COLONY BANKCORP INC Q4 FY2024 earnings call

• Margin bottomed in Q3 and improved to 2.84% in Q4, leading to net interest income increase.
• Total deposits rose $43M, primarily low-cost DDAs. Seasonally, municipal and Ag deposits increase in Q4.
• Loan payoffs occurred in Q4, minimal impact on asset yields; loan growth expected in 2025.
• Noninterest income up, SBSL division up $536k QoQ; mortgage impacted by rate increase.
• Consecutive dividend increase; executive team changes with promotions and additions; listing on NYSE.
• Focus on growth, M&A, strategy; technology initiatives like new digital banking platform and RPA for efficiency.

In the fourth quarter, net interest income increased by about $1.9 million quarter-over-quarter, with margin turning the corner to 2.84% (up 20 basis points). Total deposits increased $43 million, primarily in low-cost deposit categories. Loan balances decreased due to larger loan payoffs, but loan pipelines are growing with expected 4%-6% growth in 2025, more in the second half. Noninterest income increased, led by the SBSL division; mortgage saw slowdown due to 10-year Treasury rate increase. Interest income on loans increased from renewals and new production, while interest expense declined, with cost of funds down 13 basis points.

• Loan growth expected 4%-6% in 2025, with more growth in the second half.
• Anticipate modest margin increase in 2025, though QoQ not as much as Q4 due to Fed rate cut expectations and seasonal DDA declines.
• Target ROA of 1% in Q4 2025 and maintain it. Stock repurchase program extended through end of 2025; quarterly dividend of $0.1150 per share declared.

• Factors like pandemics, asset variations, cash flows, financial conditions can impact performance.
• Seasonality in deposits (municipal/Ag deposits decrease in Q1-Q2) and loans (first quarter or two may be slow).
• Mortgage performance dependent on interest rates; M&A execution risks.

Q: Could you elaborate on loan growth in the back half of 2025 and specific segments driving it?

A: Expect 4%-6% loan growth in 2025, back half. No specific segment focus, but across-the-board growth expected, with CRE potentially seeing growth as it's a big concentration. Activity picking up post-election.

Q: How will hiring in 2025 be cadenced, lumpy or steady?

A: Anticipate fairly steady hiring, but opportunistic with M&A. Not expecting huge lumps, but sporadic fill-in in adjacent markets and within footprint to support growth goals.

Q: Could you share thoughts on tech initiatives moving into the new year?

A: Rolled out new digital banking platform, excited about treasury solutions. Focus on efficiency with RPA projects mid-year and beyond, aiming to grow and scale profitably through process improvement.