10-K: Colony Bankcorp: 2025 Growth Driven by Acquisitions

Sentiment:

Annual Report 13 March 2026 10:02 AM

Colony Bankcorp, Inc. reported significant growth in 2025, fueled by strategic acquisitions and improved net interest income, despite an increase in nonperforming assets.

Capital raiseIssued 3,839,613 common shares at a fair value of $65.8 million as part of the TC Bancshares, Inc. acquisition consideration.The company has the ability to incur debt and pledge assets, and may need to raise additional capital in the future to meet commitments, business needs, or finance acquisitions.Subordinated notes ($38.9 million outstanding) and subordinated debentures ($24.2 million outstanding) are existing forms of capital.

Summary

Total assets grew to $3.7 billion as of December 31, 2025, up from $3.1 billion in 2024.
Total loans increased to $2.5 billion as of December 31, 2025, from $1.8 billion in 2024.
Total deposits reached $3.1 billion as of December 31, 2025, compared to $2.6 billion in 2024.
Net income for 2025 was $28.3 million, or $1.59 per diluted share, an increase from $23.9 million, or $1.36 per diluted share, in 2024.
Net interest income increased by $15.9 million, or 20.7%, to $91.9 million in 2025 from $76.1 million in 2024.
Net interest margin improved to 3.14% in 2025 from 2.72% in 2024, primarily due to lower rates paid on interest-bearing liabilities and increased loan rates.
The company completed two acquisitions in 2025: The Ellerbee Agency (consumer property and casualty insurance) on April 1, 2025, and TC Bancshares, Inc. on December 1, 2025.
The acquisition of TC Bancshares, Inc. involved issuing 3,839,613 common shares (fair value of $65.8 million) and paying $15.4 million in cash.
Nonperforming assets increased to $24.7 million (0.66% of total assets) at December 31, 2025, from $11.3 million (0.36% of total assets) at December 31, 2024.
The provision for credit losses increased to $4.5 million in 2025 from $3.1 million in 2024.
The stock buyback program was extended through the end of 2026, with $7,387,000 remaining for repurchases as of December 31, 2025.
The company early adopted ASU 2025-08, Financial Instruments Credit Losses (Topic 326): Purchased Loans, on October 1, 2025, resulting in a $4.6 million increase to the allowance for credit losses on loans.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive report, reflecting strong growth through strategic acquisitions and improved net interest margin, though tempered by a notable increase in nonperforming assets and associated credit loss provisions.

Positives

Net income increased to $28.3 million in 2025 from $23.9 million in 2024, representing a 18.5% increase.
Diluted earnings per share rose to $1.59 in 2025 from $1.36 in 2024.
Net interest income grew by 20.7% to $91.9 million in 2025, driven by increased loan volume and rates, and decreased deposit rates.
Net interest margin improved to 3.14% in 2025 from 2.72% in 2024.
Successful completion of two strategic acquisitions in 2025, The Ellerbee Agency and TC Bancshares, Inc., expanding market presence and service offerings.
Insurance commissions increased by $1.1 million, or 60.07%, due to increased volume and the Ellerbee acquisition.
Operating efficiency ratio improved to 66.98% in 2025 from 69.77% in 2024 (non-GAAP).
Maintained strong regulatory capital ratios, significantly exceeding well-capitalized standards (CET1: 12.67%, Tier 1: 13.60%, Total Capital: 15.95%, Leverage: 10.78%).
The company is in an asset-sensitive position, projecting an increase in net interest income by 4.33% for a 100 basis point rise and 8.10% for a 200 basis point rise in short-term interest rates.
Adjusted uninsured deposits represent a stable 18.8% of total deposits, indicating a solid funding base.

