Q2 2024 Colony Bankcorp Inc Earnings Call
Operator: Good day everyone, and welcome to the Colony Bank second quarter 2024 conference call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask questions by pressing the start and 1 on your telephone keypad. You may withdraw your question by pressing star 2. Please note this call is being recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Chief Financial Officer Derek Shelnutt. Please go ahead.
Good day, everyone and welcome to the Colony Bank second quarter 2024 conference call.
Speaker Change: At this time all participants are in a listen only mode. Later, you will have the opportunity to ask questions. During the question and answer session.
Speaker Change: I'm afraid you start to ask questions by pricing to start and one on your telephone keypad.
Speaker Change: You may withdraw your question by pressing star two.
Speaker Change: Please note. This call is being recorded and I will be sending by should you need any assistance.
Speaker Change: It is now my pleasure to turn the conference over to Chief Financial Officer, Derek Shelnutt. Please go ahead.
Derek Shelnutt: Thanks, Nikki. Before we get started, I would like to go through our standard disclosure. Certain statements we make on this call could be constituted as forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Current and prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance but involve known and unknown risk and uncertainty. Factors that could cause these differences include, but are not limited to, pandemics, variations in the company's assets, businesses, cash flows, financial condition, prospects, and other results of operations.
Derek Shelnutt: Thanks, Nikki before we get started I would like to go through our standard disclosures.
Derek Shelnutt: Certain statements we make on this call could be constituted as forward looking statements within the meaning of the Securities Act of 1933, and the Securities Exchange Act of 1930 for current and prospective investors are cautioned that any such forward looking statements are not guarantees of future performance, but involve known and unknown risks and uncertainties.
Derek Shelnutt: Factors that could cause. These differences include but are not limited to pandemics variations of the company's assets businesses cash flows financial condition prospects in other results of operations.
Derek Shelnutt: I would also like to add that during our call today, we will reference both our earnings release and our quarterly investor presentation, both of which were filed yesterday. So please have those available to reference. And with that, I will turn the call over to our Chief Executive Officer, Keith Fountain.
Speaker Change: I'd also like to add that during our call today, we will reference both our earnings release, and our quarterly Investor presentation, both of which were filed yesterday. So please have those available to reference.
Heath film: And with that I will turn the call over to our Chief Executive Officer Heath film.
Keith Fountain: Thanks Derek and thanks to everyone joining our second quarter earnings call today. We're pleased with our improved operating results in the second quarter, and we appreciate the hard work from our team members, which has allowed us to continue to achieve progress towards our strategic goals. Operating net income increased close to $200,000 during the quarter as we continue to see improved performance from our complementary lines of business; all were profitable in the quarter with the exception of marine RV lending, which improved quarter over quarter but was held back by sluggish sales in that industry.
Heath film: Thanks, Derek and thanks to everyone.
Heath film: Everyone, joining our second quarter earnings call today.
Heath film: We're pleased with our improved operating results in the second quarter and we appreciate the hard work from our team members, which has allowed us to continue to achieve progress towards our strategic goals.
Heath film: Operating net income increased close to 200000 during the quarter as we continued to see improved performance from our complementary lines of business.
Heath film: All were profitable in the quarter with the exception of marine RV lending, which improved quarter over quarter, but was held back by sluggish sales in that industry.
Keith Fountain: Net interest income decreased slightly during the quarter and was driven by a continued increase in our funding costs, albeit at a slower pace than in recent quarters. However, loan growth was relatively low this quarter. As we've mentioned previously, our loan growth expectations were modest for the year. However, we do see our loan pipeline increasing, and we do expect a little more growth in the second half. Margin declined one basis point during the quarter, which was a little better than our expectations of a three to five basis point decline. We still expect margin to improve in the second half of the year, and Derek's gonna speak in more detail about that later in the call.
Heath film: Net interest income decreased slightly during the quarter and was driven by a continued increase in our funding cost, albeit at a slower pace than in recent quarters.
Heath film: Loan growth was relatively low this quarter as we've mentioned previously our loan growth expectations were modest for the year, we do see our loan pipelines, increasing and we do expect a little more growth in the second half of the year.
Heath film: Margin declined one basis point during the quarter, which was a little better than our expectations of a three to five basis point decline, we still expect margin to improve in the second half of the year and Derek is going to speak in more detail to that later in the call.
