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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934
        
For the quarterly period ended March 31, 2024
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number: 000-12436
COLONY BANKCORP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Georgia58-1492391
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)

115 South Grant Street, Fitzgerald, Georgia 31750
(Address of principal executive offices) (Zip Code)
(229) 426-6000
(Registrant’s Telephone Number, Including Area Code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, Par Value $1.00 per shareCBANThe NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes              No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes              No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerate Filer      Accelerated Filer        Non-accelerated Filer
Smaller Reporting Company      Emerging Growth Company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with the new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of May 8, 2024, the registrant had 17,558,611 shares of common stock, $1.00 par value per share, issued and outstanding.



TABLE OF CONTENTS
Page
PART I – Financial Information
Item 1.
Financial Statements 





PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
COLONY BANKCORP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
 March 31, 2024December 31, 2023
(dollars in thousands, except per share data)(Unaudited)(Audited)
ASSETS
  
Cash and due from banks$22,914 $25,339 
Federal funds sold and interest-bearing deposits in banks71,755 57,983 
Cash and cash equivalents94,669 83,322 
Investment securities available for sale, at fair value (amortized cost $431,138 and $455,294, respectively)
382,953 407,382 
Investment securities held to maturity, at amortized cost (fair value $398,852 and $405,576, respectively)
447,157 449,031 
Other investments16,034 16,868 
Loans held for sale31,102 27,958 
Loans, net of unearned income1,859,018 1,883,470 
Allowance for credit losses(18,657)(18,371)
      Loans, net1,840,361 1,865,099 
Premises and equipment39,381 39,870 
Other real estate owned562 448 
Goodwill48,923 48,923 
Other intangible assets3,855 4,192 
Bank-owned life insurance56,765 56,925 
Deferred income taxes, net24,587 25,405 
Other assets29,160 27,999 
Total assets$3,015,509 $3,053,422 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
Noninterest-bearing
$476,413 $498,992 
Interest-bearing
2,046,335 2,045,798 
Total deposits
2,522,748 2,544,790 
Federal Home Loan Bank advances
155,000 175,000 
Other borrowings
62,969 63,445 
Other liabilities
14,878 15,252 
Total liabilities
$2,755,595 $2,798,487 
Stockholders' equity:
Preferred stock, stated value $1,000; 10,000,000 shares authorized, none issued or outstanding as of March 31, 2024 and December 31, 2023, respectively
  
Common stock, par value $1.00 per share; 50,000,000 shares authorized, 17,558,611 and 17,564,182 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
$17,559 $17,564 
Paid in capital168,951 168,614 
Retained earnings
127,758 124,400 
Accumulated other comprehensive loss, net of tax(54,354)(55,643)
Total stockholders' equity
259,914 254,935 
Total liabilities and stockholders' equity
$3,015,509 $3,053,422 
See accompanying notes to consolidated financial statements (unaudited).



COLONY BANKCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income (unaudited)
 Three Months Ended
(dollars in thousands, except per share data)March 31, 2024March 31, 2023
Interest income
Loans, including fees$27,097 $22,153 
Investment securities5,520 5,860 
Deposits with other banks and short term investments693 357 
Total interest income33,310 28,370 
Interest expense
Deposits12,091 4,999 
Federal funds purchased 88 
Federal Home Loan Bank advances1,572 1,626 
Other borrowings993 1,089 
Total interest expense14,656 7,802 
Net interest income18,654 20,568 
Provision for credit losses1,000 900 
Net interest income after provision for credit losses17,654 19,668 
Noninterest income
Service charges on deposits2,373 1,914 
Mortgage fee income1,249 1,183 
Gain on sales of SBA loans2,046 1,057 
Loss on sales of securities(555) 
Interchange fees2,028 2,068 
BOLI Income533 331 
Insurance commissions465 460 
Other1,348 646 
Total noninterest income9,487 7,659 
Noninterest expense
Salaries and employee benefits12,018 12,609 
Occupancy and equipment1,507 1,622 
Information technology expenses2,110 2,341 
Professional fees834 715 
Advertising and public relations960 993 
Communications226 294 
Other2,742 2,591 
Total noninterest expense20,397 21,165 
Income before income taxes6,744 6,162 
Income taxes1,411 1,119 
Net income$5,333 $5,043 
Earnings per common share:
Basic$0.30 $0.29 
Diluted0.30 0.29 
Dividends declared per share0.1125 0.1100 
Weighted average common shares outstanding:
Basic17,560,210 17,595,688 
Diluted17,560,210 17,595,688 

 See accompanying notes to consolidated financial statements (unaudited).


