2 0 2 1 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
Colony Bankcorp, Inc.,
with assets of $2.7
billion, is the bank
holding company for
Colony Bank.
Founded in 1975 and
headquartered in
Fitzgerald, Georgia,
Colony operates 39
locations throughout
Georgia. At Colony
Bank, we offer a wide
range of banking services including personal banking,
business banking, mortgage solutions, government
guaranteed lending solutions, and more. We have
expanded our services to also include consumer
insurance products, such as automotive, homeowners,
and other insurance needs for our community. 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 social media.
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 2 1
Financial Highlights
(dollars in thousands, except per share amounts)
2021
2020
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
$ 2,691,715
1,337,977
12,910
2,374,608
217,707
15.92
11.51
$ 1,763,974
1,059,503
12,127
1,445,027
144,488
15.21
13.26
$
$
$
$
$
$
66,189
700
65,489
36,290
78,625
23,154
4,495
18,659
18,659
1.66
1.66
0.41
$
$
$
$
$
$
55,245
6,558
48,687
24,244
58,301
14,630
2,815
11,815
11,815
1.24
1.24
0.40
3.39%
0.89%
10.60%
72.21%
3.50%
0.70%
8.56%
73.34%
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 2 1
To Our Shareholders
s a result of our team’s dedicated efforts and the solid execution of our
strategic initiatives, we reported record results in 2021. Net income was
$18.7 million, or $1.66 per diluted share, an increase of 34% over the prior
year. Total assets reached a record $2.7 billion. With significant new hires and
a successful integration of SouthCrest Financial Group, we are on track
for another strong year.
Transformative Acquisition
The most notable achievement of the year was the acquisition of SouthCrest Financial Group,
which was completed on August 1, 2021. This transaction added $730 million in assets to our
balance sheet and propelled us to be Georgia’s largest community bank and the sixth largest
bank in the state. It increased our footprint to include the attractive Northern Georgia markets
and the highly populous suburban Atlanta markets, which will be key areas for growth going
forward. By giving us a statewide footprint and a balance between urban and rural markets, the
acquisition diversifies our credit portfolio while also extending us into new markets.
The incorporation of SouthCrest also solidified our leadership team with the addition of key
SouthCrest executives including Brian Schmitt, Executive Vice President, Executive Vice
Chairman, and Andy Borrmann, Executive Vice President, Chief Strategy Officer, who round
out our team as we strive for continued growth and value creation. SouthCrest has enhanced
our scale, growth prospects, profitability, and overall performance. We expect the transaction to
provide heightened opportunities for continued growth by positioning Colony as the acquirer
of choice for community banks looking to partner in Georgia as well as surrounding states.
Diversifying Revenue Streams
Also in August, we formed Colony Insurance, a new subsidiary that offers a suite of
consumer insurance solutions and completed the acquisition of The Barnes Agency, an
Allstate appointed consumer property and casualty insurance agency in Macon, GA. Since
then, we have completed six additional agency acquisitions in middle and west Georgia and
plan to seek additional opportunities to continue to grow this business.
Providing a convenient option for our banking, mortgage, and consumer lending customers
to purchase insurance through their trusted advisors at Colony Insurance is a logical
extension of our existing products and services. This expansion is in-line with our stated goal
to have a wide range of revenue streams and increase non-interest income.
In December 2021, we launched our Merchant Services division with the addition of two
industry veterans charged with leading this effort. Merchant Services will allow us to meet an
even greater range of our corporate customers’ needs and is yet another avenue to diversify
our revenue sources. We look forward to building this division out in 2022 and beyond.
2
Financial Highlights
Operating net income, which excludes
the impact of non-recurring items such as
acquisition expenses, rose to $22.4 million,
or $1.99 per diluted share, for the year
ended December 31, 2021, compared to
$12.1 million, or $1.28 per diluted share, in
2020. Key drivers of our improved results
include 50% growth in non-interest income,
mortgage fee income growth of 44%, and
organic loan growth of 13%.
Our balance sheet remains strong with
total loans, excluding loans held for sale
and PPP, of $1.3 billion at the end of 2021,
an increase from $958 million at the end
of 2020. Total deposits reached a record
$2.4 billion.
Mark Massee, Chairman, left, and Heath Fountain, President and
Chief Executive Officer
We continue to maintain a solid capital position, with ratios that exceed regulatory
minimums required to be classified as “well-capitalized.” Tier one leverage ratio, tier one
capital ratio, total risk-based capital ratio and common equity tier one capital ratio were,
7.25%, 11.28%, 12.05%, and 9.87%, respectively.
With record 2021 results and a positive outlook for the future, our Board of Directors voted
to increase the Company’s quarterly cash dividend to $0.1075 per share. This marks the fifth
consecutive year of higher dividend payouts since dividends were reinstated in 2017.
The Colony Manifesto
Despite the significant transformation of our business over the past year, we have stayed
true to our community banking heritage. The Colony Manifesto, the internal framework
that guides us towards our mission of delivering solutions that exceed customer
expectations, has helped us continue to earn our clients’ trust through our personal service
and impactful advice.
Our mantra is simple: We are called to serve. Bank with passion. Go out and make
it happen. This simple, face-to-face, action-oriented approach is one that is difficult for the
larger regional and national franchises to replicate and one of the reasons our customers
choose Colony Bank.
Another key aspect of fulfilling our mission is investing in the communities we serve. Each
year, Colony Leadership Academy provides approximately 40 high school students the
opportunity to build leadership skills through service learning projects, seminars, workshops
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 2 1
and interaction with local leaders and decision makers. We also work to improve financial
education in our communities by providing a range of educational tools for youth and
adults designed to help them make informed and effective decisions about their financial
resources. We are honored to share our time, talents, and financial resources to improve our
communities, and this will remain a key focus going forward.
Planning for the Future
Community banking is rapidly evolving, and we are committed to remaining at the forefront
of these changes to always provide our customers with the most relevant and valuable
banking experience. As we look to the future, we see a fundamental shift in how customers
use banking centers, in large part due to the rising role of technology. Banking centers will
remain relevant to our customers, but they will be utilized differently than they have been in
the past. Whereas banking center visits were primarily used for transactions, in the future it’s
about delivering a dialog-based, holistic customer experience. Banking center team members
will be cross trained to handle a wider array of products and services and will be more
consultative, providing advice and solutions informed by technology. As the commercial
lending process becomes faster and more automated, our commercial bankers will evolve
to become trusted business advisors that help their business customers navigate the entire
financial side of their business. Despite all the technological advancements, relationships and
personal service will continue to be the key differentiating factor for Colony Bank.
Looking ahead, we continue to have significant opportunities to grow earnings at Colony
through strategic acquisitions and additional production hires. We expect to see merger cost
savings in 2022 and are continuing to execute on multiple expense and efficiency initiatives.
We are focused on improving processes, running a more efficient branch network, and
utilizing technology to lower operating costs.
In conclusion
We take our commitments to customers, team members, communities and shareholders very
seriously, and we intend to continue delivering on those in the year ahead. None of what
we have accomplished this year would be possible without the hard work and tremendous
efforts by team members across our organization. I would like to recognize the dedication of
our team and thank them for their passion and commitment to our customers, particularly
during a year where we underwent a great deal of change, all while navigating the
uncertainty of the ongoing pandemic.
To our shareholders, thank you for your continued investment in our company and the trust
you place in us each day.
Mark H. Massee
Chairman of the Board
T. Heath Fountain
President and Chief Executive Officer
4
Total Assets
(in Thousands)
Total Net Loans
(in Thousands)
Non-Interest Income
(in Thousands)
7
6
0
,
5
2
3
,
1
$
6
7
3
,
7
4
0
,
1
$
1
5
9
,
1
6
9
$
9
4
2
,
4
7
7
$
1
8
2
,
7
5
7
$
5
1
7
,
1
9
6
,
2
$
4
7
9
,
3
6
7
,
1
$
3
1
3
,
5
1
5
,
1
$
8
7
8
,
1
5
2
,
1
$
5
5
7
,
2
3
2
,
1
$
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
0
9
2
,
6
3
$
4
4
2
,
4
2
$
2
6
7
,
4
1
$
5
3
7
,
9
$
1
2
6
,
9
$
$45,000
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
‘17 ‘18 ‘19 ‘20 ‘21*
‘17 ‘18 ‘19 ‘20 ‘21*
‘17 ‘18 ‘19 ‘20 ‘21*
The most notable achievement
of the year was the acquisition
of SouthCrest Financial Group,
which was completed on
August 1, 2021. This transaction
added $730 million in assets to
our balance sheet and propelled
us to be Georgia’s largest
community bank and the sixth
largest bank in the state.
– Heath Fountain
President and
Chief Executive Officer
Locations throughout
Georgia
Georgia counties
represented
* Includes acquisition of SouthCrest Financial Group as of August 1, 2021.
5
Technique Concrete Construction
FOREST PARK, GEORGIA
It’s important for me to deal with
people who know you, so that
you’re not just a number.
BILLY FREEMAN JR.
OWNER / CHIEF EXECUTIVE OFFICER
/ PRESIDENT
Billy Freeman Jr. and
Colony Bank’s Jan Morris
at Technique Concrete
Construction in Forest Park
6
66
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 2 1
Billy Freeman has a passion for
concrete. He found a bank to match.
When he was 10, Billy Freeman Jr. began accompanying
his father to jobsites at night, studying his technique
for laying concrete. “I just wanted to be with dad,”
he recalls. By age 14, the younger Freeman could run
the finishing machine. At 16, he was a union-certified
cement finisher, and a foreman at 21. In 2010, he
launched his own company.
Today, you can see the results of Technique Concrete
Construction’s work, and what Freeman learned from
his late father, everywhere from Atlanta’s Mercedes-
Benz Stadium and State Farm Arena to the runways
and plane-train tunnels at Hartsfield-Jackson Atlanta
International Airport.
Freeman vividly remembers his first meeting with
Colony’s Jan Morris. “She brought her president and vice
president to my office,” he says. “We met for an hour and
a half and they never talked money. They wanted to hear
about my business. That made an impression.”
Slowly, the company transitioned its banking relationship
to Colony. Then, in 2013, when Technique landed a
project to build a seven-mile tunnel, Colony met the need
for capital to buy new equipment and expand from 30 to
140 employees. Now the bank is financing Technique’s
huge new facility on the old Fort Gilliam military
property. “As we’ve grown,” says Freeman, “Colony has
been right there with us.”
Ivey Residential
AUGUSTA, GEORGIA
Matt and Mark Ivey learned
homebuilding from their father,
whose mantra was “You build homes
for a living but relationships for
life.” That’s also how they approach
banking. The Iveys’ relationship with
Colony’s Hugh Hollar goes back
almost two decades. “Hugh really
helped us get started in 2004, and
has been instrumental in helping us
grow from day one,” Matt Ivey says.
“It’s nice to know you have a bank
that understands your business and
your philosophy.”
“The Iveys aren’t just a second-generation business; for me,
they’re also second-generation clients and friends. Before
I worked with Matt and Mark, I also worked with their parents.”
– Hugh Hollar
Director of Homebuilder Finance
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 2 1
“Nine years ago,
Boaen Mechanical
became one of the
first in our market to
begin using Treasury
services. We drill
down and look at their
needs to continually
help them use
those services more
effectively.”
– Kerry Huettner
Treasury Solutions
Advisor
Part of what it means to be called to serve
is always to be just one call away.
In a company that encompasses three generations of one family, the
importance of long-term relationships almost goes without saying. Shawn
Boaen, who began working for his parents’ mechanical contracting company
in Savannah right after high school, stays in regular touch with many of his
customers even long after they’ve retired. Maintaining such relationships is
both a point of pride and a secret of Boaen Mechanical’s sustained success.
“It’s the people and how you deal with them,” Shawn explains.
Unsurprisingly, the Boaens take the same approach to their banking
relationships. And one of those relationships involves Kerry Huettner,
Colony’s Treasury Solutions Advisor, who has guided Boaen Mechanical
to implement specialized services, from direct payroll deposit to ACH
capabilities for collections, that help the company manage cash flows
smoothly and make day-to-day operations more efficient.
“I don’t care to deal with huge banks,” Shawn says, who has worked with
many of the same people at Colony ever since the bank opened an office
in Savannah. “If I have an issue, there are five or six people here I can call
direct. It’s very easy to get through and get answers.”
Holt’s Bakery
DOUGLAS, GEORGIA
Howard Holt and his son Alex are carrying on
the business that Howard’s father began in
1965, still making things from scratch every
day. Their shops in Douglas and Fitzgerald
are beloved local institutions. One of the
biggest fans is Scott Miller, Colony’s Regional
President, who stops by every week to pick
up glazed donuts for the bank’s staff. It’s that
personal touch that Howard Holt likes. “People
are what make the bank,” he says. “I’ve known
Scott for years. He’s a banker and a friend, too.”
8
8
Boaen Mechanical
SAVANNAH, GEORGIA
We’ve been dealing with Colony
since Colony started in Savannah.
Their people make it easy.
SHAWN BOAEN
PRESIDENT
Drew Hulsey
Colony’s Regional President
and Shawn Boaen at
Boaen Mechanical
in Savannah
999
Anthony Rodriguez
and Rob Goldstein at
Wild Leap Brewery
in LaGrange
1 0
“We were looking for
small businesses to
work with during the
startup phase. It is
gratifying to watch a
business like Wild Leap
grow, especially when
they’re your neighbors.”
– Joe Little
Market President
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 2 1
Two beer aficionados went out to make a business
happen. Colony jumped in to go with them.
Wild Leap Brewery began as just that. Founders Anthony Rodriguez and Rob
Goldstein had established successful careers in other fields but shared a love for
craft beer. Combining Anthony’s 16 years of experience with brewing and Rob’s
expertise in marketing and promotions, the two began staging craft beer festivals
around Atlanta. After one of their events in LaGrange drew thousands of people,
Anthony says, “We felt like this was our opportunity. We said to ourselves,
‘We need to do this.’”
As they established Wild Leap in 2017, Colony provided capital for equipment
purchases — and loans for a series of expansions as the initial leap sustained a
long, still-rising trajectory. “Colony has been an integral part of our expansion,”
Anthony says.
After being named the nation’s Best New Brewery in 2019, Wild Leap also
began producing its own brand of vodka, served in hand-crafted cocktails along
with its award-winning craft beers. When the Covid pandemic hit, the brewery
nimbly launched a line of Ready-to-Drink premium crafted cocktails that proved
popular all over Georgia.
Another leap is in the works: A new taproom, in the renovated old Norfolk
Southern Railroad building, less than a five-minute walk from Atlanta’s new State
Farm Arena. As with so many others, Colony is financing that expansion, too.
Wild Leap Brewery
LAGRANGE, GEORGIA
Joe (Little) understood us and
has always been there for us.
I like being able to go out to lunch
with the president of the bank,
talking about my goals and what
I need to do to reach them.
ANTHONY RODRIGUEZ
CO-FOUNDER
1 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 2 1
Environmental,
Social and
Governance
Initiatives
Our Board of Directors is committed to overseeing our
ESG initiatives. We consider ESG-related matters throughout
the organization with a focus on transparency and continuous
improvement. Our ESG initiatives currently focus on supporting
the communities we serve in the areas of affordable housing, community development
and financial education; promoting diversity, equity and inclusion within the Company;
and corporate governance best practices.
Environmental
In a variety of ways, we work to be good stewards of our environment. To reduce energy
consumption, we are transitioning to LED lighting, with a goal to convert all of our
offices to these more efficient systems by December 2024. As part of any agreement with
us, the shred companies we use to dispose of confidential documents are required to
recycle. To reduce the consumption of fossil fuels, we are utilizing digital processes such
as e-signature and digital board packages, and we are relying more on remote work and
virtual meetings.
