425: Colony Bankcorp to Acquire TC Bancshares in $86.1 Million Stock-and-Cash Deal

Colony Bankcorp, Inc. announced a definitive merger agreement to acquire TC Bancshares, Inc. for approximately $86.1 million in a combined stock-and-cash transaction, creating a stronger banking franchise with expanded market presence in Georgia and Florida.

Summary

• Colony Bankcorp, Inc. (CBAN) will acquire TC Bancshares, Inc. (TCBC) for approximately $86.1 million.
• Each TCBC shareholder can elect to receive either $21.25 in cash or 1.25 shares of CBAN common stock for each TCBC share, subject to proration such that approximately 20% of TCBC shares convert to cash and 80% to Colony common stock.
• The combined organization is projected to have approximately $3.8 billion in total assets, $3.1 billion in total deposits, and $2.4 billion in loans.
• The transaction is expected to be immediately accretive to Colony's earnings per share, excluding one-time merger-related expenses.
• The merger is anticipated to close in the fourth quarter of 2025, with system conversion and rebranding planned for the first quarter of 2026.
• TCBC stock options will be cancelled and converted into a cash payment based on the difference between the Per Share Cash Consideration and the exercise price, less applicable taxes.
• TCBC restricted shares will fully vest and convert into the right to receive either cash or stock consideration.
• The merger and the subsequent bank merger of TC Federal Bank into Colony Bank are intended to qualify as a reorganization for U.S. federal income tax purposes under Section 368(a) of the Internal Revenue Code.
• A termination fee of $3,443,000 is payable by TCBC under certain specified conditions, such as a change in recommendation or acceptance of a superior proposal.

Sentiment

Score: 8

Explanation: The merger is presented as highly strategic and financially attractive, with immediate EPS accretion and improved key performance ratios projected. The expansion into new and existing markets, coupled with strong capital positioning, indicates a positive outlook for the combined entity, despite some dilution and integration risks.

Positives

• Creates a stronger banking franchise with enhanced customer service, expanded capabilities, and scalable, long-term growth.
• Brings together two institutions with complementary strengths, strong cultural alignment, and a shared commitment to community banking.
• Expected to be immediately accretive to Colony's earnings per share, excluding one-time merger-related expenses.
• Anticipated to enhance Colony's key performance ratios.
• Expands Colony's in-state franchise by entering the Thomasville market and strengthening its presence in coastal Georgia (Savannah MSA).
• Enhances Colony's Florida presence with full-service entry into the dynamic, high-growth Tallahassee and Jacksonville markets, complementing existing loan production office (LPO) operations.
• Improves the pro forma demographic profile, contributing stronger household income levels and favorable growth dynamics.
• Well-positioned for organic growth and future M&A opportunities due to strong pro forma capital ratios at closing.
• Enables cross-sell of noninterest income products, such as insurance, mortgage, merchant services, and credit cards, into TCBC's existing customer base and across new markets.
• Estimated FY2026 and FY2027 EPS accretion of approximately 8.5% and 11.9%, respectively.
• Manageable tangible book value dilution of approximately 5.7% with an earnback period of less than 3.0 years (cross over method).
• Pro Forma FY2026E Return on Average Assets (ROAA) is projected at approximately 1.19%, higher than the peer group average of 0.99%.
• Pro Forma FY2026E Return on Average Tangible Common Equity (ROATCE) is projected at approximately 15.3%, higher than the peer group average of 12.6%.
• Pro Forma FY2026E Net Interest Margin (NIM) is projected at approximately 3.43%, higher than the peer group average of 3.07%.
• Pro Forma FY2026E Efficiency Ratio is projected at approximately 60.5%, lower (better) than the peer group average of 66.4%.
• The combined entity will strengthen Colony's deposit market share, becoming the #1 community bank in Georgia.
• TCBC and TC Federal Bank are currently well-capitalized, as is Colony Bank.

Negatives

• Estimated tangible book value dilution of approximately 5.7%.
• Pre-tax merger costs are estimated at $10.4 million.
• Risk that cost savings and revenue synergies from the Merger may not be realized or may take longer than anticipated.
• Potential for disruption from the Merger with customers, suppliers, employee, or other business partners relationships.
• Risk of unsuccessful integration of TCBC's business into Colony.
• The possibility that the Merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events.
• Dilution caused by Colony's issuance of additional shares of its common stock in the Merger transaction.
• Potential for a 'Burdensome Condition' to be imposed by regulatory authorities, which could have a material and adverse effect on the combined entity.
• A termination fee of $3,443,000 is payable by TCBC under certain conditions, which could be a financial burden if the merger fails due to TCBC's actions.