4


COLONY BANKCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss) (unaudited)
 Three Months Ended
(dollars in thousands)March 31, 2024March 31, 2023
Net income$5,333 $5,043 
Other comprehensive income:
Net unrealized gains (losses) on securities arising during the period(1,198)1,520 
Tax effect255 (319)
Reclassification adjustment for amortization of unrealized holding losses from the transfer of securities from available for sale to held to maturity1,523 6,348 
   Tax effect(324)(1,333)
Realized losses on sales of available for sale securities included in net income555  
Tax effect(118) 
Unrealized gains on derivative instruments designated as cash flow hedges930  
  Tax effect(198) 
Realized gains on derivative instruments recognized in net income(173) 
  Tax effect37  
Total other comprehensive income1,289 6,216 
Comprehensive income$6,622 $11,259 

 See accompanying notes to consolidated financial statements (unaudited).

5


COLONY BANKCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity (unaudited)

(dollars in thousands, except per share data)Common Stock
Three Months EndedSharesAmountPaid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Balance, December 31, 202317,564,182 $17,564 $168,614 $124,400 $(55,643)$254,935 
 Other comprehensive income— — — — 1,289 1,289 
Dividends on common shares ($0.1125 per share)
— — — (1,975)— (1,975)
    Issuance of restricted stock, net of forfeitures(594)— — — —  
   Tax withholding related to vesting of restricted stock(4,977)(5)(61)— — (66)
Stock-based compensation expense
— — 398 — — 398 
Net income
— — — 5,333 — 5,333 
Balance, March 31, 202417,558,611 $17,559 $168,951 $127,758 $(54,354)$259,914 
Balance, December 31, 202217,598,123 $17,598 $167,537 $111,573 $(66,440)$230,268 
Cumulative change in accounting principle for ASU 2016-13, net of tax (1)
— — — (1,198)— (1,198)
Other comprehensive income— — — — 6,216 6,216 
Dividends on common shares ($0.1100 per share)
— — — (1,933)— (1,933)
Issuance of restricted stock, net of forfeitures1,546 2 (2)— —  
Tax withholding related to vesting of restricted stock(5,790)(6)(67)— — (73)
Stock-based compensation expense— — 454 — — 454 
Net income— — — 5,043 — 5,043 
Balance, March 31, 202317,593,879 $17,594 $167,922 $113,485 $(60,224)$238,777 
 (1) Represents the impact of the adoption of Accounting Standards Update ("ASU") No. 2016-13: CECL

See accompanying notes to consolidated financial statements (unaudited).



6


COLONY BANKCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (unaudited)
 Three Months Ended
(dollars in thousands)March 31, 2024March 31, 2023
Operating Activities  
Net income$5,333 $5,043 
Adjustments reconciling net income to net cash provided by operating activities:
Provision for credit losses1,000 900 
Depreciation, amortization, and accretion2,002 2,233 
Equity method investment loss(35)(88)
Share-based compensation expense398 454 
Net change in servicing asset(240)(219)
Loss on sales of securities, available-for-sale555  
Gain on sales of SBA loans(2,046)(1,057)
Gain on sales of other real estate owned(131) 
Gain on sales of premises & equipment 18 
Originations of loans held for sale(61,649)(43,910)
Proceeds from sales of loans held for sale60,551 49,087 
Change in bank-owned life insurance(540)(344)
Deferred tax benefit377 228 
Change in other assets(122)(1,004)
Change in other liabilities(424)45 
Net cash provided by operating activities5,029 11,386 
Investing Activities
Purchases of investment securities, available-for-sale(2,275)(3,518)
Proceeds from maturities, calls, and paydowns of investment securities, available-for-sale16,834 7,924 
Proceeds from sales of investment securities, available-for-sale8,555  
Proceeds from maturities, calls and paydowns of securities, held-to-maturity2,509 2,575 
Change in loans, net23,343 (63,194)
Purchase of premises and equipment(101)(893)
Proceeds from sales of other real estate owned467  
Proceeds from bank-owned life insurance700  
Redemption of other investments 702 
Redemption (purchase) of Federal Home Loan Bank Stock869 (1,820)
Net cash provided by (used in) investing activities50,901 (58,224)
Financing Activities
Change in noninterest-bearing customer deposits(22,579)(31,242)
Change in interest-bearing customer deposits537 56,374 
Dividends paid for common stock(1,975)(1,933)
Repayments on Federal Home Loan Bank Advances(70,000)(280,000)
Proceeds from Federal Home Loan Bank Advances50,000 320,000 
   Repayments on other borrowings (15,000)
   Redemption of subordinated debt(500) 
   Tax withholding related to vesting of restricted stock(66)(73)
Net cash provided by (used in) financing activities(44,583)48,126 
Net increase in cash and cash equivalents11,347 1,288 
Cash and cash equivalents at beginning of period83,322 80,678 
Cash and cash equivalents at end of period$94,669 $81,966 




