CBAN - Earnings call transcript Q1 2024

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Operator

Welcome to Colony Bank's First Quarter 2024 Conference Call. [Operator Instructions] It is now my pleasure to turn the conference over to Colony's Chief Financial Officer, Mr. Derek Shelnutt.

Derek Shelnutt

Thanks, Abby.

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

So please to And over our that, have Chief Executive I Fountain. reference. with will Officer, turn call available those the Heath to

T. Fountain

of expenses members complementary quarter. their customer today our driving want to pleased the the mission made of being Thanks, managed commitment our Derek, high-performing core last the you results banks customer thank improved improved well first sustainable, achieve and experience. independent for align build as several our and enhance on quarters. Colony. that while with innovate that's great We're our your and business all I progress strengthen current growth our congratulate I and call our internal to on support with of our our continuing quarter as relationships, in to a operating we all on first want to lines the for team outlook, thank and over to It's build a We've to earnings.

noninterest basis. we by million increased lot quarter, continued increased on business. Noninterest $X of driven income is expect mentioned and income an first $XXX,XXX, of income a net operating operating to we quarter, the lines In improvement first that Last slowing in the saw points our our decline, rise our almost stability that margin and cost of slightly which point X see basis the basis we in quarter. during some few than expectations. a and We did funds quarter, during more the was see of better of nearly

you we've also seen the have continue we've the the XX-year all into diminish. XX X- However, continued back the and know, entered our put treasury That's And likelihood of deposits of we as end as since points this the that rate basis on for rate heat The see quarter. more the up. increased costs. environment second cuts competition seen marketplace, over funding you've to year driving in will pressure quarter, and

first merchant those to our lines earnings. business. performance seasonality complementary likely RV is could margin we're that if see Given broker highlighted stays X well see that, year. adjustments believe, service balance the basis But in we the to before of we will The strategic some securities and to we to while and points the recover going forward our There of glad ongoing X and decline sales, of management discuss going is lines continue adjustments, sheet of are see more and X. to our sheet These to to of business from lines Slide half as progress. another paydown we quarter, part Derek's transactions, We're closer where we are the security second balance during to we helpful see of contraction, on and some in detail. here, start items they as margin of next end expand, the make did including the environment the marine loans now, future of appropriate it this the sale entire similar particularly deposits believe borrowings. when are

expect a little marine last QX RV when though next We So do this year. Even lot in or emerging profitability profitable they're from look QX the so. we improvement of be over quarter to year, to you going down forward, at QX. a reach saw bit

increase noninterest in from The in on gains our the income biggest loans. sale was driver of SBA

During lending the hit SBSL, last mark so. the the or over small first group, year our high business quarter, specialty our

success continue small our lending We to the quarters. those expect and see well several with to next see dollar do over program

the see a environment. mortgage, first For we environment. any mortgage. interest typically course, quarter quarter for rate in of is mortgage for slower challenging of And still kind a

quarter I However, and we mortgage during in quarter the -- XXXX. during of come the primarily of over to result quarter, and first where and the in on, that detail pretty quarter. sale grow and we break as our some were then go into loans certainly off loans the did portfolio earlier loans more see did mortgage the mentioned first close breakeven paid decline of improvement We a see first criticized will Derek

our last However, loan pipeline modest some $X if about the indicate quarter-over-quarter rest expect And only you should average the of we've of few which we balance and million today we forecasting look is quarters. growth our been levels this average at loans, down were current loan our in year, for in balance. what

go broker to deposits. that payoff Total quarter-over-quarter, the but deposits of did down was due primarily

expense focused We by our increased report and deepening relationships. slightly the over on customer that Expense a building priority. about to million core It glad prior remains the last noninterest and customer although from by quarter, was are increased we our quarter. core And noninterest income. increased deposits $XX discipline remain deposits offset

overall addition of in unguaranteed portion credit first SBA prior related We feel quarter the primarily improvement loans quarter-over-quarter the expense basis our decrease think quality. over which business to we So lines X.XX% in charge-offs from which and quarter an about good XXXX. really was have charge-offs net X.XX% our quarter. as our -- significant the seen the first That the we is to in is assets same The Nonperforming decreased it are noninterest last operating of given loans. how average a quarter, was to our judge efficiency. number to exactly best operating net in the our on

some and see to to see to have we and charge-offs some We couple as small in of see in that started -- those we expect to see as about expect that. talked we that did of dollar well, we expect loans the last increase to quarters,

loans those a have that sell great premium for. we do those However,

great source think so SBS team, very for it's our And and revenue a product. sales we overall a profitable

