade of 6.
The following tables present the loan portfolio, excluding purchased loans, by credit quality indicator (risk
grade) as of December 31, 2019. Those loans with a risk grade of 1, 2, 3 or 4 have been combined in the pass
column for presentation purposes. For the periods ending December 31, 2019, the Company did not have any
loans classified as “doubtful” or a “loss”.
(Dollars in thousands)
Construction, land and land development
Other commercial real estate
Total commercial real estate
Residential real estate
Commercial, financial, and agricultural
Consumer and other
Total loans
Pass
$ 82,322
459,064
541,386
159,194
86,558
18,883
$ 806,021
Special
Mention
$
445
13,438
13,883
4,632
1,973
148
$ 20,636
Substandard
$
269
9,441
9,710
7,515
3,004
214
$ 20,443
Total
Loans
$ 83,036
481,943
564,979
171,341
91,535
19,245
$ 847,100
The following table presents the purchased loan portfolio by credit quality indicator (risk grade) as of
December 31, 2019.
(Dollars in thousands)
Construction, land and land development
Other commercial real estate
Total commercial real estate
Residential real estate
Commercial, financial, and agricultural
Consumer and other
Total loans
Pass
$ 12,996
57,881
70,877
23,097
19,443
4,077
$ 117,494
Special
Mention
–
$
381
381
249
2,949
–
$ 3,579
Substandard
$
$
65
34
99
109
433
–
641
Total
Loans
$ 13,061
58,296
71,357
23,455
22,825
4,0775
$ 121,714
The following tables present the loan portfolio, excluding purchased loans, by credit quality indicator
(risk grade) as of December 31, 2018. Those loans with a risk grade of 1, 2, 3 or 4 have been combined in
the pass column for presentation purposes. For the periods ending December 31, 2018, the Company did not
have any loans classified as “doubtful” or a “loss”.
(Dollars in thousands)
Construction, land and land development
Other commercial real estate
Total commercial real estate
Residential real estate
Commercial, financial, and agricultural
Consumer and other
Total loans
Pass
$ 58,050
409,793
467,843
167,913
63,394
23,045
$ 722,195
$
Special
Mention
45
9,574
9,619
7,107
1,366
64
$ 18,156
Substandard
$
717
9,817
10,534
10,557
1,371
326
$ 22,788
Total
Loans
$
58,812
429,184
487,996
185,577
66,131
23,435
$ 763,139
6 4
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
The following table presents the purchased loan portfolio by credit quality indicator (risk grade) as of
December 31, 2018.
(Dollars in thousands)
Construction, land and land development
Other commercial real estate
Total commercial real estate
Residential real estate
Commercial, financial, and agricultural
Consumer and other
Total loans
Pass
1,498
6,777
8,275
2,015
8,035
62
18,387
$
$
Special
Mention
–
–
–
–
–
–
–
$
$
Substandard
$
–
–
–
–
–
–
–
$
Total
Loans
$
$
1,498
6,777
8,275
2,015
8,035
62
18,387
A loan’s risk grade is assigned at the inception of the loan and is based on the financial strength of the
borrower and the type of collateral. Loan risk grades are subject to reassessment at various times throughout
the year as part of the Company’s ongoing loan review process. Loans with an assigned risk grade of 6 or
below and an outstanding balance of $250,000 or more are reassessed on a quarterly basis. During this
reassessment process individual reserves may be identified and placed against certain loans which are
not considered impaired. In assessing the overall economic condition of the markets in which it operates,
the Company monitors the unemployment rates for its major service areas. The unemployment rates are
reviewed on a quarterly basis as part of the allowance for loan loss determination.
Loans are considered past due if the required principal and interest payments have not been received as
of the date such payments were due. Generally, loans are placed on nonaccrual status if principal or interest
payments become 90 days past due or when, in management’s opinion, the borrower may be unable to meet
payment obligations as they become due, as well as when required by regulatory provision. Loans may be
placed on nonaccrual status regardless of whether such loans are considered past due.
The following table represents an age analysis of past due loans and nonaccrual loans, segregated by
class of loans, excluding purchased loans, as of December 31, 2019:
(Dollars in thousands)
Construction, land
and land development
Other commercial real estate
Total commercial real estate
Residential real estate
Commercial, financial,
and agricultural
Consumer and other
Total loans
Current
Loans
Total
Loans
$ 82,954
477,870
560,824
166,402
89,695
19,086
$ 836,007
$ 83,036
481,943
564,979
171,341
91,535
19,245
$ 847,100
Accruing Loans
90 Days
or More
Past
Due
30-89
Days Past
Due
Total
Accruing
Loans Past Nonaccrual
Due
Loans
$
50
335
385
1,296
212
21
$ 1,914
$
$
–
–
–
–
–
–
–
$
50
335
385
1,296
212
21
$ 1,914
$
32
3,738
3,770
3,643
1,628
138
$ 9,179
6 5
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
The following table represents an age analysis of past due loans and nonaccrual loans, segregated by
class of loans, for purchased loans, as of December 31, 2019:
Accruing Loans
90 Days
or More
Past
Due
30-89
Days Past
Due
Total
Accruing
Loans Past Nonaccrual
Due
Loans
$
–
83
83
57
553
8
$ 701
$
$
–
–
–
–
–
–
–
$
$
–
83
83
57
553
8
701
$
96
34
130
85
433
–
$ 648
Current
Loans
$ 12,965
58,179
71,144
23,313
21,839
4,069
$ 120,365
Total
Loans
$ 13,061
58,296
71,357
23,455
22,825
4,077
$ 121,714
(Dollars in thousands)
Construction, land
and land development
Other commercial real estate
Total commercial real estate
Residential real estate
Commercial, financial,
and agricultural
Consumer and other
Total loans
The following table represents an age analysis of past due loans and nonaccrual loans, segregated by
class of loans, excluding purchased loans, as of December 31, 2018:
Accruing Loans
90 Days
or More
Past
Due
30-89
Days Past
Due
Total
Accruing
Loans Past Nonaccrual
Due
Loans
$
88
755
843
6,882
399
110
$ 8,234
$
$
–
–
–
–
–
–
–
$
88
755
843
6,882
399
110
$ 8,234
$ 463
5,018
5,481
2,734
1,050
217
$ 9,482
Current
Loans
$ 58,349
424,166
482,515
182,843
65,081
23,218
$ 753,657
Total
Loans
$ 58,812
429,184
487,996
185,577
66,131
23,435
$ 763,139
(Dollars in thousands)
Construction, land
and land development
Other commercial real estate
Total commercial real estate
Residential real estate
Commercial, financial,
and agricultural
Consumer and other
Total loans
The following table represents an age analysis of past due loans and nonaccrual loans, segregated by
class of loans, for purchased loans, as of December 31, 2018:
(Dollars in thousands)
Construction, land
and land development
Other commercial real estate
Total commercial real estate
Residential real estate
Commercial, financial,
and agricultural
Consumer and other
Total loans
Accruing Loans
90 Days
or More
Past
Due
30-89
Days Past
Due
Total
Accruing
Loans Past Nonaccrual
Due
Loans
$
$
–
–
–
–
–
–
–
$
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$
$
6 6
$
$
–
–
–
–
–
–
–
Current
Loans
$
1,498
6,777
8,275
2,015
8,035
62
$ 18,387
Total
Loans
$
1,498
6,777
8,275
2,015
8,035
62
$ 18,387
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
The following table details impaired loan data, including purchased credit impaired loans, as of
December 31, 2019:
(Dollars in thousands)
With no related allowance recorded
Construction, land and land development
Commercial real estate
Residential real estate
Commercial, financial and agricultural
Consumer and other
Total impaired loans with no allowance
With an allowance recorded
Construction, land and land development
Commercial real estate
Residential real estate
Commercial, financial and agricultural
Consumer and other
Total impaired loans with allowance
Purchased credit impaired loans
Construction, land and land development
Commercial real estate
Residential real estate
Commercial, financial and agricultural
Consumer and other
Total purchased credit impaired loans
Total
Construction, land and land development
Commercial real estate
Residential real estate
Commercial, financial and agricultural
Consumer and other
Unpaid
Contractual
Principal
Balance
$
67
12,455
2,706
257
–
15,485
–
6,379
757
2,189
–
9,325
65
34
11
37
–
147
Recorded
Investment
Related
Allowance
$
67
11,639
2,711
257
–
14,674
–
6,385
760
1,989
–
9,134
65
34
11
37
–
147
$
–
–
–
–
–
–
–
1,939
137
1,073
–
3,149
–
–
6
–
–
6
Average
Recorded
Investment
$
168
13,924
3,693
910
123
18,818
80
3,898
367
722
–
5,067
80
35
24
47
–
186
132
18,868
3,474
2,483
–
$ 24,957
132
18,058
3,482
2,283
–
$ 23,955
–
1,939
143
1,073
–
$ 3,155
328
17,857
4,084
1,679
123
$ 24,071
6 7
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
Interest income recorded on impaired loans during the year ended December 31, 2019 was $175,000,
and reflects interest income recorded on nonaccrual loans prior to them being placed on nonaccrual status
and interest income recorded on TDRs. Had nonaccrual loans performed in accordance with their original
contractual terms, the Company would have recognized additional interest income of approximately
$221,000 for the year ended December 31, 2019.
