Colony Bankcorp (CBAN) 24 Oct 242024 Q3 Earnings call transcript

Good day, everyone, and welcome to today's Colony Bank Third Quarter 2024 Conference Call. [Operator Instructions] Today's call is being recorded. [Operator Instructions] It is now my pleasure to turn the conference over to Mr. Derek Shelnutt.

Thanks, Marjorie.

I to started, standard through get disclosures. we would go like our Before make could Act this forward-looking statements of on Certain we call the Exchange the of XXXX. and statements meaning be the XXXX Securities of Securities Act within as constituted prospective and any forward-looking Current uncertainties. not investors statements known involve cautioned performance future of but are and are that and such guarantees unknown risks

were financial these to, assets, add yesterday. could today, cause also differences prospects flows, pandemics, businesses, quarterly our both filed of that are would limited will release include, we results Factors not that other and investor company's variations the cash I which call of our conditions, and both but presentation, reference earnings during operations. our to like of

to have available So please those reference.

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

all our and you Derek, quarter Thanks, of to call earnings thanks today. joining third

the the say Helene about I by right quarter. that our or none very Before fortunate results, just of of started team get at our XX% the team, to our on impact on the communities our customers were end want that we about third XX% by and damage words impacted during were happened quarterly more. of few the the in team or spite of were injured of storm We members that the fact a Hurricane storm

members immediately the financial stalls managed roadways how chain driveways wind up tree normalcy. to communities whether our team of help back power X,XXX of and proud some have help moved Several stepped making each it serving storms, members They've of to damage, was and community. over other really to damage, restored. to the I'm fellow their team were with significantly Today, or of after and power impacted outages their clear meals like. those contributions communities communities, our their in level

community and proud bank and above response. and beyond fashion, they my our went up, true I'm really expectations stepped of really team Our

did expect While many seen near of Tennessee And this our the level material those and communities were in we recent devastation Helene and like Western was from hit certainly of some areas and Eastern thoughts that not But are see prayers impacted at the storm, time. storms. Carolina. North with all our storm with by don't we impact any Hurricane financial that other

So of complementary progress operating I'll continued our results. with really quarter. in being reported our move into We're business, pleased lines the to Glad made us. which now to see

increased and saw $XXX,XXX net quarter increases interest we both Our the operating during as income in income net noninterest income.

our of in increased of quarter third complementary income over All lines net and were XX%. profitable combined pretax business the

this we income margin despite and Net in in increased that the the the during past first in saw approximately interest increase the decrease quarter-over-quarter year, is $XXX,XXX and slight a quarter. quarter, third

deposits and With part and lot it's third to the the focus beginning for on that to the our and environment rate changing both ease, of quarter of the relieved pricing has on the in us it the of costs, pressure a seen reducing allowed funding latter deposits. we've competition Fed

of lot a continue opportunity, have for earning still climb. their We asset yields to though,

to decline that get to do point then into further us expect we've improve rather We'd start margin as comfortable the we a and forward. So and going feel of bottom it with we expand to leads seen that to margin be where modest XXXX. expect

mentioned some Along deposit grew saw a quarter, quarter's negative the DDAs were decreasing, up growth pleased little quarter. impact accounts loan to which occurred had deposits growth, margin that there money and our return market deposits We with for call. shift we see last we CD we on that was on some and a seasonality third bit. customer in tick Total saw and mix after increasing the where

annualized So the around a over $XX on million quarter. little for an basis, we X% were

the pipeline it some starting but get to We pick does are up, stuff see the through take time pipeline. to

were loan be expect in some activity down pressure the do back quarter. the second see nonperforming lows. We in We or at more growth did second normalized would and could get us the quarter, in do could -- on we loan little. some It growth, in In fourth a expect nonperforming large to and in increases that rates XXXX. to for QX our loans expect loans but quarter, to we have similar put criticized payoffs historic

off we're unusual larger not us any still issues but some credit weakness. see anything seeing good coming systemic So increases quarter, did we pop about this concern about feel or lows, we up gives those and somewhat quality, that

our earlier. complementary mentioned I lines

as last noninterest the increase mortgage was even little a quarters especially did bit good Our in in Mortgage and by our income the for led in we've quarter. for few both seen, bit go banking rates a down ticked up They back little weeks. SBSL third

challenging there's so a And environment There's inventory there. challenges. still

kind mortgage that may good quarter, the improvement it see see So not was but quarters there. this saw that we to of

and Our about lines forward. more we're going other of opportunities for growth business excited the are growing,

around Discipline the and efficiency third expenses in continued quarter.