7


COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW (unaudited)
Three Months Ended
(dollars in thousands)March 31, 2024March 31, 2023
Supplemental Disclosure of Cash Flow Information  
Cash paid during the period for interest$14,604 $6,734 
Cash paid during the period for income taxes2 3 
 See accompanying notes to consolidated financial statements (unaudited).

8

COLONY BANKCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)




(1) Summary of Significant Accounting Policies
Presentation
Colony Bankcorp, Inc. (the “Company”) is a bank holding company located in Fitzgerald, Georgia. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Colony Bank, Fitzgerald, Georgia (the “Bank”). The “Company” or “our,” as used herein, includes Colony Bank, except where the context requires otherwise.
All adjustments consisting of normal recurring accruals which are, in the opinion of management, necessary for fair presentation of the interim consolidated financial statements, have been included and fairly and accurately present the financial position, results of operations and cash flows of the Company. All significant intercompany accounts have been eliminated in consolidation.
The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles ("GAAP") utilized in the commercial banking industry for interim financial information and Regulation S-X. Accordingly, the accompanying unaudited interim consolidated financial statements do not include all of the information or notes required for complete financial statements.
The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results which may be expected for the year ending December 31, 2024. These statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”).
Nature of Operations
The Bank provides a full range of retail, commercial and mortgage banking services as well as government guaranteed lending, consumer insurance, wealth management and merchant services for consumers and small- to medium-size businesses located primarily in north, central, south and coastal Georgia, Birmingham, Alabama and Tallahassee and the Florida Panhandle. The Bank is headquartered in Fitzgerald, Georgia with locations in the Georgia cities of Albany, Ashburn, Athens, Atlanta, Augusta, Broxton, Cedartown, Centerville, Chickamauga, Columbus, Cordele, Douglas, Eastman, Fayetteville, Fitzgerald, LaGrange, Leesburg, Macon, Manchester, Moultrie, Quitman, Rochelle, Rockmart, Savannah, Statesboro, Sylvester, Thomaston, Tifton, Valdosta and Warner Robins along with loan production offices in Birmingham, Alabama and Tallahassee, Florida. Lending and investing activities are funded primarily by deposits gathered through its retail banking office network.
Use of Estimates
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet date and revenues and expenses for the period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for credit losses, the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans and fair value of assets acquired and liabilities assumed in a business combination, including goodwill impairment.
Reclassifications
In certain instances, amounts reported in prior years’ consolidated financial statements have been reclassified to conform to statement presentations selected for 2024. Such reclassifications have not materially affected previously reported stockholders’ equity or net income.


9

COLONY BANKCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)