The following table details impaired loan data as of December 31, 2018. There were no purchased credit
impaired loans and related allowance for loan losses as of December 31, 2018.
(Dollars in thousands)
With no related allowance recorded
Construction, land and land development
Commercial real estate
Residential real estate
Commercial, financial and agricultural
Consumer and other
With an allowance recorded
Construction, land and land development
Commercial real estate
Residential real estate
Commercial, financial and agricultural
Consumer and other
Total
Construction, land and land development
Commercial real estate
Residential real estate
Commercial, financial and agricultural
Consumer and other
Unpaid
Contractual
Principal
Balance
$
132
14,218
4,214
1,029
217
19,810
399
4,055
274
42
–
4,770
Recorded
Investment
Related
Allowance
$
132
14,216
4,130
1,008
217
19,703
399
4,055
274
42
–
4,770
$
–
–
–
–
–
–
39
1,312
61
6
–
1,418
531
18,273
4,488
1,071
217
$ 24,580
531
18,271
4,404
1,050
217
$ 24,473
39
1,312
61
6
–
$ 1,418
Average
Recorded
Investment
$
69
12,401
4,067
909
198
17,644
466
5,489
98
8
–
6,061
535
17,890
4,165
917
198
$ 23,705
Interest income recorded on impaired loans during the year ended December 31, 2018 was $320,000,
and reflects interest income recorded on nonaccrual loans prior to them being placed on nonaccrual status
and interest income recorded on TDRs. Had nonaccrual loans performed in accordance with their original
contractual terms, the Company would have recognized additional interest income of approximately
$226,000 for the year ended December 31, 2018.
6 8
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
Troubled Debt Restructurings (TDRs) are troubled loans on which the original terms of the loan
have been modified in favor of the borrower due to deterioration in the borrower’s financial condition.
Each potential loan modification is reviewed individually and the terms of the loan are modified to meet
the borrower’s specific circumstances at a point in time. Not all loan modifications are TDRs. Loan
modifications are reviewed and approved by the Company’s senior lending staff, who then determine
whether the loan meets the criteria for a TDR. Generally, the types of concessions granted to borrowers that
are evaluated in determining whether a loan is classified as a TDR include:
•
Interest rate reductions - Occur when the stated interest rate is reduced to a nonmarket rate or a rate the
borrower would not be able to obtain elsewhere under similar circumstances.
• Amortization or maturity date changes - Result when the amortization period of the loan is extended beyond
what is considered a normal amortization period for loans of similar type with similar collateral.
•
Principal reductions - These are often the result of commercial real estate loan workouts where two
new notes are created. The primary note is underwritten based upon the Company’s normal
underwriting standards and is structured so that the projected cash flows are sufficient to repay
the contractual principal and interest of the newly restructured note. The terms of the secondary
note vary by situation and often involve that note being charged off, or the principal and interest
payments being deferred until after the primary note has been repaid. In situations where a portion
of the note is charged off during modification, there is often no specific reserve allocated to those
loans. This is due to the fact that the amount of the charge-off usually represents the excess of
the original loan balance over the collateral value and the Company has determined there is no
additional exposure on those loans.
As discussed in Note 1, Summary of Significant Accounting Policies, once a loan is identified as a TDR,
it is accounted for as an impaired loan. The Company had no unfunded commitments to lend to a customer
that has a troubled debt restructured loan as of December 31, 2019. The Company had no loan contracts
restructured during 2019. The Company had one loan contract in the amount of $402,000 restructured
during 2018.
Loans modified in a troubled debt restructuring are considered to be in default once the loan becomes
90 days past due. A TDR may cease being classified as impaired if the loan is subsequently modified at
market terms and, has performed according to the modified terms for at least six months, and there has not
been any prior principal forgiveness on a cumulative basis.
During 2019, the Company had one loan totaling $859,000 that subsequently defaulted. This loan failed
to continue to perform as agreed and was moved to non-accrual status. During 2018, the Company had one
loan $131,000 that subsequently defaulted. This loan failed to continue to perform as agreed and was moved
to non-accrual status.
6 9
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
5. ALLOWANCE FOR LOAN LOSSES
The following tables detail activity in the allowance for loan losses, segregated by class of loan, for the
year ended December 31, 2019. Allocation of a portion of the allowance to one category of loans does not
preclude its availability to absorb losses in other loan categories and periodically may result in reallocation
within the provision categories.
Construction,
Land and
Land
Other
Commercial
Commercial Residential Financial, and
Real Estate Agricultural
Consumer
and
Other
Total
Development Real Estate
$
$
131
(29)
82
31
215
$
$
5,251
(119)
218
(1,442)
3,908
$
$
1,181
(758)
174
383
980
$
$
618
(403)
36
1,406
1,657
$
$
96
(784)
65
726
103
$
$
7,277
(2,093)
575
1,104
6,863
$
–
$
1,939
$
137
$ 1,073
$
–
$
3,149
215
–
215
1,969
–
3,908
$
837
6
980
$
584
–
1,657
$
103
–
103
3,708
6
6,863
$
$
(Dollars in thousands)
Twelve months ended
December 31, 2019
Beginning balance
Charge-offs
Recoveries
Provision
Ending balance
Period-end amount
allocated to:
Individually evaluated
for impairment
Collectively evaluated
for impairment
Purchase credit impaired
Ending balance
$
Loans:
Loans individually evaluated
for impairment
$
67
$ 18,024
$
3,471
$ 2,246
$
–
$ 23,808
Loans collectively evaluated
for impairment
Purchased credit impaired
Ending balance
95,965
65
$ 96,097
522,181
34
$ 540,239
191,314
11
$ 194,796
112,077
37
$ 114,360
23,322
–
$ 23,322
944,859
147
$ 968,814
7 0
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
The following tables detail activity in the allowance for loan losses, segregated by class of loan, for the
year ended December 31, 2018. Allocation of a portion of the allowance to one category of loans does not
preclude its availability to absorb losses in other loan categories and periodically may result in reallocation
within the provision categories.