operating noninterest an X.XX% we've the X improve to a track, the talked which expense lot Our on last continued to metric that was our about average basis, net quarters. for has we quarter-over-quarter operating assets

expect below, around expand. to stay to to begins will or upside which of give us a as income XXX% We margin that net lot

this Cissy week, of And priority to kind our Giglio have as this Optimization. hiring we announced of and and commitment we Earlier Director the just highlights of efficiency profitability.

our we're that able earnings as and and ensure improve scale going expansion to margin we're we again, into grow. and back move keep to efficiency we focus on As growth

came enhance new improve from launched online banking platform, to in a our to really experience. This which quarter, digital customer past our technology we and commitment invest our

use care banking our We're stay really teams have to their features hard can to a transition. worked and ensure that that seamless customers and launch take successful state-of-the-art a robust to needs. is Our has platform connected a proud that of

a this also support for through we opportunity the also This to things digital abilities perspective. to up and going to where the vision opens of data. expansion marketing our will with business use efficient efforts more to also want and our development investment from and go increase platform growth support do That's --

as excited we're So about really well. that

kind quarter that pressure believe we upside So the quality, as asset of credit on We and of with in, and reduced of funds into loan lot cost environment summarize pipeline. to into XXXX. opportunity rate the fourth and head stable we're there's a growing

over into more that, go with so I'll turn Derek And to it financials. on the to details

a increasing and earning of We million over opportunity still noninterest in earning income declining as increased rate the operating third of good asset growth in and income you, third interest operating yields $XXX,XXX quarter net interest increased see quarter result in Interest to increased income $X.X environment. result and GAAP as continued Thank increased the of with income. increase loan and a net net Heath. income income a assets. repricing by even

the budget are quarter in third to year quarter in not There shift are million still up the in deposits fourth in mix taxes that that to our support overall a new they a when enough deposits a we reprice in about DDAs increased maturity, yields. return is lot loans increases $X will decline at their saw reprice Interest as start and as see property deposits. then of collected. those unusual and expense municipal on It's

changes cooling later adjusted That in primarily to our portion deposit quarter. response have rates of We and competition. happened market in the the

over deposit not the that costs upward the So we've impact have quarters. it that. on trajectory expect of yet we reduce seen we several to the seen full But or change last

and decline the us. good This As our the lowest quarters Heath part that though down increase, is interest was basis income environment are the mentioned, of increased net of margin X after with improvement even in quarter-over-quarter margin along indicators behind several points. funding

we're We feel of thinking expansion and next of margin. that number we're or start impact that magnitude increase for and conservative margin Fed will may about rates off forward the quarter X, in the going gradually that the how

income. to Moving noninterest

about NSF slightly better previous mortgage quarter it than being fee Third were the specialty compared a for And with by them. still deposit about lending an quarter fees up decreased average $XXX,XXX, good quarter small increased income business quarter. revenue for our slightly, operating to and $XXX,XXX. division mortgage-related led although revenue was up noninterest

X.XX% increased interest the -- net $XXX,XXX, the variable-based increase that see growth SBA of compensation average quarter. and assets to a target between expense going at our prior totaled was about of and Loan to the noninterest income good $XXX,XXX about some noninterest it result Operating operating and here to expense feel our remaining net related and contributed noninterest servicing compared expense to Provision forward. valuation. quarter. for We XXX%

see unusual a that business otherwise we Total held during down outside quarter that the first during or this quarter. prior quarter But Nonperforming course as any the the will of normal for would charge-offs not be year. levels X% coming seeing the We're second us anything were loans low increased that quarter was the roughly concern. likely more increased very levels. comparable off at Heath annualized. and also Net investment and to of million loans would give of from going quarter, it $XX is forward mentioned, again,

a suggested mentioned, As good will our CDs of in a starting the of deposits hedge. the and bit. year, redeployment fourth which Total to deposits There's payoffs to were call, coming are on were we last the the off Also, and expect market. in tied about quarter, below as growth upside what a we do the $XX.X are back pipeline which half increased our that's brokered half growth loan little cash that Heath payoffs those more of on flow customer about because half see. well in we're other rates hold mentioned number second the million,

and money portion in a interest-bearing mix deposits, earlier. in DDA as our Our municipal deposit A overall which of growth of I saw retail a was shift balances deposits. again, large was and declined the mentioned CDs lower result market we cost

runoff Although align or haven't early, we still it anything to seen deposit market. rates reduce the as would we any that indicate to with that started is

