Colony Bankcorp (CBAN) 27 Jan 232022 Q4 Earnings call transcript

Hello, and welcome to today's Colony Bank Fourth Quarter 2022 Conference Call. My name is Harry, and I'll be coordinating your call today. [Operator Instructions]

And I'll now hand over to Derek Shelnutt to begin. Derek, please go ahead.

Harry. Thanks,

these statements started Certain known like not differences this XXXX statements and limited be as get variations our go forward-looking prospects call and I such of flows, operations. prospective constituted disclosures. future of meaning investors of Act standard we forward-looking Current the today, any that Securities not we guarantees could but financial results statements Factors include, Act of are cause risks to are would to, unknown of but through could assets, that the Exchange Before and Securities the the XXXX. of condition, uncertainties. and within make involve cautioned businesses, other on performance, pandemics, are and company's cash

also those to like our release earnings today, were filed so that both during yesterday both which add and reference will to of available our base, we reference. have I call our quarterly presentation, investor would please

I Officer, Heath And with Executive our will to over that, Fountain. Chief call the turn

want D. being today. call the everyone thank Thanks, on for to I

Before other results, read that to I the I in things release. you a couple into get the cover operating of want

and a Terry sorely was CFO. be and member is his who team with going of said really his member Sunday. family, He team. on his over this much spending was and our as company our XX-years, by in dedicated of First, Terry served Hester, career week, he's team, missed XXXX our a goodbye XXXX. since started to passed Colony and we Colony longtime family part director away of the family, director, also in Terry to with our the

and to work all sympathies certainly those our him that So his family. to with go closely out

that our he future appreciate with wishing search through career in pursue endeavors. We has Second, us Borrmann, his you a time who also and Andy in the leaving for replacement we we to all here for opportunities. SouthCrest started that XXXX his our Andy CFO merger other Andy. is company and announced yesterday joined process all we saw in contributed well

Acting CFO In Holding Financial plus the Heritage of CFO Group. of the eight you been years I've I know, Most of as spent meantime, Company. named the

deep We smooth confident that going team our the a I'm management have the bench, have can transition, we needs for provide and transition. a I'm primary and I make and you accounting sure serve this support during relation to contact investor as finance

to aspects the when accounting comes I him Acting Subsidiary role Officer, CPA accounting confidence Also team experience all development and as Shelnutt, our in who's of the Colony his this team. operations. He's of our played and of our our it joined named in also handled Derek a on key and Accounting a Operating is Bank. has to He work have through of in banking. this ALCO well. Chief in CFO Derek XXXX lead lot a us and public our transition been call a accounting M&A, in has of ability and lot

bit I'm segment reported And presentation of for a is completely quarter. earnings our $X.XX versus our us, note into $X.XX quarter came all last slightly a it going up behind to banking those wanted quarter. right quarter. We in XX you banking quarter shows to got and with that from to our net. this the by the division Slide made So from breakdown good get I last the up were earnings cover

core is much from of earnings our coming the the And up of our only banking. significant made we've slightly so year quarter, in terms while are strides the earnings for throughout how

significant the banking mortgage on an side perspective We this headwinds quarter. from of rate course had interest

fourth, of of portfolio, adjustable-rate like the over mortgage into from peaked at other products was rates businesses. market quarter. We products into banks end the shift a the the a secondary saw quarter lot real going during As seven third significant and

And nearly $X.X so from on our $X.X of million year. fourth the million quarter quarter last down gain that's sale about from and last was down

and of our in presentation, been On slide you XX see XX originations how kind can have impacted.