Construction,
Land and
Land
Development
Other
Commercial
Real Estate
Residential
Real Estate
Commercial
Financial, and
Agricultural
Consumer
and
Other
Total
$
$
$
$
1,216
–
155
(1,240)
131
$
$
4,653
(257)
52
803
5,251
$
$
968
(162)
91
284
1,181
39
$
1,312
$
61
92
131
3,939
5,251
$
1,120
1,181
$
$
$
$
$
633
(246)
161
70
618
6
612
618
$
$
$
$
37
(300)
75
284
96
$
$
7,507
(965)
534
201
7,277
–
$
1,418
96
96
5,859
7,277
$
(Dollars in thousands)
Twelve months ended
December 31, 2018
Beginning balance
Charge-offs
Recoveries
Provision
Ending balance
Period-end amount
allocated to:
Individually evaluated
for impairment
Collectively evaluated
for impairment
Ending balance
Loans:
Loans individually evaluated
for impairment
$
531
$ 18,271
$
4,404
$
1,050
$
217
$ 24,473
Loans collectively evaluated
for impairment
Ending balance
59,779
$ 60,310
417,690
$ 435,961
183,188
$ 187,592
73,116
$ 74,166
23,280
$ 23,497
757,053
$ 781,526
6. PREMISES AND EQUIPMENT
Premises and equipment are comprised of the following as of December 31:
(Dollars in thousands)
Land
Building
Furniture, fixtures and equipment
Leasehold improvements
Construction in progress
Total cost
Accumulated depreciation
Total premises and equipment
2019
$ 10,914
30,518
13,690
809
117
56,048
(23,566)
$ 32,482
2018
$ 10,935
26,545
12,782
697
581
51,540
(22,709)
$ 28,831
Depreciation charged to operations totaled $2.1 million in 2019 and $1.8 million in 2018.
7 1
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
7. OTHER REAL ESTATE OWNED
The following is a summary of the activity in other real estate owned during the years ended December 31,
2019 and 2018:
(Dollars in thousands)
Balance, beginning of year
Loans transferred to other real estate
Acquired in acquisitions
Sales proceeds
Transfer to premises and equipment
Net gain/(loss) on sale and writedowns
Ending balance
2019
$ 1,841
1,009
243
(2,553)
–
780
$ 1,320
2018
$ 4,256
792
–
(2,949)
(300)
42
$ 1,841
At December 31, 2018, the Company held $564,748 of residential real estate property as foreclosed
property. Also at December 31, 2018, $25,069 of consumer mortgage loans collateralized by residential real
estate property was in the process of foreclosure according to local requirements of the applicable jurisdictions.
8. GOODWILL AND INTANGIBLE ASSETS
The following is an analysis of the core deposit intangible activity for the years ended December 31:
(Dollars in thousands)
Amortizable intangible assets:
Core deposit intangible
Total
Unamortizable intangible assets:
Goodwill
2019
Gross
2018
Gross
Carrying Accumulated Carrying Accumulated
Amount Amortization
Amount Amortization
$ 4,716
4,716
$ 1,660
1,660
$ 1,616
1,616
$ 1,060
1,060
$ 16,477
$
202
Activity related to transactions since January 1, 2018 includes the following:
(1) In connection with the October 22, 2018 acquisition of Albany, Georgia branch from Planters First
Bank, the Company recorded $560,000 in a core deposit intangible and $202,000 in goodwill.
(2) In connection with the LBC Bancshares, Inc. acquisition on May 1, 2019, the Company recorded
$3.1 million in a core deposit intangible and $15.7 million in goodwill.
(3) In connection with the May 1, 2019 acquisition of PFB Mortgage from Planters First Bank, the
Company recorded $541,000 in goodwill.
Amortization expense related to the core deposit intangible was $600,000 and $48,000 at December 31,
2019 and 2018, respectively. The estimated future amortization expense for intangible assets remaining as of
December 31, 2019 is as follows:
(Dollars in thousands)
2020
2021
2022
2023
2024
Thereafter
Total
7 2
Amount
776
$
665
554
444
333
284
$ 3,056
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
9. INCOME TAXES
The income tax expense in the consolidated statements of income for the years ended December 31, 2019
and 2018 are as follows:
(Dollars in thousands)
Current federal expense
Deferred federal expense
Federal income tax expense
Current state income tax expense
Federal and state income tax expense
2019
$ 1,881
517
2,398
–
$ 2,398
2018
$ 2,727
273
3,000
–
$ 3,000
The Company’s income tax expense differs from amounts computed by applying the federal statutory
rates to income before income taxes. A reconciliation of the differences for the years ended December 31,
2019 and 2018 is as follows:
(Dollars in thousands)
Tax at federal income tax rate
Change resulting from:
Tax-exempt interest
Income in cash value of bank owned life insurance
Nondeductible merger expenses
Other
Provision for income taxes
2019
$ 2,648
2018
3,133
$
(130)
(113)
39
(46)
$ 2,398
(57)
(97)
9
12
$ 3,000
The components of deferred income taxes for the years ended December 31, 2019 and 2018 are as follows:
(Dollars in thousands)
Deferred tax assets
Allowance for loan losses
Other real estate
Deferred compensation
Core deposit intangible
Unrealized loss on securities available for sale
Goodwill
Restricted stock
Purchase accounting adjustments
Other
Nonaccrual interest
Gross deferred tax assets
Deferred tax liabilities
Premises and equipment
Unrealized gain on securities available for sale
Core deposit intangible
Other
Gross deferred tax liabilities
Net deferred tax assets
7 3
2019
2018
$ 1,624
115
163
–
–
33
9
633
401
2
2,980
839
96
533
7
1,475
$ 1,505
$ 1,528
184
148
1
2,177
48
2
–
411
2
4,501
1,023
–
–
6
1,029
3,472
$
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
10. DEPOSITS
The aggregate amount of overdrawn deposit accounts reclassified as loan balances totaled $718,000 and
$476,000 as of December 31, 2019 and 2018, respectively.
Components of interest-bearing deposits as of December 31 are as follows:
(Dollars in thousands)
Interest-bearing demand
Savings
Time, $250,000 and over
Other time
Total interest-bearing deposits
2019
$ 624,658
88,970
55,677
291,802
$ 1,061,107
2018
$ 471,795
79,453
53,881
287,149
$ 892,278
At December 31, 2019 and 2018, the Company had brokered deposits of $2.0 million and $5.0 million,
respectively. All of these brokered deposits represent Certificate of Deposit Account Registry Service
(CDARS) reciprocal deposits. The CDARS deposits are ones in which customers placed core deposits into
the CDARS program for FDIC insurance coverage and the Company receives reciprocal brokered deposits
in a like amount. The aggregate amount of jumbo certificates of deposit, each with a minimum denomination
of $250,000 was $55.7 million and $53.9 million as of December 31, 2019 and 2018, respectively.
As of December 31, 2019, the scheduled maturities of certificates of deposit are as follows:
(Dollars in thousands)
Year ending December 31
2020
2021
2022
2023
2024
Thereafter
Total time deposits
Amount
$ 246,342
52,165
34,903
9,555
4,147
367
$ 347,479
11. OTHER BORROWED MONEY
The following table presents information regarding the Company’s outstanding borrowings at
December 31, 2019:
(Dollars in thousands)
Description
FHLB Advances
FHLB Advances
FHLB Advances
FHLB Advances
FHLB Advances
FHLB Advances
FHLB Advances
FHLB Advances
Term Note
Revolving Credit
Total other borrowings
Weighted average rate
Maturity Date
March 23, 2020
June 1, 2020
August 15, 2022
February 3, 2023
August 15, 2025
August 24, 2026
March 21, 2028
July 30, 2029
May 24, 2025
May 21, 2021
Amount
$ 2,500
1,000
18,000
3,000
4,500
3,000
5,000
10,000
9,250
5,313
$ 61,563
Interest Rate
2.17%
1.65%
2.69%
3.51%
2.62%
1.27%
2.67%
1.01%
4.70%
5.15%
2.86%
7 4
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
The following table presents information regarding the Company’s outstanding borrowings at
December 31, 2018:
(Dollars in thousands)
Description
FHLB Advances
FHLB Advances
FHLB Advances
FHLB Advances
FHLB Advances
FHLB Advances
FHLB Advances
Total other borrowings
Weighted average rate
Maturity Date
March 23, 2020
August 15, 2022
February 3, 2023
August 23, 2023
August 15, 2025
August 24, 2026
March 21, 2028
Amount
$ 2,500
18,000
3,000
3,000
4,500
3,000
5,000
$ 44,000
Interest Rate
2.17%
2.69%
3.51%
0.98%
2.62%
1.27%
2.67%
2.39%
As collateral on the outstanding FHLB advances, the Company has provided a blanket lien on its
portfolio of qualifying residential first mortgage loans and commercial loans. At December 31, 2019 and
2018, the lendable collateral value of those loans pledged was $111.6 million and $108.6 million, respectively.