Keith Fountain: There was some seasonality in our deposit base in the second quarter. Historically, it's not unusual pre-COVID for us to see declines in the second quarter. However, a large portion of the decline this quarter was related to tax payments from a small number of large depositors.
Derek Shelnutt: There was some seasonality in our deposit base in the second quarter historically, it's not unusual pre COVID-19 for us to see declines in the second quarter.
Derek Shelnutt: A large portion of the decline this quarter was related to tax payments from a small number of large depositors and of course, we generally would expect to see those balances come back later in the year and we also were able to reduce our brokered CD levels this quarter.
Keith Fountain: And, of course, we generally would expect to see those balances come back later in the year. And we also were able to reduce our brokered CD levels this quarter. Our focus remains on deposits first, and our bankers continue to develop relationships that include deposits and other opportunities. We believe that the value created in banking is based on the deposit relationships we can build, and so that's our primary focus; credit quality remains strong.
Derek Shelnutt: Our focus remains on deposits first and.
Derek Shelnutt: And our bankers continue to develop relationships that include deposits and other opportunities.
Derek Shelnutt: We are believers that the value created in banking is based on the deposit relationships, we can build and so that's our primary focus.
Speaker Change: Credit quality remains strong plas.
Keith Fountain: Classified and criticized loans decreased during the quarter, and those figures are available on page 18 of the earnings release. At the end of the quarter, past dues were at very low levels. We had zero past due CRE loans at the end of the quarter.
Speaker Change: Classified and criticized loans decreased during the quarter and those figures are available on page 18 of the earnings release.
Speaker Change: At the end of the quarter past dues were at very low levels, we had zero past due CRE loans.
Speaker Change: The end of the quarter.
Keith Fountain: We have confidence in the credit quality of our portfolio, and we're not really seeing any areas at this time that give us concerns about potential. Our mortgage banking group was profitable in the second quarter and had its most profitable quarter since we started this rate cycle. We started seeing more activity during the home buying season this spring, but we're still seeing low inventory levels have an impact on volume.
Derek Shelnutt: We have confidence in the credit quality of our portfolio and we're not really seeing any areas at this time that gives us.
Derek Shelnutt: Concerns about potential weakening.
Derek Shelnutt: Our mortgage banking group was profitable in the second quarter and had its most profitable quarter. Since we started this rate cycle, we started seeing more activity there in the home buying.
Derek Shelnutt: Season, this spring, but we're seeing still low inventory levels have an impact on volume.
Keith Fountain: But the outlook on rate stability and the market adjusting to the current level of rates is starting to help drive activity, and we continue to adjust our product offering and staffing to remain competitive in the market and to remain profitable in this line. Our small business and specialty lending division had another great quarter. We've seen a lot of success from our small dollar loan program, and this will continue to be a good source of revenue for our SPSL group.
Derek Shelnutt: But the outlook on rate stability and and the market adjusting to the current level of rates are starting to help drive activity and.
Derek Shelnutt: And we continue to adjust our product offering and staffing to remain competitive in the market and to remain profitable in this land.
Speaker Change: Our small business and specialty lending division had another great quarter, we've seen a lot of success from our small dollar loan program and these will continue to be a good source of revenue for our Sps. They all agree there is some slowdown expected in that going forward as we've seen many are.
Keith Fountain: There is some slowdown expected in that going forward as we've seen many new entrants into that marketplace. And so while we expect to see revenue continue and this be a good product for us, it will not likely be at the same levels that we saw in the first half of this year. We continue to focus on our core SBA loan customers and maintain a consistent pipeline in those products as well. Expenses were in line with our expectations, and I think our team did an outstanding job of maintaining efficiency and expense discipline over the last year.
Derek Shelnutt: New entrants into that marketplace.
Derek Shelnutt: And so while we expect to see revenue continue and this would be a good product for us it will not likely be at the same levels that we've seen in the first half of this year and we keep continue to focus on our core SBA loan customers and maintain a consistent pipeline in those products as well.
Derek Shelnutt: Yeah.
Derek Shelnutt: Expenses were in line with our expectation and I think our team's done an outstanding job of maintaining efficiency and expense discipline over the last year.