Innovation.

better our continued I on despite ability expense we've our We've -- As earlier, the strategy our mentioned an control. effectively important innovation. focus and and part growth had efficiently. to It's customers on serve with of

prompt, initiatives we're going looking customer our being that boost experience a simple, forward innovation that, Our a to teams better that go give numbers rest of customer got I'm out and the to back to us year. and more roll they're on, turn and standards the seeing through some number in of of collaborative, detail. will Derek, the of some who's that And working over going over service to with it

Derek Shelnutt

little the see before point X.XX% This of with earlier, from Heath basis decline margin interest off but The in earnings on increase start in about income income to quarter. less $XXX,XXX. On I'll $XXX,XXX, X our quarter Interest and margin any expect the start a to income Heath. we prior the X a mentioned by in was as increased led to point of than excluding quarter. margin basis do to still net a to X.XX% was operating Thanks, about which the the this our security net in the $XXX,XXX. net a loss range expectations, GAAP slight expense, X led seeing slightly basis, around some sales, decrease income interest for quarter, decline we prior decline outpaced from but expansion. decreased increased

throughout We interest quarter in points we slower and and quarter. gain to and of revenue of from fourth compare, related points quarter, to noninterest an the at the the some of from to cost was a stay loan dollar in Net fee increased during the up from fourth small to they seeing our related of This is the To gains $XXX,XXX, the X.XX% a slightly what have of the income for continue showed a we slowdown That are product. the and was both increase If basis operating in primarily basis was quarter. while, income but On charge X.XX% income been third down during the wealth newer we'll fee service increase was interest-bearing than from insurance prior our rates where increased be of from SBA expect X it funds pace first fewer quarter, to increases see XX result days increase, first and the 'XX to quarter. X.XX%. from small the due quarter increase cost an XXXX. saw basis, 'XX $XXX,XXX of liabilities. some

a compensation was benefits. million, a but that payout expense $XX.X the most and quarter. first income Our claim and increase quarter-over-quarter, BOLI did Noninterest was increase of onetime of employee in result totaled in

The expenses we first first assets an net in beginning increases NIE NIE quarter to few quarter's in Operating at still was that match payroll we call, mentioned see that in that see to of X.XX% taxes X.XX% being for assets. around the were and we the the On we increase annual more that go likely into year resets. effect. is last We when salary XXX(k) would see range quarter, first next it we the quarter see quarters. and and the targeting net X.XX% typically

it is $X $XXX,XXX what could on set SPSL sold. good from small decreased expense a slightly we're premiums they $XXX,XXX quarter. noninterest underwriting the $XX.X higher $X.X are recently loans activity. volume. The also $X.X our of we Provision of and seeing to based income. have basis, loans, these last expense of down slightly million slightly a were nonperforming Total with the was million And losses, be that, Net little Of million but the quarter-over-quarter. which noninterest for would loans million, higher in quarter. express are XX% go-forward million from but quarter when of charge-offs Total higher that around guaranteed, unguaranteed SBA on tightened expecting had on that be our anticipate $XX still totaled portion charge-offs, dollar net division. We've this

a going be term. to product good they're long think we So

investment $XX.X Total decreased million quarter. loans held the from prior for

us. driver average primarily However, earlier, but the of that down loans $XX still our we standards. quarterly expect we was $XX only million deposits year. in as Based gain, quarter and due we're has by the loan still no the Total portfolio call, Overall to customer for on $X anticipating. grew about a current slowed, and is what this that's remains was to this We sale longer and Heath half close the expected broker mortgages payoffs of pipeline, deposits. primary deposits still and growth of for $XX.X that mentioned million. core And our of loan last we the million credit in demand up million, $XX,XXX to focus million see a payoff declined modest our matched latter of on that million $X for $XX.X area pick said the that year,

Additionally, borrowings not did our have we outstanding $XX paid down strong during cost a higher still in FHLB quarter the doing We and and liquidity reliance so, maintain borrowings on further funding. reduced any overnight million position. by