the out the actually remained mortgage to really originations were new And down significantly customers, strong, lot originators them poised our are out together, origination our and when advantage sales it'll with keep business take within when settle Our to I rates but out, folks give now move that and right out team of products. our in a mortgage focused now footprint quarter be recruit strategy affiliated to little is getting think opportunity be purchase of a to as to just we banks product our bit. settle there's in in fourth primed portfolio the get our rates right really

growth. over loan It $X.X to Our X.XX% due dollars million, down primarily interest slightly. but net interest our net went from down margin in income was to our up was X.XX%,

deposits And growth to deposits having so our is were happening really still outpacing our discipline at are some And minute. marginal good about feel and talk funds, quarter-over-quarter fund things deposits. that and a cost hear in wholesale we X.X% putting on going focus that's excludes on growth we D are. but what's pressure so you're about pricing maintained been deposits where to deposit loan up able our grow any good cost We've our is and and deposit some our to our our

higher to be our environment tough slightly see at we're to have put going are but to and ROA dilutive assets to It's slightly that. interest this we margin may from or predict rates. NIM, stabilize on that to going level. to But accretive and compressed ROE are may We earning to a be do levels opportunities continue

well. strong, as growth loan and discuss as D Our you that saw was will

down. quality asset really went remained Non-performers loans criticizing and flat classified good. Our were

quality, growth. And so less asset despite to we were a with little that strong the able quarter this loan provision

in last to somewhere think range quarter. in CECL things now going next will as now, how adoption. that. forward-looking moving that And reminder so reserve quarter, forward we we and from we model to a the is XX% from to as to so increase of just XX% three happen not are months look sure. continue We Core disclosed our was a with CECL And

So just that change. that, could reminder a

talk performance I through highlights. to want in three performance we're to and nine We want to our high in, about going. presentation. I where kind our Slides Going share out, lay path of, XX, but the

First is strong organic achieving growth.

well that We the that. executing loan doing are We're side. on

this I we're on executing the well side. that think deposit in environment,

it. Just in deposits is growing tough, but we're doing this environment

we second but opportunity is I hurt revenue And to our doing our still for real that on side, think merchant the non-interest of have to obviously treasury SBSL is highlights mortgage in opportunity grow there. the continue three strong there as and And down has Increasing is income insurance, to us return. well. team and being

internal is then a now think is And on to to shifting opportunities. is M&A for We focus real the be back burner going just lastly a while.

internal the with business you CRM profitability capture the So gotten just made that, in technology. our to we track all internally and of our efficiencies referrals, going we just focused we're new system really ensuring Driving operating focusing investments from we've lines, know, internally. on the

a to environment. to Reducing travel, new in be in of development, significantly. lowering also costs. our And We've not We're then end expenses, this right been now we've those going and market our really, markets now limiting strategic it's expanding core mode controllable We're been growth hiring expenses. managing then business and kind hires. growing to provider things

in We here to are in first the the start that this and core of final renegotiating cost some agreement flowing our year. from saves stages of we expect quarter

lines I've since under our lending you $X.X to business, just new done we've of type group, here insurance, And year specialty business, We've XXXX, mortgage, number overall added growth We've of just markets. to addressing per whole level gone merchant. bank expenses, know, XX% assets. been small smaller gone another from acquisitions. acquisitions. of we've billion, averaged multiple in done We've $X We've in as billion

And in. not a not so to time, a growth mode, go been into prepared they at growth moved have Colony into we was what this that's platform that phase

economy given and we we technology. have And in So we've We the really investing But team in largely the been place in place. where at significantly shifting people efficiency now. in external and have to focus slowing systems profitability. experienced, are, our from improve to ahead of processes opportunities We're growth grow internal potential amount we've really the looking to opportunities where years.

focused we're on. where that's so And

that we X we laid end last do of XXXX, a higher excess is provision you walk is been the through things. basis I where quarter, growth on And just as in out just from get internally rate Excess some was to run the than XX, that what call XX slide about we've by points quarter. do quarter X.X that normal, few targeting. which talks slide do how get And get we this -- bps. How ROA we

where a X-basis detail New have they it’s are lines And point this quarter. on from of business drag we today. to there, this get in some