At December 31, 2019, the Company had remaining credit availability from the FHLB of $321.4 million.
At December 31, 2018, the Company had remaining credit availability from the FHLB of $252.1 million.
The Company may be required to pledge additional qualifying collateral in order to utilize the full amount
of the remaining credit line.
At December 31, 2019 and 2018, the Company also has available federal funds lines of credit with
various financial institutions totaling $55.0 million and $43.5 million, respectively, of which there were none
outstanding at December 31, 2019 and 2018.
The Company has the ability to borrow funds from the Federal Reserve Bank (FRB) of Atlanta
utilizing the discount window. The discount window is an instrument of monetary policy that allows eligible
institutions to borrow money from the FRB on a short-term basis to meet temporary liquidity shortages
caused by internal or external disruptions. At December 31, 2019, the Company had borrowing capacity
available under this arrangement, with no outstanding balances. The Company would be required to pledge
certain available-for-sale investment securities as collateral under this agreement.
On May 1, 2019, the Company completed a borrowing arrangement with a correspondent bank for
$10.0 million. The term note is secured by the Bank’s stock, expires on May 1, 2024, and bears a fixed
interest rate of 4.70 percent. The proceeds were used for the acquisition of LBC Bancshares, Inc. and its
subsidiary, Calumet Bank. As of December 31, 2019, the outstanding balance totaled $9.3 million.
On May 1, 2019, the Company completed a revolving credit arrangement with a correspondent bank
with a maximum line amount of $10.0 million. This line of credit is secured by the Bank’s stock, expires
on May 1, 2021, and bears a variable interest rate of Wall Street Journal Prime minus 0.40 percent. The
Company advanced $5.3 million that was used toward the acquisition of LBC Bancshares, Inc. and its
subsidiary, Calumet Bank. As of December 31, 2019, the outstanding balance totaled $5.3 million.
7 5
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
12. SUBORDINATED DEBENTURES (TRUST PREFERRED SECURITIES)
The following table presents the information regarding the Company’s subordinated debentures at
December 31, 2019:
(Dollars in thousands)
Description
Colony Bankcorp Statutory Trust III 6/17/2004
4/13/2006
Colony Bankcorp Capital Trust I
3/12/2007
Colony Bankcorp Capital Trust II
9/14/2007
Colony Bankcorp Capital Trust III
Date
Added
3-Month
Amount Libor Rate Points
2.68%
$ 4,640 1.89963%
1.50%
5,155 1.94463%
1.65%
9,279 1.96050%
1.40%
5,155 1.93550%
Total
Interest
5-Year
Call
Rate Maturity Option
6/14/2034
4/13/2036
3/12/2037
9/14/2037
4.57963%
3.44463%
3.61050%
3.33550%
6/17/2009
4/13/2011
3/12/2012
9/14/2012
The Trust Preferred Securities are recorded as subordinated debentures on the consolidated balance
sheets, and subject to certain limitations, qualify as Tier 1 Capital for regulatory capital purposes. The
proceeds from these offerings were used to fund certain acquisitions, pay off holding company debt and inject
capital into the Bank subsidiary. The Trust Preferred Securities pay interest quarterly.
13. LEASES
A lease is defined as a contract, or part of a contract, that conveys the right to control the use of
identified property, plant or equipment for a period of time in exchange for consideration. On January 1,
2019, the Company adopted ASU No. 2016-02 and all subsequent ASUs that modified this topic (collectively
referred to as “Topic 842”). For the Company, Topic 842 primarily affected the accounting treatment for
operating lease agreements in which the Company is the lessee.
Substantially all of the leases in which the Company is the lessee are comprised of real estate for
branches and office space with terms extending through 2027. All of our leases are classified as operating
leases, and therefore, were previously not recognized on the Company’s consolidated balance sheet. With
the adoption of Topic 842, operating lease arrangements are required to be recognized on the consolidated
balance sheet as a right-of-use (“ROU”) asset and a corresponding lease liability.
The following table represents the consolidated balance sheet classification of the Company’s ROU assets
and liabilities. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve
months or less), or equipment leases (deemed immaterial) on the consolidated balance sheet.
(Dollars in thousands)
Assets
Operating lease right-of-use assets
Liabilities
Operating lease liabilities
Classification
December 31,
2019
Other assets
$
572
Other liabilities $
547
The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the
length of the lease term and the discount rate used to present value the minimum lease payments. The
Company’s lease agreements often include one or more options to renew at the Company’s discretion. If
at lease inception the Company considers the exercising of a renewal option to be reasonably certain, the
Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding
the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily
determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at
lease inception, on a collateralized basis, over a similar term. For operating leases existing prior to January 1,
2019, the rate for the remaining lease term as of January 1, 2019 was used.
7 6
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
For 2019, operating lease cost was $152,000. Rental expense measured under ASC Topic 840, Leases,
was $443,000 for 2018.
As of December 31, 2019, the weighted average remaining lease term was 5.35 years and the weighted
average discount rate was 2.06%.
The following table represents the future maturities of the Company’s operating lease liabilities and other
lease information.
(Dollars in thousands)
Year
2020
2021
2022
2023
2024
Thereafter
Total lease payments
Less: interest
Present value of lease liabilities
(Dollars in thousands)
Supplemental lease information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (cash payments)
Operating cash flows from operating leases (lease liability reduction)
Operating lease right-of-use assets obtained in exchange for leases entered into during the period
Lease
Liability
$
$
186
110
73
45
45
128
587
(40)
547
December 31,
2019
$
$
$
151
138
676
14. PREFERRED STOCK AND WARRANT
The Company redeemed 9,360 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A
(the Preferred Stock) outstanding with private investors as of March 31, 2017. The Company redeemed 8,661
shares of Preferred Stock at $1,000 per share in 2016. The Company redeemed 9,979 shares of Preferred
Stock at $1,000 per share during 2015. The Company currently has no outstanding shares of Preferred
Stock. The Company also had a warrant (the Warrant) to purchase up to 500,000 shares of the Company’s
common stock outstanding with private investors. The Warrant was repurchased by the Company on
June 5, 2018, for $3,175,000. Both the Preferred Stock and the Warrant originated in 2009 through
transactions with the United States Department of the Treasury and were subsequently sold to the public
through an auction process during 2013. The Company had no outstanding warrants as of December 31,
2019 and 2018.
15. EMPLOYEE BENEFIT PLAN
The Company offers a defined contribution 401(k) Profit Sharing Plan (the Plan) which covers
substantially all employees who meet certain age and service requirements. The Plan allows employees to
make voluntary pre-tax salary deferrals to the Plan. The Company, at its discretion, may elect to make
an annual contribution to the Plan equal to a percentage of each participating employee’s salary. Such
discretionary contributions must be approved by the Company’s board of directors. Employees are fully
vested in the Company contributions after six years of service. In 2019 and 2018, the Company made total
contributions of $674,000 and $710,000 to the Plan, respectively.
7 7
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
16. COMMITMENTS AND CONTINGENCIES
Credit-related financial instruments. The Company is a party to credit-related financial instruments with
off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These
financial instruments include commitments to extend credit, standby letters of credit and commercial letters
of credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of
the amount recognized in the consolidated balance sheets.