Extending these efforts to our customers, we are steadily increasing the adoption of
electronic statements and online/mobile banking. Many of our clients, moreover,
represent renewable industries such as farming and timber. Supporting them and
facilitating their growth and success contribute to environmental sustainability.
Social
As part of our commitment to building up the communities we serve, we work to
develop youth leaders through Colony Leadership Academy, whose first class graduated
in 2021. Academy participants cultivate leadership skills and benefit from an exchange
of ideas and experiences while also developing a network of relationships with leaders
from various backgrounds throughout Georgia who serve as mentors. The professional
leadership curriculum involves an eleven-month program of structured activity through
which students gain understanding of crucial issues facing our communities. Colony
1 2
1 2
Leadership Academy utilizes professional leadership trainers through
UGA’s Fanning Institute, along with community resources for courses
such as Health and Recreation, Economic Development, Arts and
Culture, Public Safety, Social Services, Education and Government
Affairs. Upon completion of the program, participants receive a
$1,000 scholarship to the college or university of their choice.
In addition, Colony provides financial literacy education in 21 high
schools across our footprint. Through this program, which involves
the Dave Ramsey Foundation’s coursework, more than 5,000
students now have access to financial literacy in their classrooms.
We also work to sustain our communities through financial and
volunteer support for numerous charitable and community
organizations. Each year, Colony team members contribute hundreds
of hours to these efforts in the locales that we call home.
Besides building stronger communities, we also work to encourage
a healthier Colony team. Through internal weight loss and health
promotion initiatives, our team members collectively lost 120 pounds.
Governance
Throughout our organization, we promote sustainability, diversity
and transparency in our corporate governance. With one-year terms,
all members of our Board of Directors stand annually for election by
shareholders. With insider ownership of 7.69%, we strongly align the
interests of our leadership with those of our shareholders. Meanwhile,
since 2018 we have added one female Board member and two females
to our executive management team, and we are actively pursuing
opportunities to enhance the diversity of our Board.
1 3
“At Colony Bank,
sustainability is a matter
that’s equally important
to our team members,
shareholders, and
communities. With a
committee dedicated
to overseeing our ESG
initiatives, we’re able
to focus on our role as
a company to make the
world a better place.
ESG is an ongoing process
and our committee is
continuously reviewing and
identifying opportunities
where we can make
an impact.”
– Karen Martin, SPHR,
SHRM-SCP
Team Member
Experience Manager
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 2 1
Board of Directors and Officers
Board of Directors
Mark H. Massee
Chairman
Colony Bankcorp, Inc.
Retired 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/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
Savannah, 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
Brian D. Schmitt
Executive Vice President/
Executive Vice Chairman
Colony Bankcorp, Inc.
Harold W. Wyatt, III
Founder of Wyatt Realty Co.
LLC and Wyatt Capital LLC
1 4
Executive Officers
T. Heath Fountain
President/Chief Executive Officer
Edward L. Bagwell, III
Executive Vice President/General
Counsel/Chief Risk Officer
Leonard H Bateman, Jr.
Executive Vice President/
Chief Credit Officer
Andy Borrmann
Executive Vice President/
Chief Strategy Officer
Kimberly C. Dockery
Executive Vice President/
Chief Administrative Officer
M. Edward Hoyle, Jr.
Executive Vice President/
Chief Banking Officer
Brian Schmitt
Executive Vice President/
Executive Vice Chairman
Tracie Youngblood
Executive Vice President/
Chief Financial Officer
Market and Division Leaders
Jason Barnes
President/Colony Insurance
Joe Little
Market President/LaGrange
Stephen Browning
Market President/Eastman
Scott Miller
Regional President/SE Central
Johnny Bryan
Market President/Sylvester
Jason Morris
Market President/Ashburn
Chris Carter
Market President/Statesboro
Wesley Olliff
Market President/Savannah
Tommy Clark
Regional President/Southwest
John Roberts
Regional President/West Georgia
Dallis “D” Copeland
Special Advisor
Kirk Scott
Regional President/Mid-State
Darren Davis
President/Small Business
Specialty Lending
Mike Davis
President/Community Banking
Bob Evans
Regional President/West Central
Cindy Griffin
Director of Commercial Banking
Hugh Hollar
President/Home Builder Finance
Drew Hulsey
Regional President/Coastal
Jesse Kight
President/Mortgage Division
Eddie Smith
Regional President/South
Mike Smith
Market President/Fitzgerald
Michael Washburn
President/Corporate Banking
Mike Welch
Market President/Columbus
David Wilson
Market President/Macon
Nic Worthy
Market President/Rochelle
Bagwell
Bateman
Borrmann
Dockery
Fountain
Hoyle
Schmitt
Youngblood
Barnes
Browning
Bryan
Carter
Clark
Copeland
D. Davis
M. Davis
Evans
Griffin
Hollar
Hulsey
Kight
Little
Miller
Morris
Olliff
Roberts
Scott
E. Smith
M. Smith
Washburn
Welch
Wilson
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 2 1
Locations, as of March 31, 2022
Cordele
1031 E 24th Ave
Cordele, GA 31015
(229) 271-2100
Cumming
3275 Market Place Blvd.
Suite 100
Cumming, GA 30041
(770) 813-4800
Douglas
625 Ward St W
Douglas, GA 31533
(912) 384-3100
Eastman
5510 Oak St
Eastman, GA 31023
(478) 374-4739
Fayetteville
741 West Lanier Avenue
Fayetteville, GA 30214
(678) 783-4111
Fitzgerald
Corporate Office
115 South Grant St
Fitzgerald, GA 31750
(229) 426-6000
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
Albany
2900 Old Dawson Rd
Albany, GA 31721
(229) 430-8080
Ashburn
515 E Washington Ave
Ashburn, GA 31714
(229) 567-4383
Athens
Loan Production Office
1586 Mars Hill Rd
Suite C
Watkinsville, GA 30677
(478) 273-3199 Ext. 4111
Atlanta
Loan Production Office
1475 Peachtree St. NE
Atlanta, GA 30309
(678) 810-1103
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
Cedartown
967 North Main Street
Cedartown, GA 30125
(678) 747-5200
Canton
Loan Production Office
341 E Main St
Canton, GA 30114
229-426-6000 ext. 6174
Centerville
200 Gunn Rd
Centerville, GA 31028
(478) 953-1010
Chickamauga
12691 North Highway 27
Chickamauga, GA 30707
(706) 375-3112
Columbus
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
Branch locations
Loan Production Office
Savannah
Macon
Columbus
Albany
Fitzgerald
Valdosta
Pooler
Loan Production Office
138 Canal Street
Suite 204
Pooler, GA 31322
(912) 927-1277
Luthersville
14 North Main Street
Luthersville, GA 30251
(770) 927-6418
Quitman
602 E Screven St
Quitman, GA 31643
(229) 263-7538
Macon
Loan Production Office
1515 Bass Road Suite E
Macon, GA 31210
(478) 845-4430
Manchester
406 West Main Street
Manchester, GA 31816
(706) 846-8471
Moultrie
621 Veterans Pkwy N
Moultrie, GA 31788
(229) 985-1380
Rockmart
131 West Elm Street
Rockmart, GA 30153
(770) 684-1919
Rochelle
920 1st Ave
Rochelle, GA 31079
(229) 365-7871
1 6
Savannah
Hwy 17 Office
5987 Ogeechee Rd
Savannah, GA 31419
(912) 927-1277
Sylvester
601 N Main St
Sylvester, GA 31791
(229) 776-7641
7011 Hodgson Memorial Dr
Savannah, GA 31406
(912) 303-9449
Thomaston
108 South Church Street
Thomaston, GA 30286
(706) 938-3151
Loan Production Office
241 Drayton Street
Savannah, GA 31401
(912) 454-2479
Tifton
104 2nd St W
Tifton, GA 31794
(229) 386-2265
Soperton
4313 West Main St
Soperton, GA 30457
(912) 529-5000
Valdosta
3774 Old US Hwy 41 N
Valdosta, GA 31602
(229) 241-9900
Statesboro
104 Springhill Drive
Statesboro, GA 30458
(912) 225-1460
Warner Robins
1290 S. 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 2 1
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 2 1
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 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
On August 1, 2021, the Company completed its previously announced acquisition (the “Merger”) of
SouthCrest Financial Group, Inc. (“SouthCrest”), a Georgia corporation and the parent holding company
of SouthCrest Bank, N.A. The Merger was completed pursuant to the Agreement and Plan of Merger (the
“Merger Agreement”), dated April 22, 2021, by and between the Company and SouthCrest. In accordance
with the terms of the Merger Agreement, at the effective time, SouthCrest was merged with and into the
Company, with the Company surviving the Merger. Immediately following the holding company Merger,
SouthCrest Bank,N.A. was merged with and into Colony Bank, with Colony Bank as the surviving bank.
Pursuant to the terms of the Merger Agreement, each issued and outstanding share of SouthCrest
stock was converted into the right to receive either $10.45 in cash or 0.7318 of a share of the Company’s
common stock, subject to certain proration and allocation procedures. In aggregate, the Company issued
approximately 4.0 million shares of its common stock at a fair value of $71.4 million and paid approximately
$21.6 million cash in the Merger.
The Company paid dividends to its shareholders throughout 2021 and 2020 on a quarterly basis. In
2021, we had a quarterly dividend of $0.1025 per common stock and in 2020, we had a quarterly dividend of
$0.10 per common stock.
On February 10, 2022, the Company completed a public offering of 3,848,485 shares of its common
stock at a public offering price of $16.50 per share, with aggregate proceeds of approximately $63.5 million.
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 19% and 21% to increase tax-exempt interest income to a tax-equivalent basis for the year
ended December 31, 2021 and 2020, respectively. Tax-equivalent adjustments are reported in Notes 1 and
2 to the Average Balances with Average Yields and Rates table under Rate/Volume Analysis. Management
believes that non-GAAP financial measures provide additional useful information that allows investors
to evaluate the ongoing performance of the company and provide meaningful comparisons to its peers.
Management believes these non-GAAP financial measures also enhance investors’ ability to compare period-
to-period financial results and allow investors and company management to view our operating results
excluding the impact of items that are not reflective of the underlying operating performance.
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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.
A reconciliation of these performance measures to GAAP performance measures is included in the
tables below.
Non-GAAP Performance Measures Reconciliation
Years Ended December 31,
2021
2020
(Dollars in thousands, except per share data)
Operating noninterest expense reconciliation
Operating net income reconciliation
Net income (GAAP)
Acquisition-related expenses
Gain on sale of Thomaston branch
Writedown of Building
Income tax benefit of expenses
Operating net income
Weighted average diluted shares
Adjusted earnings per diluted share
Tangible book value per common share reconciliation
Book value per common share (GAAP)
Effect of goodwill and other intangibles
Tangible book value per common share
$
$
$
$
18,659
4,617
–
–
(874)
22,402
11,254,130
1.99
$
11,815
862
(1,026)
582
(88)
$
12,145
9,498,783
1.28
$
15.92
(4.41)
11.51
$
15.21
(1.95)
13.26
COVID-19 and Recent Events
The U.S. economy contracted in the first half of 2020, ending the longest expansionary period in U.S.
history, due to the COVID-19 pandemic. During March 2020, in an effort to lessen the impact of COVID-
19 on consumers and businesses, the Federal Reserve reduced the federal funds rate 1.5 percentage points
to 0.00 to 0.25 percent and the U.S. government enacted the CARES Act, the largest economic stimulus
package in the nation’s history. The Company responded to the pandemic, beginning in March 2020, by
supporting our clients, employees, and communities with such measures as remote work capabilities and
branch service enhancements, loan payment deferrals, and accelerated investments in several technology
initiatives that provided more convenience and a better digital experience as clients adapted to this highly
virtual environment. The Company participated in the PPP and funded approximately 2,600 loans totaling
approximately $193.2 million under the programs available in both 2020 and 2021, and $144.0 million in
PPP loans related to CARES Act were forgiven.
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Additional government spending measures and the availability of vaccines improved consumer
confidence and demand, and the economy largely reopened in 2021, leading to a reduction in the
unemployment rate and accelerated GDP growth. While 2021 has seen a recovery in the U.S. economy
compared to 2020, uncertainty and market disruptions such as additional coronavirus variants, pandemic-
related supply chain issues and labor shortages persist. The economic expansion has been met with
inflationary pressures that are expected to result in the Federal Open Market Committee policy-tightening in
2022, likely including multiple interest rate hikes. With a strong asset-sensitive balance sheet and our strong
position in our market markets, we expect increases in loan demand and interest rates will improve returns
going forward.
Critical Accounting Estimates
The consolidated financial statements of Colony are prepared in conformity with U.S. generally
accepted accounting principles (“GAAP”) and follow general practices within the industry in which it
operates. This preparation requires management to make estimates, assumptions and judgments that
affect the amounts reported in the consolidated financial statements and accompanying notes. These
estimates, assumptions and judgments are based on information available as of the date of the consolidated
financial statements; accordingly, as this information changes, actual results could differ from the estimates,
assumptions and judgments reflected in the consolidated financial statements. Certain policies inherently
have a greater reliance on the use of estimates, assumptions and judgments and, as such, have a greater
possibility of producing results that could be materially different than originally reported. Estimates that are
particularly susceptible to significant change include the valuation of loan acquisition transactions, as well
as the determination of the allowance for loan losses and income taxes and, therefore, are critical accounting
policies. In addition to the discussion that follows, the accounting policies related to these estimates are
further described in Note 1, “Summary of Significant Accounting Policies,” in the Notes to Consolidated
Financial Statements, under Part II, Item 8.
Business Combinations and Valuation of Loans Acquired in Business Combinations
We account for acquisitions under Financial Accounting Standards Board (“FASB”) ASC Topic 805,
Business Combinations, which requires the use of the acquisition method of accounting. Assets acquired
and liabilities assumed in a business combination are recorded at the estimated fair value on their purchase
date. As provided for under GAAP, management has up to 12 months following the date of the acquisition
to finalize the fair values of acquired assets and assumed liabilities, where it was not possible to estimate the
acquisition date fair value upon consummation. Management finalized the fair values of acquired assets and
assumed liabilities within this 12-month period and management currently considers such values to be the
Day 1 Fair Values for the acquisition transactions.
In particular, the valuation of acquired loans involves significant estimates, assumptions and judgment
based on information available as of the acquisition date. Loans acquired in a business combination
transaction are evaluated either individually or in pools of loans with similar characteristics; including
consideration of a credit component. A number of factors are considered in determining the estimated fair
value of purchased loans including, among other things, the remaining life of the acquired loans, estimated
prepayments, estimated loss ratios, estimated value of the underlying collateral, estimated holding periods,
contractual interest rates compared to market interest rates, and net present value of cash flows expected
to be received.
Allowance for Loan Losses
The allowance for loan losses is a critical accounting estimate that requires significant judgments and
assumptions, which are inherently subjective. The use of different estimates or assumptions could have a
significant impact on the provision for credit losses, allowance for loan losses, financial condition, and results
of operations. The economic and business climate in any given industry or market is difficult to gauge and
can change rapidly, and the effects of those changes can vary by borrower.
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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 loans that are 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,
(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.
Consolidated net income and stockholders’ equity could be affected if management’s estimate of the
allowance necessary to cover loan losses is subsequently materially different, requiring a change in the
level of provision for loan losses to be recorded. While management uses currently available information
to recognize losses on loans, future adjustments may be necessary based on newly received appraisals,
updated commercial customer financial statements, rapidly deteriorating customer cash flow, and changes in
economic conditions or forecasts that affect the Company’s customers.
Income Taxes
The assessment of income tax assets and liabilities involves the use of estimates, assumptions,
interpretation, and judgment concerning certain accounting pronouncements and federal and state tax codes.