The overall Slide quarter-over-quarter. our X.XX%. highlighted value around million $X.X XX sell details and book presentation. investments those of an the for on in securities led fair securities increased value million of The increase are portfolio $X.X with investor yield few to loss that quarter, and a investment about was We during of a the did $XXX,XXX in of about OCI

at investment that wholesale a our Our we probably conservative optimize It's mortgage transactions puts some could in all a portfolio that security of and years, about to our assets, somewhat forward restructuring earn better for on mix strategy. The more restructuring size. feel shorter back improvement. be going do would be into X those margin estimates alongside of will And likely sheet loans. similar continuing deployed put in if and balance sales overall paydowns prudent sales, we funding position part that funding underperforming management us are but

to production environment. stable relative seeing still higher the rate is Mortgage

business. express offsetting SPSL around the breakeven was larger and a over some big the prime of year. basis division, improvement And profit to lending income seasonal, and and complementary breakdown a just on on we pretax loans. are smaller of of our pretax we've well SBA is see doing the loans X. in of into now. seen quarter the getting quarter RV Marine we're first first lines last continue improvement slowdown season our and start-up is for In Slide the The The

year. to to in see And which March our we we've to respond the tripled the However, and our compared Heading when dealers XXXX underwriting season, of us decisioning quickly last number end enables considerable of aligned network. when auto guidelines into compared first to of quarter improvement network software, we've the recently dealers XXXX. our in the with is almost implemented

Merchant last compared compared first when Services total transactions total March. of XX% last the compared significantly additional quarterly we total in quarter first to has And The increase, number progress is to customers with the The have quarter the the of grow quarter also year. made revenue are 'XX. continues the of volume to great capacities since were XX% quarter up first 'XX. XX% of lot current without of 'XX resources quarterly up and of first a the to to up our of adding expense. Volume number

of insurance life before and to Insurance, under lead products comments offerings We customers. ahead. customers advisers generate back serve feel as our our turn Colony take product list with now by for Colony revenue. recently a I'll to see to overview, opportunity our over we revenue wealth a increase this team. any management, lot the final us questions. adding additional adding add assets expanded see concludes developing we potential also and specialist for it great continues We allows my relationships in and insurance Heath customer we And full to a and life to better of That product

T. Fountain

call wrap the That that, on comments. with I'll questions. does to Derek. up up open Thanks, line And our for Abbie

Operator

question David the line Group. [Operator Instructions] from Bishop comes Your first the from of Hefty

David Bishop

we overall or the that probably sort small fee curious, think pipeline, going was double that second good drain falloff think $X in how quarter broad sort quarter of Yes, here? of from first should pretty we as rebuild forward? income of pipeline. should Did beyond million you approximate just sort business a expect that's you last the very quarter. just rate the about from a a Or and dramatic I'm it strong curious do what segment, the

T. Fountain

Yes.

do be So this. volumes of There's, expect strong, year's be of we do think, expect than we but quite to with Group that there. this previous addition SBSL the might not stronger it opportunity I it in lot a the

be always Of interchange, out course, other whether our look as the we QX account year, it our in customer-related that. fees, all for light our fee income deposit is fees,

So out normally. from be stronger certainly second expect that first quarter quarter, there that we up those we would despite of things to quarter the pick side. our challenges expect would the are And some to second back mortgage mortgage than

see should forward. fee we going a So good income

David Bishop

hearing Okay. Mari I I Marine and sort reporting to of and issues any you inventory And I blips know maybe Are some seeing then RV to earlier in guess, the RV issues the season, marine segment, think there some or related -- related peers lending? were build. in

T. Fountain

No.

bit We of charge-offs there. significant. little have Nothing a seen

Of course, into business. newer we're that

portion kind year. But as quite is seasoned some the our into So season other it's up that outlook portfolios. time Marine We're not good. just maybe for of this of gearing of generally the

to and end of the by roughly half, So then back Marine the in season the in while pick up see would spring the during year, pickup up generally fall. the mix buying is a our RV we'll start

but a RV on probably good it's side projections and demand in had strong challenging make there Marine early So the the little there's and past. to the available any been the which inventory, looks looks side,

little. too Marine like much on the is issue feel the an with don't or too So, side is inventory --

David Bishop

we have And the should any Got investment about stores. And curious expect the in deposit runoff it. there. forward? securities Does brokered continue to sort of should we then there how yields? outlook some that think terms the NIM funding I appreciate impact moving Just restructure in of

Derek Shelnutt

Yes.

can overall transactions assets demand continuing not up think these with kind as this quarter loans. size going underperforming reprice I and expect of make did the security types the some that on have help we they of these loan impact see sense think that to especially see to we improvement But we huge those to see going the sales, are speed So overall. margin there. probably mean, continuing of a I the of is I -- into types if

for be that's I going do we'll And down as and to So to then to to I pay broker forward think positive going that's been that we've deposits managing we have that -- going be think availability. earnings. continue

down level we're see you bit, we little come our below, So our of broker compare it but a when should peers, well to deposits.