Concentrations of Credit Risk
Concentrations of credit risk can exist in relation to individual borrowers or groups of borrowers, certain types of collateral, certain types of industries, or certain geographic regions. The Company has a concentration in real estate loans as well as a geographic concentration that could pose an adverse credit risk. At March 31, 2024, approximately 84% of the Company’s loan portfolio was concentrated in loans secured by real estate. A substantial portion of borrowers’ ability to honor their contractual obligations is dependent upon the viability of the real estate economic sector. Management continues to monitor these concentrations and has considered these concentrations in its allowance for credit loss analysis.
The success of the Company is dependent, to a certain extent, upon the economic conditions in the geographic markets it serves. Adverse changes in the economic conditions in these geographic markets would likely have a material adverse effect on the Company’s results of operations and financial condition. The operating results of the Company depend primarily on its net interest income. Accordingly, operations are subject to risks and uncertainties surrounding the exposure to changes in the interest rate environment.
At times, the Company may have cash and cash equivalents at financial institutions in excess of federal deposit insurance limits. The Company places its cash and cash equivalents with high credit quality financial institutions whose credit ratings are monitored by management to minimize credit risk.
Allowance for Credit Losses ("ACL") – Loans
The current expected credit loss (“CECL”) approach requires an estimate of the credit losses expected over the life of an exposure (or pool of exposures). It replaced the incurred loss approach’s threshold that delayed the recognition of a credit loss until it was probable a loss event was incurred. The estimate of expected credit losses is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. The Company then considers whether the historical loss experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the historical period used. The Company also considers future economic conditions and portfolio performance as part of a reasonable and supportable forecast period.
The ACL is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the ACL when management believes the uncollectibility of a loan balance is confirmed. Accrued interest receivable is excluded from the estimate of credit losses.
Management determines the ACL balance using relevant available information from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit behaviors along with model judgments provide the basis for the estimation of expected credit losses. Adjustments to modeled loss estimates may be made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, such as changes in economic conditions, property values, or other relevant factors. For the majority of loans and leases the ACL is calculated using a discounted cash flow methodology applied at a loan level with a one-year reasonable and supportable forecast period and a two-year straight-line reversion period.
The ACL-loans are measured on a collective basis when similar risk characteristics exist. The Company has identified the following portfolio segments and calculates the ACL for each using a discounted cash flow methodology at the loan level, with loss rates, prepayment assumptions and curtailment assumptions driven by each loan’s collateral type:
Construction, land & land development - Risks common to construction, land & development loans are cost overruns, changes in market demand for property, inadequate long-term financing arrangements and declines in real estate values.
Other commercial real estate - Loans in this category are susceptible to business failures and declines in general economic conditions, including declines in real estate value, declines in occupancy rates, and lack of suitable alternative use for the property.
Residential real estate - Residential real estate loans are susceptible to weakening general economic conditions, increases in unemployment rates and declining real estate values.

10

COLONY BANKCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)




Commercial, financial & agricultural - Risks to this loan category include the inability to monitor the condition of the collateral, which often consists of inventory, accounts receivable and other non-real estate assets. Equipment and inventory obsolescence can also pose a risk. Declines in general economic conditions and other events can cause cash flows to fall to levels insufficient to service debt.
Consumer and other - Risks common to consumer direct loans include unemployment and changes in local economic conditions as well as the inability to monitor collateral consisting of personal property.
When management determines that foreclosure is probable or when the borrower is experiencing financial difficulty at the reporting date and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.
Allowance for Credit Losses – Off-Balance Sheet Credit Exposures
Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and standby letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.
Management estimates expected credit losses on commitments to extend credit over the contractual period during which the Company is exposed to credit risk on the underlying commitments. The ACL on off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The ACL is calculated using the same aggregate reserve rates calculated for the funded portion of loans at the portfolio level applied to the amount of commitments expected to fund.
Allowance for Credit Losses – Held-to-Maturity Securities ("HTM")
Management measures current expected credit losses on HTM debt securities on a collective basis by major security type. The estimate of current expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Management classifies the HTM portfolio into the following major security types: U.S. Treasury securities, U.S. agency securities, State, county & municipal securities, and Mortgage-backed securities. Accrued interest receivable on HTM debt is excluded from the estimate of credit losses.
All of the residential and commercial mortgage-backed securities held by the Company as HTM are issued by U.S. government agencies and government sponsored entities. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. The state and political subdivision securities are also highly rated by major rating agencies.
Allowance for Credit Losses – Available-for-Sale Securities ("AFS")
For AFS debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or whether it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. For AFS debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACL is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any amount of unrealized loss that has not been recorded through an ACL is recognized in other comprehensive income. Accrued interest receivable on AFS debt securities is excluded from the estimate of credit losses.