Negatives

Nonperforming assets increased significantly by 117.9% to $24.7 million (0.66% of total assets) at December 31, 2025, from $11.3 million (0.36% of total assets) at December 31, 2024.
Nonaccrual loans increased by $12.7 million, or 119.3%, to $23.4 million at December 31, 2025.
The provision for credit losses increased to $4.5 million in 2025 from $3.1 million in 2024.
Net charge-offs increased to $5.1 million in 2025 compared to $3.0 million in 2024.
Gain on sales of SBA loans decreased by $3.9 million, or 41.87%, due to fewer loans sold.
Noninterest expense increased by $9.7 million, or 11.72%, in 2025, partly due to $2.1 million in acquisition-related expenses and a $1.3 million nonrecoverable loss from a wire fraud incident.
The allowance for credit losses as a percentage of total loans decreased to 0.97% at December 31, 2025, from 1.03% at December 31, 2024, despite the rise in nonperforming assets.
The assumed employee pension plan experienced an asset loss of $151,000 during December 2025, with an actual return of (1.05)% versus an assumed annual rate of 7.00%.

Risks

A decline in general business and economic conditions, including persistent inflation, changes in interest rates, and economic slowdowns, could materially adversely affect business, financial position, results of operations, and growth prospects.
Strong competition from various financial institutions, including fintech companies and credit unions, could reduce loans, deposits, and profitability.
Fluctuations in interest rates may negatively impact net interest income, financial condition, and results of operations, particularly in a rising rate environment.
Prolonged periods of inflation could negatively impact profitability by increasing fixed costs, funding costs, and reducing demand for products and services, potentially leading to increased default rates.
Negative developments in the banking industry, such as high-profile bank failures, could impact customer confidence, liquidity, regulatory scrutiny, and deposit insurance costs.
Liquidity risks, including an inability to raise funds through deposits, borrowings, or asset sales, could substantially negatively affect liquidity.
Risk of losses from the failure of borrowers, guarantors, and related parties to pay on loans, heightened by concentrations in certain loan types, industries, or geographic areas.
Commercial real estate, real estate construction, and commercial business loans increase exposure to credit risks due to dependence on business operations and potential collateral depreciation.
The allowance for credit losses may not cover actual losses, potentially requiring material increases that could adversely affect capital and financial condition.
Inability to meet unfunded credit commitments, especially during economic stress, could significantly increase liquidity demands.
Reliance on brokered deposits, which may be unstable and/or expensive, and could be unavailable if the Bank is not well-capitalized.
Potential for partial or full impairment of intangible assets (goodwill, core deposit intangibles), which would reduce earnings and book values.
Decreased residential mortgage origination volume and competitive pricing decisions may adversely affect profitability.
Nonperforming assets take significant time to resolve and adversely affect results of operations and financial condition.
Potential losses on securities held in the portfolio, particularly if interest rates increase or economic and market conditions deteriorate.
Implementation of new lines of business or products/services may subject the company to additional risks, including unachieved targets and increased reliance on third-party vendors.
High dependence on the management team; loss of senior executive officers or other key employees could harm strategic plan implementation and customer relationships.
Failure to maintain reputation due to adverse sentiment, unethical practices, employee misconduct, service failures, security breaches, or litigation.
The risk management framework may not be effective in mitigating all risks or losses.
Inability to stay current with rapid technological changes, including those involving artificial intelligence, could impair competitiveness and growth.
System failures or disruptions of network security, including cyberattacks, could lead to increased operating costs, litigation, and liabilities.
Operations could be interrupted if third-party service providers experience difficulties, terminate services, or fail to comply with regulations.
Operational risks, including client or employee fraud and data processing system failures and errors.
Risks and challenges from the development and use of artificial intelligence (AI), including legal/regulatory uncertainty, incorrect/biased output, and intellectual property infringement.
Accounting estimates and risk management processes rely on analytical and forecasting models that may not be accurate, particularly in times of market stress.
Changes in accounting standards could materially impact financial statements.
Failure to maintain effective internal controls over financial reporting could adversely affect business and stock price.
Hurricanes or other adverse weather events could negatively affect local economies, disrupt operations, and impact loan collateral values.
Costs and effects of litigation, investigations, or similar matters could materially affect business, operating results, and financial condition.
Extensive government regulation could limit or restrict activities, increasing compliance costs and affecting profitability.
Federal and state regulators periodically examine the business, and remediation of adverse findings may be costly and time-consuming.
Changes to monetary policy by the Federal Reserve could adversely impact results of operations.
Failure to comply with federal and state fair lending laws could lead to material penalties.
The Federal Reserve may require commitment of capital resources to support the Bank.
Risk of noncompliance and enforcement action with Bank Secrecy Act and other anti-money laundering statutes and regulations.
Deposit insurance premiums could be substantially higher in the future.
Investment in common stock is not an insured deposit and may lose value.
Environmental, social, and governance ("ESG") and diversity, equity, and inclusion ("DEI") risks could adversely affect reputation and stakeholder relationships.
The dividend policy may change, and future dividends are not guaranteed.
The need to raise additional capital in the future could result in dilution to existing shareholders or increased leverage.
The ability to incur debt and pledge assets means debt holders have rights superior to common stockholders.
Failure to successfully integrate acquisitions or realize anticipated benefits could negatively affect financial condition and results of operations.
Future success depends on the ability to effectively execute business strategy, including managing growth, implementing new technologies, and controlling expenses.