$XX above that our million CDs of and fourth million $XX current between the have we in retail Additionally, rate. quarter board maturing are

some we the see there saw demand Home costs. opportunity the and Bank we million as short-term of Loan lot a in we as for of So in by our off paid steepening advances quarter Federal of CD inversion reduction the the a flow $XX reduce retail help decreased rates additional did cut quarter, as Fed the pressure we that cash during some wholesale employ funding hedge does curve suggested. cost see the in which strategies, on as may have fast we any not forecasts the if

X loss, this some and The years loss. or $XXX,XXX those book worth we summarized around investor Again, Slide for of was X.XX%, XX $X.X investments approximately on included presentation. We yield in are a earn-back quarter, the less. million and sold a which sold on estimates securities, our are those

make We similar quarter the the to expect up help upcoming the restructure of speed portfolio. to transactions in

the With our rate and increase recent fair change seen the the environment, overall portfolio. we've of outlook the in in value an

larger are transaction larger would to done the possibility what the We in in scale. future, of look so evaluating similar a far, slightly just we've which

as average and we're another proud cash During an at we the our repurchased then price a dividends. yesterday, quarter And declared shares dividend of of repurchase to the $X.XXXX continue additionally, quarter, consecutive quarterly program. of XX,XXX $XX.XX of share, stock Board part per

back from of and Mortgage have third quarter. prior income about dipped activity, second the rates the Mortgage quarter for moved and $XXX,XXX increased $XXX,XXX rates prior quarter. related generated quarter, but sale Gain revenue since some $XXX,XXX net on from increase an in up. the was the

to year give saw and of of third mortgage high little on quarter Just perspective Xs in the last low the rates a that, you Xs. bit

remained our And back of they're then in this And the dipped year Xs, Xs, we've slowed to markets, has but Xs. maybe which high up low quarter climb mid- started in the in has Xs XX-year. low also Inventory to as seen high a the today, the to activity. the third the low

be and banking So rates our fourth changes in profitability we'll decline influenced in movement could division, in to the remain we from some see level quarter the that mortgage profitable by and but revenue likely in XX-year. mortgage expect

the $X.X to of the on a expected income unguaranteed similar during higher is from net quarter. had Charge-offs during that the sale quarter, $XXX,XXX first third they were the be fourth be down comparable a generally would division quarter, likely SBSL. forecasted little Gain of first is year. the prior levels in and to then lending loans, of quarter slightly to million this specialty business or quarter level this revenue to quarter the return small portion but on slower the and Our increase which at for are a in second quarter, softer

merchant, our improvement of both experienced small the all still line We're third loans volume pipeline breakdown express of lines good income a fluctuate line quarter showed and profitable seeing in lines of few provides which but And a in our a the that loans. really prior the that's a hundred actually pretax by complementary with of the processing from exception business. breakeven No little business. seasonality to in there, lot dollars. seasonality. core loss of X for seeing does good Slide still progress due due and business volume We're shows was for our business bit but quarter, a to

secondary sales year, of spot pools lending that a quarter. business plan and loan additional where we in but market. Marine had the We're and was profitability back the line start the get RV create can revenue on to to with a to third some growing of slower to still eventually

relaxing third to quarter. led have bit we we in We increase in pretax that to appetite industry and those requirements year was the starting tighter requirements, an little see impacting about the volume income quarter, in that discussed we and that, increase allowed lower Colony some Insurance. Last team the and risk seen and to of underwriting our a Talking are insurance. and earlier that's mentioned

So back for take overview, comments turn that questions. and final it concludes my to we now I'll before over any Heath

comments. any open that, I'd questions line on Thanks, our Marjorie gotten. might for Derek. have wraps to with And up we That up call the

Scott. from we'll with question Instructions] Marinac take [Operator Janney first our Christopher Montgomery

take profitability extent the we as earnings moving 'XX. had the few wanted I know them, Is the I that that about forward. a reasonable annualize and could parts Derek to in to core there's a particularly in And ask QX outlined. going base?

Yes.

