8-K: Colony Bankcorp to Acquire TC Bancshares in $86.1 Million Stock-and-Cash Merger, Expanding Southeast Footprint

Colony Bankcorp, Inc. announced a definitive agreement to acquire TC Bancshares, Inc. for approximately $86.1 million in a combined stock-and-cash transaction, aiming to create a stronger banking franchise with enhanced customer service and expanded capabilities.

Summary

• Colony Bankcorp, Inc. (CBAN) will acquire TC Bancshares, Inc. (TCBC) for approximately $86.1 million.
• TCBC will merge into CBAN, and TC Federal Bank (TCBC's subsidiary) will merge into Colony Bank (CBAN's subsidiary).
• Each outstanding share of TCBC common stock will convert into the right to receive either $21.25 in cash or 1.25 shares of CBAN common stock, subject to proration.
• Approximately 20% of TCBC shares will be converted to cash consideration, and 80% to Colony common stock.
• Outstanding TCBC stock options will be cancelled and converted into a cash payment based on the excess of the Per Share Cash Consideration over the exercise price.
• TCBC restricted shares will fully vest and convert into cash or stock, subject to allocation procedures.
• The transaction is expected to close during the fourth quarter of 2025, with system conversion and rebranding planned for the first quarter of 2026.
• 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 merger is intended to qualify as a reorganization for U.S. federal income tax purposes.
• The boards of directors of both Colony and TC Bancshares have unanimously approved the transaction.

Sentiment

Score: 8

Explanation: The filing presents a highly positive outlook for the merger, emphasizing immediate EPS accretion, strong pro forma financial metrics exceeding industry averages, strategic market expansion, and cultural alignment. While acknowledging typical merger risks and dilution, the overall tone and projected outcomes are very favorable.

Positives

• The merger is expected to be immediately accretive to Colony's earnings per share, excluding one-time merger-related expenses.
• Estimated FY2026 and FY2027 EPS accretion of approximately 8.5% and 11.9%, respectively.
• The transaction will enhance Colony's key performance ratios, with projected FY2026E ROAA of ~1.19%, ROATCE of ~15.3%, NIM of ~3.43%, and Efficiency Ratio of ~60.5%.
• Tangible book value dilution is estimated at ~5.7% with a manageable earnback period of less than 3.0 years (cross over method).
• Expands Colony's in-state franchise by entering the Thomasville market and strengthening its presence in coastal Georgia, including the Savannah MSA.
• Enhances 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.
• Enables cross-selling of noninterest income products such as insurance, mortgage, merchant services, and credit cards into TCBC's existing customer base and across new markets.
• The combined entity will be well-positioned for organic growth and future M&A opportunities due to strong pro forma capital ratios at close (7.9% TCE Ratio, 9.8% Leverage Ratio, 12.5% CET1 Ratio, 15.6% Total RBC Ratio).
• Greg Eiford, TC Bancshares President and CEO, will join Colony as an Executive Vice President and Chief Community Banking Officer, bringing valuable experience and market knowledge.

Negatives

• The merger will result in an estimated tangible book value dilution of approximately 5.7%.
• Pre-tax merger costs are estimated at $10.4 million.
• Integration of TCBC's business into Colony carries risks, including potential disruptions with customers, suppliers, employees, or other business partners.
• The integration process could be materially delayed or prove more costly or difficult than expected.
• The merger may be more expensive to complete than anticipated due to unexpected factors or events.
• Dilution could be caused by Colony's issuance of additional shares of its common stock in the transaction.

Risks

• Cost savings and 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.
• Risk of successful integration of TCBC's business into Colony.
• 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 of 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.
• 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 could adversely affect the combined company's results.

Future Outlook

The merger is expected to be immediately accretive to Colony Bankcorp's earnings per share, excluding one-time merger-related expenses, and will enhance its key performance ratios. The combined entity is well-positioned for organic growth and M&A opportunities in 2026 and beyond. System conversion and rebranding are planned for the first quarter of 2026.

Management Comments

• Heath Fountain, Colony's Chief Executive Officer, stated: "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 Chief Executive Officer, commented: "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 represents a strategic consolidation within the community banking sector in the Southeast U.S. It brings together two institutions with similar values and a shared focus on community banking, aiming to leverage complementary strengths. The transaction is designed to enhance Colony Bankcorp's competitive positioning by expanding its geographic footprint into attractive, high-growth markets in Georgia and North Florida, and by increasing its deposit market share, positioning it as a leading community bank in Georgia.