11

COLONY BANKCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)



Changes in the ACL are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the ACL when management believes the uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met.
Derivatives
The Company records cash flow hedges at the inception of a derivative contract based on management’s intentions and belief as to the likely effectiveness of the hedge. Cash flow hedges represent a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability. For a cash flow hedge, the gain or loss on the derivative is recorded in other comprehensive income ("OCI") and is reclassified into earnings in the same period during which the hedged transaction affects earnings. The changes in the fair value of a derivative that is not highly effective in hedging the expected cash flows of the hedged item are recognized immediately as interest expense in the consolidated statements of income.
Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Net cash settlements on derivatives that do not qualify for hedge accounting are reported in noninterest income or noninterest expense. Cash flows from hedges are classified in the consolidated statements of cash flows in the same manner as the items being hedged.
The Company formally documents the relationship between derivatives and hedged items, as well as the risk management objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in cash flows of the hedged item. The Company discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in cash flows of the hedged item, the derivative is settled or terminated, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm or treatment of the derivative as a hedge is no longer appropriate or intended.
When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as interest expense. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in OCI are amortized into earnings over the same periods which the hedged transactions will affect earnings.

Changes in Accounting Principles
In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU No. 2020-04, Reference Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). This ASU provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. It provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The updated guidance was originally effective for all entities from March 12, 2020 through December 31, 2022. In December 2022, the FASB issued ASU 2022-06 which deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. The Company has been diligent in responding to reference rate reform and does not anticipate a significant impact to its financial statements as a result.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures ("ASU 2023-07"). This ASU was issued to improve segment reporting disclosures. The amendments in this ASU improve financial reporting by requiring disclosure of incremental segment information including significant segment expenses regularly provided to the chief operating decision maker as well as the amount and composition of other segment items on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. Retrospective application is required in all prior periods unless impracticable to do so. The Company will adopt the new disclosure requirements for the annual period beginning on January 1, 2024 and interim periods beginning on January 1, 2025. The Company is currently evaluating the impact of the incremental segment information that will be required to be disclosed as well as the impact to the Segment Reporting footnote.


12

COLONY BANKCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)



In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures ("ASU 2023-09"). This ASU was issued to enhance the transparency and decision usefulness of income tax disclosures. The ASU addresses investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. Retrospective application in all prior periods is permitted. The Company will adopt the new disclosures for the annual periods beginning on January 1, 2025. The Company is currently evaluating the impact of the incremental income taxes information that will be required to be disclosed as well as the impact to the Income Taxes footnote.

13

COLONY BANKCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)



(2) Investment Securities
The amortized cost and estimated fair value of securities available-for-sale and held-to-maturity along with gross unrealized gains and losses are summarized as follows:
(dollars in thousands)
March 31, 2024Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Securities Available for Sale:
U.S. treasury securities$2,296 $ $(11)$2,285 
U.S. agency securities4,433  (394)4,039 
Asset backed securities21,526 14 (268)21,272 
State, county & municipal securities123,045  (15,986)107,059 
Corporate debt securities53,343  (6,535)46,808 
Mortgage-backed securities226,495 158 (25,163)201,490 
Total$431,138 $172 $(48,357)$382,953 
March 31, 2024Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Securities Held to Maturity:
U.S. treasury securities$93,728 $ $(3,995)$89,733 
U.S. agency securities16,250  (1,502)14,748 
State, county & municipal securities136,816 175 (14,727)122,264 
Mortgage-backed securities200,363  (28,256)172,107 
Total$447,157 $175 $(48,480)$398,852 
December 31, 2023Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Securities Available for Sale:
U.S. treasury securities$500 $ $(2)$498 
U.S. agency securities4,500  (361)4,139 
Asset backed securities25,035  (405)24,630 
State, county & municipal securities124,524 6 (15,494)109,036 
Corporate debt securities53,834 16 (6,460)47,390 
Mortgage-backed securities246,901 36 (25,248)221,689 
Total$455,294 $58 $(47,970)$407,382 
December 31, 2023Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
Securities Held to Maturity:
U.S. treasury securities$93,306 $ $(3,212)$90,094 
U.S. agency securities16,282  (1,424)14,858 
State, county & municipal securities136,685 356 (13,859)123,182 
Mortgage-backed securities202,758  (25,316)177,442 
Total$449,031 $356 $(43,811)$405,576 
14

COLONY BANKCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)



The Company elected to exclude accrued interest receivable from the amortized cost basis of available-for-sale and held-to-maturity securities disclosed throughout this note. As of March 31, 2024 and December 31, 2023, accrued interest receivable for available-for-sale and held-to-maturity securities totaled $2.1 million and $2.4 million, and $2.0 million and $1.9 million, respectively, and is included in the "Other assets" line item on the Company’s consolidated balance sheet.