Mortgage SBA each of year-to-date those bps And last really X businesses points quarter really X X years out have only contributing about carried us basis netted of to ROA. other ROA. contributed the contributed ROA, the and are net, nothing of and this XX that couple

do profitable expect be basis in point are or we get range us the lines XX% going of those and those so And range. to for to XX somewhere

office on X% we a loan X we've the loans; infrastructure standpoint line every And we've of technology -term really then the get improvement about long been our bps personnel to sheet. back built know ROA. growing fully a to in be growth, have owned -- from And you all both our and front finally, and balance deposit,

through more that's the get just end maybe without start you technology, XXX. getting leveraging managing went year around know, counting breaking expenses profitable. business you the down. without those, so, those And by with up, I And of That's and lines somewhere them that just next adding That's we even. just

that's So plan. our

we comes Our that that. day on can team on execute we deliver think every in and to

production Couple over I D to side. talk about to more things turn before it

go our breakdown and to a going just of or I lot XX lot causing Our this want to don't there. a you sideways securities our see exposure portfolio. there. that disclosures rates which slides in of quarters driving saw portfolio, a you several have nice quarter, see investment to losses. of was unrealized more our some XX AOCI negative what's We up our We of Interest after really that. added gives rates credit loss we

a that peak yield hopeful our And our rates creep I'm up seeing extension We where reached there. little are, are we've bit.

recover our life come think and book a I our we're going seeing see to average to tangible as stabilize. So there's we real store duration, that of opportunity a lot down, value

we're if taking a and opportunities deposit are to trim payback if on portfolio avoid looking time-to-time we're when we we successful and losses, quick the down from rates at get Holdings so look And to would but really we Trim that opportunities move we especially. to our potential strategy see can take

then our about to lastly, base. $X.XX on the do just dividend we're for half that for quarter, our shareholder investors, the of And glad to able be that's retail

of And a investment so them. very component it's the important for

I also keep have the think it we earnings. has and our and Board expresses improving our ability to our confidence

with D to going production those over and side the about I'll bank turn talk and the business it he's of So lines. highlights, to our

Thanks, Heath.

growth. commercial we the bank, great side had the of On loan another quarter of

we mentioned As over earlier, last X.X% rate. Heath growth as of XX% quarter had of annualized annualized growth

growth. want little few loan slides do to the portfolio a the to color point about talk on I bit in to you here a

like is If to we’ve really, page with say it several with will these been you gives a on the would values look details. the breakdown the which CRE. I'd I at last of XX. the over some XX, And it originating to you of breakdown slide point main quarters leave on you it that loan starting

what the we've our that And would has, guess, loan low good very a originated. it about non-owner feel Our customers way portfolio put in I CRE we the I my is to cash call, saying value. occupied of deals. loans

based through of we We in have And see but towards to forward. And continued approach Fed strong the rates in moved addition end we little as that we the credit grow to on slowly we've really And able you we've loans, few the fact with the quarters have to year, the tighten we in rates year see been and say that, coming the expectations moving been a credit opportunity as up bit more move We've metrics our I has the year-end, as we end we've environment can as keep with that'll moved. first originations, on turn the year. up. have been I'll about of well. moving aggressive this those to talk more the them, as our would the

reduces will significantly year. growth and CRE loan lending we is and still it we'll see think what we this originations We the loan loan what pipeline I reduce that raise strong our it will slowing, do definitely with as still growth So first loan on but significantly I the second two the for One, construction the -- half pricing. elevated up, first loan growth to it we've we draws in to lines, should quarter, say from a But even done of will happen the continue have to growth those addition year. in these as in reasons. elevated add that, those see

put execute discipline on of to expectation place of back strategy XX% put growth Our loan second we've of in more as the the pricing we into year we've half kind X% that goal move for well. place, that to our the is in maintain as as credit as the well long-term

can one really deposit To was on really markets called deposits. that glad that we is, me, growth, bankers things excludes we've for a wholesale deposit report the got that know, been deposit got all deliver and that's a and good with when over We've the that's I I had growth X.X% You to think rate us top good to environment. of quarter on. me, In important number. growth

that as other then Some as changes is their for focused started these about some a into bit third a ‘XX and Colony, in in third the talked in of as is of really good will lines We just the focus proud the we've significant XXXX ancillary to we've go this I'm of are and more for we growth, plans I the think the will as I quarter, made deposit in This that and growth a we starting to Heath then go side incentive minute. majority the plans and commercial X.X% our changes little the be number on we in new well into referrals quarter, had I quarter see think well. a fourth this made success.