we been So then we feel to as comfortable paying as pretty much and there the get but we we focus our optionality down some has if have it, think I can. need that

T. Fountain

a then just and hard the we're down. I seeing the strong few at And little seen listening would We're from Dave, significantly. banks the of the over I lot back to But I our pushing And competition add, of last the mentioned, and then ended still. drive up in subsequent right competition more in quarter banks. weeks, bigger to over costs were quarter earnings regional end you've pretty deposit move as deposits for what the some calls, bit know community seeing the rates and

to customer a picks as as So broker we some for pull deposits back especially in go up, loan we're going to to push to out, to as we've balance but the possible, terms we may order done a have may -- do it and and shorter fund growth drive our customers generate affordable it like little to bit it minimum. then out past from keep and those in at try

David Bishop

the -- into Got commercial loans question, like X and criticized and the commentary side Any seeing the what and front? hop X then the on just on of slid the puts it. looks classified. takes I'll or last it on in back The just And queue. maybe estate sort classified real you're

T. Fountain

coming have of group. on SBA -- on the -- we're lending Those thing really of they're coming since all change the biggest seen the most really the we're in loans. the is What classified variable amount seeing only rate criticized Yes. rate out

continuing about we've we're some of last to so the And like couple see quarters. just that that weakness of talked

So see we that. don't material challenges from

strong. our As remain you've seen, reserves

We to and but them. in work a for haven't them got had provision pull we for lot to those,

Operator

Marinac Your of Christopher next Janney question from line and from the comes Montgomery Scott.

Christopher Marinac

ask portfolio. those just can on seeing that for coverage there of on of that give you're I that what And wanted an us Is is any you office kind to more service update loans? about the debt particular criticized? part

T. Fountain

slide Yes, Chris, and outlined portfolio. office on a we our

that. get on you a granular view think I So pretty

are We office to of is Again, most our different lack not given exposure from challenges markets. office seeing our on the major side.

of most the Again, we story So X, in and to loan value we're break is X, our challenges categories. in there, portfolio. the office in sector that the down X any not real seeing also

Christopher Marinac

Okay.

So indicated LTV service anyways? still have the and are the criticized ratios debt are would low coverage which above

T. Fountain

challenges Correct. And like to direction properties bit, any kind but want I where not of guess little trends may clear major changes debt in we in we're have major a be doing seeing that coverage. we're service I any refinancing with office or

for So it's just really been a us. nonevent

Christopher Marinac

Great. very slide Thanks helpful. That's for that. too, follow the I

kind evolution that but apply that portfolio kind and the margin, this implied an the be to it we like kind Dave of asked on of too, and the there's payback of and securities still the on can ahead. upon take then Because build So Would already, sounds fair? next that? quarter

T. Fountain

And portfolio, call, it like what what mean the elevated really away at I this. think intent our look chip is probably I -- would we're to while doing. at rates I Yes. remain that's

net XX% I the of income for to quarter is willing operating the do. we'd of range sort think XX% what to we of be discussed in

to obviously, the value. We we what loss build want to tangible even because terms positioning for to other side this. willing to book start we capital. want of improvement And In continue take to to now. of ourselves on But want build continue we're

in chip go that. to some be faster. we're there we'll is So we'll to off we're if if in buy pay or range, to we basically seeing a able at the Again, security years the continue X%-X% off away to able those under X pay to even get what just loans borrowings, were

those it's they're So to the few something meaningful. to the we're take start just adding a to going be to relative going to dollars entire given up helpful, portfolio, about but for quarters talking

Christopher Marinac

is -- be Great. you kind in on me And That's have what new year? of last helpful. train whether for just it will the this Atlanta, Savannah, what's additional hires, FTEs Augusta,

T. Fountain

Yes.

own So have. we really kind our currently we our team are holding with of that

to probably the plan in demand doing we were side, we -- allocation that that as on environment, income now general build having to get in rate up at the treasury we pipeline. and and when then has is those but up, support two that comfortable growth And opportunities across think quickly. of opportunity what also more better the we have the fee to those resource really that loan folks bank places commercial -- folks talent put And low noninterest-bearing can there's as at I not have a are in get believe -- add we opportunities opportunity be very just can as developing hiring the making that And we that we're can is the go regional this grow discussions believe we a been to we be the had get are banks. back larger We our going quickly some get differential revenues muted. and the And with environment, maybe opportunities we to company, we versus loan starting our so and rate profitable in we really do that we're can the from getting are -- most looking then sure resources opportunities effective secondarily, and growing the most we are, they think good going deposits. that.