The amortized cost and fair value of investment securities as of March 31, 2024, by contractual maturity, are shown hereafter. Expected maturities may differ from contractual maturities for certain investments because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. This is often the case with mortgage-backed securities, which are disclosed separately in the table below.
Available for SaleHeld to Maturity
(dollars in thousands)Amortized CostFair ValueAmortized CostFair Value
Due in one year or less$2,511 $2,500 $9,823 $9,679 
Due after one year through five years18,090 16,800 93,608 89,399 
Due after five years through ten years97,783 84,148 72,591 64,113 
Due after ten years86,259 78,015 70,772 63,554 
$204,643 $181,463 $246,794 $226,745 
Mortgage-backed securities226,495 201,490 200,363 172,107 
$431,138 $382,953 $447,157 $398,852 
Proceeds from the sale of investment securities totaled $8.6 million for the three month period ended March 31, 2024 and resulted in gross realized losses of $555,000. The Company had no sales of investment securities for the three month period ended March 31, 2023.
Investment securities having a carrying value of approximately $341.8 million and $429.9 million were pledged to secure public deposits and for other purposes as of March 31, 2024 and December 31, 2023, respectively.
Information pertaining to available-for-sale securities with gross unrealized losses at March 31, 2024 and December 31, 2023 aggregated by investment category and length of time that individual securities have been in a continuous loss position is as

15

COLONY BANKCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)



follows:
Less Than 12 Months12 Months or GreaterTotal
(dollars in thousands)Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
March 31, 2024
U.S. treasury securities$2,285 $(11)$ $ $2,285 $(11)
U.S. agency securities  4,039 (394)4,039 (394)
Asset backed securities4,285 (16)13,107 (252)17,392 (268)
State, county & municipal securities1,570 (146)105,239 (15,840)106,809 (15,986)
Corporate debt securities260 (140)46,548 (6,395)46,808 (6,535)
Mortgage-backed securities  193,006 (25,163)193,006 (25,163)
$8,400 $(313)$361,939 $(48,044)$370,339 $(48,357)
December 31, 2023
U.S. treasury securities$ $ $498 $(2)$498 $(2)
U.S. agency securities  4,139 (361)4,139 (361)
Asset backed securities6,196 (75)17,424 (330)23,620 (405)
State, county & municipal securities1,033 (138)107,443 (15,356)108,476 (15,494)
Corporate debt securities1,446 (105)45,044 (6,355)46,490 (6,460)
Mortgage-backed securities5,921 (49)212,876 (25,199)218,797 (25,248)
$14,596 $(367)$387,424 $(47,603)$402,020 $(47,970)
Information pertaining to held-to-maturity securities with gross unrealized losses at March 31, 2024 and December 31, 2023 aggregated by investment category and length of time that individual securities have been in a continuous loss position is as follows:
Less Than 12 Months12 Months or GreaterTotal
(dollars in thousands)Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
March 31, 2024
U.S. treasury securities$ $ $89,733 $(3,995)$89,733 $(3,995)
U.S. agency securities  14,748 (1,502)14,748 (1,502)
State, county & municipal securities5,756 (41)104,271 (14,686)110,027 (14,727)
Mortgage-backed securities  172,107 (28,256)172,107 (28,256)
$5,756 $(41)$380,859 $(48,439)$386,615 $(48,480)
December 31, 2023
U.S. treasury securities$ $ $90,094 $(3,212)$90,094 $(3,212)
U.S. agency securities  14,858 (1,424)14,858 (1,424)
State, county & municipal securities1,461 (78)103,500 (13,781)104,961 (13,859)
Mortgage-backed securities  177,442 (25,316)177,442 (25,316)
$1,461 $(78)$385,894 $(43,733)$387,355 $(43,811)
Management evaluates available for sale securities in an unrealized loss position at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation to determine if credit-related impairment exists. Management first evaluates whether they intend to sell or more likely than not will be required to sell an impaired security