developing our In a puts treasury, on on we treasury we to can It customers. last deliver and help us needs the different year that building the in spent products customer position deliver we team from commercial the that out treasury. have

way us sell addition, we service In proactively our in experience, a approach sales to of and the deposits. October, manager that and with treasury a years we added really the allows structure we way commercial

will and the a I ancillary bit talk of little lines move about some now. over

that slide If consistently on business you the excuse or or me, look small specialty would profitable lending SBA government guarantee had a XX, say lending year. I we on

you each see we I If hopefully consistent that at and forward. look can quarter, think delivered profitability going we

slightly We pipeline into over XXXX. into have where went elevated XXXX good that is a coming we

did little little while were a bit, on -- Heath sales. about same, talk I'll bit we touched but mortgage, this our a has volume we secondary the market reduce

where sales. in could a strategy origination loans The Rates the rates have. near-term. that we have we and have is luxury interim stabilize. but we a that market bit. made secondary loans have sheet did an back can mix back that together, is the appealing. more the do secondary the really we more that shifting helped little have we to until not keep portfolio it long-term have we is That come And focuses market those of want Rates year that those strategy this balance One that has to really for us

were for our the our if the difference the you secondary year-over-year. market and XX, in year. see XXXX laid XXXX profitability you flat XX was If And we've short-term sales on slides look and our out basically production production production

new markets we them. and ancillary our as a also on want call or few to of business lines of our I lines new touch

the We million bankers For Alabama, mid-year $XX have these either after. in at in and hired in we year-end, growth Huntsville Birmingham. a LPOs had of were little over all or

number. a are that's year a So good. pipelines half Their really

C&I commercial is but And really the focusing things incentive origination on also operating plans, historically, and Huntsville with shifting of away go and direction the loan groups businesses that One with the those. and much fees been from really and their for CRE and Birmingham or we've with deposits good done industrial have as businesses. that

the And booked would in should that or at shortly look loan in our loans become we brings also to forward and profitable way I look two like it a next we on their said last pipeline that started we loans, say growth week. to I've originating based personal quarter it. on marine just what in. RV,

will to in loans. the coming Well, best way to generate much us ground. I efficient there the opportunity for the from us few describe be to here, standpoint some very on It's that it working so the but our off in think for way been And a a we've numbers get is is not it years. tremendous it’s

for we flexibility it consumer the to a because latter addition, to them And or the addition profitability. secondary our portfolio. on then them in in abilities in addition, it big it market. it's in in spend not My just the the the to gives that, add us we to to too get really to sheet, breakeven us balance And year. in will loans helps us short-term of get until those be of is either sell able hold part expectation And that

our wanted to he's to effect us the today's in got great which wanted world to I mention to that City time He's Chief Congratulate Lastly, came is Revenue in mortgage, Capital wealth Bank. and have joined from November who in making. a early of on team him Ed Cannon, a already recently Officer, I He knowledge as resource.

banker board about lines energized, way a across big our I and career but already starting has to here. the that like different ancillary are really, difference it's really them. opportunities addition make he's that just do ahead of the and great he to In wealth, experience

revenue stay each more on and those even importantly profitability we XXXX. hit driving that And talking and sure making focused during we that of to pushing about targets the that we're areas

So to with that Heath, over back will you. Thanks. I it turn

Harry open That And wraps our up questions. D. that, ask prepared to up line that I'd comments. Thanks, with the for

first Thanks David, Hovde line very the of please of much. ahead. [Operator go David Instructions] Group. is today question And our Bishop from

were going here. Yes, you pricing taking D, Hey, to the D. the to behind curve structure of and competition maybe, do does loan maybe in the raising fact of you slow Appreciate raising Heath, give think maybe growth terms or just the little good alluded you're the half loan the year. that yields you back a maybe maybe the had lift of of loan that's sort you in in and And question. portfolio, of morning. margin But given and and pricing that pricing? a bit

should how that in in the the about we plays year? maybe Just think how of half out the margin second