The Company’s exposure to credit loss is represented by the contractual amount of these commitments.
The Company follows the same credit policies in making commitments as it does for on-balance sheet
instruments.
At December 31, 2019 and 2018, the following financial instruments were outstanding whose contract
amounts represent credit risk:
(Dollars in thousands)
Commitments to extend credit
Standby letters of credit
Contract Amount
2019
$ 102,890
1,576
2018
$ 98,736
1,525
Commitments to extend credit are agreements to lend to a customer as long as there is no violation
of any condition established in the contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. The commitments for equity lines of credit may expire
without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future
cash requirements. The amount of collateral obtained, if it is deemed necessary by the Company, is based on
management’s credit evaluation of the customer.
Unfunded commitments under commercial lines of credit, revolving credit lines and overdraft protection
agreements are commitments for possible future extensions of credit to existing customers. These lines of
credit are uncollateralized and usually do not contain a specified maturity date and may not be drawn upon
to the total extent to which the Company is committed.
Standby and performance letters of credit are conditional lending commitments issued by the Company
to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to
support public and private borrowing arrangements. Essentially all letters of credit issued have expiration
dates within one year. The credit risk involved in issuing letters of credit is essentially the same as that
involved in extending loan facilities to customers.
Legal contingencies. In the ordinary course of business, there are various legal proceedings pending against
Colony and its subsidiaries. The aggregate liabilities, if any, arising from such proceedings would not, in the
opinion of management, have a material adverse effect on Colony’s consolidated financial position.
17. DEFERRED COMPENSATION PLAN
Colony Bank, the wholly-owned subsidiary, has deferred compensation plans covering certain former
directors and certain officers choosing to participate through individual deferred compensation contracts.
In accordance with terms of the contracts, the Bank is committed to pay the participant’s deferred
compensation over a specified number of years, beginning at age 65. In the event of a participant’s death
before age 65, payments are made to the participant’s named beneficiary over a specified number of years,
beginning on the first day of the month following the death of the participant.
Liabilities accrued under the plans totaled $774,000 and $707,000 as of December 31, 2019 and 2018,
respectively. Benefit payments under the contracts were $82,000 in 2019 and $108,000 in 2018.
Provisions charged to operations totaled $63,000 in 2019 and $52,000 in 2018.
The Company has purchased life insurance policies on the plans’ participants and uses the cash flow
from these policies to partially fund the plan. Fee income recognized with these plans totaled $190,525 in
2019 and $135,000 in 2018.
7 8
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
18. RELATED PARTY TRANSACTIONS
The following table reflects the activity and aggregate balance of direct and indirect loans to directors,
executive officers or principal holders of equity securities of the Company. All such loans were made on
substantially the same terms, including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and do not involve more than a normal risk of collectability. A
summary of activity of related party loans is shown below:
(Dollars in thousands)
Balance, beginning
New loans
Repayments
Transactions due to changes in directors
Balance, ending
2019
692
4,777
(3,855)
4,793
6,407
$
$
2018
745
114
(167)
–
692
$
$
19. FAIR VALUE OF FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Generally accepted accounting standards in the U.S. require disclosure of fair value information about
financial instruments, whether or not recognized on the face of the balance sheet, for which it is practicable
to estimate that value. The assumptions used in the estimation of the fair value of Colony Bancorp, Inc. and
subsidiaries financial instruments are detailed hereafter. Where quoted prices are not available, fair values
are based on estimates using discounted cash flows and other valuation techniques. The use of discounted
cash flows can be significantly affected by the assumptions used, including the discount rate and estimates of
future cash flows.
Generally accepted accounting principles related to Fair Value Measurements define fair value, establish
a framework for measuring fair value, establish a three-level valuation hierarchy for disclosure of fair value
measurement and enhance disclosure requirements for fair value measurements. The valuation hierarchy is
based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.
The three levels are defined as follows:
• Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or
liabilities in active markets.
• Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in
active markets, and inputs that are observable for the asset or liability, either directly or indirectly,
for substantially the full term of the financial instrument.
• Level 3 inputs to the valuation methodology are unobservable and represent the Company’s own
assumptions about the assumptions that market participants would use in pricing the assets or liabilities
The following disclosures should not be considered a surrogate of the liquidation value of the Company,
but rather a good-faith estimate of the increase or decrease in value of financial instruments held by the
Company since purchase, origination or issuance.
Cash and short-term investments - For cash, due from banks, bank-owned deposits and federal funds sold, the
carrying amount is a reasonable estimate of fair value and is classified Level 1
Investment securities - Fair values for investment securities are based on quoted market prices where
available and classified as Level 1. If quoted market prices are not available, estimated fair values are based
on quoted market prices of comparable instruments and classified as Level 2. If a comparable is not available,
the investment securities are classified as Level 3.
Federal Home Loan Bank Stock - The fair value of Federal Home Loan Bank stock approximates carrying
value and is classified as Level 1.
7 9
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
Loans held for sale - The fair value of loans held for sale is determined on outstanding commitments from
third party investors in the secondary markets and is classified within Level 2 of the valuation hierarchy.
Loans - The fair value of fixed rate loans is estimated by discounting the future cash flows using the
current rates at which similar loans would be made to borrowers with similar credit ratings. For variable rate
loans, the carrying amount is a reasonable estimate of fair value. Most loans are classified as Level 2, but
impaired loans with a related allowance are classified as Level 3.
Deposit liabilities - The fair value of demand deposits, savings accounts and certain money market deposits
is the amount payable on demand at the reporting date and is classified as Level 1. The fair value of fixed
maturity certificates of deposit is estimated by discounting the future cash flows using the rates currently
offered for deposits of similar remaining maturities and is classified as Level 2.
Subordinated debentures - The fair value of subordinated debentures is estimated by discounting the future
cash flows using the current rates at which similar advances would be obtained. Subordinated debentures are
classified as Level 2.
Other borrowed money - The fair value of other borrowed money is calculated by discounting contractual
cash flows using an estimated interest rate based on current rates available to the Company for debt of
similar remaining maturities and collateral terms. Other borrowed money is classified as Level 2 due to their
expected maturities.
Disclosures of the fair value of financial assets and financial liabilities, including those financial assets
and financial liabilities that are not measured and reported at fair value on a recurring basis or non-
recurring basis, are required in the financial statements.
The carrying amount, estimated fair values, and placement in the fair value hierarchy of the Company’s
financial instruments are as follows:
(Dollars in thousands)
December 31, 2019
Assets
Cash and short-term investments
Investment securities available for sale
Federal Home Loan Bank stock
Loans held for sale
Loans, net
Liabilities
Deposits
Subordinated debentures
Other borrowed money
December 31, 2018
Assets
Cash and short-term investments
Investment securities available for sale
Federal Home Loan Bank Stock
Loans, net
Liabilities
Deposits
Subordinated debentures
Other borrowed money
Carrying
Amount
Estimated
Fair Value
1
Level
2
3
$ 104,092
347,332
4,288
10,076
961,696
$ 104,092
347,332
4,288
10,076
938,475
$ 104,092
–
–
–
–
$
–
345,310
4,288
10,076
–
$
–
2,022
–
–
938,475
1,293,742
24,229
61,563
1,294,506
24,229
60,585
–
–
–
1,294,506
24,229
60,585
–
–
–
$
60,156
353,066
2,978
774,249
$
60,156
353,066
2,978
769,809
$ 60,156
–
–
–
$
–
351,057
2,978
–
$
–
2,009
–
769,809
1,085,125
24,229
44,000
1,086,503
24,229
44,032
–
–
–
1,086,503
24,229
44,032
–
–
–
8 0
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
Fair value estimates are made at a specific point in time, based on relevant market information and
information about the financial instrument. These estimates do not reflect any premium or discount that
could result from offering for sale at one time the Company’s entire holdings of a particular financial
instrument. Because no market exists for a significant portion of the Company’s financial instruments,
fair value estimates are based on many judgments. These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on- and off-balance sheet financial instruments without
attempting to estimate the value of anticipated future business and the value of assets and liabilities that
are not considered financial instruments. Significant assets and liabilities that are not considered financial
instruments include deferred income taxes and premises and equipment. In addition, the tax ramifications
related to the realization of the unrealized gains and losses can have a significant effect on fair value
estimates and have not been considered in the estimates.