There can be no assurance that future events, such as court decisions or positions of federal and state taxing
authorities, will not differ from management’s current assessment, the impact of which could be significant to
the consolidated results of operations and reported earnings.
Colony files a consolidated federal income tax return and a combined state income tax return (both of
which include Colony and its wholly owned subsidiaries). Accordingly, amounts equal to tax benefits of those
companies having taxable federal losses or credits are reimbursed by the companies that incur federal tax
liabilities. Amounts provided for income tax expense are based on income reported for financial statement
purposes and do not necessarily represent amounts currently payable under tax laws. Deferred income tax
assets and liabilities are computed quarterly for differences between the financial statement and tax bases of
assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax law
rates applicable to the periods in which the differences are expected to affect taxable income. As changes
in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through provision for income
tax expense. Valuation allowances are established when it is more likely than not that a portion of the full
amount of the deferred tax asset will not be realized. In assessing the ability to realize deferred tax assets,
management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and
tax planning strategies. Colony may also recognize a liability for unrecognized tax benefits from uncertainty
in income taxes. Unrecognized tax benefits represent the differences between a tax position taken or
expected to be taken in a tax return and the benefit recognized and measured in the financial statements.
Penalties related to unrecognized tax benefits are classified as income tax expense.
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
The following discussion and analysis present the more significant factors affecting the Company’s
financial condition as of December 31, 2020 and 2019 and results of operations for each of the two year-
periods ended December 31, 2020. 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 2020 and 2019 and, thus making tax-exempt yields comparable to taxable asset yields.
Dollar amounts in tables are stated in thousands, except for per share amounts.
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 $18.7 million, or $1.66 per diluted shares in 2021, compared to $11.8 million, or
$1.24 per diluted shares in 2020.
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 64.3% of total revenue
during 2021 and 66.76% of total revenue during 2020.
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.
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 3.25% as of December
31, 2021 and 2020. The Federal Reserve Board sets general market rates of interest, including the deposit and
loan rates offered by many financial institutions. During 2021, the prime interest rate remained the same.
During 2020, the prime interest rate decreased by 100 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.
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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
Total interest income
Interest expense
Interest-Bearing Demand and Savings Deposits
Time Deposits
FHLB Advances
Paycheck Protection Program Liquidity Facility (“PPPLF”)
Other Borrowings
Total interest expense
Net interest income
Changes From 2020 to 2021 (a)
Total
Volume
Rate
$
4,850
4,329
861
85
10,125
681
(94)
36
(147)
(202)
274
9,851
$
$
(272)
(1,861)
(31)
(309)
(2,473)
$
4,578
2,468
830
(224)
7,652
(1,622)
(1,963)
(88)
35
(119)
(3,757)
$ 1,284
(941)
(2,057)
(52)
(112)
(321)
(3,483)
$ 11,135
(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.
The Company maintains about 22.36% 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. During 2021,
Federal Reserve rates remained stable. The Federal Reserve rates decreased 150 basis points in 2020. We have
seen the net interest margin decrease to 3.39% for 2021, compared to 3.50% for 2020.
Taxable-equivalent net interest income for 2021 increased by $11.1 million or 20.0%, compared to 2020,
due to an increase in loan fee income generated through PPP loan originations during 2021, which was
approximately $5.4 million and increase in investment securities income, along with decreases in interest
expense. The average volume of interest-earning assets during 2021 increased $378.5 million compared to 2020
while over the same period the net interest margin decreased 11 basis points to 3.39% from 3.50%. The change
in the net interest margin in 2021 and 2020 was primarily driven by a continued higher level of low yielding
assets offset by a decrease in the cost of funds, as well as downward pressure exerted from lower yielding PPP
loans offset by lowering our borrowing costs during the year as well as lower interest on the level of deposits on
our balance sheet. Growth in average earning assets during 2021 was primarily in loans and interest-bearing
deposits in other banks related to the acquisition of SouthCrest Financial Group, Inc (“SouthCrest”).
The average volume of loans increased $94.9 million in 2021 compared to 2020, which reflects both organic
loan growth, growth from acquisition of SouthCrest offset by $144.0 million in loans PPP loans forgiven. The
average yield on loans remained stable from 2021 compared to 2020, and only decreased two basis points. The
average volume of interest-bearing deposits increased $279.1 million in 2021 compared to 2020. Average demand
deposits increased $286.8 million while average time deposits decreased $7.7 million in 2021 compared to 2020.
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Accordingly, the ratio of average interest-bearing deposits to total average deposits was 75.3% in 2021 and
78.8% in 2020. For 2021, this deposit mix, combined with a general decrease in interest rates, had the effect of
(i) decreasing the average cost of total deposits by 32 basis points in 2021 compared to 2020 and (ii) offsetting a
portion of the impact of decreasing 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, remained stable and only
decreasing to 3.32% in 2021 from 3.37% in 2020. 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.
Average Balance Sheets
(Dollars in thousands)
Assets
Average
Balances
2021
Income/
Expense
Yields/
Rates
Average
Balances
2020
Income/
Expense
Loans, net of unearned fees (1)
Investment securities, taxable
Investment securities, exempt (2)
Deposits in banks and
short term investments
Total interest-earning assets
Total noninterest-earning assets
Total assets
$ 1,186,919
547,793
61,476
$ 60,380
9,343
1,161
169,188
1,965,376
135,916
$ 2,101,292
214
71,098
5.09%
1.71
1.89
0.13
3.62
$1,092,009
336,140
17,070
$ 55,802
6,875
331
438
63,446
141,641
1,586,860
104,375
$1,691,235
Liabilities and stockholders’ equity
Interest-bearing liabilities:
Interest-bearing liabilities:
Savings and interest-bearing
demand deposits
Time deposits
Total interest-bearing deposits
FHLB advances
Paycheck Protection Program
Liquidity Facility
Other borrowings
Total interest-bearing liabilities
Noninterest-bearing demand deposits
Other liabilities
Stockholders’ equity
Total liabilities and
1,073,824
297,704
$ 1,371,528
34,849
$
25,546
32,686
1,464,609
449,445
11,195
176,043
929
1,672
2,601
691
93
1,012
4,397
0.09%
0.56
0.19
1.98
0.36
3.10
0.30
stockholders’ equity
Interest rate spread
Net interest income
Net interest margin
$ 2,101,292
$ 66,701
3.32%
3.39 %
787,030
305,374
$1,092,404
33,249
90,768
38,527
1,254,948
294,008
4,325
137,954
$1,691,235
$
1,870
3,729
5,599
743
205
1,333
7,880
$ 55,566
Yields/
Rates
5.11%
2.05
1.94
0.31
4.006
0.24%
1.22
0.51
2.23
0.23
3.46
0.63
3.37%
3.50%
(1) The average balance of loans includes the average balance of nonaccrual loans. Income on such loans is recognized and recorded on the cash basis.
Taxable-equivalent adjustments totaling $268,000 and $252,000 for the year ended December 31, 2021 and 2020, respectively, are included in
income and fees on loans. Accretion income of $470,000 and $763,000 for the year ended December 31, 2021 and 2020 are also included in income
and fees on loans.
(2) Taxable-equivalent adjustments totaling $244,000 and $69,000 for the year ended December 31, 2021 and 2020, respectively, are included in
tax-exempt interest on investment securities. The adjustments are based on federal tax rate of 19% and 21% with appropriate reductions for the
effect of disallowed interest expense incurred in carrying tax-exempt obligations for the year ended December 31, 2021 and 2020, respectively.
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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 $700,000 in 2021 compared to $6.6 million in 2020. See the section
captioned “Allowance for Loan Losses” elsewhere in this discussion for further analysis of the provision for
loan losses. The decrease in provision for loan losses for the year ended December 31, 2021 compared to
2020 is largely due to the reserve levels that have already been established in response to the COVID-19
pandemic. See the section captioned “Loans and Allowance for Loan Losses” elsewhere in this discussion for
further analysis of the provision for loan losses. Net recoveries for the year ended December 31, 2021 were
$83,000 compared to net charge-offs of $1.3 million for the same period in 2020. As of December 31, 2021,
Colony’s allowance for loan losses was $12.9 million, or 0.96% of total loans, compared to $12.1 million, or
1.14% of total loans, at December 31, 2020. At December 31, 2021 and 2020, nonperforming assets were
$5.8 million and $10.2 million, or 0.21% and 0.58% of total assets, respectively. While asset quality remains
stable period over period, social and economic disruption in response to the COVID-19 pandemic continued
to result in business closures and job losses during the year ended 2021.
Noninterest Income
The components of noninterest income were as follows:
$
%
(Dollars in thousands)
Service charges on deposit accounts
Mortgage fee income
Gain on sales of SBA loans
Gain (loss) on sales of securities
Gain on sales of assets
Interchange fees
BOLI income
Other
Total
2021
$
6,213
13,213
7,547
(87)
–
6,929
1,041
1,434
$ 36,290
2020
$ 5,293
9,149
1,600
926
1,082
4,988
743
463
$ 24,244
Variance Variance
17.38%
$
920
4,064
5,947
(1,013)
(1,082)
1,941
298
971
$ 12,046
44.42
100.00
(109.40)
100.00
38.91
40.11
209.81
49.69%
Noninterest income increased $12.0 million, or 49.69% from 2020. The Company saw considerable
increases in mortgage fee income, gain on sale of SBA loans, and interchange fees, off-set slightly by losses on
sales of securities and the absence of a gain on sale of assets in 2021. The increase in mortgage fee income is
primarily attributed to the increase in volume of mortgage activity as well as the acquisition of SouthCrest
in August 2021. Furthermore, during the years ended December 31, 2020 and 2021, there was an increase in
the demand for mortgage rate locks and mortgage closings due to a historically low interest rate environment.
The decrease in mortgage rates was partially attributable to the 150 basis point decrease in the national
federal funds rate during the year ended December 31, 2020 and remained in effect for 2021 in response
to the COVID-19 pandemic. Gain on sale of SBA loans increased $5.9 million in 2021 from 2020. The
increase in 2021 is primarily attributable to the continued growth in the Small Business Specialty Lending
division. The increase of $1.9 million in interchange fees was a result of the perks program the Company
offered from Discover® and the program becoming the Bank’s primary program late in 2020.
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Noninterest Expense
The components of noninterest expense were as follows:
$
%
(Dollars in thousands)
Salaries and employee benefits
Occupancy and equipment
Acquisition related expenses
Information technology
Professional Fees
Advertising and public relations
Communications
Writedown of building
FHLB prepayment penalty
Other
Total
2021
$ 45,596
6,149
4,617
7,673
2,951
2,657
1,373
90
–
7,609
$ 78,715
2020
$ 34,141
5,311
862
5,746
2,250
2,111
835
582
925
5,538
$ 58,301
Variance Variance
33.55%
$
15.78
435.61
33.54
31.16
25.86
64.43
100.00
100.00
37.40
35.01%
11,455
838
3,755
1,927
701
546
538
(492)
(925)
2,071
20,414
$
Increases in salaries and employee benefits, acquisition related expenses, information technology
expenses accounted for the majority of the increase in noninterest expense, offset by the writedown of the
Thomaston building and FHLB prepayment penalties in 2020. The increase in salaries and employee
benefits of $11.5 million in 2021 was primarily attributable to merit pay increases and salaries from the
SouthCrest and insurance acquisitions completed in the last half of 2021, as well as commissions paid to
mortgage employees due to an increase in volume. Information technology expenses increased $1.9 million
primarily due to the Company’s additional processing needs due to growth, as well as implementation of
new software. Other noninterest expense increased due to increases in FDIC insurance from acquisition of
SouthCrest and deposit charge-offs.
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 $2.1 billion in 2021 compared to $1.7 billion in 2020.
(Dollars in thousands)
Sources of Funds:
Noninterest-bearing deposits
Interest-bearing deposits
FHLB advances
PPPLF
Other borrowings
Other noninterest-bearing liabilities
Equity capital
Total
Uses of Funds:
Loans held for sale and loans
Investment securities
Deposits in banks and short term investments
Other noninterest-bearing assets
Total
2021
2020
$ 449,445
1,371,528
34,849
25,546
32,685
11,196
176,043
21.39% $ 294,008
1,092,404
65.27%
33,249
1.66%
90,768
1.22%
38,527
1.56%
4,325
0.53%
137,954
8.37%
$ 2,101,292 100.00% $ 1,691,235
17.38%
64.59
1.97
5.37
2.28
0.26
8.15
100.00%
56.49% $1,092,009
$ 1,186,919
353,210
28.99%
609,269
141,641
8.05%
169,188
104,375
6.47%
135,916
$ 2,101,292 100.00% $ 1,691,235
64.57%
20.88
8.38
6.17
100.00%
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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. Average interest-
bearing deposits totaled 75.3% in 2021 compared to 78.8%% of total average deposits in 2020.
The Company primarily invests funds in loans and securities. Loans continue to be the largest component
of the Company’s mix of invested assets.
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
2021
2020
2019
2018
2017
$
165,446
787,392
952,838
212,527
154,048
18,564
1,337,977
(12,910)
$ 1,325,067
$ 121,093
520,391
641,484
183,021
213,380
21,618
1,059,503
(12,127)
$ 1,047,376
$ 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
Maturity and Repricing Opportunity
The following table presents total loans as of December 31, 2021 according to maturity distribution and/
or repricing opportunity on adjustable rate loans.
(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
Five Years
$
35,389
258,403
293,792
58,650
70,186
12,813
$ 435,441
After Five
Years
Through
After
Fifteen Years Fifteen Years
Total
$ 12,953
403,288
416,241
87,000
51,757
1,515
$ 556,513
$
17,267
39,964
57,231
56,784
$ 165,446
787,392
952,838
212,527
2,216
–
$ 116,231
154,048
18,564
$ 1,337,977
One Year
or Less
$
$
99,837
85,737
185,574
10,093
29,889
4,236
229,792
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview. Loans totaled $1.3 billion at December 31, 2021, up 26.3% from $1.1 billion at December 31, 2020.
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 87.1% and 77.8% of total loans at December 31, 2021 and December 31, 2020,
respectively. Commercial, financial, & agriculture represents another 11.5% of the population of the loans at
December 31, 2021 down from 20.1% of the population at December 31, 2020. The reason for the decrease is
primarily due to the PPP loan production during 2020. These loans were at gross $9.0 million at December
31, 2021 compared to a gross of $101.1 million at December 31, 2020. The PPP loans are included in our
commercial, financial and agricultural loans.
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.
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Commercial, financial and agricultural. Commercial and agricultural loans at December 31, 2021 decreased
by $59.3 million, or 27.8% to $154.0 million from December 31, 2020 at $213.4 million. This decrease was
primarily attributable to the PPP loans which was $101.1 million at December 31, 2020 versus $9.0 million
at December 31, 2021, offset by growth from the SouthCrest acquisition. 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. These
agricultural lines typically reduce in size at year end as crops are sold. 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
$44.4 million, or 36.6%, at December 31, 2021 to $165.4 million from $121.1 million at December 31, 2020.
This increase was primarily attributable to the acquisition of SouthCrest and the continued growth of the
business during 2021.
Other commercial real estate. Other commercial real estate loans increased by $267.0 million, or 51.3%, at
December 31, 2021 to $787.4 million from $520.4 million at December 31, 2020. This increase was primarily
attributable due to the acquisition of SouthCrest and the continued growth of the business during 2021.
Residential Real Estate Loans. Residential real estate loans increased by $29.5 million or 16.1%, at
December 31, 2021 to $212.5 million from $183.0 million at December 31, 2020. This increase was primarily
attributable due to the acquisition of SouthCrest and the continued growth of the business during 2021.
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, 2021 decreased $3.1 million or 14.1% to $18.6 million from $21.6 million at
December 31, 2020. This decrease was primarily attributable to payoffs and amortization of the portfolio.
