Colony Bankcorp Hits Profitability Target, Unveils New Deal
Colony Bankcorp's operating return on average assets reached management's 1.20% goal in the second quarter, even as the bank agreed to acquire First Reliance Bancshares for about $163 million.
Colony Bankcorp (CBAN) reported net income of $10.9 million, or $0.51 a diluted share, in the second quarter of 2026, up from $8.2 million, or $0.39, in the first quarter and $8.0 million, or $0.46, a year earlier. The Fitzgerald, Georgia-based bank holding company's operating net income rose to $11.0 million, or $0.52 a share, marking a third consecutive quarter of operating income growth after $8.9 million in the fourth quarter of 2025 and $8.2 million in the third.
The quarter capped a run of margin expansion that has now lasted five straight periods. Net interest margin widened to 3.52% from 3.12% a year ago, climbing through 3.17%, 3.32% and 3.48% in the intervening quarters. That trajectory pushed operating return on average assets to 1.20%, the level management had set as its target, after readings of 1.02%, 1.06%, 1.05% and 1.04% in the four quarters prior.
Loan growth also accelerated. Total loans excluding those held for sale grew $51.4 million, or 2.13%, sequentially to $2.46 billion, faster than the $32.2 million increase posted in the first quarter. Deposits moved the other way, falling $76.2 million to $2.97 billion as noninterest-bearing demand, interest-bearing demand and savings and money-market balances all declined, a drop only partly offset by an $8.7 million rise in time deposits. Total assets fell $93.0 million to $3.63 billion, reversing the buildup that followed Colony's acquisition of TC Bancshares, which had carried assets from $3.12 billion at the end of 2025 to a peak of $3.72 billion in the first quarter.
Expense discipline drove much of the earnings improvement. Noninterest expense fell to $26.4 million from $27.7 million in the first quarter, even though it remained above the $22.0 million booked a year earlier, as integration costs from the TC Bancshares deal eased. The efficiency ratio improved to 62.89% from 69.37%, reversing a deterioration that had carried the ratio from 67.74% in the second quarter of 2025 to 75.06% in the third. Noninterest income rose 20.4% year over year to $12.2 million, helped by a $706,000 tax-free gain on bank-owned life insurance that did not recur from prior periods.
Credit costs moved higher alongside the loan growth. The provision for credit losses rose to $1.90 million from $1.75 million in the first quarter and just $450,000 a year earlier, more than a fourfold increase from the year-ago period. Nonperforming assets ticked up to $20.9 million from $19.9 million at the end of March, though they remained below the $24.7 million reported at the end of 2025. Mortgage production rose to $115.4 million from $88.5 million in the first quarter, with mortgage sales increasing to $67.3 million from $61.4 million, the first quarter Colony has broken out both metrics sequentially.
Colony disclosed on June 24, 2026, ahead of the quarter's close, that it had signed a definitive agreement to acquire First Reliance Bancshares for approximately $163 million in stock and cash, with the deal expected to close in the fourth quarter of 2026. The transaction remained on track and related integration expenses were already flowing through noninterest expense.
Tangible book value per common share rose to $15.12 from $14.65 in the prior quarter, extending a climb from $13.73 a year earlier over five consecutive quarters. Total borrowings fell $25.0 million to $233.2 million. Weighted average diluted shares outstanding held roughly steady at about 21.2 million, still well above the 17.4 million to 18.7 million range in 2025, reflecting the share issuance tied to the TC Bancshares acquisition that closed late last year.