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Notes to Consolidated Financial Statements (Unaudited)



before recovering its amortized cost basis. If either criteria is met, the entire amount of unrealized loss is recognized in earnings with a corresponding adjustment to the security's amortized cost basis. If either of the above criteria is not met, management evaluates whether the decline in fair value is attributable to credit or resulted from other factors. The Company does not intend to sell these investment securities in an unrealized loss position at March 31, 2024, and it is more likely than not that the Company will not be required to sell these securities prior to recovery or maturity. Based on management's review, the Company's available for sale securities have no expected credit losses and no related allowance for credit losses has been established.
The Company uses a systematic methodology to determine its ACL for debt securities held to maturity considering the effects of past events, current conditions, and reasonable and supportable forecasts on the collectibility of the portfolio. The ACL is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on the held to maturity portfolio. The Company monitors the held to maturity portfolio on a quarterly basis to determine whether a valuation account would need to be recorded. Based on management's review, the Company's held to maturity securities have no expected credit losses and no related allowance for credit losses has been established.
At March 31, 2024, there were 261 available-for-sale securities and 150 held-to-maturity securities that had unrealized losses. These securities are guaranteed by either the U.S. Government, other governments or U.S. corporations. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred and the results of reviews of the issuer’s financial condition. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. As management has the ability to hold debt securities until maturity, or for the foreseeable future if classified as available-for-sale, no declines are due to reasons of credit quality.
The Company adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326), as amended on January 1, 2023 which included evaluation of expected credit losses on debt securities. As part of the Company's calculated credit losses, the allowance for credit losses on investment securities was determined to be de minimis due to the high credit quality of the portfolio, which includes securities issued or guaranteed by the U.S. Treasury, U.S. Government agencies and high quality municipalities. Therefore, no allowance for credit losses was recorded as of March 31, 2024. See Note 1 for additional details on the allowance for credit losses as it relates to the securities portfolio.
(3) Loans
The following table presents the composition of loans segregated by class of loans, as of March 31, 2024 and December 31, 2023.
(dollars in thousands)March 31, 2024December 31, 2023
Construction, land & land development$234,000 $247,146 
Other commercial real estate971,205 974,375 
Total commercial real estate1,205,205 1,221,521 
Residential real estate347,277 356,234 
Commercial, financial & agricultural 239,837 242,756 
Consumer and other66,699 62,959 
Total Loans$1,859,018 $1,883,470 










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Notes to Consolidated Financial Statements (Unaudited)



Included in the above table are government guaranteed loans totaling $94.6 million at March 31, 2024 and $86.8 million at December 31, 2023. The following table presents the composition of government guaranteed loans segregated by class of loans for each respective period.

(dollars in thousands)March 31, 2024December 31, 2023
Construction, land & land development$6,658 $7,027 
Other commercial real estate48,396 40,852 
Total commercial real estate55,054 47,879 
Residential real estate9,272 12,170 
Commercial, financial & agricultural 30,272 26,716 
Consumer and other  
Total Loans$94,598 $86,765 

The Company elected to exclude accrued interest receivable from the amortized cost basis of loans disclosed throughout this note. As of March 31, 2024 and December 31, 2023, accrued interest receivable for loans totaled $8.8 million and $8.8 million, respectively, and is included in the "Other assets" line item on the Company’s consolidated balance sheet.

