Colony Bankcorp (CBAN) 8-K/A Southcrest Financial Group, Inc. Index to Consolidated Financial Statements

SOUTHCREST FINANCIAL GROUP, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets at June 30, 2021 and December 31, 2020	F-3
Consolidated Statements of Income for the three and six months ended June 30, 2021 and June 30, 2020	F-4
Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2021 and June 30, 2020	F-5
Consolidated Statements of Changes in Stockholders' Equity for the three and six months ended June 30, 2021 and June 30, 2020	F-6
Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and June 30, 2020	F-7

F-1

SouthCrest Financial Group, Inc.

and Subsidiary

Unaudited Consolidated Financial Statements

As of and for the Three and Six Months Ended June 30, 2021 and 2020

SOUTHCREST FINANCIAL GROUP, INC. AND SUBSIDIARY

Consolidated Balance Sheets

(Dollars in thousands, except share and per share data)

	(Unaudited) June 30, 2021		(Audited) December 31, 2020
Assets
Cash and due from banks	$	8,274	6,895
Interest-bearing deposits with other banks	38,802		75,533
Federal funds sold	5,224		4,912
Investment securities available-for-sale	317,766		256,478
Investment securities held-to-maturity (fair value of $5,029 and $5,044 at June 30, 2021 and December 31, 2020, respectively)	3,500		5,000
Restricted equity securities, at cost	3,196		4,124
Loans, net of allowance for loan losses of $3,696 and $3,705	302,240		322,979
Bank-owned life insurance	23,291		23,009
Premises and equipment, net	8,409		8,581
Intangible assets, net	1,032		1,089
Other real estate owned	516		447
Other assets	6,036		6,043
Total assets	$	718,286	715,090
Liabilities and Stockholders’ Equity
Deposits:
Noninterest-bearing	$	133,797	130,268
Interest-bearing	482,687		465,395
Total deposits	616,484		595,663
Borrowings	37,716		52,246
Other liabilities	2,897		2,302
Total liabilities	657,097		650,211
Commitments and contingencies
Stockholders’ equity:
Series D Preferred stock, no par value, 2,500,000 shares authorized, 1,523,265 and 1,935,636 shares issued, respectively	5,515		9,515
Series AAA Preferred stock, $1 par value, 500,000 shares authorized, 115,331 and 116,881 shares issued and outstanding, respectively	115		117
Common stock, $1 par value; authorized 50,000,000 shares; 6,378,695 and 6,374,469 issued, respectively	6,379		6,374
Additional paid-in capital – Series AAA Preferred stock	1,468		1,487
Additional paid-in capital	59,256		59,238
Accumulated deficit	(11,314)		(13,803)
Accumulated other comprehensive income	5,418		7,557
Treasury stock, at cost (614,849 and 609,849 shares, respectively)	(5,648)		(5,606)
Total stockholders’ equity	61,189		64,879
Total liabilities and stockholders’ equity	$	718,286	$	715,090

F-3

SOUTHCREST FINANCIAL GROUP, INC. AND SUBSIDIARY

Consolidated Statements of Income

(Unaudited)