Industry concentrations. As of December 31, 2021 and December 31, 2020, 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. At December 31, 2021, approximately 87.1% 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.
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Large credit relationships. The Company currently operates 31 branches in north, central, south and
coastal Georgia and includes metropolitan markets in Forsyth, Fulton, Fayette, 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. At December 31, 2021, our largest 20 relationships consisted of loans and loan
commitments, where the total committed balance was $203.6 million with $160.6 million outstanding.
At December 31, 2020, our largest 20 relationships had total committed balance of $174.8 million with
$156.2 million outstanding.
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, 2021. 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.
(Dollars in thousands)
Loans with fixed interest rates
Loans with floating interest rates
Total
Due in
One Year
or Less
$
$
134,376
95,416
229,792
but Within
After One After Five years
but Within
Five Years
$ 393,599
41,842
$ 435,441
Fifteen Years Fifteen Years
$ 460,333
97,222
$ 557,555
$ 50,558
64,631
$ 115,189
After
Total
$1,038,866
299,111
$ 1,337,977
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
Although asset quality experienced some recovery during the year December 31, 2021, the continuing
effects of the COVID-19 pandemic will likely have an impact on our asset quality, but it is unknown to
what extent at this point. Nonperforming assets include nonaccrual loans, accruing loans contractually past
due 90 days or more, repossessed personal property and other real estate owned (“OREO”). Nonaccrual
loans totaled $5.4 million at December 31, 2021, a decrease of $3.68 million, or 40.3%, from $9.1 million
at December 31, 2020. There were no loans contractually past due 90 days or more and still accruing for
either period presented. At December 31, 2021, OREO totaled $281,000, a decrease of $725,000, or 72.1%,
compared with $1.0 million at December 31, 2020. The change in OREO is a combination of sales of assets
during 2020 offset by asset additions and additions from the acquisition of SouthCrest. At the end of the
year ended December 31, 2021, total nonperforming assets as a percent of total assets decreased to 0.21%
compared with 0.58% at December 31, 2020.
At December 31, 2021, 4.7% of the Company’s loan portfolio, or $62.9 million, is in the hotel sector
which we expected to be the most sensitive to the COVID-19 pandemic, of which $5.5 million in loans are
guaranteed. While our entire loan portfolio is being continuously assessed, enhanced monitoring for these
sectors is ongoing. We are continuously working with these customers to evaluate how the current economic
conditions are impacting, and will continue to impact, their business operations.
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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
Repossessed assets
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
Nonperforming assets as a percentage of:
Total loans, other real estate and foreclosed assets
Total assets
Nonperforming loans as a percentage of:
Total loans
Supplemental data:
Trouble debt restructured loans in compliance with modified terms (1)
Trouble debt restructured loans
Past due 30-89 days (1)
Accruing past due loans:
30-89 days past due (1)
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
2021
5,449
–
281
49
5,779
31
837
3,839
708
34
5,449
$
$
$
$
2020
$
9,128
–
1,006
30
$ 10,164
$
$
197
4,613
2,958
1,065
295
9,128
2019
$
9,827
–
1,320
13
$ 11,160
$
$
128
3,772
3,728
2,061
138
9,827
0.43%
0.21%
0.96%
0.58%
1.15%
0.74%
0.41%
0.86%
1.01%
$
7,326
$ 12,320
$ 12,337
–
273
–
$
$
4,567
–
4,567
$
$
3,092
–
3,092
$ 12,910
$ 12,127
$
$
$
2,615
–
2,615
6,863
0.96%
236.92%
1.14%
132.85%
0.71%
69.84%
(1) Loans granted payment deferrals related to the COVID-19 pandemic are not reported as past due or placed on nonaccrual status (provided the
loans were not past due or on nonaccrual status prior to the deferral), there were no loans under these terms deemed past due or nonaccrual as of
December 31, 2021 and December 31, 2020.
Nonperforming assets include nonaccrual loans, loans past due 90 days or more, foreclosed real estate,
repossessed assets and nonaccrual securities. Nonperforming assets at December 31, 2021 decreased 43.1%
from December 31, 2020, as a result of the decrease in nonaccrual loans and the sale of other real estate
owned property.
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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.
The restructuring of a loan is considered a “troubled debt restructuring (“TDR”)” if both (i) the
borrower is experiencing financial difficulties, and (ii) the Company has granted the borrower a concession
that we would not consider otherwise. At December 31, 2021, TDRs totaled $7.3 million, a decrease from
$12.3 million reported December 31, 2020. At December 31, 2021 and 2020, all TDRs were performing
according to their modified terms and were therefore not considered to be nonperforming assets.
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 and impaired troubled debt
restructured loans. This review process usually involves the Chief Credit Officer and Director of Credit
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Administration 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.
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
2021
2020
December 31,
2019
2018
2017
Reserve
%(1)
Reserve
%(1)
Reserve
%(1)
Reserve
%(1)
Reserve
%(1)
$ 1,127
7,691
1,805
12.4%
58.8%
15.9%
$ 1,013 11.4%
6,880 49.1%
2,278 17.3%
$
215
3,908
980
9.9% $
55.8%
20.1%
131
5,251
1,181
7.7% $ 1,216
7.0%
4,654 54.7%
968 25.4%
55.8%
24.0%
11.5%
1,083
1,204 %1.4%
618
96
100.0% $12,127 100.0% $ 6,863 100.0% $ 7,277
1,713 20.1%
2.1%
11.8%
2.4%
1,657
103
243
$12,910
8.4%
9.5%
3.0%
4.4%
100.0% $ 7,508 100.0%
633
37
(1) Percentage represents the loan balance in each category expressed as a percentage of total end of period loans.
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 2 1
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
2021
$ 12,127
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 (recoveries)/charge-offs
Provision for loans losses
Allowance for loan losses at end of year
Ratio of net (recoveries)/
charge-offs to average loans
–
568
3
274
68
913
$
466
118
274
91
47
996
(83)
700
$ 12,910
2020
$ 6,863
4
226
206
242
1,103
$ 1,781
45
153
142
43
104
487
1,294
6,558
$ 12,127
2019
7,277
$
29
119
758
403
784
$ 2,093
82
218
174
36
65
575
1,518
1,104
$ 6,863
2018
$ 7,508
2017
$
8,923
–
257
162
247
299
965
155
52
91
161
74
533
432
201
7,277
$
$
52
1,027
1,048
458
330
2,915
266
544
82
141
77
1,110
1,805
390
7,508
$
$
(0.01)%
0.12%
0.11%
0.04%
0.15%
The allowance for loan losses increased from $12.1 million or 1.14% of total loans at December 31, 2020
to $12.9 million, or 0.96% of total loans at December 31, 2021. Excluding outstanding PPP loans of $9.0
million and $101.1 million as of December 31, 2021 and December 31, 2020, the allowance for loan losses as
a percentage of total loans was 0.96% and 1.27%, respectively. The allowance for loan losses allocated 0.10%
of the balance to our PPP loan portfolio at December 31, 2020. The provision for loan losses reflects loan
quality trends, including the level of net charge-offs or recoveries, among other factors.
Social and economic disruption in response to the COVID-19 pandemic continue to result in businesses
closures and job losses during the year ended 2021. Net (recoveries)/charge-off’s continued to improve
by $1.4 million from 2020 resulting in net recovery of $83,000. As such, additional qualitative measures
were incorporated as part of the December 31, 2021 allowance for loan losses calculation for the economic
uncertainties caused by the COVID-19 pandemic, which was the primary cause for the increase to the
provision for loan losses during the year ended December 31, 2021 compared to the same period 2020.
Additional reserves were also allocated to the non-owner occupied commercial real estate pools due to
economic impacts in the retail and hospitality sectors.
Management believes the allowance for loan losses is adequate to provide for losses inherent in the loan
portfolio as of December 31, 2021. The continuing impact of the COVID-19 pandemic during 2021 leading
to significant market changes, high levels of unemployment and increasing degrees of uncertainty in the U.S.
economy, the impact on collectability is not currently known, and it is possible that additional provisions for
credit losses could be needed in future periods.
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 2 1
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, 2021, 2020 and 2019.
(Dollars in thousands)
U.S. treasury securities
U.S. agency
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
Total debt securities
$
2021
87,551
17,781
250,153
48,408
534,271
$ 938,164
2020
$
245
1,004
62,388
4,250
312,927
$ 380,814
2019
$
–
–
5,115
2,806
339,411
$ 347,332
The following table represents expected maturities and weighted-average yields of investment securities
held by the Company as of December 31, 2021 (mortgage- backed securities are based on the average life at
the projected speed, while State and Political Subdivisions reflect anticipated calls being exercised).
After 1 Year But After 5 Years But
Within 1 Year Within 5 Years Within 10 Years After 10 Years
Yield
Amount Yield
Yield
$
(Dollars in thousands)
U.S. treasury securities
U.S. agency
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
Total debt securities
Amount
–
–
453
–
1,789
$ 2,242
–% $ 33,405
6,812
–
1,036
3.47
8,369
–
47,094
–
3.51% $ 96,716
Amount
1.06% $ 54,146
10,969
1.13
41,753
1.84
36,143
3.45
94,723
4.45
$ 237,734
2.93
Amount
Yield
–
1.02% $
–
1.40
206,911
1.73
3,896
3.97
390,665
4.94
3.17% $ 601,472
–%
–
1.92
5.13
1.65
1.76%
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, 2021, 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 1.72% in 2021 and 2.04% in 2020. The decrease in
the average yield from 2021 to 2020 was primarily attributed to the purchase of new securities which have
a lower yield.
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Deposits
The following table presents the average amount outstanding and the average rate paid on deposits by
the Company for the years 2021, 2020, and 2019.
(Dollars in thousands)
Noninterest-bearing
demand deposits
Interest-bearing demand
and savings deposits
Time deposits
Total deposits
2021
Average
Amount
Average
Rate
2020 2019
Average
Rate
Average
Amount
Average
Amount
Average
Rate
$
449,445
–
$
294,008
–
$ 208,320
–
1,073,824
297,704
$ 1,820,973
787,030
0.09%
305,374
0.56%
0.14% $ 1,386,412
640,180
0.24%
361,319
1.22%
0.40% $1,209,819
0.67%
1.60%
0.83%
The following table presents the maturities of the Company’s time deposits as of December 31, 2021.
(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
or Greater
$250,000
Total
$ 18,171
19,808
17,415
18,013
$ 73,407
$ 56,628
47,154
91,676
80,363
$ 275,821
$ 74,799
66,962
109,091
98,376
$ 349,228
Average deposits increased $434.6 million in 2021 compared to 2020. The increase in 2021 included
$286.8 million or 36.4% in interest-bearing demand and savings deposits while, at the same time, noninterest
bearing deposits increased $155.4 million, or 52.9% and time deposits decreased $7.7 million, or 2.5%. The
growth in our deposits is due primarily to acquisition of SouthCrest, combination of government stimulus
programs, PPP loan proceeds retained on deposits by corporate borrowers, and customer expense and
savings habits in response to the COVID-19 pandemic.
The Company supplements deposit sources with brokered deposits. As of December 31, 2021, the Company
had $883,000, or 0.04% 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 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 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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following table summarizes commitments and contractual obligations outstanding at December 31, 2021.
(Dollars in thousands)
Contractual obligations:
Borrowings
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
$
88,448
665
349,228
$ 438,341
$
5,313
493
250,852
$ 256,658
$
3,000
172
83,224
$ 86,396
$ 11,750
–
14,264
$ 26,014
$ 68,385
–
888
$ 69,273
$ 318,853
4,869
$ 323,722
$ 191,067
2,923
$ 193,990
$ 48,363
1,946
$ 50,309
$ 7,105
–
$ 7,105
$ 72,318
–
$ 72,318
$ 762,063
$ 450,648
$ 136,705
$ 33,119
$ 141,591
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, 2021 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, 2021 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
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.”
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
At December 31, 2021, shareholders’ equity totaled $217.7 million compared to $144.5 million at
December 31, 2020. In addition to net income of $18.7 million, other significant changes in shareholders’
equity during 2020 included $71.4 million issuance of common stock from SouthCrest acquisition, and $4.5
million of dividends declared on common stock. The accumulated other comprehensive loss component
of stockholders’ equity totaled $6.2 million at December 31, 2021 compared to accumulated other
comprehensive income $6.8 million at December 31, 2020. 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 securities less goodwill, intangibles
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, 2021 was 11.28%
and total Tier 1 and 2 risk-based capital was 12.05%. Both of these measures compare favorably with the
regulatory minimum of 6.0% for Tier 1 and 8% for total risk-based capital. The Company’s common equity
Tier 1 ratio as of December 31, 2021 was 9.87%, which exceeds the regulatory minimum of 4.50%. The
Company’s Tier 1 leverage ratio as of December 31, 2021 was 7.25%, which exceeds the required ratio
standard of 4.0%.
The Bank participate in the PPP and the PPPLF to fund PPP Loans. In accordance with regulatory
guidance, PPP loans pledged as collateral for PPPLF, and PPPLF advances, are excluded from leverage
capital ratios. PPP loans will also carry a 0% risk-weight for risk-based capital rules.
For the year ended December 31, 2021, average capital was $176.0 million representing 8.4% of average
assets for the year. This compares to average capital of $138.0 million, representing 8.2% of average assets
for 2020.
For the years ended December 31, 2021 and 2020, the Company did not have any material
commitments for capital expenditures.
In 2021, the Company granted 187,600 restricted shares of common stock and these restricted shares
vest over a three year period.
A cash dividend of $4.5 million and $3.8 million was paid for the year ended December 31, 2021 and
2020, respectively.
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.
Cash and cash equivalents at December 31, 2021 and 2020 were $197.2 million and $183.5 million,
respectively. Management believes the various funding sources discussed above are adequate to meet the
Company’s liquidity needs in these unsettled times without any material adverse impact on our operating results.
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,
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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.
The investment portfolio provides a ready means to raise cash if liquidity needs arise. As of December
31, 2021, the available for sale bond portfolio totaled
$938.2 million At December 31, 2020, the available for sale bond portfolio totaled $380.8 million. Only
marketable investment grade bonds are purchased. Although approximately 26% 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 56.3% as of December 31, 2021 and
73.3% as of December 31, 2020. 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, 2021 and December 31, 2020 were 54.9% and 71.5%, 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, 2021 and December 31, 2020,
the Bank had $73.4 million and $34.9 million, respectively, in certificates of deposit of $250,000 or more.
These larger deposits represented 3.1% and 2.4% of total deposits as of December 31, 2021 and 2020,
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, 2021, the
Company had $883,000 or 0.1% 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, 2021, the Company had $99,000 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. At
December 31, 2021 and 2020, we had $51.7 million and $22.5 million, respectively, of outstanding advances
from the FHLB. Based on the values of loans pledged as collateral, we had $574.7 million and $416.1 million
of additional borrowing availability with the FHLB at December 31, 2021 and 2020, respectively.
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.
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 2 1
Management’s Discussion and Analysis of Financial Condition and Results of Operations
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.
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 directly affect 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.
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 2 1
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 3 ½ - 5 ½ 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.
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 2 1
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 0.25% and the prime rate of 3.25%
at December 31, 2021. 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 6.83% and 13.80% if interest rates increased by 100 and 200 basis points, respectively. Net
interest income is projected to decline by 3.18% 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,
2021
13.80%
6.83%
–%
-3.18%
2020
12.55%
6.71%
–%
-2.19%
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.