Following is a description of the valuation methodologies used for instruments measured at fair value on
a recurring and nonrecurring basis, as well as the general classification of such instruments pursuant to the
valuation hierarchy:
Assets
Securities - Where quoted prices are available in an active market, securities are classified within Level 1
of the valuation hierarchy. Level 1 inputs include securities that have quoted prices in active markets for
identical assets. If quoted market prices are not available, then fair values are estimated by using pricing
models, quoted prices of securities with similar characteristics, or discounted cash flow. Examples of such
instruments, which would generally be classified within level 2 of the valuation hierarchy, include certain
collateralized mortgage and debt obligations and certain high-yield debt securities. In certain cases where
there is limited activity or less transparency around inputs to the valuation, securities are classified within
level 3 of the valuation hierarchy. When measuring fair value, the valuation techniques available under the
market approach, income approach and/or cost approach are used. The Company’s evaluations are based
on market data and the Company employs combinations of these approaches for its valuation methods
depending on the asset class.
Impaired loans - Impaired loans are those loans which the Company has measured impairment generally
based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent
third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These
assets are included as level 3 fair values, based upon the lowest level of input that is significant to the fair
value measurements.
Other real estate - Other real estate owned assets are adjusted to fair value less estimated selling costs upon
transfer of the loans to other real estate owned. Typically, an external, third-party appraisal is performed
on the collateral upon transfer into the other real estate owned account to determine the asset’s fair value.
Subsequent adjustments to the collateral’s value may be based upon either updated third-party appraisals or
management’s knowledge of the collateral and the current real estate market conditions. Appraised amounts
used in determining the asset’s fair value, whether internally or externally prepared, are discounted 10
percent to account for selling and marketing costs. Adjustments are routinely made in the appraisal process
by the appraisers to adjust for differences between the comparable sales and income data available. Such
adjustments are typically significant and result in a level 3 classification of the inputs for determining fair
value. Because of the high degree of judgment required in estimating the fair value of other real estate owned
assets and because of the relationship between fair value and general economic conditions, we consider the
fair value of other real estate owned assets to be highly sensitive to changes in market conditions.
8 1
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
Assets and liabilities measured at fair value on a recurring and nonrecurring basis - The following table presents
the recorded amount of the Company’s assets measured at fair value on a recurring and nonrecurring basis
as of December 31, 2019 and 2018, aggregated by the level in the fair value hierarchy within which those
measurements fall. The table below includes only impaired loans with a specific reserve and only other real
estate properties with a valuation allowance at December 31, 2019 and 2018. Those impaired loans and other
real estate properties are shown net of the related specific reserves and valuation allowances.
Fair Value Measurements at
(Dollars in thousands)
December 31, 2019
Recurring
Securities available for sale
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
Total available for sale securities
Nonrecurring
Impaired loans
Other real estate
December 31, 2018
Recurring
Securities available for sale
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
Total available for sale securities
Nonrecurring
Impaired loans
Other real estate
Total Fair
Value
$
5,115
2,806
339,411
$ 347,332
$
$
5,985
1,320
$
3,989
2,872
346,205
$ 353,066
$
$
3,352
1,841
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Reporting Date Using
Significant
Other
Significant
Observable Unobservable
Inputs
(Level 2)
Inputs
(Level 3)
$
$
$
$
$
$
$
$
–
–
–
–
–
–
–
–
–
–
–
–
$
5,115
784
339,411
$ 345,310
$
$
–
–
$
3,989
863
346,205
$ 351,057
$
$
–
–
$
$
$
$
$
$
$
$
–
2,022
–
2,022
5,985
1,320
–
2,009
–
2,009
3,352
1,841
The Company did not identify any liabilities that are required to be presented at fair value.
8 2
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
The following tables present quantitative information about the significant unobservable inputs used in
the fair value measurements for assets in level 3 of the fair value hierarchy measured on a nonrecurring basis
at December 31, 2019 and 2018. These tables are comprised primarily of collateral dependent impaired loans
and other real estate owned:
(Dollars in thousands)
Impaired loans
Other real estate
(Dollars in thousands)
Impaired loans
Other real estate
December 31,
2019
$
$
5,985
1,320
December 31,
2018
$
$
3,352
1,841
Valuation
Techniques
Appraised value
Appraised value
Comparable sales
Valuation
Techniques
Appraised value
Appraised value
Comparable sales
Unobservable
Inputs
Discounts to reflect current market
conditions, ultimate collectability,
and estimated costs to sell
Discounts to reflect current market
conditions and estimated costs to sell
Unobservable
Inputs
Discounts to reflect current market
conditions, ultimate collectability,
and estimated costs to sell
Discounts to reflect current market
conditions and estimated costs to sell
Range
Weighted Avg
0%-20%
0%-20%
Range
Weighted Avg
0%-20%
0%-20%
The following table presents a reconciliation and statement of income classification of gains and losses
for all assets measured at fair value on a recurring basis using significant unobservable inputs (level 3) for the
years ended December 31, 2019 and 2018:
(Dollars in thousands)
Beginning balance
Sales
Paydowns
Accretion (amortization) of discounts and premiums
Unrealized gains (loss) included in other comprehensive income (loss)
Ending balance
Available for Sale Securities
2019
$ 2,009
–
–
(18)
31
$ 2,022
2018
$ 2,068
–
–
(18)
(41)
$ 2,009
The Company’s policy is to recognize transfers in and transfers out of levels 1, 2 and 3 as of the end of
a reporting period. There were no transfers of securities between level 1 and level 2 or level 3 for the years
ended December 31, 2019 and 2018.
The following table presents quantitative information about recurring level 3 fair value measurements as
of December 31, 2019 and 2018:
(Dollars in thousands)
Corporate debt securities
(Dollars in thousands)
Corporate debt securities
$
$
December 31, 2019
Valuation
Techniques
Discounted cash flow
Fair
Value
2,022
Unobservable
Inputs
Discount rate or yield
December 31, 2018
Valuation
Techniques
Discounted cash flow
Fair
Value
2,009
Unobservable
Inputs
Discount rate or yield
Range
(Weighted Avg)
N/A*
Range
(Weighted Avg)
N/A*
* The Company relies on a third-party pricing service to value its securities. The details of the unobservable inputs and other adjustments
used by the third-party pricing service were not readily available to the Company.
8 3
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
20. REGULATORY CAPITAL MATTERS
The amount of dividends payable to the parent company from the subsidiary bank is limited by various
banking regulatory agencies. Upon approval by regulatory authorities, the Bank may pay cash dividends to
the parent company in excess of regulatory limitations.
The Company is subject to various regulatory capital requirements administered by the federal banking
agencies. Failure to meet minimum capital requirements can initiate certain mandatory and, possibly,
additional discretionary actions by regulators that, if undertaken, could have a direct material effect on
the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Company must meet specific capital guidelines that involve
quantitative measures of the Company’s assets, liabilities and certain off-balance sheet items as calculated
under regulatory accounting practices. The Company’s capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Company to
maintain minimum amounts and ratios of total and Tier I capital to risk-weighted assets, and of Tier I
capital to average assets. As of December 31, 2019, the interim final Basel III rules (Basel III) require the
Company to also maintain minimum amounts and ratios of common equity Tier 1 capital to risk weighted
assets. These amounts and ratios as defined in regulations are presented hereafter. Management believes, as
of December 31, 2019, the Company meets all capital adequacy requirements to which it is subject under the
regulatory framework for prompt corrective action. In the opinion of management, there are no conditions
or events since prior notification of capital adequacy from the regulators that have changed the institution’s
category.