have that's quicker raised Dave, good a think certainly as I prices could Yes, up rates we do fast. so loan moved question. always

the you -- Just it under five. to of about was quarter you before was give know, little our a six idea on little an a put the quarter weighted and we average, over fourth in

you barely back last go it four. If just to the was end of year, over

is to see think, I And to opportunity, up. loan continues our portfolio so yield go there some loan,

pressure to what's an be continue to causing just confident going are I But to them a know to for it to to If interim, aggressive. a on funding loan margin with more of lot if that, absolute losing there's that's see which want that add I know, banks hard yield in think pickup. on see is opportunity and, I'd don't D? wasn't you the you you really on get out pickup. there predict deposits pricing

sure a to balance as long. were customer they up, commercial curve introduced that little further sheets as we've we this to I moved guidance, wanted were were would to honoring that commitments had out we us and able forward. been a our point, -- point, at would have sheet we new, take this because going our just we've to think I rates raising they long we as while have pricing out we call pricing there when make the at bankers say No, I even with be stabilized at bit

it. Got

all Just these you curious, where are at [Indiscernible] days…

sorry. I'm

a You for where of know, factor these I at concentration CRE curious days? standing Is was you're CRE factored all? all at limiting that the

push little today. of concentration bit want is already is are limits more at see where We're want to the place but We going -- down of some mix Funds the not of but to sheet. keep whole where We a added we're the just really the that, we capital XXX we stuff the we for to right see holding we kind it do a really close CRE to done. some at to XXX, have creep we've sort company. up, a CRE as at lot up balance could

treasury putting those refer well, can that when been the standpoint you looking drive to income point. thing say would fee from the we other those just bring we to know, businesses, additive ROA is are that. Yes. also And them, which operating ones to ones that an shift deposits it income. And fee up with tremendously because can start the of at us part overall is and I would is I because drive our we bring wanting as an are is on that services why profitability in merchant anything And we've those

that's the focus as on so I shift So of -- think well. the part that's

more you if the you Should high targets any a efficiency target low-to-mid sense you pretty hop expense the revenue Thanks. the in mind back of And decline look aggressive down then a question, rate? a that growth curious and see as it. probably we OpEx for this hopefully into be in out, from teens single-digits? to the guys the budget queue. one get line. will I'll for or have are? sort to either you slowdown year Just expanding have Heath, Got be Do benefits probably or

now I ensure of we that's have, And as we've we talked of, question. those Yes, won't. get out kind got a we about, invested investments, good to returns significantly the, and

focused to reduce hiring a basically type internally strategic on in operating and are market hires. expenses to isn't freeze certainly that projects of we lot So

And fourth reduce have so second quarter rate the standpoint of an third and you'll our of we've I little I from to see things as up done current run run we quarter, get think rate. creep our think the from bit fourth a opportunity the to a into quarter. But just in we start

And a then into where get mortgage we as a standpoint, of generation sort grow other business revenue lower that's to we'll bit as back from comes revenue these run than and able rate that little be profitable, lines of are right now.

Got it. Thanks.

our from And today of next of Instructions] line your Feddie open. [Operator question now Feddie, is Janney. the Strickland line is

Hey, I if the And earnings in quarter? good I the morning. they're producers? in timeline these headcount rise drove what was opening just Apologize this if a in hires fourth is missed FTE new generate remarks, for but to the there curious

Yes.

So to to that our staffing. the driving to COVID the been some of first there's service is our level quarter things of network. one, get branch was two able need fourth well quarter retail we've really really we customers efficiently Back Number that. the that aftermath in the and since that really our

what saw QX. So a bit that of in good was you

the on so the there. are And end those lower of pay

we those I on guarantee. in or we some picked earnings the year, type with as in the three-month hires, for call of of the tight on up those release we're dealing Birmingham, fourth a a And the a that generally then team think example, opportunity hires pick I we the either to mentioned production. quarter. in up and have mentioned, And had were throughout mortgage number we did some

out into all rolled January I on think the their as guarantee are side, we we period. mortgage of producers our new roll have

is our And all we so the they'll be compensate world in how MLOs. commission

came some fourth and you quarter. are -- them as about, obviously and team detailed the that had, know, a group those third in in we loans the D get. where that and mentioned, to And are then expect where we of And Alabama in, we how

really be soon. we so And think that'll profitable

gathering retail on that Should to it. about, think in we an little I a effectively folks for mean, bit, deposits think a retail investment that I retain investment that easier the guess to you the the as more of rural about on retail particularly filling my guess, probably deposit is, kind position more side. have Got know the in those thinking had the about part if footprint? of little we I it's vacant it's but think side, trying of you've I some