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 2 1
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Colony Bankcorp, Inc. and Subsidiaries Fitzgerald, Georgia
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Colony Bankcorp, Inc. and Subsidiaries (the “Company”) as of
December 31, 2021 and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows
for the year ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and
the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United
States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audit. 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 the U.S.
federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit
we are required to obtain an understanding of internal control over financial
reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audit 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 audit also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a
reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was
communicated or required to be communicated to the Audit Committee and that: (1) relates to accounts or disclosures that are material to the
financial statements and (2) involved especially challenging, subjective, or complex judgement. The communication of the critical audit matter
does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Allowance for Loan Losses
Description of the Matter
The Company’s loan portfolio totaled $1.338 billion as of December 31, 2021, and the associated allowance for loan losses (“ALL”) was
$12.9 million. As discussed in Notes 1, 4, and 5 to the consolidated financial statements, the ALL is established to absorb probable credit losses
inherent in the Company’s loan portfolio. Management’s estimate for the probable credit losses is established through quantitative, as well as
qualitative, factors. The Company attributes portions of the allowance to loans that it evaluates individually and determines to be impaired. For
non-impaired loans, the ALL is estimated based on historical default and/or loss information for pools of loans with similar risk characteristics
and product types. The Company’s methodology for determining the appropriate ALL also considers the imprecision inherent in the
estimation process. As a result, management adjusts the ALL for consideration of the potential impact of qualitative factors, which include
levels of and trends in delinquencies and impaired loans (including TDRs); levels of and trends in charge-offs and recoveries; migration of loans
to the classification of special mention, substandard, or doubtful; trends in volume and terms of loans; effects of any changes in risk selection
and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management
and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentration.
Auditing management’s estimate of the ALL involved a high degree of subjectivity in evaluating the qualitative factors that management
assessed and the measurement of each qualitative factor. Management’s assessment and measurement of the qualitative factors is highly
judgmental and has a significant effect on the ALL.
How We Addressed the Matter in Our Audit
Our audit procedures related to the qualitative factors of the ALL included the following procedures, among others. We gained an
understanding of the Company’s process for establishing the ALL, including the identification and measurement of qualitative factors. We
evaluated the design and documented the operating effectiveness of controls relevant to that process, including controls over the reliability of
data from the loan systems, the completeness and accuracy of quantitative data, and the ALL methodology and assumptions. In doing so, we
tested review and approval controls in the Company’s governance process designed to identify and assess the need for and measurement of
qualitative factors to estimate inherent credit losses associated with factors not captured fully in the quantitative components of the ALL.
With respect to the identification of qualitative factors, we evaluated 1) the potential impact of imprecision in the quantitative models
(and hence the need to consider a qualitative adjustment to the ALL); 2) changes, assumptions and adjustments to the models; 3) sufficiency,
availability, and relevance of historical loss data used in the models; and 4) the risk factors used in the models. Regarding measurement of
the qualitative factors, we evaluated internal data utilized by management to estimate the appropriate level of the qualitative factors, as well
as internal/external data produced by the Company’s Credit Review functions, with consideration given to the reliability of the factors and
existence of new and potentially contradictory information. We also evaluated the overall ALL balance taken as a whole inclusive of such
qualitative factors.
We have served as the Company’s auditor since 2021.
Albany, Georgia March 17, 2022
4 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 2 1
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Colony Bankcorp, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Colony Bankcorp, Inc. and its subsidiaries (the Company)
as of December 31, 2020, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and
cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the
financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the
results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the
United States of America.
Basis for Opinion
These financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these
financial statements based on our audit. 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 the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express
no such opinion.
Our audit 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 audit also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audit provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) related to accounts or disclosures that are
material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication
of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not,
by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or
disclosures to which it relates.
Allowance for Loan Losses
As described in Notes 1 and 5 to the Company’s consolidated financial statements, the Company has a gross loan balance of
$1.06 billion and related allowance for loan losses balance of $12.1 million as of December 31, 2020. As described by the Company
in Note 1, the evaluation of the allowance for loan losses is inherently subjective as it requires estimates that are susceptible to
significant revision as more information becomes available. The allowance for loan losses is evaluated on a regular basis and is
based upon the Company’s 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.
We identified the Company’s estimate of the allowance for loan losses as a critical audit matter. The principal considerations
for our determination of the allowance for loan losses as a critical audit matter related to the high degree of subjectivity in the
Company’s judgments in determining the qualitative factors. Auditing these complex judgments and assumptions by the Company
involves especially challenging auditor judgement due to the nature and extent of audit evidence and effort required to address these
matters, including the extent of specialized skill or knowledge needed.
The primary procedures we performed to address this critical audit matter included the following:
• We evaluated the relevance and the reasonableness of assumptions related to evaluation of the loan portfolio, current economic
conditions, and other risk factors used in development of the qualitative factors for collectively evaluated loans.
• We evaluated the reasonableness of assumptions and data used by the Company in developing the qualitative factors by
comparing these data points to internally developed and third-party sources, and other audit evidence gathered.
McNAIR, McLEMORE, MIDDLEBROOKS & CO., LLC
We served as the Company’s auditor from 1995 through 2021.
Macon, Georgia
March 23, 2022
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 2 1
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
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
Federal Home Loan Bank advances
Paycheck Protection Program Liquidity Facility
Other borrowed money
Other liabilities
Total liabilities
Commitments and contingencies (Note 15)
Stockholders’ equity
Preferred stock, stated value $1,000; 10,000,000 shares authorized,
0 shares issued and outstanding as of December 31, 2021 and 2020
Common stock, par value $1; 20,000,000 shares authorized,
13,673,898 and 9,498,783 shares issued and outstanding
as of December 31, 2021 and 2020
Paid-in capital
Retained earnings
Accumulated other comprehensive (loss) income, 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,
2021
2020
$
18,975
178,257
197,232
938,164
14,012
38,150
1,337,977
(12,910)
1,325,067
43,033
281
52,906
7,389
55,159
3,644
16,678
$ 2,691,715
$
552,576
1,822,032
2,374,608
51,656
–
36,792
10,952
$ 2,474,008
$
17,218
166,288
183,506
380,814
3,296
52,386
1,059,503
(12,127)
1,047,376
32,057
1,006
15,992
2,271
31,547
134
13,589
$ 1,763,974
326,999
$
1,118,028
1,445,027
22,500
106,789
37,792
7,378
$ 1,619,486
–
–
13,674
111,021
99,189
(6,177)
217,707
$ 2,691,715
9,499
43,215
84,993
6,781
144,488
$ 1,763,974
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 2 1
Consolidated Statements of Income
(Dollars in thousands, except per share data)
Interest income
Loans, including fees
Deposits with other banks and short term investments
Investment securities
Total interest income
Interest expense
Deposits
Federal Home Loan Bank advances
Paycheck Protection Program Liquidity Facility
Other borrowings
Total interest expense
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Noninterest income
Service charges on deposits
Mortgage fee income
Gain on sales of SBA loans
Gain (loss) on sales of securities
Gain on sales of assets
Interchange fees
BOLI income
Other
Total noninterest income
Noninterest expenses
Salaries and employee benefits
Occupancy and equipment
Acquisition related expenses
Information technology expense
Professional fees
Advertising and public relations
Communications
Writedown of building
FHLB prepayment penalty
Other
Total noninterest expense
Income before income taxes
Income taxes
Net income
For The Years Ended
December 31,
$
2021
60,112
214
10,260
70,586
2,601
691
93
1,012
4,397
66,189
700
65,489
6,213
13,213
7,547
(87)
–
6,929
1,041
1,434
36,290
45,596
6,149
4,617
7,673
2,951
2,657
1,373
90
–
7,519
78,625
23,154
4,495
18,659
$
2020
55,550
438
7,137
63,125
5,599
743
205
1,333
7,880
55,245
6,558
48,687
5,293
9,149
1,600
926
1,082
4,988
743
463
24,244
34,141
5,311
862
5,746
2,250
2,111
835
582
925
5,538
58,301
14,630
2,815
11,815
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.
4 6
$
$
$
1.66
1.66
0.41
11,254,130
11,254,130
1.24
$
1.24
$
0.40
$
9,498,783
9,498,783
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 2 1
Consolidated Statements of Comprehensive Income
(Dollars in thousands)
Net income
For The Years Ended
December 31,
2021
18,659
$
2020
11,815
$
Other comprehensive income:
Net unrealized gains (losses) on investment securities arising during the period
Tax effect
Reclassification adjustment for (gains) losses on sales of securities available
for sale included in net income
Tax effect
(16,491)
3,463
87
(17)
9,052
(1,901)
(926)
194
Change in unrealized gains (losses) on securities available for sale,
net of reclassification adjustment and tax effects
Comprehensive income
(12,958)
5,701
$
6,419
18,234
$
See accompanying notes which are an integral part of these financial statements.
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 2 1
Consolidated Statements of Changes in Stockholders’ Equity
(Dollars in thousands)
Balance, December 31, 2019
Other comprehensive income
Dividends on common shares
Goodwill adjustment
Stock-based compensation expense
Net income
Balance, December 31, 2020
Other comprehensive income
Dividends on common shares
Issuance of common stock
Issuance of restricted stock, net
Stock-based compensation expense
Net income
Preferred Stock Common Stock
Amount
–
$
–
–
–
–
–
–
–
–
–
–
–
–
–
Shares
9,498,783
–
–
–
–
–
9,498,783
–
–
3,987,815
187,300
–
–
13,673,898
Share
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Amount
9,499
$
–
–
–
–
–
9,499
–
–
3,988
187
–
–
$ 13,674
$
$
$
Balance, December 31, 2021
Paid-In
Capital
$ 43,667
–
–
(485)
33
–
$ 43,215
–
–
67,394
(187)
599
–
$ 111,021
Retained
Earnings
$ 76,978
–
(3,800)
–
–
11,815
$ 84,993
–
(4,463)
–
–
–
18,659
$ 99,189
Accumulated
Other
Comprehensive
Income (Loss)
362
$
6,419
–
–
–
–
$ 6,781
(12,958)
–
–
–
–
–
$ (6,177)
Total
$ 130,506
6,419
(3,800)
(485)
33
11,815
$ 144,488
(12,958)
(4,463)
71,382
–
599
18,659
$ 217,707
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 2 1
Consolidated Statements of Cash Flows
For The Years Ended
December 31,
(Dollars in thousands)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
2021
2020
Provision for loan losses
Depreciation, amortization and accretion
Stock-based compensation expense
(Gains) losses on sales of securities available for sale
Net increase in servicing asset
Loss on sales and writedowns of other real estate and repossessions
(Gain) losses on sales of premises & equipment
Gain on sale of bank owned buildings
Writedowns on sale of bank owned buildings
Increase in bank owned life insurance
Gain on sales of SBA loans
Origination of loans held for sale
Proceeds from sales of loans held for sale
Change in other assets
Change in other liabilities
Net cash provided by (used in) 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 sales of investment securities available for sale
Net change in loans
Purchase of premises and equipment
Proceeds from sales of other real estate and repossessions
Purchase of equity securities
Purchase of bank-owned life insurance
Proceeds from bank owned life insurance
Redemption (purchase of) Federal Home Loan Bank stock
Proceeds from sale of bank owned buildings
Proceeds from sales of premises and equipment
Net cash and cash equivalents received from bank acquisition
Net cash and cash equivalents paid in insurance acquisitions
Net cash used in investing activities
Cash flows from financing activities
Change in noninterest-bearing customer deposits
Change in interest-bearing customer deposits
Dividends paid on common stock
Proceeds from Paycheck Protection Program Liquidity Fund
Repayment of Paycheck Protection Program Liquidity Fund
Proceeds from Federal Home Loan Bank advances
Repayments of Federal Home Loan Bank advances
Repayments of other borrowings
Net cash 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
Acquisition of real estate through foreclosure
Change in goodwill
See accompanying notes which are an integral part of these financial statements.
4 9
$
18,659
$
11,815
700
8,628
599
87
(1,040)
48
49
(96)
90
(1,042)
(7,547)
(439,160)
460,943
(654)
(4,160)
36,104
(460,500)
103,002
96,781
28,450
(5,838)
1,360
(9,500)
–
752
2,308
1,535
17
37,511
(4,210)
(208,332)
86,307
211,899
(4,463)
–
(106,789)
–
–
(1,000)
185,954
13,726
183,506
$ 197,232
$
4,387
3,859
145
–
6,558
5,859
33
(926)
(295)
8
(56)
(1,028)
582
(743)
(1,600)
(315,929)
275,219
(696)
2,105
(19,094)
(181,685)
96,999
58,069
(94,623)
(4,241)
2,363
–
(10,000)
825
992
–
1,035
–
–
(130,266)
94,364
56,921
(3,800)
134,500
(27,711)
14,000
(38,500)
(1,000)
228,774
79,414
104,092
$ 183,506
$
7,821
2,450
2,057
485
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 2 1
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. The Company also provides an option for its customers to purchase insurance services including
vehicle, home, renters and life insurance. Additionally, Colony Risk Management, Inc. is a subsidiary
of the Company and is located in Las Vegas, Nevada. It is a captive insurance subsidiary which insures
various liability and property damage policies for the Company and its related subsidiaries. Colony Risk
Management is regulated by the State of Nevada Division of Insurance.
Basis of Presentation and Accounting Estimates
The consolidated financial statements include the accounts of Colony Bankcorp, Inc. and its wholly
owned subsidiaries, Colony Bank and Colony Risk Management. 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.
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 2 1
Notes to Consolidated Financial Statements
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.
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.
During 2020, the Federal Reserve stopped requiring the Bank to maintain a reserve requirement. The
Federal Reserve Bank does not have plans to reimplement a reserve requirement in the near future, but did
reserve the right to require a reserve requirement at a future date.
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, 2021 and 2020, 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.
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 2 1
Notes to Consolidated Financial Statements
Other Investments
Other investments include managed investment funds which are carried at their fair value and
unrealized gains or losses are recorded through earnings as a component of noninterest income.
Federal Home Loan Bank (“FHLB”) and First National Bankers Bank (“FNBB”) stock are also included
in other investments. These investments do not have a readily determinable market value due to restrictions
placed on transferability and therefore are carried at cost.
These other 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.
Loans Held for Sale
Mortgage and SBA loans held for sale are carried at the lower of aggregate cost or estimated fair value,
as determined by outstanding commitments from third party investors in the secondary market. Adjustments
to reflect unrealized gains and losses resulting from changes in fair value of mortgage loans held for sale and
realized gains and losses upon ultimate sale of the mortgage loans held for sale are classified as mortgage fee
income in the consolidated statements of income. Adjustments to reflect unrealized gains and losses resulting
from changes in fair value of SBA loans held for sale and realized gains and losses upon ultimate sale of the
SBA loans held for sale are classified as gain on sale of SBA loans in the consolidated statements of income.
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.
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
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 2 1
Notes to Consolidated Financial Statements
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,
(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 the staff appraiser and
appraisal department. 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 25 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
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 2 1
Notes to Consolidated Financial Statements
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 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, Senior Credit
Officer, Director of Administration or Regional 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. 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.
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 and customer relationship 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. The customer relationship
intangible is associated with the acquisition of several insurance companies during 2021. The customer
intangible assets were also initially recognized based on independent valuations performed as of the
acquisition date and are being amortized by the straight-line method over 10 years.
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 2 1
Notes to Consolidated Financial Statements
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.
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 2021, 2020, 2019 and 2018 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 restricted shares for the years ended
December 31, 2021 and 2020, 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.
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 2 1
Notes to Consolidated Financial Statements
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. Accounting standards
codification requires the presentation in the consolidated financial statements of net income and all items of
other comprehensive income as total comprehensive income.
Fair Value Measures
Fair values of assets and liabilities are estimated using relevant market information and other
assumptions, as more fully disclosed in Note 17. 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.