The Basel III rules also require the implementation of a new capital conservation buffer comprised of
common equity Tier 1 capital. The capital conservation buffer was phased in beginning January 1, 2016 at
0.625 percent of risk-weighted assets, with subsequent increases of 0.625 percent each year until reaching its
final level of 2.5 percent on January 1, 2019.
The following table summarizes regulatory capital information as of December 31, 2019 and December 31,
2018 on a consolidated basis and for the subsidiary, as defined. Regulatory capital ratios for December 31,
2019 and 2018 were calculated in accordance with the Basel III rules.
Actual
Amount
Ratio
For Capital
Adequacy Purposes
Ratio
Amount
To Be Well
Capitalized Under
Prompt Corrective
Action Provisions
Ratio
Amount
$ 140,973
151,444
13.17%
14.19
$ 85,661
85,407
8.00%
8.00
N/A
106,758
134,110
144,581
12.52
13.54
64,246
64,055
6.00
6.00
N/A
85,407
110,610
144,581
10.33
13.54
134,110
144,581
8.92
9.77
48,185
48,041
60,141
59,977
4.50
4.50
4.00
4.00
N/A
69,393
N/A
74,972
N/A
10.00%
N/A
8.00
N/A
6.50
N/A
5.00
(Dollars in thousands)
As of December 31, 2019
Total capital to risk-weighted assets
Consolidated
Colony Bank
Tier I capital to risk-weighted assets
Consolidated
Colony Bank
Common equity Tier 1 capital
to risk-weighted assets
Consolidated
Colony Bank
Tier I capital to average assets
Consolidated
Colony Bank
8 4
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
Actual
Amount
Ratio
For Capital
Adequacy Purposes
Ratio
Amount
To Be Well
Capitalized Under
Prompt Corrective
Action Provisions
Amount
Ratio
$ 133,900
131,723
15.86%
15.63
$ 67,527
67,418
8.00%
8.00
N/A
84,272
126,623
124,446
15.00
14.77
50,645
50,563
103,123
124,446
126,623
124,446
12.22
14.77
10.24
10.08
37,984
37,923
49,478
49,396
6.00
6.00
4.50
4.50
4.00
4.00
N/A
67,418
N/A
54,777
N/A
61,745
N/A
10.00%
N/A
8.00
N/A
6.50
N/A
5.00
(Dollars in thousands)
As of December 31, 2018
Total capital to risk-weighted assets
Consolidated
Colony Bank
Tier I capital to risk-weighted assets
Consolidated
Colony Bank
Common equity Tier 1 capital
to risk-weighted assets
Consolidated
Colony Bank
Tier I capital to average assets
Consolidated
Colony Bank
In 2018, the Bank obtained approval of its regulators and paid a $8,300,000 dividend to the Company. The
dividend was utilized to pay dividends to shareholders and to repurchase the Warrant, which was for 500,000
shares of the Company’s common stock outstanding with private investors. The Warrant was repurchased during
the second quarter of 2018 for $3.2 million.
21. STOCK-BASED COMPENSATION
In August 2018, the Company granted an award of 5,650 restricted shares of the Company’s common
stock to T. Heath Fountain, the Company’s Chief Executive Officer (“CEO”), with a market price of $17.73
per share. The restricted shares vest in equal installments on each of July 30, 2019, 2020 and 2021, subject
to continued service by Mr. Fountain through each applicable vesting date, or earlier upon the occurrence
of a change in control. With the restricted stock, there will be no cash consideration to the Company for the
shares. The CEO will have the right to vote all shares subject to such grant and receive all dividends with
respect to such shares, whether or not the shares have vested.
Compensation expense for restricted stock is based on the market price of the Company stock at the
time of the grant and amortized on a straight-line basis over the vesting period. The balance of unearned
compensation related to these restricted shares as of December 31, 2019 is $52,000 which is expected to be
recognized over a weighted-average of 1.58 years. The balance of unearned compensation related to these
restricted shares as of December 31, 2018 is $86,000 which is expected to be recognized over a weighted-
average of 2.58 years. Total compensation expense recognized for the restricted shares granted for the year
ended December 31, 2018 and 2019 was $34,000 and $14,000, respectively
8 5
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
22. FINANCIAL INFORMATION OF COLONY BANKCORP, INC. (PARENT ONLY)
The parent company’s balance sheets as of December 31, 2019 and 2018 and the related statements of
operations and comprehensive income (loss) and cash flows for each of the years in the three-year period then
ended are as follows:
Balance Sheets
(Dollars in thousands)
Assets
Cash
Premises and equipment, net
Investment in subsidiaries
Other
Total assets
Liabilities
Other borrowed money
Other
Subordinated debt
Total liabilities
Stockholders’ equity
Common stock, par value $1; 20,000,000 shares authorized, 9,498,783
and 8,439,258 shares issued and outstanding as of December 31, 2019
and 2018, respectively
Paid-in capital
Retained earnings
Accumulated other comprehensive income (loss), net of tax
Total stockholder’s equity
Total liabilities and stockholders’ equity
December 31,
2019
2,049
1,171
165,836
483
169,539
14,563
241
24,229
39,033
9,499
43,667
76,978
362
130,506
169,539
$
$
$
$
$
2018
937
1,198
117,743
236
120,114
–
193
24,229
24,422
8,445
25,978
69,459
(8,190)
95,692
120,114
$
$
$
$
$
Statements of Income
(Dollars in thousands)
Income
Dividends from subsidiaries
Management fees
Other
Total income
Expenses
Interest
Salaries and employee benefits
Other
Total expenses
Income before income taxes and equity in
undistributed earnings of subsidiaries
Income tax benefit
Income before equity in undistributed earnings of subsidiaries
Equity in undistributed earnings of subsidiaries
Net income
8 6
For The Years Ended
December 31,
2019
2018
$
$
6,731
750
18
7,499
1,541
1,097
1,262
3,899
3,600
639
4,239
5,972
10,211
$
$
8,329
601
106
9,036
972
1,084
691
2,747
6,289
422
6,711
5,206
11,917
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
Statements of Cash Flows
(Dollars in thousands)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization
Share-based compensation expense
Equity in undistributed earnings of subsidiaries
Change in interest payable
Other
Net cash provided by operating activities
Cash flows from investing activities
Purchase of premises and equipment
Net cash and cash equivalents paid in acquisition
Net cash (used in) provided by investing activities
Cash flows from financing activities
Net increase (decrease) in other borrowed money
Dividends paid for common stock
Repurchase of warrants
Net cash (used in) provided by financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
For The Years Ended
December 31,
2019
2018
$
10,211
$
11,917
81
34
(5,972)
21
1,065
5,440
(54)
(16,145)
(16,199)
14,563
(2,692)
–
11,871
1,112
937
2,049
$
85
14
(5,206)
3
(240)
6,573
(183)
–
(183)
(1,500)
(1,688)
(3,175)
(6,363)
27
910
937
$
23. EARNINGS PER SHARE
The following table presents earnings per share for the years ended December 31, 2019 and 2018:
(Dollars in thousands, except per share amounts)
Numerator
Net income available to common stockholders
Denominator
Weighted average number of common shares outstanding
for basic earnings per common share
Dilutive effect of potential common stock
Restricted stock
Stock warrants
Weighted average number of common shares outstanding
for diluted earnings per common share
Earnings per share - basic
Earnings per share - diluted
2019
2018
$
10,211
$
11,917
9,129,705
8,439,454
–
–
9,129,705
1.12
$
1.12
$
–
99,154
8,538,608
1.41
$
1.40
$
8 7
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
24. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Changes in accumulated other comprehensive income (loss) for unrealized gains and losses securities
available for sale for the years ended December 31, 2019 and 2018 are as follows:
(Dollars in thousands)
Beginning balance
Other comprehensive loss before reclassification