Comparison to Industry Standards

• The Pro Forma FY2026E Return on Average Assets (ROAA) is projected at ~1.19%, which is higher than the peer group average of 0.99% for public Southeast banks with $2.0B-$10.0B in total assets.
• The Pro Forma FY2026E Return on Average Tangible Common Equity (ROATCE) is projected at ~15.3%, exceeding the peer group average of 12.6%.
• The Pro Forma FY2026E Efficiency Ratio is projected at ~60.5%, indicating better efficiency compared to the peer group average of 66.4%.
• The Pro Forma FY2026E Net Interest Margin (NIM) is projected at ~3.43%, which is higher than the peer group average of 3.07%.
• The peer group for comparison includes major exchange-traded banks headquartered in the Southeast (as defined by S&P Capital IQ Pro) with total assets between $2.0 billion and $10.0 billion, excluding merger targets and banks without consensus analyst estimates.

Management Changes

Corporate Governance

Legal Proceedings

• No material civil, criminal, administrative, or regulatory actions, suits, or proceedings are pending or, to the knowledge of either company, threatened against Colony Bankcorp or TC Bancshares, or their respective subsidiaries, that would challenge the validity or propriety of the merger transactions.
• No material injunction, order, judgment, or decree or regulatory restriction is imposed upon either company or their assets that would apply to the surviving entity or its affiliates upon consummation of the merger, other than those generally applicable to banks and bank holding companies.

Related Party Transactions

• TCBC has disclosed outstanding amounts payable to or receivable from, or advances by TCBC or its subsidiaries to, any director, executive officer, 5% or greater shareholder of TCBC or its subsidiaries, or their respective affiliates or associates, other than as part of normal and customary employment terms or ordinary course deposits.
• All agreements between TC Federal Bank and its affiliates comply with Sections 23A and 23B of the Federal Reserve Act and Regulation W of the FRB, to the extent applicable.

Stakeholder Impact

• Shareholders of TCBC will receive a combination of cash and Colony Bankcorp common stock, providing liquidity and continued equity participation in the combined entity.
• Shareholders of Colony Bankcorp are expected to benefit from immediate EPS accretion and enhanced key performance ratios, potentially leading to increased shareholder value.
• Employees of TCBC and TC Federal Bank are expected to largely continue in their roles, with opportunities for expanded career paths within the larger combined organization.
• Key management personnel from TCBC, including its President and CEO, will join Colony Bankcorp's leadership team, ensuring continuity and integration of expertise.
• A severance policy is in place for TCBC/TC Federal Bank employees terminated within one year post-merger (excluding for cause, death, disability, normal retirement, or voluntary resignation).
• Customers will benefit from a larger branch footprint, improved digital banking tools, and a wider range of personal and business banking services.
• The merger is expected to amplify the combined entity's impact and strengthen its commitment to local leadership in the communities it serves.

Next Steps

• Obtain necessary regulatory approvals for the merger and bank merger.
• Obtain shareholder approvals from both TCBC and CBAN.
• File the Registration Statement on Form S-4 with the SEC within 45 days of the agreement date.
• Cause the Registration Statement to be declared effective by the SEC.
• Mail the Proxy Statement-Prospectus to shareholders of both companies.
• Hold separate shareholder meetings for CBAN and TCBC to vote on the merger and stock issuance.
• Close the merger transaction, expected in the fourth quarter of 2025.
• Complete system conversion and rebranding of TC Federal Bank to Colony Bank in the first quarter of 2026.
• Integrate TCBC's business and operations with CBAN's.
• Colony Bankcorp to cause the shares of CBAN Common Stock to be issued in connection with the merger to be approved for listing on NYSE.

Key Dates

Recommendation

The merger is highly attractive due to its immediate EPS accretion and significant enhancement of key financial performance ratios (ROAA, ROATCE, Efficiency Ratio, NIM) compared to industry peers. Strategically, it expands the company's footprint into high-growth markets and offers substantial cross-selling opportunities. The manageable tangible book value dilution and strong pro forma capital ratios further de-risk the transaction, making it a compelling investment opportunity for long-term growth.

Keywords

Bank Merger, Acquisition, Financial Services, Community Banking, Colony Bankcorp, TC Bancshares, Georgia, Florida, Banking Industry, SEC Filing, Earnings Accretion, Tangible Book Value, Strategic Expansion, Financial Performance