Colony Bankcorp (NYSE:CBAN) executives highlighted improving operating performance, progress on its recently closed TC Federal merger, and continued momentum across several fee-based business lines during the company’s fourth-quarter 2025 earnings call held Jan. 29, 2026.
Chief Executive Officer Heath Fountain said the quarter reflected “strong operating performance” and credited execution on strategic initiatives, including the legal close of the TC Federal transaction at the beginning of December. The company expects to complete the systems conversion in the first quarter of 2026, with most remaining cost savings expected to be realized after that conversion, beginning in the second quarter.
Merger integration and updated deal expectations
Derek also said the company early adopted a new CECL-related accounting standard, which resulted in “no CECL double count” as part of the acquisition, with TC Federal’s credit quality reflected through purchase accounting and the allowance for credit losses adjustment.
Profitability: margin expansion and operating improvement
Fountain said operating net income increased by $675,000 versus the third quarter, driven by continued net interest margin improvement and strong non-interest income. He added that the company achieved its stated target of a 1% operating return on assets in the second quarter and maintained that level through the remainder of 2025, resulting in a 1% operating ROA for the full fiscal year.
Looking ahead, Fountain said the company’s next goal is a 1.20 ROA and that it believes it can reach that quarterly starting in the second quarter of 2026 as it receives the full benefit of the TC Federal merger, with an expectation to hit 1.20 for the full year 2026.
Derek said net interest income rose about $3.2 million from the prior quarter, reflecting higher earning asset yields, a reduction in funding costs, and the addition of one month of TC Federal balances. Net interest margin increased 15 basis points to 3.32%. Loan yields increased to 6.19% from 6.15% in the third quarter, aided by loan repricing and accretion income from acquired TC Federal loans, though partly offset by variable-rate resets following short-term rate cuts. Cost of funds decreased to 1.96% from 2.03% in the third quarter, helped by Fed rate cuts and seasonal inflows of lower-cost deposits.
Derek said the company continues to project a “modest increase” in net interest margin each quarter throughout 2026 as cash flows reprice from lower-earning assets.
Loan growth outlook and credit trends
Fountain said core loan growth in 2025 was 10.5% excluding TC Federal and that pipelines remain strong heading into 2026. However, he said the company is seeing increased lending competition across its footprint and expects to trend closer to the 8% end of its 8% to 12% long-term target range.
During Q&A, Fountain described the competitive environment as “definitely getting more competitive,” particularly on commercial pricing, and said the bank remains focused on relationship-based growth and discipline—willing to walk away from deals that do not meet return objectives—while continuing to seek margin improvement.
On credit, Derek said provision expense was $1.65 million for the quarter, up from $900,000 in the prior quarter. Net charge-offs were $1.6 million, slightly lower than the prior quarter, and were “primarily driven” by SBA loans and some marketplace loans from third-party partners. Fountain said charge-offs have mainly come from the company’s SBSL division, while bank net charge-offs remain low, which management said supports confidence in overall credit quality.
Derek said classified and criticized loans increased from the prior quarter, with a majority of the increase attributed to TC Federal (68% of the criticized increase and 93% of the classified increase). Non-performing loans also rose quarter over quarter, and Derek said $6 million of the $9 million increase was due to the TC Federal acquisition, with anticipated losses captured through acquisition accounting. Looking forward, Derek said management expects SBA charge-offs to improve versus trends seen in 2025, supported by collateral underlying classified SBA loans.
Fees and complementary business lines
Operating non-interest income was $11.1 million, which Derek said reflected a strong quarter for several complementary business lines, particularly mortgage and SBSL. Mortgage-related non-interest revenue increased $270,000 from the prior quarter, and the company recorded a $108,000 gain on a sale of a roughly $10 million portfolio mortgage pool in the quarter. Fountain said the bank expects to sell another $30 million of portfolio mortgage loans in the first quarter of 2026, citing improving non-agency secondary market conditions and a desire to manage one-to-four family concentration following the TC Federal addition.
Management also pointed to continued improvement in marine and RV lending and in merchant services. Fountain highlighted growth in Colony’s wealth management effort, including the addition of two financial advisors and a transition with its broker-dealer relationship (Ameriprise) from a managed program to a dual-employee model. Fountain said assets under management more than doubled from about $200 million at the end of 2024 to over $460 million at the end of 2025, and management expects the program transition to be complete by the end of the first quarter of 2026. Derek said the strategy involves upfront expenses but is expected to increase earnings power over time through a larger share of dealer commissions.
On Colony Insurance, Fountain said bank referrals increased 20% in 2025 and described a “hard insurance market” that pressured retention due to carrier-driven rate increases. He said the market is beginning to soften and expects retention and production to improve in 2026. Derek noted the fourth quarter is typically seasonally lower for the insurance business and expects performance to normalize in the first quarter and improve into the rest of 2026.
Funding, expenses, capital actions, and M&A outlook
Deposits increased in the quarter, and Derek said that excluding acquired deposits, deposit growth was approximately $24.3 million in the fourth quarter and flat for the full year. Fountain and Derek said the bank has been aggressive in moving interest-bearing deposit rates lower during the rate-cut cycle, which has led to losing some price-sensitive, non-relationship accounts. Fountain said the bank remains focused on building a deposit-first relationship banking culture and expects competitiveness to improve as rates stabilize. Derek also noted the company has about $65 million in base-case investments rolling off in 2026 at a 3.10% yield.
Operating non-interest expenses were $24.4 million, with Derek attributing the increase primarily to the TC Federal acquisition and lingering deal-related expenses ahead of the systems conversion. He said management expects expenses to drop off in the second quarter of 2026 and that the company expects to move its net non-interest expense to average assets closer to a 1.45% target after conversion, from 1.58% in the fourth quarter. Merger-related expenses totaled $1.3 million in the quarter and were adjusted out of operating earnings.
The board declared a quarterly dividend of $0.12 per share, an increase that Fountain said marks another consecutive year of dividend growth. Derek also disclosed share repurchases of $47,000 at an average price of $16.50 during the quarter. Tangible book value per share increased to $14.31 from $14.24, and Derek said the tangible common equity ratio rose to 8.30% from 8.00%, aided by improved AOCI and purchase accounting impacts.
Fountain also reiterated the bank’s interest in additional M&A. He said the company is actively talking with potential targets and believes it could announce another transaction at some point in 2026. In response to analyst questions, Fountain said the bank prefers negotiated or limited-process transactions, while acknowledging competitive bid situations can be harder to win on price discipline. He described the bank’s geographic focus as Georgia and contiguous states, including South Carolina, Tennessee, Alabama, and Florida, and said the number of potential opportunities remains higher in Georgia.
About Colony Bankcorp (NYSE:CBAN)
Colony Bankcorp, Inc is a bank holding company headquartered in Baxley, Georgia, that operates through its primary subsidiary, The Colony Bank. The company’s core focus is on delivering community banking services tailored to individuals, small businesses and agricultural customers throughout Georgia and Florida. Colony Bankcorp’s structure supports a full suite of deposit and lending solutions designed to meet the needs of local markets.
The company offers a range of deposit products, including personal and business checking accounts, savings and money market accounts, and certificates of deposit.
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