Future Outlook

The company anticipates stable economic and unemployment conditions in its operating markets over the next year, with delinquencies returning to more normalized levels. It projects an increase in net interest income in a rising interest rate environment, with a 4.33% increase for a 100 basis point rise and an 8.10% increase for a 200 basis point rise in short-term rates. The company continues to focus on generating local core deposits and managing its asset/liability structure to balance liquidity, safety, and earnings potential.

Management Comments

We recognize that our most valuable asset is our people. One of our top strategic priorities is the retention and development of our talent.
We consider our relationship with our employees to be satisfactory and have not experienced interruptions of operations due to labor disagreements.
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 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.
Management is not aware of any regulatory recommendations regarding liquidity, which if implemented, would have a material adverse effect on the Company.

Industry Context

StockSavvy.ai notes that Colony Bankcorp's strategic acquisitions and focus on core deposit growth align with broader trends in the regional banking sector, where consolidation and deposit stability are key drivers of competitive advantage. The increased nonperforming assets and provision for credit losses reflect a challenging credit environment, consistent with some industry observations, particularly in commercial real estate. The company's asset-sensitive position is a strategic move to capitalize on potential rising interest rates, a common approach among banks anticipating Federal Reserve policy shifts.

Comparison to Industry Standards

Colony Bankcorp's net interest margin of 3.14% in 2025 is competitive within the regional banking sector, though specific peer comparisons would require detailed analysis of similar-sized banks in the Southeast region.
The increase in nonperforming assets to 0.66% of total assets, while still relatively low, warrants close monitoring compared to industry averages, especially given the concentration in commercial real estate loans.
Colony's regulatory capital ratios (CET1: 12.67%, Tier 1: 13.60%, Total Capital: 15.95%, Leverage: 10.78%) significantly exceed the "well-capitalized" thresholds, indicating a strong capital position relative to global benchmarks and regulatory requirements.
The operating efficiency ratio of 66.98% in 2025 shows improvement and is generally in line with or better than many regional banks, which often strive for ratios below 70% to indicate efficient operations.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Board Structure	The board of directors shall consist of not less than three (3), nor more than twenty-five (25) persons, with the exact number determined by board or shareholder resolution.	NA	Provides flexibility in board size while maintaining governance structure.
Director Election	Directors are elected by a majority of votes cast at a meeting where a quorum is present, or by a plurality of votes in a contested election.	NA	Ensures clear election outcomes, with a mechanism for contested elections.
Director Removal	The entire board or any individual director may be removed from office with or without cause by the affirmative vote of the holders of a majority of the shares entitled to vote.	NA	Grants shareholders significant power over board composition.
Board Vacancy Filling	Vacancies on the board, including those from an increase in director numbers, may be filled by the directors, with such appointments lasting until the next shareholder election.	NA	Allows for continuity and efficient board operations between shareholder meetings.
Articles of Incorporation Amendment	The Articles may be amended in accordance with the Georgia Business Corporation Code, generally requiring approval of the board and a majority of votes entitled to be cast by shareholders.	NA	Ensures significant corporate charter changes require both board and majority shareholder consent.
Bylaws Amendment	Bylaws may be amended, altered, or repealed by a majority vote or written consent of outstanding shares or by the board of directors, with notice required for shareholder meetings.	NA	Provides flexibility for both shareholders and the board to adapt internal governance rules.
Special Shareholder Meetings	Special meetings of shareholders shall be called upon the written request of holders of 45% or more of voting shares, or by the CEO, Chairman, or Board of Directors.	NA	Establishes a threshold for shareholders to call special meetings, ensuring a balance of power.
Shareholder Proposals and Nominations	Shareholder proposals must be received by the Board of Directors within a specific window (90th to 120th day) prior to the annual meeting anniversary date.	NA	Sets clear deadlines for shareholder engagement in corporate governance.
Director and Officer Liability	Bylaws provide for indemnification or reimbursement for reasonable expenses incurred in legal proceedings, provided the person was not guilty of gross negligence, willful misconduct, or criminal acts.	NA	Protects directors and officers from certain liabilities, encouraging qualified individuals to serve, while setting limits for severe misconduct.
Cybersecurity Oversight	The Board has delegated primary oversight of cybersecurity to its Technology and Risk Management Committees, with quarterly updates from the Information Security Officer.	NA	Enhances board-level attention and expertise on critical cybersecurity risks.
Code of Ethics	Adopted a Code of Ethics applicable to the principal executive officer and principal accounting and financial officer.	NA	Promotes ethical conduct and accountability among senior financial leadership.
Insider Trading Policy	Adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of the company's securities by directors, officers, and employees.	NA	Aims to ensure compliance with insider trading laws and protect market integrity.
Incentive Compensation Claw-back Policy	The SEC adopted final rules on October 26, 2022, requiring public companies to adopt and disclose a policy for the recovery of incentive-based compensation based on erroneously reported financial information.	NA	Increases accountability for executive officers regarding financial reporting accuracy.