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 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. This ASU is effective for fiscal years beginning after December 15, 2019, including interim
periods within those fiscal years. On October 16, 2019, the Financial Accounting Standards Board (“FASB”)
voted to extend the delay of the effective date of this ASU for smaller reporting companies, such as the
Company, until fiscal years beginning after December 15, 2022. The Company is currently assessing the
impact of the adoption of this ASU on its consolidated financial statements.
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
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 2 1
Notes to Consolidated Financial Statements
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 adopted this standard as of January 1,
2021. The adoption of this standard did not 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 adopted
this standard as of January 1, 2021. The adoption of this standard did not have a material impact on the
consolidated financial statements.
In March 2020, the FASB issued ASU No. 2020-04, Reference Reform (Topic 848) Facilitation of the Effects
of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional guidance
for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of)
reference rate reform on financial reporting. The amendments are effective for the Company as of March
12, 2020 through December 31, 2022. The provisions of ASU 2020-04 did not have a material impact on the
consolidated financial statements.
2. BUSINESS COMBINATIONS
Acquisition of SouthCrest Financial Group
On August 1, 2021, the Company completed its acquisition of SouthCrest Financial Group, Inc.
(“SouthCrest”), a bank holding company headquartered in Atlanta, Georgia. Upon consummation of
the acquisition, SouthCrest was merged with and into the Company, with Colony Bankcorp, Inc. as the
surviving entity in the merger. Immediately following the holding company merger, SouthCrest’s wholly
owned bank subsidiary, SouthCrest Bank, N.A. was also merged with and into the Bank. The acquisition
expanded the Company’s market presence, as SouthCrest Bank, N.A. had eight full-service banking
locations, one in Cedartown, Chickamauga, Cumming, Fayetteville, Luthersville, Manchester, Rockmart
and Thomaston, Georgia. Under the terms of the Agreement and Plan of Merger, each SouthCrest
shareholder had the option to receive either $10.45 in cash or 0.7318 shares of the Company’s common stock
in exchange for each share of SouthCrest stock. As a result, the Company issued 3,987,815 common shares
at a fair value of $71.4 million and paid $21.6 million in cash to the former shareholders of SouthCrest as
merger consideration.
The merger was effected by the issuance of shares of the Company’s common stock along with cash
consideration to shareholders of SouthCrest. The assets and liabilities of SouthCrest 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 $35.0 million was recorded as part of the SouthCrest acquisition and is not expected to be
deductible for income tax purposes.
In periods following the merger, the financial statements of the combined entity will include the results
attributable to SouthCrest beginning on the date the merger was completed. For the twelve month period
ended December 31, 2021, the revenues attributable to SouthCrest were approximately $7.9 million.
In the twelve month period ended December 31, 2021, the net income attributable to SouthCrest was
approximately $6.0 million.
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 2 1
Notes to Consolidated Financial Statements
The supplemental consolidated pro-forma impact to 2020 revenues if the merger had occurred on
January 1, 2020 would have been $114.7 million for year ended December 31, 2020. The supplemental
consolidated pro-forma impact to 2020 net income if the merger had occurred on January 1, 2020 would
have been $11.6 million for the year ended December 31, 2020. The supplemental consolidated pro-forma
impact to 2021 revenues if the merger had occurred on January 1, 2020 would have been $121.9 million for
the year ended December 31, 2021. The supplemental consolidated pro-forma impact to 2021 net income if
the merger had occurred on January 1, 2020 would have been $20.8 million for the year ended December
31, 2021. While certain adjustments were made for the estimated impact of certain fair value adjustments,
they are not indicative of what would have occurred had the merger taken place on the indicated date nor
are they intended to represent or be indicative of future results of operations. In particular, no adjustments
have been made to eliminate the amount of SouthCrest’s provision for credit losses or any adjustments to
estimate any additional income that would have been recorded as a result of fair value adjustments for 2020
that may have occurred had the acquired loans been recorded at fair value as of the beginning of 2020. In
addition, there are no adjustments to reflect any expenses that potentially could have been reduced for 2020
had the merger occurred on January 1, 2020.
The following table presents the assets acquired and liabilities assumed of SouthCrest as of August 1,
2021, and their fair value estimates. The fair value estimates are 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
August 1, 2021, 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, except market price)
Purchase price consideration:
Shares of CBAN common stock issued to SouthCrest shareholders as of August 1, 2021
Market price of CBAN common stock on July 30, 2021
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
Restricted investments
Loans
Premises and equipment
Core deposit intangible
Other real estate
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) Subsequent adjustments were done within the one year period allowed after the acquisition.
5 8
Initial Fair
Value Adjustments
3,987,815
17.90
$
71,382
21,620
93,002
$
$
$
$
$
$
$
59,131
317,857
3,196
307,456
8,543
4,025
538
25,393
726,139
(631,375)
(29,064)
(7,735)
(668,174)
57,965
35,037
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 2 1
Notes to Consolidated Financial Statements
In the acquisition, the Company purchased $307.5 million of loans at fair value, net of $635,000, or
0.21%, estimated discount to the outstanding principal balance. Of the total loans acquired, management
identified $1.2 million 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.
(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
$
$
1,154
–
1,154
–
1,154
The following table presents the acquired loan data for the SouthCrest acquisition.
(Dollars in thousands)
Acquired receivables subject to ASC 310-30
Acquired receivables not subject to ASC 310-30
Formation of Colony Insurance
Fair Value of
Acquired Loans at
Acquisition Date
$
1,154
$ 306,302
Contractually
Required
Principal and
Interest Payments
$
1,154
$ 306,302
Nonaccretable
Difference
–
$
–
$
On August 1, 2021, September 1, 2021 and October 1, 2021, the Company acquired several insurance
agencies and formed Colony Insurance, a division of the Bank and recorded goodwill of $1.9 million and
customer deposit intangibles of $2.3 million.
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, 2021
U.S. treasury securities
U.S. agency
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
Total debt securities
Amortized
Cost
$
88,638
17,916
252,632
48,153
539,172
$ 946,511
Gross
Unrealized
Gains
Gross
Unrealized
Losses
$
$
–
5
877
520
2,160
3,562
$ (1,087)
(140)
(3,356)
(265)
(7,061)
$ (11,909)
Fair
Value
$
87,551
17,781
250,153
48,408
534,271
$ 938,164
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 2 1
Notes to Consolidated Financial Statements
(Dollars in thousands)
December 31, 2020
U.S. treasury securities
U.S. agency
State, county and municipal securities
Corporate debt securities
Mortgage-backed securities
Total debt securities
Amortized
Cost
$
245
1,000
61,298
4,250
305,438
$ 372,231
Gross
Unrealized
Gains
$
$
–
4
1,155
1
7,837
8,997
Gross
Unrealized
Losses
$
$
–
–
(65)
(1)
(348)
(414)
Fair
Value
$
245
1,004
62,388
4,250
312,927
$ 380,814
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 More
Total
Estimated
Fair
Value
Unrealized
Losses
Estimated
Fair
Value
Unrealized
Losses
Estimated
Fair
Value
Unrealized
Losses
(Dollars in thousands)
December 31, 2021
U.S. treasury securities
U.S. agency
State, county
$ 87,302
10,969
$ (1,087)
(140)
and municipal securities
Corporate debt securities
Mortgage-backed securities
Total debt securities
180,551
31,977
377,413
$ 688,212
(3,131)
(265)
(6,421)
$(11,044)
December 31, 2020
State, county and
municipal securities
Corporate debt securities
Mortgage-backed securities
Total debt securities
$
8,282
999
28,835
$ 38,116
$
$
(65)
(1)
(77)
(143)
$
$
$
$
–
–
5,970
–
21,129
27,099
–
–
3,949
3,949
$
$
$
$
–
–
$
87,302
10,969
(225)
–
(640)
(865)
186,521
31,977
398,542
$ 715,311
–
–
(271)
(271)
$
$
8,282
999
32,784
42,065
$
$
$
$
(1,087)
(140)
(3,356)
(265)
(7,061)
(11,909)
(65)
(1)
(348)
(414)
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, 2021, 272 securities have unrealized losses 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 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.
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 2 1
Notes to Consolidated Financial Statements
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.
The amortized cost and fair value of investment securities as of December 31, 2021, 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
$
453
49,599
144,692
212,595
$ 407,339
539,172
$ 946,511
Fair
Value
$
453
49,622
143,011
210,807
$ 403,893
534,271
$ 938,164
Proceeds from sales of investments available for sale were $96.8 million in 2021 and $58.1 million in
2020. Gross realized gains totaled $391,000 in 2021 and $1,228,000 in 2020. Gross realized losses totaled
$478,000 in 2021 and $302,000 in 2020.
Investment securities having a carrying value totaling $247.4 million and $126.5 million as of December
31, 2021 and 2020, respectively, were pledged to secure public deposits and for other purposes.
4. LOANS
The following table presents the composition of loans segregated by legacy and purchased loans and by
class of loans, as of December 31, 2021 and 2020. Purchased loans are defined as loans that were acquired in
bank acquisitions.
(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
$ 119,953
595,739
715,692
159,469
113,040
16,003
$1,004,204
December 31, 2021
Purchased
Loans
$
45,493
191,653
237,146
53,058
41,008
2,561
$ 333,773
Total
$ 165,446
787,392
952,838
212,527
154,048
18,564
$ 1,337,977
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 2 1
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
$ 109,577
477,445
587,022
167,714
200,800
19,037
$ 974,573
December 31, 2020
Purchased
Loans
$
$
11,516
42,946
54,462
15,307
12,580
2,581
84,930
Total
$
121,093
520,391
641,484
183,021
213,380
21,618
$ 1,059,503
(*) Includes $9.0 million and $101.1 million in PPP loans as of December 31, 2021 and 2020, respectively.
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 10. A description of the general characteristics of the grades is as follows:
• Grades 1, 2 and 3 - Borrowers with these assigned risk grades range 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 4 and 5 - 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. These loans are also included in into the “pass” classification.
• Grade 6 - 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.
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 2 1
Notes to Consolidated Financial Statements
• Grades 7 and 8 - These grades 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 grade 8, 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.
• Grades 9 and 10 - 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 7 or 8.
The following tables present the loan portfolio, excluding purchased loans, by credit quality indicator (risk
grade) as of December 31, 2021. Those loans with a risk grade of 1, 2, 3, 4, and 5 have been combined in the
pass column for presentation purposes. For the periods ending December 31, 2021, 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
$ 116,524
527,227
643,751
148,507
100,282
15,787
$ 908,327
Special
Mention
$
3,154
60,719
63,873
5,733
11,460
78
$ 81,144
Substandard
$
275
7,793
8,068
5,229
1,298
138
$ 14,733
$
Total
Loans
119,953
595,739
715,692
159,469
113,040
16,003
$ 1,004,204
The following table presents the purchased loan portfolio by credit quality indicator (risk grade) as of
December 31, 2021.
(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
45,432
186,905
232,337
49,875
40,711
2,558
$ 325,481
Special
Mention
–
$
3,518
3,518
563
–
3
4,084
$
Substandard
$
$
61
1,230
1,291
2,620
297
–
4,208
Total
Loans
45,493
191,653
237,146
53,058
41,008
2,561
333,773
$
$
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 2 1
Notes to Consolidated Financial Statements
The following tables present the loan portfolio, excluding purchased loans, by credit quality indicator
(risk grade) as of December 31, 2020. 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, 2020, 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
99,430
430,515
529,945
157,927
196,749
18,734
$ 903,355
Special
Mention
2,940
$
33,579
36,519
3,855
2,870
124
$ 43,368
Substandard
7,207
$
13,351
20,558
5,932
1,181
179
$ 27,850
Total
Loans
$ 109,577
477,445
587,022
167,714
200,800
19,037
$ 974,573
The following table presents the purchased loan portfolio by credit quality indicator (risk grade) as of
December 31, 2020.
(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
11,275
40,825
52,100
14,909
10,198
2,364
79,571
$
$
Special
Mention
241
53
294
312
1,803
25
2,434
$
$
Substandard
$
–
2,068
2,068
86
579
192
2,925
$
Total
Loans
11,516
42,946
54,462
15,307
12,580
2,581
84,930
$
$
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.
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 2 1
Notes to Consolidated Financial Statements
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, 2021:
Accruing Loans
90 Days
or More
Past
Due
30-89
Days Past
Due
Total
Accruing
Loans Past Nonaccrual
Due
Loans
$
$
6
349
355
421
69
93
938
$
$
–
–
–
–
–
–
–
$
$
6
349
355
421
69
93
938
$
–
577
577
2,641
708
26
$ 3,952
Current
Loans
Total
Loans
$ 119,947
594,813
714,760
156,407
$
119,953
595,739
715,692
159,469
112,263
15,884
$ 999,314
113,040
16,003
$ 1,004,204
(Dollars in thousands)
Construction, land
and land development
Other commercial real estate
Total commercial real estate
Residential real estate
Commercial, financial,
and agricultural
Consumer & 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, 2021:
Current
Loans
Total
Loans
$
42,782
191,393
234,175
51,300
40,619
2,553
$ 328,647
$
$
45,493
191,653
237,146
53,058
41,008
2,561
333,773
(Dollars in thousands)
Construction, land
and land development
Other commercial real estate
Total commercial real estate
Residential real estate
Commercial, financial,
and agricultural
Consumer & other
Total loans
Accruing Loans
90 Days
or More
Past
Due
30-89
Days Past
Due
Total
Accruing
Loans Past Nonaccrual
Due
Loans
$ 2,680
–
2,680
560
389
–
$ 3,629
$
$
–
–
–
–
–
–
–
$ 2,680
–
2,680
560
389
–
$ 3,629
$
31
260
291
1,198
–
8
$ 1,497
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 2 1
Notes to Consolidated Financial Statements
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, 2020:
(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
30-89
Days Past
Due
$ 1,314
229
1,543
667
150
48
$ 2,408
Accruing Loans
90 Days
or More
Past
Due
Total
Accruing
Loans Past
Due
Nonaccrual
Loans
Current
Loans
Total
Loans
$
$
–
–
–
–
–
–
–
$ 1,314
229
1,543
667
150
48
$ 2,408
$
80
2,545
2,625
2,873
1,010
102
$ 6,610
$ 108,183
474,671
582,854
164,174
199,640
18,887
$ 965,555
$ 109,577
477,445
587,022
167,714
200,800
19,037
$ 974,573
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, 2020:
(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
30-89
Days Past
Due
$
$
–
544
544
15
125
–
684
Accruing Loans
90 Days
or More
Past
Due
Total
Accruing
Loans Past
Due
Nonaccrual
Loans
Current
Loans
Total
Loans
$
$
–
–
–
–
–
–
–
$
$
–
544
544
15
125
–
684
$
117
2,068
2,185
85
55
193
$ 2,518
$
$
11,399
40,334
51,733
15,207
12,400
2,388
81,728
$
11,516
42,946
54,462
15,307
12,580
2,581
$ 84,930
6 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 2 1
Notes to Consolidated Financial Statements
The following table details impaired loan data, including purchased credit impaired loans, as of
December 31, 2021:
Average
Recorded
Investment
$
4,311
8,113
1,083
56
–
13,563
–
4,429
1,029
79
1
5,538
51
802
7
35
72
967
4,362
13,344
2,119
170
73
$ 20,068
(Dollars in thousands)
With no related allowance recorded
Unpaid
Contractual
Principal
Balance
Recorded
Investment
Related
Allowance
$
$
–
–
–
–
–
–
–
148
108
–
–
256
–
18
6
–
96
120
–
166
114
–
96
376
Construction, land and land development
Other commercial real estate
Residential real estate
Commercial, financial and agricultural
Consumer and other
$
Total impaired loans with no allowancee
With an allowance recorded
Construction, land and land development
Other commercial real estate
Residential real estate
Commercial, financial and agricultural
Consumer and other
Total impaired loans with allowance
Purchased credit impaired loans
Construction, land & land development
Other commercial real estate
Residential real estate
Commercial, financial and agricultural
Consumer and other
Total purchased credit impaired loans
Total
Construction, land and land development
Other commercial real estate
Residential real estate
Commercial, financial and agricultural
Consumer and other
62
7,203
958
75
–
8,298
–
430
685
–
–
1,115
–
2,003
4
–
192
2,199
$
62
6,369
997
75
–
7,503
–
483
773
–
–
1,256
–
1,916
–
–
73
1,989
62
9,636
1,647
75
192
$ 11,612
62
8,768
1,770
75
73
$ 10,748
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 2 1
Notes to Consolidated Financial Statements
Interest income recorded on impaired loans during the year ended December 31, 2021 was $570,000,
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 $1.2 million for the year ended December 31, 2021.