(Dollars in thousands, except share and per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Interest income:
Loans	$	3,681	$	4,177	$	7,496	$	8,371
Investment securities – taxable	1,387		945		2,561		1,926
Investment securities – nontaxable	412		448		860		490
Federal funds sold	1		2		18		114
Interest-bearing deposits in other banks	9		4		3		22
Total interest and dividend income	5,490		5,576		10,938		10,923
Interest expense:
Interest expense – deposits	520		567		1,044		1,192
Interest expense – borrowings	154		173		308		317
Total interest expense	674		740		1,352		1,509
Net interest income	4,816		4,836		9,586		9,414
Provision for loan losses	—		450		—		600
Net interest income after provision for loan losses	4,816		4,386		9,586		8,814
Other income:
Service charges on deposit accounts	385		363		754		870
Other service charges and fees	354		277		680		524
Net gain on sales of investment securities available-for-sale	648		516		1,464		548
Income on bank-owned life insurance	150		154		281		281
(Loss) gain on sales and foreclosures of other real estate owned, net	11		(18)		11		(16)
Other operating income	48		61		112		139
Total other income	1,596		1,353		3,302		2,346
Other expenses:
Salaries and employee benefits	2,338		2,052		4,629		4,404
Equipment and occupancy expenses	466		505		929		1,008
Amortization of intangibles	29		13		58		17
Writedowns of other real estate owned	—		50		—		50
Other	1,747		1,177		3,088		2,436
Total other expenses	4,580		3,797		8,704		7,915
Income before income taxes	1,832		1,942		4,184		3,245
Income tax expense	318		316		765		581
Net income	$	1,514	$	1,626	$	3,419	$	2,664
Basic earnings per common share	$	0.22	$	0.21	$	0.47	$	0.34
Diluted earnings per common share	$	0.22	$	0.21	$	0.47	$	0.34

F-4

SOUTHCREST FINANCIAL GROUP, INC. AND SUBSIDIARY

Consolidated Statements of Comprehensive Income

(Unaudited)

(Dollars in thousands)

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net income	$	1,514	$	1,626	$	3,380	$	2,664
Other comprehensive income (loss):
Unrealized holding gains (losses) on securities available-for-sale arising during period, net of taxes of $706, $1,411, ($1,103), $1,900	2,085		4,165		(3,259)		5,612
Reclassification adjustments for gains included in operations, net of taxes of $152, $121,$344 and $129	496		395		1,120		419
Other comprehensive income (loss)	2,581		4,560		(2,139)		6,031
Comprehensive income	$	4,095	$	6,186	$	1,241	$	8,695

F-5

SOUTHCREST FINANCIAL GROUP, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders’ Equity

For the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited)

(Dollars in thousands)

	Preferred Stock										Common Stock
	Series A		Series B		Series D		Series AAA		Additional Paid-In Capital Series AAA Preferred		Shares	Par Value		Additional Paid-In Capital		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Equity
Balance, March 31, 2021	$	—	$	—	$	5,515	$	115	$	1,468	6,376,019	$	6,376	$	59,259	$	(5,648)	$	(12,375)	$	2,837	$	57,547
Net income	—		—		—		—		—		—	—		—		—		1,514		—		1,514
Cashless exercise of stock options	—		—		—		—		—		2,676	3		(3)		—		—		—		—
Purchase of treasury stock	—		—		—		—		—		—	—				—		—		—		—
Dividends declared	—		—		—		—		—		—	—		—		—		(453)		—		(453)
Other comprehensive income	—		—		—		—		—		—	—		—		—		—		2,581		2,581
Balance, June 30, 2021	—		—		5,515		115		1,468		6,378,695	6,379		59,256		(5,648)		(11,314)		5,418		61,189
Balance, March 31, 2020	—		—		9,515		119		1,516		6,376,793	6,368		59,161		(5,149)		(17,764)		2,195		55,961
Net income	—		—		—		—				—	—		—		—		1,626		—		1,626
Stock compensation awards	—		—		—		—				—	—		18		—		—		—		18
Conversion of AAA preferred stock to common stock	—		—		—		—		—		3,495	3		(3)				—		—		—
Purchase of treasury stock	—		—		—		—		—		—	—		—		(300)		—		—		(300)
Dividends declared	—		—		—		—		—		—	—		—		—		(400)		—		(400)
Other comprehensive income	—		—		—		—		—		—	—		—		—		—		4,560		4,560
Balance, June 30, 2020	—		—		9,515		119		1,516		6,380,288	6,371		59,176		(5,449)		(16,538)		6,755		61,465
Balance, December 31, 2020	—		—		9,515		117		1,487		6,367,469	6,374		59,238		(5,606)		(13,803)		7,557		64,879
Net income	—		—		—		—		—		—	—		—		—		3,419		—		3,419
Cashless exercise of stock options	—		—		—		—		—		—	3		18		—		—		—		21
Conversion of AAA preferred stock to common stock	—		—		—		(2)		(19)		1,550	2		—		—		—		—		(19)
Purchase and retirement of series D stock	—		—		(4,000)		—		—		—	—		—		—		—		—		(4,000)
Purchase of treasury stock	—		—		—		—		—		—	—		—		(42)		—		—		(42)
Dividends declared	—		—		—		—		—		—	—		—		—		(930)		—		(930)
Other comprehensive income	—		—		—		—		—		—	—		—		—		—		(2,139)		(2,139)
Balance, June 30, 2021	—		—		5,515		115		1,468		6,369,019	6,379		59,256		(5,648)		(11,314)		5,418		61,189
	—		—
Balance, December 31, 2019	—		—		9,515		119		1,516		6,367,793	6,368		59,141		(5,149)		(18,401)		724		53,833
Net income	—		—		—		—		—		—	—				—		2,664		—		2,664
Stock compensation awards	—		—		—		—		—		—	—		38		—		—		—		38
Conversion of AAA preferred stock to common stock	—		—		—		—		—		3,495	3		(3)		—		—		—		—
Purchase of treasury stock	—		—		—		—		—		—	—		—		(300)		—		—		(300)
Dividends declared	—		—		—		—		—		—	—		—		—		(801)		—		(801)
Other comprehensive income	—		—		—		—		—		—	—		—		—		—		6,031		6,031
Balance, June 30, 2020	—		—		9,515		119		1,516		6,371,288	6,371		59,176		(5,449)		(16,538)		6,755		61,465

