Colony Bankcorp, Inc. Announces First Quarter Results

/ Source: GlobeNewswire

FITZGERALD, Ga., April 22, 2011 (GLOBE NEWSWIRE) -- Colony Bankcorp, Inc. (Nasdaq:CBAN), today reported net income available to shareholders of $706,000, or $0.08 per diluted share for the first quarter of 2011 compared to first quarter 2010 net income available to shareholders of $334,000 or $0.05 per diluted share. This increase of 111.38 percent in net income for the comparable periods was primarily driven by the reduction in loan loss provision to $1.5 million for the three months ended March 31, 2011 from $3.25 million for the comparable quarterly period in 2010. "Though earnings are not where we want to be or where we need to be, we are pleased to show improvement in earnings compared to the previous year. Our pre-tax, pre-provision core earnings continue to provide solid support for the credit-related expenses needed to address our problem assets. The liquidation of other real estate remains a challenge for the banking industry in this "soft" real estate market and earnings continue to be pressured due to the credit-related expenses associated with carrying and liquidating these properties. Certain economic indicators point toward improvement in U. S. economic fundamentals, thus we remain cautiously optimistic that the real estate market and economy in general will stabilize and provide a much needed boost to the banking industry. Until we reach a level of stabilization, we expect problem assets, charge-offs and credit-related expenses to continue to be elevated and loan demand to remain slow and sluggish. This has been a difficult and challenging environment the past several years and though much progress has been made, we still have much work ahead in reducing our problem assets to an acceptable level and returning to our accustomed earnings standards," said Al D. Ross, President and Chief Executive Officer. "Our goal during 2011 is to make incremental progress and we think that we were able to accomplish that this quarter."      

Capital

Colony continues to maintain a favorable capital position to be categorized as "well-capitalized" by regulatory benchmarks. At March 31, 2011, the Company's tier one leverage ratio, tier one and total risk-based capital ratios were 8.63 percent, 14.12 percent and 15.39 percent, respectively, compared to the previous quarter end of 8.59 percent, 13.55 percent  and 14.83 percent, respectively, at December 31, 2010. Regulatory benchmarks to be categorized as "well-capitalized" for tier one leverage ratio, tier one and total risk-based capital ratios are 5.00 percent, 6.00 percent and 10.00 percent, respectively.   

Net Interest Margin

During the first quarter of 2011, the Company reported net interest income of $8.82 million and a net interest margin of 2.98 percent, compared to $9.68 million and 3.16 percent, respectively, for first quarter 2010. While anemic loan demand continues to hamper net interest margin, the Company continues to focus on maximizing its net interest margin through deposit and loan pricing guidance. At the same time the Company is minimizing interest rate risk exposure by extending some liabilities to longer maturities, shortening some assets to shorter durations, and maintaining higher levels of liquidity for balance sheet structuring in anticipation of higher interest rates in the future. Extending liabilities, shortening asset durations and maintaining higher liquidity levels will pressure our net interest margin in the near term, but we feel prudent for interest rate risk management in the current low interest rate environment. Net interest margin decreased slightly to 2.98 percent for first quarter 2011 compared to 3.02 percent for fourth quarter 2010. 

Asset Quality

The Company continues to closely monitor our non-performing assets and focus on problem asset resolution. Non-performing assets increased slightly from December 31, 2010 to $51.02 million, or 6.35 percent of total loans and other real estate owned as of March 31, 2011. This compares to $49.26 million, or 5.91 percent as of December 31, 2010 and $53.7 million, or 5.94 percent as of March 31, 2010. The level of non-performing assets ties directly to the elevated risk in our residential, land development and commercial real estate loan portfolio and has resulted in higher than normal loan loss provisions for the past three years. During first quarter 2011, the Company continued its methodology regarding the look-back period for charge-off experience to one year and this resulted in the Company reducing its loan loss provisions from the same year ago period as first quarter 2011 provision for loan losses was $1.50 million compared to $3.25 million for the same 2010 period. Unusually high levels of loan loss provision have been required the past several years as company management addresses asset quality deterioration associated with the housing and real estate downturn.  Until we see stabilization in the economy and the housing and real estate market, we expect problem assets and charge-offs to be elevated above historical levels as we work through our problem assets.

In the first quarter of 2011 net charge-offs were $7.31 million, or 0.92 percent of average loans as compared to net charge-offs of $4.96 million, or 0.55 percent of average loans in first quarter 2010. Restructuring of some non-performing loans during the quarter resulted in significant charge-offs this quarter, but a strategy deemed prudent in bringing resolution with these credits and a return to performing status in the future. The loan loss reserve was $22.47 million on March 31, 2011, or 2.87 percent of total loans compared to $29.70 million on March 31, 2010, or 3.35 percent of total loans.  Management believes that the 2011 contributions to Allowance for Loan Losses address the level of non-performing assets and the related level of classified assets to be adequately reserved at March 31, 2011.

Noninterest Income

Total noninterest income decreased in the comparable quarterly periods as first quarter 2011 noninterest income was $2.10 million compared to $2.54 million in the same comparable 2010 period. Gains realized from the sale of securities totaled $396 thousand during first quarter 2011 compared to a gain recorded on security transactions during first quarter 2010 of $781 thousand to primarily account for the decrease. The company has been successful in generating SBA loans during the year and realized $360 thousand from the sale of SBA loans during first quarter 2011 compared to no SBA fee income for the comparable 2010 period. The increased activity with SBA lending has offset the decline in service charge on deposit fee income which has been impacted by recent regulatory changes with Regulation E. SBA lending will continue to be a focus during 2011 to supplement noninterest income. Non-recurring noninterest income of $215 thousand realized in first quarter 2010 from BOLI insurance program was also significant in the comparable periods.     

Noninterest Expense

Total noninterest expense decreased to $7.94 million in first quarter 2011 from $8.31 million in first quarter 2010, or a decrease of 4.45 percent. The decrease is primarily attributable to a reduction in credit-related expenses and FDIC insurance assessments. Credit-related expenses including write down and losses on OREO property and repossession and foreclosure expenses decreased to $827 thousand in first quarter 2011 compared to $1.12 million in first quarter 2010, while FDIC insurance assessments decreased to $442 thousand in first quarter 2011 compared to $527 thousand in first quarter 2010.      

Colony Bankcorp, Inc. is a bank holding company headquartered in Fitzgerald, Georgia that consists of one operating subsidiary, Colony Bank. The Company conducts a general full service commercial, consumer and mortgage banking business through thirty offices located in the middle and south Georgia cities of Fitzgerald, Warner Robins, Centerville, Ashburn, Leesburg, Cordele, Albany, Thomaston, Columbus, Sylvester, Tifton, Moultrie, Douglas, Broxton, Savannah, Eastman, Chester, Soperton, Rochelle, Pitts, Quitman and Valdosta, Georgia. 

Colony Bankcorp, Inc. Common Stock is quoted on the Nasdaq Global Market under the symbol "CBAN".

Certain statements contained in the preceding release that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"), notwithstanding that such statements are not specifically identified. In addition, certain statements may be contained in the Company's future filings with the SEC, in press releases, and in oral and written statements made by or with the approval of the Company that are not statements of historical fact and constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statement of plans and objectives of Colony Bankcorp, Inc. or its management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as "believes," "anticipates," "expects," "intends," "targeted" and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Forward-looking statements speak only as of the date on which such statements are made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events.    Readers are cautioned not to place undue reliance on these forward-looking statements.

CONTACT: Terry L. Hester Chief Financial Officer (229) 426-6002