The following table details impaired loan data as of December 31, 2020, including purchased credit
impaired loans.
(Dollars in thousands)
With no related allowance recorded
Construction, land and land development
Other commercial real estate
Residential real estate
Commercial, financial and agricultural
Consumer and other
With an allowance recorded
Construction, land and land development
Other commercial real estate
Residential real estate
Commercial, financial and agricultural
Consumer and other
Purchase credit impaired
Construction, land and land development
Other commercial real estate
Residential real estate
Commercial, financial and agricultural
Consumer and other
Total
Construction, land and land development
Other commercial real estate
Residential real estate
Commercial, financial and agricultural
Consumer and other
Unpid
Contractual
Principal
Balance
$
6,969
11,978
1,140
42
–
20,129
–
6,292
1,274
310
–
7,876
118
–
14
55
192
379
Recorded
Investment
Related
Allowance
$
6,982
11,105
1,122
40
–
19,249
–
6,325
1,230
310
–
7,865
94
–
11
46
96
247
$
–
–
–
–
–
–
–
1,436
226
263
–
1,925
–
–
4
–
81
85
Average
Recorded
Investment
$
2,841
12,190
2,142
203
–
17,376
–
5,945
703
1,118
–
7,766
96
63
13
49
113
334
7,087
18,270
2,428
407
192
$ 28,384
7,076
17,430
2,363
396
96
$ 27,361
–
1,436
230
263
81
2,010
$
2,937
18,198
2,858
1,370
113
$ 25,476
Interest income recorded on impaired loans during the year ended December 31, 2020 was $761,000,
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
$518,000 for the year ended December 31, 2020.
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 2 1
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, 2021. The Company had four loan contracts
totaling 647,000 restructured and one of these loans which was a construction, land and development loan
for $511,000 was subsequently paid off during 2021.
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.
There were two loan contracts restructured at December 31, 2021. Both modifications were payment
deferral modifications. The loans consisted of two residential real estate loans totaling $136,000. Both
residential real estate loans were also placed on non-accrual status as of December 31, 2021. 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. The Company had four loan contracts totaling $494,000 restructured
during the year ended December 31, 2020, all four modifications were payment deferral modifications. The
loans consisted of two commercial real estate loans totaling $132,000, one commercial loan totaling
$89,000 and one residential real estate loan totaling $273,000. The two commercial real estate loans were
also placed on non-accrual status as of December 31, 2020; the remaining TDR loans were accruing. During
2021 and 2020, the Company had no loans that subsequently defaulted.
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 2 1
Notes to Consolidated Financial Statements
Modifications in Response to COVID-19
Certain borrowers were unable to meet their contractual payment obligations because of the adverse
effects of the COVID-19 pandemic. To help mitigate these effects, loan customers applied for a deferral
of payments, or portions thereof, for up to three months. In the absence of other intervening factors, such
short-term modifications made on a good faith basis are not categorized as troubled debt restructurings, nor
are loans granted payment deferrals related to the COVID-19 pandemic reported as past due or placed on
nonaccrual status (provided the loans were not past due or on nonaccrual status prior to the deferral).
As of December 31, 2021, the Company had no loans under modified terms. As of December 31, 2020,
the Company had approximately $1.9 million in loans still under their modified terms. The Company’s
modification program included payment deferrals, interest only, and other forms of modifications.
See Note 1 - Summary of Significant Accounting Policies for more information.
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, 2021. 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
Development Real Estate
Commercial
Residential Financial, and
Agricultural
Real Estate
Consumer
and
Other
Total
(Dollars in thousands)
Year ended
December 31, 2021
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
Loans collectively evaluated
for impairment
Purchased credit impaired
Ending balance
$
$
1,013
–
466
(352)
1,127
–
1,127
–
1,127
$
$
$
$
6,880
(568)
118
1,261
7,691
148
7,525
18
7,691
$
$
$
$
2,278
(3)
274
(744)
1,805
108
1,691
6
1,805
62
$
6,852
$
1,770
$
$
$
$
$
1,713
(274)
91
(447)
1,083
$
243
(68)
47
982
$ 1,204
$
$
12,127
(913)
996
700
12,910
–
$
–
$
256
1,083
–
1,083
1,108
96
$ 1,204
$
12,534
120
12,910
75
$
–
$
8,759
165,384
–
$ 165,446
778,624
1,916
$ 787,392
210,757
–
$ 212,527
153,973
–
$ 154,048
18,491
73
$ 18,564
1,327,229
1,989
$1,337,977
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 2 1
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, 2020. 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
(Dollars in thousands)
Year ended
December 31, 2020
Beginning balance
Charge-offs
Recoveries
Provision
Ending balance
$
$
215
(4)
45
757
1,013
$
$
3,908
(226)
153
3,045
6,880
Period-end amount allocated to:
Individually evaluated
for impairment
Collectively evaluated
for impairment
Purchase credit impaired
Ending balance
$
$
–
$
1,436
1,013
–
1,013
5,444
–
6,880
$
Loans:
Loans individually evaluated
$
$
$
$
980
(206)
142
1,362
2,278
$
$
1,657
(242)
43
255
1,713
226
$
263
2,048
4
2,278
1,450
–
1,713
$
$
$
$
$
$
103
(1,103)
104
1,139
243
$
$
6,863
(1,781)
487
6,558
12,127
–
$
1,925
162
81
243
$
10,117
85
12,127
–
$
27,114
for impairment
$
6,982
$
17,430
$
2,352
$
350
Loans collectively evaluated
for impairment
Purchase credit impaired
Ending balance
114,017
94
$ 121,093
502,961
–
$ 520,391
180,658
11
$ 183,021
212,984
46
$ 213,380
21,522
96
$ 21,618
1,032,142
247
$ 1,059,503
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
2021
$ 11,848
38,777
17,792
1,073
1,946
71,436
(28,403)
$ 43,033
2020
$ 10,576
28,671
14,091
797
1,860
55,995
(23,938)
$ 32,057
Depreciation charged to operations totaled $2.7 million in 2021 and $2.3 million in 2020. Construction
in progress consists of building and land improvements to three of the Company’s bank branches. Cost to
complete these projects is expected not to exceed $20,000.
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 2 1
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,
2021 and 2020:
(Dollars in thousands)
Balance, Beginning of year
Loans transferred to other real estate
Acquired in acquisitions
Sales proceeds
Net gain/(loss) on sale and writedowns
Ending balance
2021
$ 1,006
145
538
(1,360)
(48)
281
$
2020
1,320
2,057
–
(2,363)
(8)
1,006
$
$
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
Customer relationship intangible
Total
Unamortizable intangible assets:
Goodwill
2021
Gross
2020
Gross
Carrying Accumulated
Amount Amortization
Carrying Accumulated
Amount Amortization
$
7,685
2,250
9,935
$ 52,906
$ 2,464
82
2,546
$
3,660
–
3,660
$
1,389
–
1,389
$ 15,992
Activity related to transactions since January 1, 2019 includes the following:
(1)
In connection with the SouthCrest, Inc. acquisition on August 1, 2021, the Company recorded $4.0
million in core deposit intangible and $35.0 million in goodwill.
In connection with insurance acquisitions that occurred on August 1, 2021, September 1, 2021,
and October 1, 2021, the Company recorded $2.3 million in customer deposit intangibles and $1.9
million in goodwill.
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. The company recorded a
subsequent adjustment within the one year period allowed after the acquisition of $485,000 in 2020.
In connection with the May 1, 2019 acquisition of PFB Mortgage from Planters First Bank, the
Company recorded $541,000 in goodwill.
(2)
(3)
(4)
Amortization expense related to the core deposit intangible was $1.2 million and $785,000 at December
31, 2021 and 2020, respectively. The estimated future amortization expense for intangible assets remaining
as of December 31, 2021 is as follows:
(Dollars in thousands)
2022
2023
2024
2025
2026
Thereafter
Total
7 2
Amount
1,726
$
1,471
1,217
962
658
1,355
7,389
$
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 2 1
Notes to Consolidated Financial Statements
9. INCOME TAXES
The income tax expense in the consolidated statements of income for the years ended December 31, 2021
and 2020 are as follows:
(Dollars in thousands)
Current federal expense
Deferred federal expense
Federal income tax expense
Current state expense
Deferred state expense
State income tax expense
Provision for income taxes
$
2021
5,316
(661)
4,655
663
(823)
$
(160)
$ 4,495
2020
3,965
(1,150)
2,815
–
–
–
2,815
$
$
$
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,
2021 and 2020 is as follows:
(Dollars in thousands)
Tax at federal income tax rate
Change resulting from:
State taxes
Tax-exempt interest
Income in cash value of bank owned life insurance
Nondeductible merger expenses
Other
Provision for income taxes
2021
$ 4,862
2020
3,072
$
(126)
(404)
(219)
222
160
$ 4,495
$
–
(253)
(156)
–
152
2,815
The components of deferred income taxes for the years ended December 31, 2021 and 2020 are as follows:
(Dollars in thousands)
Deferred tax assets
Allowance for loan losses
Lease liability
Net operating loss carryforwards
Other real estate
Deferred compensation
Unrealized loss on securities available for sale
Restricted stock
Purchase accounting adjustments
Investment in partnerships
Other
Gross deferred tax assets
Deferred tax liabilities
Premises and equipment
Right of use lease asset
Unrealized gain on securities available for sale
Purchase accounting adjustments
Core deposit intangible
Gross deferred tax liabilities
2021
2020
$ 3,290
169
272
–
297
2,170
166
–
232
19
6,615
267
164
–
1,322
1,218
2,971
$
1,958
109
272
48
147
–
10
202
191
87
3,024
604
107
1,803
–
376
2,890
Net deferred tax assets
$ 3,644
$
134
7 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 2 1
Notes to Consolidated Financial Statements
10. DEPOSITS
The aggregate amount of overdrawn deposit accounts reclassified as loan balances totaled $626,000 and
$406,000 as of December 31, 2021 and 2020, respectively.
Components of interest-bearing deposits as of December 31 are as follows:
(Dollars in thousands)
Interest-bearing demand
Savings and money market deposits
Time, $250,000 and over
Other time
Total interest-bearing deposits
$
2021
930,811
541,993
73,407
275,821
$ 1,822,032
2020
$ 433,554
422,860
34,905
226,709
$1,118,028
At December 31, 2021 and 2020, the Company had brokered deposits of $883,000 and $1.1 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 $73.4 million and $34.9 million as of December 31, 2021 and 2020, respectively.
As of December 31, 2021, the scheduled maturities of certificates of deposit are as follows:
(Dollars in thousands)
Year ending December 31
2022
2023
2024
2025
2026
Thereafter
Total time deposits
11. BORROWINGS
Amount
$ 250,852
53,544
29,680
8,048
6,216
888
$ 349,228
The following table presents information regarding the Company’s outstanding borrowings at
December 31, 2021:
(Dollars in thousands)
Description
FHLB Advances
FHLB Advances
FHLB Advances
FHLB Advances
FHLB Advances
FHLB Advances
Term Note
Revolving Credit
Subordinated debentures
Fair Value Adjustment for FHLB Borrowings acquired from
SouthCrest
Total borrowings
Maturity Date
February 3, 2023
March 21, 2028
August 15, 2025
July 30, 2029
July 11, 2029
November 9, 2029
May 24, 2025
July 30, 2022
(2)
$
Amount
3,000
5,000
4,500
10,000
10,000
20,000
7,250
5,313
24,229
(844)
$ 88,448
Interest Rate
3.51%
2.67%
2.62%
1.01%
1.03%
1.07%
4.70%
2.85%
(3)
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 2 1
Notes to Consolidated Financial Statements
The following table presents information regarding the Company’s outstanding borrowings at
December 31, 2020:
(Dollars in thousands)
Description
FHLB Advances
FHLB Advances
FHLB Advances
FHLB Advances
Paycheck Protection Program Liquidity Facility
Term Note
Revolving Credit
Subordinated debentures
Total borrowings
Maturity Date
February 3, 2023
March 21, 2028
August 15, 2025
July 30, 2029
(1)
May 24, 2025
May 21, 2021
(2)
$
Amount
3,000
5,000
4,500
10,000
106,789
8,250
5,313
24,229
$ 167,081
Interest Rate
3.51%
2.67%
2.62%
1.01%
0.35%
4.70%
2.85%
(3)
(1) Maturity date is equal to the maturity date of the related PPP loans.
(2) See maturity dates in table below.
(3) Interest rates for all subordinated debentures are at the three-month LIBOR plus added points as noted in table below.
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, 2021 and
2020, the lendable collateral value of those loans pledged was $130.3 million and $88.2 million, respectively.
At December 31, 2021, the Company had remaining credit availability from the FHLB of $574.7 million. At
December 31, 2020, the Company had remaining credit availability from the FHLB of $416.1 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, 2021 and 2020, the Company also has available federal funds lines of credit with
various financial institutions totaling $64.5 million and $41.5 million, respectively, of which there were none
outstanding at December 31, 2021 and 2020.
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, 2021, 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 April 20, 2020 the Company completed a Paycheck Protection Program Liquidity Facility
(“PPPLF”) credit arrangement with the Federal Reserve. This line of credit was secured by PPP loans and
bore a fixed interest rate of 0.35% with a maturity date equal to the maturity date of the related PPP loans,
with the PPP loans maturing either two or five years from the origination date of the PPP loan. An advance
of $140.7 million through the PPPLF was used for the funding of PPP loans. The Company’s PPPLF was
paid off in second quarter of 2021.
On May 1, 2019, the Company entered into two borrowing arrangements with a correspondent bank
for $10.0 million each. The term note is secured by the Bank’s stock, expires on May 24, 2025, and bears a
variable interest rate of Wall Street Journal Prime minus 0.40%. The proceeds were used for the acquisition
of LBC Bancshares, Inc. and its subsidiary, Calumet Bank. As of December 31, 2021, the outstanding
balance on the term note and the line of credit were $7.3 million and $5.3 million, respectively. As of
December 31, 2020, the outstanding balance totaled of the term note and the line of credit were $8.3 million
and $5.3 million, respectively.
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 2 1
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, 2021 and 2020. All subordinated debentures are at three month LIBOR rat plus added points
noted below at December 31, 2021 and 2020.
(Dollars in thousands)
Date
Description
Colony Bankcorp Statutory Trust III
June 16, 2004
Colony Bankcorp Capital Trust I
April 13, 2006
Colony Bankcorp Capital Trust II
March 12, 2007
Colony Bankcorp Capital Trust III September 14, 2007
5-Year
Call
Added
Option
Amount Points
June 17, 2009
2.68%
$ 4,640
April 13, 2011
1.50%
5,155
1.65%
9,279
March 12, 2012
1.40% September 14, 2037 September 14, 2012
5,155
Maturity
June 14, 2034
April 13, 2036
March 12, 2037
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. 2016-2 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 2024. 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
Classification
December 31,
2021
December 31,
2020
Operating lease right-of-use assets
Other assets
Liabilities
Operating lease liabilities
Other liabilities
$
$
645
663
$
$
511
517
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
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 2 1
Notes to Consolidated Financial Statements
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.