Commercial, financial & agricultural loans are extended to a diverse group of businesses within the Company’s market area. These loans are often underwritten based on the borrower’s ability to service the debt from income from the business. Real estate construction loans often require loan funds to be advanced prior to completion of the project. Due to uncertainties inherent in estimating construction costs, changes in interest rates and other economic conditions, these loans often pose a higher risk than other types of loans. Consumer and other loans are originated at the Bank level.
Credit Quality Indicators. As part of the ongoing monitoring of the credit quality of the loan portfolio, management tracks certain credit quality indicators including trends related to (1) the risk grade assigned to commercial and consumer loans, (2) the level of classified commercial loans, (3) net charge-offs, (4) nonperforming loans, and (5) the general economic conditions in the Company’s geographic markets.
The Company uses a risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 10. A description of the general characteristics of the grades is as follows:
Grades 1, 2 and 3 - Borrowers with these assigned risk grades range from virtual absence of risk to minimal risk. Such loans may be secured by Company-issued and controlled certificates of deposit or properly margined equity securities or bonds. Other loans comprising these grades are made to companies that have been in existence for a long period of time with many years of consecutive profits and strong equity, good liquidity, excellent debt service ability and unblemished past performance, or to exceptionally strong individuals with collateral of unquestioned value that fully secures the loans. Loans in this category fall into the “pass” classification.
Grades 4 and 5 - Loans assigned these “pass” risk grades are made to borrowers with acceptable credit quality and risk. The risk ranges from loans with no significant weaknesses in repayment capacity and collateral protection to acceptable loans with one or more risk factors considered to be more than average. These loans are also included in into the “pass” classification.
Grade 6 - This grade includes “special mention” loans on management’s watch list and is intended to be used on a temporary basis for pass grade loans where risk-modifying action is intended in the short-term.
Grades 7 and 8 - These grades include “substandard” loans in accordance with regulatory guidelines. This category includes borrowers with well-defined weaknesses that jeopardize the payment of the debt in accordance with the agreed terms. Loans considered to be impaired are assigned grade 8, and these loans often have assigned loss allocations as part of the allowance for credit losses. Generally, loans on which interest accrual has been stopped would be included in this grade.
Grades 9 and 10 - These grades correspond to regulatory classification definitions of “doubtful” and “loss,” respectively. In practice, any loan with these grades would be for a very short period of time, and generally the Company has no loans with these assigned grades. Management manages the Company’s problem loans in such a

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Notes to Consolidated Financial Statements (Unaudited)



way that uncollectible loans or uncollectible portions of loans are charged off immediately with any residual, collectible amounts assigned a risk grade of 7 or 8. 
The following tables present the loan portfolio segregated by class of loans and the risk category of term loans by vintage year, which is the year of origination or most recent renewal, as of March 31, 2024 and December 31, 2023. Those loans with a risk grade of 1, 2, 3, 4 and 5 have been combined in the pass column for presentation purposes. There were no loans with a risk rating of "doubtful" or "loss" at March 31, 2024 or December 31, 2023.
Term Loans Amortized Cost Basis by Origination Year
(dollars in thousands)20242023202220212020PriorRevolversRevolvers converted to term loansTotal
March 31, 2024
Construction, land & land development
Risk rating
Pass$13,992 $97,191 $82,284 $28,121 $4,352 $6,398 $89 $31 $232,458 
Special Mention 640  24  25 280  969 
Substandard  429 4  140   573 
Total Construction, land & land development13,992 97,831 82,713 28,149 4,352 6,563 369 31 234,000 
  Current period gross write offs$ $ $ $ $ $ $ $ $ 
Other commercial real estate
Risk rating
Pass6,359 76,903 336,599 197,131 84,422 214,138 21,999 2,154 939,705 
Special Mention303 76 3,458 484 2,094 10,267 554 344 17,580 
Substandard 2,807 5,602 565 356 4,381 209  13,920 
Total Other commercial real estate6,662 79,786 345,659 198,180 86,872 228,786 22,762 2,498 971,205 
Current period gross write offs     20   20 
Residential real estate
Risk rating
Pass6,967 73,145 113,983 49,805 20,828 47,464 21,938 98 334,228 
Special Mention16 850 517 43 92 5,310 326  7,154 
Substandard  1,271 375 281 3,938 30  5,895 
Total Residential real estate6,983 73,995 115,771 50,223 21,201 56,712 22,294 98 347,277 
Current period gross write offs  70      70 
Commercial, financial & agricultural
Risk rating
Pass18,071 55,857 46,732 17,713 11,469 17,594 63,259 534 231,229 
Special Mention 364 579 277 719 180 1,004  3,123 
Substandard 264 2,038 1,840 202 191 910 40 5,485 
Total Commercial, financial & agricultural18,071 56,485 49,349 19,830 12,390 17,965 65,173 574 239,837 
Current period gross write offs 52 428 178     658 
Consumer and other
Risk rating
Pass21,880 36,278 3,392 1,706 987 1,619 460 11 66,333 
Special Mention 171 38 33 10 21   273 
Substandard11 34 18 15 4 11   93 

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Notes to Consolidated Financial Statements (Unaudited)



Total Consumer and other21,891 36,483 3,448