Risks

• The cost savings and any revenue synergies from the Merger may not be realized or may take longer than anticipated to be realized.
• Disruption from the Merger with customers, suppliers, employee, or other business partners relationships.
• The occurrence of any event, change, or other circumstances that could give rise to the termination of the merger agreement.
• The risk of successful integration of TCBC's business into Colony.
• The failure to obtain the necessary approvals by the shareholders of TCBC or Colony.
• The amount of the costs, fees, expenses, and charges related to the Merger.
• The ability by Colony to obtain required governmental approvals of the Merger.
• Reputational risk and the reaction of each of the companies' customers, suppliers, employees, or other business partners to the Merger.
• The failure of the closing conditions in the merger agreement to be satisfied, or any unexpected delay in closing of the Merger.
• The risk that the integration of TCBC's operations into the operations of Colony will be materially delayed or will be more costly or difficult than expected.
• The possibility that the Merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events.
• The dilution caused by Colony's issuance of additional shares of its common stock in the Merger transaction.
• General competitive, economic, political, and market conditions.
• Regulatory approvals may include a 'Burdensome Condition' (material and adverse effect on the combined entity).
• Potential shareholder litigation against either party or their directors related to the Merger.

Future Outlook

The merger is expected to close in the fourth quarter of 2025, with system conversion and rebranding anticipated in the first quarter of 2026. The transaction is projected to be immediately accretive to Colony's earnings per share (excluding one-time merger-related expenses) and enhance Colony's key performance ratios. Management expects improved operating efficiency, estimated expense reductions, and a manageable earnback period for tangible book value dilution. The combined entity is positioned for organic growth and future M&A opportunities, leveraging its strengthened market presence and capital ratios.

Management Comments

• Heath Fountain (Colony's CEO): "This partnership brings together two like-minded institutions with complementary strengths, strong cultural alignment, and a shared commitment to community banking and enduring customer relationships. Together, we are creating a stronger franchise with deeper resources, broader reach, and an even greater focus on personalized service."
• Greg Eiford (TC Bancshares President and CEO): "Colony and TC Federal share a common vision and guiding principles. This combination allows us to build on our legacy of community commitment while enhancing the products, services, and technology we offer to customers."

Industry Context

This merger creates one of the leading community banks in the Southeast, significantly strengthening Colony's deposit market share and positioning it as the #1 community bank in Georgia. The transaction builds density in existing overlapping geographies like Savannah and Tallahassee, while also expanding Colony's full-service footprint into attractive, high-growth North Florida markets such as Tallahassee and Jacksonville. This strategic expansion enhances the combined entity's competitive positioning against local and regional peers, allowing for greater scale and cross-selling opportunities in a consolidating banking landscape.

Comparison to Industry Standards

• The Pro Forma FY2026E Return on Average Assets (ROAA) of approximately 1.19% is projected to be higher than the peer group average of 0.99% for public Southeast banks with total assets between $2.0 billion and $10.0 billion.
• The Pro Forma FY2026E Return on Average Tangible Common Equity (ROATCE) of approximately 15.3% is projected to be higher than the peer group average of 12.6% for comparable banks.
• The Pro Forma FY2026E Efficiency Ratio of approximately 60.5% is projected to be lower (indicating better efficiency) than the peer group average of 66.4%.
• The Pro Forma FY2026E Net Interest Margin (NIM) of approximately 3.43% is projected to be higher than the peer group average of 3.07%.
• The combined entity's strong pro forma capital ratios, including a 7.9% TCE Ratio, 9.8% Leverage Ratio, 12.5% CET1 Ratio, and 15.6% Total RBC Ratio, are indicative of a well-capitalized institution, positioning it favorably for future growth and M&A opportunities compared to industry benchmarks.

Management Changes

Corporate Governance

Legal Proceedings

• No material civil, criminal, administrative, or regulatory actions, suits, demand letters, claims, hearings, notices of violation, arbitrations, investigations, orders to show cause, market conduct examinations, notices of non-compliance, or other proceedings of any nature pending or threatened against TCBC or any of its Subsidiaries or their current or former directors or executive officers that would challenge the validity or propriety of the transactions contemplated by this Agreement.
• No material injunction, order, judgment, decree, or regulatory restriction imposed upon TCBC or any of its Subsidiaries, or their assets, that would apply to the Surviving Entity upon consummation of the Merger or Bank Merger.
• No material litigation or written notice alleging infringement or misappropriation of any third-party Intellectual Property against TCBC or any of its Subsidiaries since January 1, 2022.
• No foreign, federal, state, or local Tax audits or administrative or judicial Tax proceedings are currently being conducted or pending or threatened in writing with respect to material Taxes of TCBC or any of its Subsidiaries.
• No material legal, administrative, arbitral, or other proceedings, claims, actions, or governmental or regulatory investigations of any nature against CBAN or any of its Subsidiaries or their current or former directors or executive officers that is reasonably likely to have a Material Adverse Effect on CBAN, or challenging the validity or propriety of the transactions contemplated by this Agreement.
• No material injunction, order, judgment, decree, or regulatory restriction (other than general regulatory restrictions) imposed upon CBAN, any of its Subsidiaries, or their assets.
• Both parties will promptly advise the other of any actual or threatened shareholder litigation related to the Agreement or Merger and will cooperate in the defense or settlement of such litigation.