as good we customer been sure of in demand market, some well. that but that a of and credit pulling we're have is appropriately making dislocated us pretty pricing quality Some back, that's

ROA in as be able way if year might want be to we early the into commercial expansion -- with produce do conjunction first longer-term have we looking a we that what then to year net I But board. our rolling to And next we in on through have. now we XXX plenty I with we capacity get to be when grow and start goal. bankers start of think got one income us back had more we'd growth We've recover, and our that to now, right bankers. have Chris, do with to to in it margin the or to when goal So later guess capacity ROA add

Operator

[Operator next David comes Group. line from the from Instructions] Your question of the Bishop Hovde

David Bishop

Okay.

Just may from Heath, a of be early too deposit sort in side Just additional quick I the in know from his ballgame, the the if you're it results follow-up. loan addition. on [indiscernible] seeing but Northern either production any shoots pipeline Florida? green in down and the or any

T. Fountain

Yes.

in market. down I've and the We are recently. -- course, of with there activity there our Seeing now. their our good been I and our Copeland, customers down with D. footprint, seeing I've go prospects I team. President throughout our know Florida team

that, we'll down the I in you'll quarters, and out able expect loan do think and as And there. have there. growth deposit to we you we for that coming be see success have So start to lay to

David Bishop

was did Got could Derek, million, it. operating $XX again. the million? OpEx guidance over -- the Just expense you go hear curious $XX And then I if it guidance at

Derek Shelnutt

Yes.

we activity. noninterest So anticipate would if be if could bit million a little with was of more it quarter. activity, but additional be see -- still income. if we that we we're $XX higher kind offset and we to -- higher targeting a saw And It

looking about at kind we're a XXX of net what assets we is the NIE the we're think when kind really for forecasting year. it, rest of to of So

David Bishop

how Is you OpEx side? me calculate Remind again? minus that fee the income

Derek Shelnutt

the income divided It's minus expense assets. noninterest average noninterest by Yes.

T. Fountain

to believe other We than inefficient for very of don't because on ROA generation the they're ROE. we efficiency ratio compare and we -- we that's some better those several just And they're banks Dave, that ratio to we like good measure try revenue that's but side, of -- have just lines think the a efficiency ourselves of when business businesses, do.

the it field that, we down revenue assets of so that to to group compare in break net peer And our a those to level to on like business. kind based average play

David Bishop

on you the looks second I half -- approach pretax that even expect that that like numbers year? the breaking appreciate that's the profit to I merchant services hear the of breakeven Do by or

T. Fountain

Yes.

definitely recurring year profits we'll there. into second of think revenue turning And most that all business. the of start I half the is

think side than continue got opportunity it we that we continue the faster within on to to a have So of we lot we'll I successes customer been just even have growing And to grow our as build. it base.

of a there. So lot opportunity

David Bishop

see And deposit well. as you often opportunities

think I before? said you

T. Fountain

we're But that. a mean or what on what a is customer, have a is on unless lead when the better most fee in is on and but call kind long issue them go all It's we we that them to the we hard deposit with I business product a of because paying Yes. see to statements call it challenge give find customers first-time perspective, the side come on and go give much problem. they're generally deposits, part just really Move process. can unhappy accounts. the merchant also to of some in too and in the service, better with business treasury a back out we and quickly they those for their think them to walk and able there proposition service first they're fees, services

a then and more develop deposit that to start just it's time develop easy the on takes just we and to an side. way relationship it so new building can And

other as entry deposits a and and -- side. it opportunity customer, to more on use use kind a begin see brand we services more an of So product new working the so to the more that can we

David Bishop

Got the I it. That's all had. color. Appreciate

Operator

the time. this for no at questions program back closing to have remarks. our now further presenters we additional appears There I will turn or any over

T. Fountain

look being to Colony all support speaking and today I again your for the you Bancorp. with forward say just you to thanks Well, Thank soon. want on We appreciate again of you. call

Operator

conclude does This for today's your program. participation. Thank you

disconnect may You any time. at

Colony Bankcorp (CBAN) 25 Apr 242024 Q1 Earnings call transcript