Legal Proceedings

As of December 31, 2025, there are no material pending legal proceedings, including any material proceedings known to be contemplated by governmental authorities, to which Colony or its subsidiary is a party or of which any of their assets or properties are subject.
In March 2025, the company was the target of a wire fraud incident, resulting in a nonrecoverable loss of $1.25 million, which did not impact customer accounts or compromise customer data.

Related Party Transactions

Loans to directors, executive officers, or principal holders of equity securities totaled $4.246 million at December 31, 2025, an increase from $3.809 million at December 31, 2024.
All related party 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.

Stakeholder Impact

Shareholders face potential dilution from future capital raises and changes in dividend policy, and the inherent investment risk as common stock is not an insured deposit.
Employees benefit from a profit-sharing plan, comprehensive health and welfare benefits, and career development opportunities; however, an assumed pension plan is being terminated by the end of 2026.
Customers benefit from expanded banking services and geographic reach due to acquisitions, but may be affected by increased deposit account fees and cybersecurity risks.
Regulators maintain extensive oversight, with the company subject to various federal and state regulations, including capital requirements, anti-money laundering, and consumer protection laws.
Creditors are prioritized over common stockholders in the event of liquidation, and the company has the ability to incur debt and pledge assets.

Next Steps

Continue to manage interest rate risk and balance sheet composition.
Monitor and manage concentrations in commercial real estate and other loan types.
Further integrate acquired businesses (TC Bancshares, Inc. and The Ellerbee Agency).
Continue to invest in cybersecurity development and improvement.
Address the termination of the assumed employee pension plan by the end of 2026.
Implement new disclosure requirements for ASU 2023-07 (Segment Reporting) and ASU 2024-03 (Disaggregation of Income Statement Expenses).
Continue stock buyback program through the end of 2026, with $7.387 million remaining.
File Proxy Statement for the 2026 Annual Meeting of Shareholders within 120 days after December 31, 2025.