Related Party Transactions

• No outstanding amounts payable to or receivable from, or advances by TCBC or any of its Subsidiaries to, and neither TCBC nor any of its Subsidiaries is otherwise a creditor or debtor to, any director, executive officer, five percent (5%) or greater shareholder of TCBC or any of its Subsidiaries or to any of their respective Affiliates or Associates, other than as part of the normal and customary terms of such persons employment or service as a director and other than deposits held by TC Federal Bank in the Ordinary Course of Business.
• Neither TCBC nor any of its Subsidiaries is a party to any transaction or agreement with any of its respective directors, executive officers, or other Affiliates, except as specifically set forth in TCBC Disclosure Schedule 3.29.
• All agreements between TC Federal Bank and any of its Affiliates (or any company treated as an affiliate for purposes of such Law) comply, to the extent applicable, with Sections 23A and 23B of the Federal Reserve Act and Regulation W of the FRB.

Stakeholder Impact

• **Shareholders (TCBC)**: Will receive either cash or CBAN common stock for their shares, subject to proration, and are expected to benefit from the combined entity's enhanced financial performance. Key directors and executive officers have entered into voting agreements to support the merger.
• **Shareholders (CBAN)**: Expected to benefit from immediate EPS accretion and improved key performance ratios, though they will experience tangible book value dilution. Key directors and executive officers have entered into voting agreements to support the merger.
• **Employees**: Greg Eiford, TC Bancshares' President and CEO, will join Colony's team as an Executive Vice President and Chief Community Banking Officer, along with other key TC Federal Bank team members. Most employees are expected to continue in their current roles, with potential for new career opportunities within the larger combined organization. Benefits and compensation are under review, and severance payments are outlined for certain terminations post-merger. TCBC's 401(k) and ESOP plans will be terminated, with rollover options to Colony's 401(k) plan.
• **Customers**: Expected to benefit from expanded access to locations, improved digital banking tools, and a wider range of personal and business banking solutions. No immediate changes to accounts, debit cards, or automatic payments/direct deposits are anticipated, with clear communication planned for any future changes.
• **Communities**: The partnership is expected to amplify the combined entity's impact and strengthen its commitment to local leadership in the communities it serves.

Next Steps

• Colony Bankcorp will file a registration statement on Form S-4 with the SEC, which will include a joint proxy statement/prospectus.
• Shareholder approvals from both CBAN and TCBC are required for the merger to proceed.
• Obtain necessary regulatory approvals from the Federal Reserve Board (FRB), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), state banking agencies, SEC, NYSE, FINRA, and other self-regulatory organizations (SROs).
• The closing of the Merger is expected in the fourth quarter of 2025.
• Immediately following the Merger, TC Federal Bank will merge with and into Colony Bank.
• System conversion and rebranding of TC Federal Bank to Colony Bank are planned for the first quarter of 2026.
• Integration of TCBC's business operations with CBAN's will occur post-merger.
• TCBC will take necessary actions to terminate the TC Federal Bank 401(k) Plan and ESOP effective immediately preceding the merger, subject to its occurrence.
• Colony Bankcorp, Inc. 401(k) Plan will accept direct rollovers in cash from the ESOP for Covered Employees.
• CBAN will assume and honor specific employment agreements listed in its disclosure schedule.
• TCBC will accrue costs for the termination of certain material contracts as requested by CBAN.
• CBAN will reimburse TCBC for reasonable out-of-pocket fees incurred to facilitate the Informational Systems Conversion prior to the Effective Time.
• Colony and TCBC will cooperate in preparing for the prompt conversion or consolidation of systems and business operations post-Effective Time.
• TCBC will, upon CBAN's reasonable request, introduce CBAN and its representatives to suppliers and customers to facilitate integration.
• TCBC and TC Federal Bank will dispose of any impermissible assets if requested by CBAN prior to the Closing Date.
• A conference call with analysts is scheduled for July 24, 2025, to discuss the transaction.

Key Dates

Recommendation

The merger is strategically compelling, expanding market presence in key growth areas of Georgia and Florida. Financially, it is projected to be immediately accretive to EPS and significantly enhance key performance ratios (ROAA, ROATCE, NIM, Efficiency Ratio) compared to industry peers. While there is tangible book value dilution, the earnback period is manageable. The strong pro forma capital ratios position the combined entity for future organic and inorganic growth. The cultural alignment and retention of key management from TCBC further de-risk the integration. These factors suggest a strong positive outlook for CBAN's stock.

Keywords

Banking, Merger, Acquisition, Financial Services, Community Bank, Georgia, Florida, Colony Bankcorp, TC Bancshares, Bank Holding Company, Financial Integration, Strategic Growth, Shareholder Value, Regulatory Approval, Deposit Growth, Loan Portfolio