For the year ended December 31, 2021 and 2020, operating lease cost was $351,000 and $243,000,
respectively.
As of December 31, 2021, the weighted average remaining lease term was 1.44 years and the weighted
average discount rate was 0.51%. The following table represents the future maturities of the Company’s
operating lease liabilities and other lease information.
(Dollars in thousands)
Year
2022
2023
2024
Total lease payments
Less: interest
Present value of lease liabilities
Lease
Liability
493
148
24
665
(2)
663
$
(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 lease right-of-use assets obtained in exchange for leases
December 31,
2021
December 31,
2020
$
335
$
238
entered into during the period
742
196
14. COMPENSATION PLANS
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 2021 and 2020, the Company made total
contributions of $1.4 million and $1.1 million to the Plan, respectively.
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 $1.2 million and $698,000 as of December 31, 2021 and
2020, respectively. Benefits accrued monthly under the contracts totaled $43,000 in 2021 and $75,000 in
2020. Payments were $136,000 in 2021 and were $153,000 in 2020.
The Company has purchased life insurance policies on the plans’ participants and uses the cash
flow from these policies to partially fund the plan. There was no fee income recognized in 2021 and
$212,000 in 2020.
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 2 1
Notes to Consolidated Financial Statements
On July 1, 2021, the Company granted total awards of 187,600 restricted shares of the Company’s common
stock to various bank employees, with a market price of $18.41 per share. The restricted shares vest in equal
installments on each of July 1, 2022, 2023, and 2024, subject to continued service 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 employees 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.
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. At December 31, 2021 the shares were fully vested. 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. Total compensation expense
unrecognized for the restricted shares granted for the year ended December 31, 2021 was $2.8 million, which
is expected to be recognized over a weighted average period of 2.5 years. Compensation expense recognized
for the years ended December 31, 2021 and 2020 was $599,000 and
$33,000, respectively.
15. 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, 2021 and 2020, 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
2021
$ 318,853
4,869
2020
$ 198,029
3,634
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.
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 2 1
Notes to Consolidated Financial Statements
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.
16. 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
2021
5,043
6,576
(5,721)
1,834
7,732
2020
6,407
4,462
(5,826)
–
5,043
$
$
$
$
17. 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.
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 2 1
Notes to Consolidated Financial Statements
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.
Other investments - The fair value of other bank stock approximates carrying value and is classified as
Level 2. Fair values for investment funds 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.
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.
2 - 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. Loans 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.
Federal Home Loan Bank advances - The fair value of Federal Home Loan Bank advances is estimated
by discounting the future cash flows using the current rates at which similar advances would be obtained.
Federal Home Loan Bank advances are classified as Level 2.
Paycheck Protection Program Liquidity Facility - The fair value of PPPLF is estimated by discounting the future
cash flows using the current rates at which similar advances would be obtained. PPPLF are classified as Level 2.
Other borrowings - The fair value of other borrowings 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 borrowings 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.
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 2 1
Notes to Consolidated 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, 2021
Assets
Carrying
Amount
Estimated
Fair Value
1
Level
2
3
Cash and short-term investments
Investment securities available for sale
Other investments
Loans held for sale
Loans, net
$ 197,232
938,164
14,012
38,150
1,325,067
$
197,232
938,164
14,012
38,150
1,328,853
$ 197,232
87,551
5,574
–
–
–
$
850,613
4,183
38,150
–
$
–
–
4,255
–
1,328,853
Liabilities
Deposits
Federal Home Loan Bank advances
Other borrowed money
2,374,608
51,656
36,792
2,375,385
51,162
36,796
–
–
–
2,375,385
51,162
36,796
–
–
–
December 31, 2020
Assets
Cash and short-term investments
Investment securities available for sale
Other investments at cost
Loans held for sale
Loans, net
$ 183,506
380,814
3,296
52,386
1,047,376
$
183,506
380,814
3,296
52,386
1,063,785
$ 183,506
245
–
–
–
$
–
380,569
3,296
52,386
–
$
–
–
–
–
1,063,785
Liabilities
Deposits
Federal Home Loan Bank advances
PPPLF
Other borrowed money
1,445,027
22,500
106,789
37,792
1,445,984
20,817
106,789
37,792
–
–
–
–
1,445,984
20,817
106,789
37,792
–
–
–
–
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.
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 2 1
Notes to Consolidated Financial Statements
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:
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.
Assets 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, 2021 and 2020, 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, 2021 and 2020. Those impaired loans and
other real estate properties are shown net of the related specific reserves and valuation allowances.
Fair Value Measurements at
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
Reporting Date Using
Significant
Other
Significant
Observable Unobservable
Inputs
(Level 2)
Inputs
(Level 3)
$
$
$
$
–
–
–
–
$
$
$
$
–
–
–
–
$
$
$
$
1,837
281
5,939
1,006
(Dollars in thousands)
December 31, 2021
Nonrecurring
Impaired loans
Other real estate
December 31, 2020
Nonrecurring
Impaired loans
Other real estate
Total Fair
Value
$
$
$
$
1,837
281
5,939
1,006
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 2 1
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, 2021 and 2020. 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,
2021
1,837
Valuation
Techniques
Appraised value
281
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
December 31,
2020
$
$
5,939
1,006
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
Range
Weighted Avg
25%-100%
0%-20%
Range
Weighted Avg
25%-100%
0%-20%
The following table presents quantitative information about recurring level 3 fair value measurements as
of December 31, 2021.
December 31, 2021
(Dollars in thousands)
Other investments
Fair Value
Valuation
Techniques
$
4,255 Discounted Cash Flow
Unobservable
Inputs
Discount Rate or Yield
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.
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
year ended December 31, 2021 and 2020:
Available for Sale Securities
2021
$
$
–
4,107
148
–
–
4,255
$
$
2020
2,022
–
–
(21)
(2,001)
–
(Dollars in thousands)
Beginning balance
Additions
Total unrealized/realized gains included in earnings
Unrealized loss included in other comprehensive income (loss)
Transfer to Level 2
Ending balance
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 2 1
Notes to Consolidated Financial Statements
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 was a transfer of one security from level 3 to level 2 for the year ended
December 31, 2020.
18. 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, 2021, 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, 2021, 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 is
2.5 percent of risk-weighted assets.
The Bank is participating in the PPP and the PPPLF to fund PPP Loans. In accordance with regulatory
guidance, PPP loans pledged as collateral for PPPLF, and PPPLF advances, are excluded from leverage
capital ratios. PPP loans will also carry a 0% risk-weight for risk-based capital rules.
The following table summarizes regulatory capital information as of December 31, 2021 and December
31, 2020 on a consolidated basis and for the subsidiary, as defined. Regulatory capital ratios for December
31, 2021 and 2020 were calculated in accordance with the Basel III rules.
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 2 1
Notes to Consolidated Financial Statements
Actual
Amount
Ratio
For Capital
Adequacy Purposes
Ratio
Amount
To Be Well
Capitalized Under
Prompt Corrective
Action Provisions
Ratio
Amount
(Dollars in thousands)
As of December 31, 2021
Total capital to risk-weighted assets
Consolidated
Colony Bank
$ 207,366
203,265
12.05%
12.18
$137,670
133,507
8.00%
8.00
N/A
166,884
N/A
10.00%
Tier I capital to risk-weighted assets
Consolidated
Colony Bank
194,456
190,355
11.28
11.41
103,434
100,099
6.00
6.00
N/A
133,465
N/A
8.00
Common equity Tier 1 capital
to risk-weighted assets
Consolidated
Colony Bank
Tier I capital to average assets
Consolidated
Colony Bank
As of December 31, 2020
Total capital to risk-weighted assets
170,956
190,355
9.87
11.41
77,943
75,074
4.50
4.50
N/A
108,441
N/A
6.50
194,456
190,355
7.25
7.53
107,286
101,118
4.00
4.00
N/A
126,398
N/A
5.00
Consolidated
Colony Bank
$ 155,447
164,050
13.78%
14.55
$ 90,245
90,199
8.00 %
8.00
N/A
112,749
N/A
10.00%
Tier I capital to risk-weighted assets
Consolidated
Colony Bank
143,320
151,923
12.71
13.48
67,657
67,622
6.00
6.00
N/A
90,162
N/A
8.00
Common equity Tier 1 capital
to risk-weighted assets
Consolidated
Colony Bank
Tier I capital to average assets
Consolidated
Colony Bank
119,820
151,923
10.62
13.48
50,771
50,716
4.50
4.50
N/A
73,257
N/A
6.50
143,320
151,923
8.49
9.12
67,524
66,633
4.00
4.00
N/A
83,291
N/A
5.00
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 2 1
Notes to Consolidated Financial Statements
19. FINANCIAL INFORMATION OF COLONY BANKCORP, INC. (PARENT ONLY)
The parent company’s balance sheets as of December 31, 2021 and 2020 and the related statements of
operations and comprehensive income (loss) and cash flows for each of the years in the two-year period then
ended are as follows:
Balance Sheets
(Dollars in thousands)
Assets
Cash
Investment in subsidiaries
Other
Total Assets
Liabilities and stockholders’ equity
Liabilities
Other borrowed money
Other
Subordinated debt
Total Liabilities
Stockholders’ equity
Stockholders’ Equity
Common stock, par value $1.00; 20,000,000 shares authorized,
13,673,898 and 9,498,783 shares issued and outstanding
as of December 31, 2021 and 2020, 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,
2021
7,304
245,614
1,689
254,607
12,563
108
24,229
36,900
13,674
111,021
99,189
(6,177)
217,707
254,607
$
$
$
$
2020
2,672
179,172
570
182,414
13,563
134
24,229
37,926
9,499
43,215
84,993
6,781
144,488
182,414
$
$
$
$
8 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 2 1
Notes to Consolidated Financial Statements
Statements of Income
For The Years Ended
December 31,
(Dollars in thousands)
Income
Dividends from subsidiaries
Other
Total income
Expenses
Interest
Salaries and employee benefits
Other
Total expenses
Income before income taxes and equity in undistributed earnings
(distributions in excess of earnings) of subsidiaries
Income tax benefit
Income before equity in undistributed earnings
(distributions in excess of earnings) of subsidiaries
Equity in undistributed earnings
(distributions in excess of earnings) of subsidiaries
Net income
$
2021
31,060
15
31,075
1,012
371
604
1,987
29,088
(731)
29,819
$
2020
6,100
28
6,128
1,223
284
428
1,935
4,193
(218)
4,411
(11,160)
18,659
$
7,404
11,815
$
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 2 1
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
Stock-based compensation expense
Distribution in excess of earnings
(equity in undistributed earnings) of subsidiaries
Change in interest payable
Other
Net cash provided by operating activities
Cash flows from investing activities
Proceeds from sale of premises and equipment
Net cash and cash equivalents paid in bank acquisition
Net cash provided by investing activities
Cash flows from financing activities
Net decrease in other borrowed money
Dividends paid on common stock
Net cash used in 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
20. EARNINGS PER SHARE
For The Years Ended
December 31,
2021
2020
$
18,659
$
11,815
–
599
11,160
1
(1,146)
29,273
–
(19,178)
(19,178)
(1,000)
(4,463)
(5,463)
4,632
2,672
7,304
$
70
33
(7,404)
(51)
(354)
4,109
1,314
–
1,314
(1,000)
(3,800)
(4,800)
623
2,049
2,672
$
The following table presents earnings per share for the years ended December 31, 2021 and 2020:
(Dollars in thousands, except per share amounts)
Numerator
2021
2020
Net income available to common stockholders
$
18,659
$
11,815
Denominator
Weighted average number of common shares outstanding
for basic earnings per common share
Weighted average number of common shares outstanding
for diluted earnings per common share
Earnings per share - basic
Earnings per share - diluted
11,254,130
9,498,783
11,254,130
1.66
1.66
$
$
9,498,783
1.24
$
1.24
$
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 2 1
Notes to Consolidated Financial Statements
21. 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, 2021 and 2020:
(Dollars in thousands)
Net interest income
Provision for loan losses
Noninterest income
Noninterest expenses
Income taxes
Net income/(loss)
Total assets
Full time employees
(Dollars in thousands)
Net interest income
Provision for loan losses
Noninterest income
Noninterest expenses
Income taxes
Net income/(loss)
Total assets
Full time employees
December 31, 2021
Small
Business
Specialty
Lending
Division
$ 1,353
–
8,212
6,109
726
$ 2,730
$46,065
Mortgage
Banking
543
$
–
13,189
11,314
458
$ 1,960
$ 25,149
Bank
$
64,293
700
14,889
61,202
3,311
$
13,969
$ 2,620,501
Totals
$
66,189
700
36,290
78,625
4,495
$
18,659
$ 2,691,715
400
55
26
481
December 31, 2020
Bank
$
54,089
6,558
13,288
46,990
2,653
$
11,176
$ 1,709,696
Mortgage
Banking
603
$
–
9,106
8,137
324
$ 1,248
$ 50,266
Small
Business
Specialty
Lending
Division
553
$
–
1,850
3,174
(162)
$
(609)
$ 4,012
Totals
$
55,245
6,558
24,244
58,301
2,815
$
11,815
$ 1,763,974
305
43
21
369
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 2 1
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 18 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, 2016, 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, 2016, 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
$300
$250
$200
$150
$100
$50
Colony Bankcorp, Inc.
NASDAQ Composite
SNL Southeast Bank
12/31/16
12/31/17
12/31/18
12/31/19 12/31/20
12/31/21
Period Ending
Index
Colony Bankcorp, Inc. 100.00
NASDAQ Composite 100.00
100.00
SNL Southeast Bank
112.78
125.96
102.20
111.41
129.64
123.70
129.83
172.18
144.05
119.07
249.51
129.15
142.2
304.8
184.4
12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21
Market and Dividend Information
The common shares of Colony Bankcorp are listed
on the NASDAQ Global Market under the symbol
CBAN. As of March 16, 2022, there were 17,586,333
shares of our common stock outstanding held by
1,019 holders of record.
The following table sets forth the high and low
common stock prices and cash dividends paid to
public stockholders in 2020 and 2021:
2021
First quarter
Second quarter
Third quarter
Fourth quarter
High
$ 16.49
$ 19.59
$ 18.74
$ 19.59
Low
$ 13.70
$ 14.50
$ 16.80
$ 16.30
Dividends
Declared
$ 0.1025
$ 0.1025
$ 0.1025
$ 0.1025
2020
First quarter
Second quarter
Third quarter
Fourth quarter
$ 16.49
$ 14.39
$ 13.21
$ 15.00
$ 9.55
$ 8.70
$ 9.52
$ 12.41
$
$
$
$
0.10
0.10
0.10
0.10
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 has
increased its dividend rate each year since dividends
were reinstated in 2017 and continued to pay the
dividend throughout the COVID-19 pandemic. In
January 2021, Colony raised the quarterly rate to
$0.1025 per share, which represents an indicated
annual rate of $0.41 per share and over 300%
growth in the annual dividend rate since 2017.
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
and regulatory limitations, and general economic
conditions. No assurance can be given that the
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
Mauldin & Jenkins, LLC
2303 Dawson Road
Albany, Georgia 31707
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, 2021, as filed with the
Securities and Exchange Commission,
will be furnished without charge to
shareholders as of the record date for
the 2022 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 Tracie Youngblood, Executive
Vice President/Chief Financial Officer at
the Company’s corporate headquarters.
Annual Meeting of Shareholders
The 2022 Annual Meeting of
Shareholders will be held at 11:00 a.m.,
local time, on Thursday, May 19, 2022.
The meeting will be held at our corporate
office, 115 S Grant Street, Fitzgerald, GA.
Shareholders as of March 25, 2022, 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