I to improvement continuing to think we're business our to noninterest better leading I lines complementary that do. see pretty reasonable income. be that's would mean of in

seeing in measures target, out that that be that noninterest we number between and line. of Our our it there. not net anything income that been to would noninterest remain cause expenses, expect and NIE contrast that's We're to

we a go bit a next it a with this then good think pretty couple margin we of at reasonable seeing annualize are kind of that as And and quarter, the increase foundation to year. it take conservative as look in and forward growth, I it's little for

I get going we're Chris, expect And back to think growth keeping growth. and to this efficiency through do that to forward, committed our we

start -- next getting getting create to we of to about first think back levels X our couple then value to, when ROA quartile we into And the we about can the so peer we group. about of and back a getting can over the get within we X years, back where thinking top talk then and higher

if in the through and us rate rate-up to few getting on really put and eventually our of We're and here. caused of we efficiency we to has a And also on us X% place operating to where have from within we by go growth pressure that margin quarters think about really can and that do really expenses excited a to back our opportunity we historical gone the hard environment having XX%. this can really focus there this good

Derek to quarters? Just in just term sales asset want onetime thing to come back a over mentioned, would Or term. is multiple go thing the it in those near the the onetime near that

We're starting expect terms We capital also outsized to either. for to trying that. continue evaluate capital quarter, of do well. to that don't I anything see others focused would TCE. more each our quarter. humongous than Don't just we build on as a think in improve this We're see super

we the what just market. little eat kind something than bigger of don't we've maybe earnings, given to want lot a our of so a done And up but

it's to curve of -- Any course, X-year of it's probably the color there, the we adjustments. part add to X- value of kind Derek? that to that And like market want of most kind impact you

larger we've have a Heath's doing Yes. point, than we little not super was I be -- good, That just transaction been bit a Heath. anything would we to at that to going say as one-off large. to look what And would might be quarter. doing next again, in one makes continue transactions would quarters thing mean, do anything larger been sense. like a I it just year, forward smaller onetime But in probably of future probably But

our next with And Group. question Dave take we'll from Bishop Hovde

of expected there's sight Question like terms sounds line there. It payoff. the of in some

other note Just curious new the what driving that getting you we're taking payoff? hearing in the comfortable more into the rolling banks some with sponsors are of that projects. Do projects see

of repeating? heard little the but a mind out you not pieces cutting question, you're whole We Dave, bit. thing. that Would

Sorry, there's an echo apparently.

of drivers payoffs the the loan curious Just expected. of

Okay. Yes.

as takeout. don't projects have aware of are financing part that coming typically to permanent that of So we're bank just their completion

And come completion. project in, seeing so payoffs that's where we're

expected type payoffs they're most for part. So the

that's timing those kind And where of is, that we based of dates -- how completion things. so those can that's -- on and the vary

first this it we see quarter, some So could be the quarter. could flow into

So out. just plays how that kind of -- we'll see

And then construction. good growth on

projects underwriting the curious Just space. of in types the you're

mean I of say in we're board. specific It's type the things industry like nothing terms across one seeing. I that Yes. or of seeing of we're that would that kind

I think we I more think, stability. seeing, are

I period to up. see borrowers see that stop weren't started going was stability think where were do sure when do returning going year, you but rates of we the and throughout some rates, time there a there that

getting forward good about infinite your And longer-term what be worst or increases may sponsors feel rates rates moving comfortable couldn't projects. And with that stability rate they longer-term think you pencil to the be, where in may what for I you're so into case things. some now feel

we across sort in up activity tick a think I of see the board. So just

just And yields quarter. origination this new it. Got loan curious, then

What was for that, new Dave, loans was again? quarter? the What

origination. loan new Yes,

Yes.

yes. bit little a over X% just was the average our quarter, think I for

that's X.XX% peak maybe I and over just over down coming quarter's think a X.XX%. little was off This X%, around barely of, And production, X.XX%. -- our

come see see continue come rates. to starting that in with So the down to and we expect down it are move to obviously

rate is income. And then, Do level moving Got seems the run million $XX fee you Heath, it for forward? feel new it. that about like comfortable

I think we're a spot in pretty for that. good

Dave, we challenge move economic starting to good. the you back mentioned think, the rates -- there, challenge have our the is really activity but you mortgage, I inventory have in markets, seen only still and the

trying some like some not up it had We've to that mean I on came little open and floodgates side, down up a mortgage ticked it's opened, when a there. bit. too, little the recruiting the good additional MLOs rates

think level. about it see I this we stay So at could

no we this And further questions. at have time,

So our any I'll turn back to it remarks. for speakers final

Well, but remarks, No right. Colony All of Bank thanks on further again. and appreciate Thank you support call the you. really I everyone's today. appreciate being

you. program. And today's Thank does that conclude

disconnect. now may You