Key Dates

Date	Description
November 8, 1982	Colony Bankcorp, Inc. incorporated under Georgia law.
April 2, 1998	Colony stock began trading on the NASDAQ Global Market.
June 16, 2004	Colony Bankcorp Statutory Trust III formed, issuing $4.5 million in Trust Preferred Securities.
April 13, 2006	Colony Bankcorp Capital Trust I formed, issuing $5.0 million in Trust Preferred Securities.
March 12, 2007	Colony Bankcorp Capital Trust II formed, issuing $9.0 million in Trust Preferred Securities.
September 14, 2007	Colony Bankcorp Capital Trust III formed, issuing $5.0 million in Trust Preferred Securities.
April 1, 2011	Employee pension plan put in place (frozen March 31, 2019).
January 1, 2019	Company adopted ASU No. 2016-2 (Topic 842) for leases.
March 31, 2019	Employee pension plan frozen and closed to new participants.
March 26, 2020	Federal Reserve reduced reserve requirement ratios to zero percent.
January 1, 2021	Congress passed federal legislation making sweeping changes to federal anti-money laundering laws.
May 20, 2022	Completed private placement of $39.5 million in fixed-to-floating rate subordinated notes due 2032.
October 18, 2022	FDIC adopted a final plan and increased initial base deposit insurance assessment rates by 2 basis points, effective Q1 2023.
October 20, 2022	Board of Directors authorized a stock buyback program of up to $12 million.
January 1, 2023	Company adopted ASC Topic 326 (CECL model).
June 2023	Company's assets passed the $3 billion threshold, requiring compliance with risk-based capital rules.
June 23, 2023	Entered into a five-year interest rate swap ($25.0 million notional amount).
June 26, 2023	Entered into a three-year interest rate swap ($25.0 million notional amount).
December 31, 2023	Initial stock buyback program expired.
March 22, 2024	Board approved extension of stock buyback program through end of 2024.
March 29, 2024	Revised CRA regulations subject to an injunction.
August 30, 2024	Entered into an interest rate swap ($25.4 million notional amount) designated as a fair value hedge.
September 6, 2024	Entered into an interest rate swap ($20.0 million notional amount) designated as a cash flow hedge.
September 13, 2024	Employment Agreement, dated, between Colony Bank and R. Dallis Copeland, Jr.
October 17, 2024	Entered into an interest rate swap ($25.0 million notional amount) designated as a fair value hedge.
November 15, 2024	Last day Colony stock traded on NASDAQ Global Market.
November 18, 2024	Colony Bankcorp, Inc. moved to trading on the New York Stock Exchange (CBAN).
November 2024	FASB issued ASU No. 2024-03, Income Statement (Topic 220): Disaggregation of Income Statement Expenses.
December 18, 2024	Board approved extension of stock buyback program through end of 2025.
January 1, 2025	Company adopted new disclosure requirements for ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Taxes).
January 19, 2025	Employment Agreement, dated, by and between Colony Bankcorp, Inc. and Leonard Bateman, Jr.
March 2025	Company was target of a wire fraud incident.
April 1, 2025	Acquired The Ellerbee Agency.
June 2025	Implemented increased deposit account fees.
July 16, 2025	Federal Reserve, OCC, and FDIC issued a joint proposal to rescind the 2023 CRA modernization rule.
September 30, 2025	DIF reserve ratio reached 1.40%, exceeding statutory minimum of 1.35%.
October 1, 2025	Company early adopted ASU 2025-08, Financial Instruments Credit Losses (Topic 326): Purchased Loans.
December 1, 2025	Completed acquisition of TC Bancshares, Inc.
December 22, 2025	Board authorized further extension of stock buyback program through end of 2026.
December 31, 2025	Fiscal year end.
January 1, 2026	Participation in the Stock Purchase Plan began.
May 20, 2027	Earliest redemption date for $39.5 million subordinated notes.
January 1, 2027	Company will adopt new disclosure requirements for ASU 2024-03 (Disaggregation of Income Statement Expenses).
January 1, 2028	Interim periods for ASU 2024-03 (Disaggregation of Income Statement Expenses) disclosure requirements begin.
June 17, 2034	Maturity date for Colony Bankcorp Statutory Trust III securities.
June 30, 2036	Maturity date for Colony Bankcorp Capital Trust I securities.
March 30, 2037	Maturity date for Colony Bankcorp Capital Trust II securities.
October 30, 2037	Maturity date for Colony Bankcorp Capital Trust III securities.

Recommendation

hold

Colony Bankcorp demonstrated strong growth in 2025, driven by strategic acquisitions and an improved net interest margin, which are positive indicators for future profitability. However, the significant increase in nonperforming assets and the associated rise in provision for credit losses introduce a degree of uncertainty regarding asset quality. While the company maintains robust capital levels and an asset-sensitive position, these mixed signals suggest a 'hold' recommendation, advising investors to monitor the integration of acquired businesses and the trend in asset quality closely before making further investment decisions.

Keywords

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