F-6

SOUTHCREST FINANCIAL GROUP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in thousands)

	Six Months Ended June 30,
	2021			2020
Cash flows from operating activities:
Net income	$	3,419		$	2,664
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	403			467
Amortization of intangibles	58			17
Other amortization	757			396
Provision for loan losses	—			600
Deferred tax expense	850			620
Stock-based compensation	—			38
Deferred compensation expense	9			12
Net gain on sales of investment securities available-for-sale	(1,464)			(548)
Income on bank-owned life insurance	(281)			(281)
(Increase) decrease in interest receivable	238			(1,119)
Decrease in interest payable	(147)			(50)
Writedowns of other real estate owned	—			50
Gain on sale of other real estate owned	11		1	(16)
Change in other assets and other liabilities	352			161
Net cash provided by operating activities	4,205			3,011
Cash flows from investing activities:
Net change in interest-bearing deposits in other banks	36,732			14,840
Net change in federal funds sold	(312)			(2,658)
Purchases of investment securities available-for-sale	(111,471)			(115,326)
Proceeds from sales of investment securities available-for-sale	40,464			44,639
Proceeds from calls, maturities and paydowns of investment securities available-for-sale	9,063			696
Purchase of restricted equity securities	(1)			(1,067)
Redemptions of restricted equity securities	929			484
Net decrease (increase) in loans	20,681			(3,667)
Purchases of premises and equipment	(232)			(302)
Net cash provided by (used in) investing activities	(4,147)			(62,361)

F-7

SOUTHCREST FINANCIAL GROUP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows, continued

(Unaudited)

(Dollars in thousands)

	Six Months Ended June 30,
	2021		2020
Cash flows from financing activities:
Net increase in deposits	$	20,821	$	42,910
Proceeds of FHLB advances	—		15,000
Repayments of FHLB advances	(15,000)		—
Proceeds from long-term borrowing	470		858
Purchase of treasury stock	(4,042)		(300)
Common stock dividends paid	(928)		(801)
Net cash provided by (used in) financing activities	1,321		57,667
Net change in cash and due from banks	1,379		(1,683)
Cash and due from banks at beginning of year	6,895		7,792
Cash and due from banks at end of year	$	8,274	$	6,109
Supplemental disclosures
Cash paid for:
Interest	$	1,499	$	1,559
Noncash transactions:
Principal balances of loans transferred to other real estate owned	58		—
Unrealized (loss) gain on investment securities available-for-sale, net	(2,139)		6,031

F-8