Amounts reclassified from accumulated other comprehensive income
Net current period other comprehensive income (loss)
Ending balance
2019
(8,190)
8,629
(77)
8,552
362
$
$
2018
(6,492)
(1,606)
(92)
(1,698)
(8,190)
$
$
25. SEGMENT INFORMATION
The Company’s operating segments include banking, mortgage banking and small business specialty
lending division. The reportable segments are determined by the products and services offered, and internal
reporting. The Bank segment derives its revenues from the delivery of full-service financial services,
including retail and commercial banking services and deposit accounts. The Mortgage Banking segment
derives its revenues from the origination and sales of residential mortgage loans held for sale. The Small
Business Specialty Lending Division segment derives its revenue from the origination, sales and servicing
of Small Business Administration loans and other government guaranteed loans. Segment performance is
evaluated using net interest income and noninterest income. Income taxes are allocated based on income
before income taxes, and indirect expenses (includes management fees) are allocated based on various
internal factors for each segment. Transactions among segments are made at fair value. The following tables
present information reported internally for performance assessment as of December 31, 2019 and 2018:
December 31, 2019
Small
Business
Specialty
Lending Holding
Division Company
$
–
–
–
1,213
(254)
(959)
405
$
$
Totals
$ (1,481) $
–
399
1,638
(637)
$ (2,083) $
$ 3,937
47,845
1,104
14,762
48,894
2,398
10,211
$ 1,515,313
(Dollars in thousands)
Net interest income
Provision for loan losses
Noninterest income
Noninterest expenses
Income taxes
Net income/(loss)
Total assets
$
Bank
49,162
1,104
11,224
42,786
3,279
$
13,217
$ 1,499,347
Mortgage
Banking
164
$
–
3,139
3,257
10
$
36
$ 11,624
8 8
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
Notes to Consolidated Financial Statements
December 31, 2018
Small
Business
Specialty
Lending
Division
–
$
–
–
–
–
–
–
$
$
Holding
Company
(927)
$
–
–
1,084
(422)
$ (1,589)
$ 2,705
Mortgage
Banking
–
$
–
–
–
–
–
–
$
$
Totals
40,797
201
9,621
35,300
3,000
11,917
1,251,878
(Dollars in thousands)
Net interest income
Provision for loan losses
Noninterest income
Noninterest expenses
Income taxes
Net income/(loss)
Total assets
$
Bank
41,194
165
9,614
33,770
3,411
$
13,462
$ 1,249,173
8 9
C O L O N Y B A N K C O R P • A n n u a l R e p o r t 2 0 1 9
and regulatory limitations, and general economic
conditions. No assurance can be given that the
Company will continue to pay dividends or that
they will not be reduced or suspended in the
future. For information regarding restrictions on
the payment of dividends by the Bank to the
Company, see Note 20 of Notes to Consolidated
Financial Statements.
The following graph shows the cumulative total
return on the common stock of the Company
over the past five years compared with the SNL
Southeast Bank Index and the NASDAQ Composite
Index. Cumulative total return on the stock or
the index equals the total increase in value since
December 31, 2014, assuming reinvestment of
all dividends paid into the stock or the index,
respectively. The graph was prepared assuming
that $100 was invested in the common stock on
December 31, 2014, and also in the indices used
for comparison purposes. The shareholder returns
shown on the performance graph are not necessarily
indicative of the future performance of the common
stock of the Company or particular index.
Total Return Performance
$250
Colony Bankcorp, Inc.
NASDAQ Composite
SNL Southeast Bank
$200
$150
$100
$50
12/31/14 12/31/15
12/31/16
12/31/17 12/31/18
12/31/19
Period Ending
Index
Colony Bankcorp, Inc. 100.00
NASDAQ Composite 100.00
100.00
SNL Southeast Bank
12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 12/31/19
217.51
200.49
188.08
120.94
106.96
98.44
188.94
146.67
133.56
186.65
150.96
161.65
167.51
116.45
130.68
Market and Dividend Information
The common shares of Colony Bankcorp are
listed on the NASDAQ Global Market under
the symbol CBAN. As of March 20, 2020, the
Company estimates that it had approximately
2,200 shareholders, including approximately
1,200 beneficial owners holding shares in
nominee or “street” name.
The following table sets forth the high and low
common stock prices and cash dividends paid to
public stockholders in 2018 and 2019:
2019
First quarter
Second quarter
Third quarter
Fourth quarter
High
$ 17.93
$ 18.95
$ 17.40
$ 16.50
Dividends
Low Declared
$ 0.075
$ 0.075
$ 0.075
$ 0.075
$ 14.53
$ 16.06
$ 15.70
$ 14.95
2018
First quarter
Second quarter
Third quarter
Fourth quarter
$ 19.50
$ 18.00
$ 19.20
$ 18.58
$ 13.50
$ 15.00
$ 16.50
$ 12.29
$ 0.05
$ 0.05
$ 0.05
$ 0.05
Like many banks in the wake of the Great
Recession, Colony suspended dividend payments in
2009. In 2017, the Company reinstated its quarterly
cash dividend at a rate of $0.025 per share, or
an annual rate of $0.10 per share. The Company
increased its dividend rate to $0.05 per share, or
an annual rate of $0.20 per share, in 2018, and to
$0.075, or an annual rate of $0.30 per share, in
2019. In January 2020, Colony raised the quarterly
rate again to $0.10 per share, which represents an
indicated annual rate of $0.40 per share.
The continued payment of dividends will depend
on a number of factors, including the Company’s
capital requirements, its financial condition and
results of operations, tax considerations, statutory
9 0
Corporate Information
Corporate Headquarters
Post Office Box 989
115 South Grant Street
Fitzgerald, Georgia 31750
(229) 426-6000
Company Website
www.Colony.Bank
Stock Registrar and Transfer Agent
Shareholders should report lost or
destroyed stock certificates or direct
inquiries concerning dividend payments,
change of name, address or ownership,
or consolidation of accounts to the
Company’s transfer agent at:
American Stock Transfer
& Trust Company
Operations Center
6201 15th Avenue
Brooklyn, New York 11219
(800) 937-5449
www.astfinancial.com
Independent Registered Public
Accounting Firm
McNair, McLemore, Middlebrooks
& Co., LLC
P.O. Box One
Macon, Georgia 31202
Special Counsel
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, GA 30309-3424
Annual Report on Form 10-K
A copy of the Company’s Annual Report
on Form 10-K for the fiscal year ended
December 31, 2019, as filed with the
Securities and Exchange Commission,
will be furnished without charge to
shareholders as of the record date for
the 2020 Annual Meeting upon written
request to Tracie Youngblood, Executive
Vice President and Chief Financial
Officer, Colony Bankcorp, Inc., 115
South Grant Street, Fitzgerald, Georgia
31750. In addition, the Company makes
available free of charge its annual reports
on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form
8-K, and all amendments to those reports
filed with or furnished to the SEC.
The reports are available as soon as
reasonably practical after the Company
electronically files such material with the
SEC, and may be found on the Internet
at www.Colony.Bank, under Shareholder
Information. Shareholder and other
investor-oriented inquiries may be
directed to T. Heath Fountain, President
and Chief Executive Officer, at the
Company’s corporate headquarters.
Annual Meeting of Shareholders
The 2020 Annual Meeting of
Shareholders will be held at 11:00 a.m.,
local time, on Tuesday, May 26, 2020, at
the Company’s corporate headquarters
at 115 South Grant Street, Fitzgerald,
Georgia. Shareholders as of March 20,
2020, the record date for the meeting, are
cordially invited to attend.
Colony Bankcorp, Inc.
Post Office Box 989
115 South Grant Street
Fitzgerald, Georgia 31750
(229) 426.6000
www.Colony.Bank