Yes.

part deposit earlier, the is have. great of franchise a that gathering footprint As had we I rural said the I we said

There So two agree model. everything are -- to a on also staffing sure that. with are I would make do running things we

we that we will as So have the on out or those up there, and levels transaction down either volume adjust those based the volumes are that have.

Heath And in I that, think to we to is good heavily driven on to all our banking gathering. addition retail, very, addition the our that center managers. In a include a which about and because think it that referral in ancillary the We've universal introduced deposit introduced an incentive plan bankers it's deposit gathering, way to lines. it was of talking these on for first time other year, this very would

deposits really drive group these can merchant so for that is to yes, investment additional so, an and and that profitability. us from help and is And also, getting also they others insurance about

that the about to I is think it. right So think way

change you Thanks. deposits, months municipalities for increases? Got past smaller these these have sticking then just significant you it. some asking there have so? That's deposits municipal helpful. time of with or the cities, seen any rate in relationships. And And in long Are XX

on ours idea the and have much end mean, of obviously $XXX a so large don't as an portion as those you I of deposits. It the operating call we million think represent type fluctuate QX, an at more our lot are to do in opportunity at really not some give do And pressure $XXX-ish concern not environment. have I we seen that municipal this our of just of accounts. a have banks other do. was because We does million them, lot it We footprint. from relationships think end QX, a municipalities more the in of we've

in we improvement and really home not muni and our opportunity in the out treasury going that one active the staffing add to really we're is have go an the municipal on what We product we have bidding that with to and think set and side. deposits doing been area

the Got questions. I'll my it. step Thanks taking queue. in back for

Thank you.

follow-up We Bishop. is a open. question now line have from of the line David, David your

Yes. the the the in bit is to pullback credit improvement, in flows, gross implied in as growth, going that economic of the decline see a in assuming little that the we're and diminution outlook. holds level Heath, of there in of ROA, a terms provisioning maybe loan

about think should back we the if in how the directionally maybe Just provision end? slow does growth

Yes.

lower again, think XX% loan is than that two has definitely above kind or % right as or our what been quarters, X of is I D have now growth And into growth growth it envision these above we lower may last we that, certainly mentioned, that. few quarter like loan but long-term So to a the rate. plays of, that

loan think, see However, it account just if go be metrics. modeling growth back we I hold loan-to-deposit these and running with and caveat I these with in as into only really the credit couple still of putting to that quarters down. But our rate, by That's economic down higher more going first XX% forward. rate able normal the down been I We'll guess that new will to trending CECL couple about the year. of would think ratio And provision take next definitely trends forward-looking I to we're are it you take a an backing now. our that of be sort we'll I that haven't after us assuming more down doing it. a end of growth quarters some got to factors then

CECL you be follow-up think and me regulatory to the neutral mentioned or the my a moment in was capital, that's Remind the going but whether ancillary the it XX% Then of negative impact. again TCE I that's is? of it. or at question, reserve estimate that Got to -- to state

right quarter we it range got we you're we there. XX-Q will XX% And our on to an is and now we disclosure this right Yes. XX% that disclosed but in and put the is put that updated last quarter,

Great. you. Thank

being time. it [Operator no this Instructions] registered have at questions And we appears further

Heath any for to closing back So remarks. I'd like to hand

for appreciate appreciate you welcome support further for call you. and and We if of to Colony have Harry, on today. Again, to I your Thank out Thanks, it, you thanks everyone. reach questions. Bancorp. we the us being

everyone. concludes you, call. Thank today's This

You may lines. now your disconnect