Keith Fountain: Our operating net non-interest expense to average assets was 1.36% for the quarter, and it's shown at the bottom of page 8 in the earnings release. Since we have multiple sources of non-interest income, we use this metric as a way to compare our non-interest expense to peers.
Speaker Change: Our operating net noninterest expense to average assets was 136% for the quarter and it's shown at the bottom of page eight in the earnings release.
Speaker Change: Since we have multiple sources of noninterest income we use this metric as a way to compare our noninterest expense to peers and we've moved in the peer group, we measure from the bottom quartile and that grew to the top quartile over the past year and we expect to stay there.
Keith Fountain: And we've moved in the peer group we measure from the bottom quartile in that group to the top quartile over the past year, and we expect to stay there. Our commitment to our markets is important to us, and although we focus on remaining disciplined with our expenses, we manage that with the long-term benefits of continuing to invest in innovation, technology, and our markets. Over the past few months, we've added experienced bankers to several of our markets based on needs and, in some markets, for transitions due to upcoming retirement.
Speaker Change: Our commitment to our markets is important to us and although remain.
Speaker Change: We focus on remaining disciplined with our expenses.
Speaker Change: So that with the long term benefits of continuing to invest in innovation technology and in our markets.
Speaker Change: Over the past few months, we've added experienced bankers to several of our markets based on needs and in some markets for transitions for upcoming retirements. We're excited to have these new team members on board and look forward to the positive impact theyre going to have on our customers and our communities.
Keith Fountain: We're excited to have these new team members on board and look forward to the positive impact that they're going to have on our customers and our community. And lastly, I'd just like to recognize two of our board members who retired this past quarter, Jonathan Ross, who served as a director since 2007, and Harold Wyatt, who served as a director with us since 2021 and previously served as a director of Southcrest Financial Group for many years before its merger with Colony Bancorp.
Speaker Change: And lastly, I'd just like to recognize two of our board members, who retired this past quarter, Jonathan Ross, who served as a director since 2007, and Harold Wyatt, who served as a director with US since 2021 and previously served as a director of South Korea Financial group for many years before it's merge.
Speaker Change: With colony.
Keith Fountain: We wish them well and would like to thank them for their leadership and their service to our shareholders, our team members, our customers, and our community. And with that, I'm going to turn it over to Derek, who will go over the financials in more detail.
Speaker Change: We wish them, well and like to thank them for their leadership and their service to our shareholders. Our team members our customers and our communities.
Derek Shelnutt: Both GAAP and Operating Net Income increased during the quarter, with Operating Net Income increasing by a little over $170,000 as a result of increased non-interest income and lower provision expense driven by improvement in credit quality. Interest income increased slightly quarter over quarter with interest income on loans increasing by about $500,000; interest income from investment securities decreased in the quarter partially due to the redeployment of principal payments to fund loans or pay down borrowings, but largely due to a one-time accelerated premium recognition on an early payoff of a security, which decreased overall investment income; that impact was about $250,000.
Speaker Change: And with Adam I'll turn it over to Derek who will go over the financials in more detail.
Derek Shelnutt: Thank you Heath.
Derek Shelnutt: Both GAAP and operating net income increased during the quarter with operating net income increasing by a little over 170000 as a result of increased noninterest income and lower provision expense driven by improvement in credit quality.
Derek Shelnutt: Interest income increased slightly over a quarter over quarter with interest income on loans, increasing by about $500000.
Derek Shelnutt: Interest income from investment securities decreased in the quarter, partially by the redeployment of principal payments to fund loans or pay down borrowings.
Derek Shelnutt: But largely due to a one time accelerated premium recognition on an early pay off of a security which decreased overall investment income.
Derek Shelnutt: That impact was about $250000 and without that net interest income would have been flat quarter over quarter.
Derek Shelnutt: And without that, interest income would have been flat quarter over quarter; interest expense on deposits increased from the first quarter, but we are still seeing the rate of that increase slow down. And as Heath mentioned, the margin declined one basis point, and that was better than our expectations for the quarter. We still believe margin will start to expand in the second half of the year, but the exact timing will depend on several factors, including deposit competition and costs, loan funding, as well as any interest rate changes.
Derek Shelnutt: Interest expense on deposits increased from the first quarter, but we are still seeing the rate of that increase slowed down.
Derek Shelnutt: And as Heath mentioned margin declined one basis point and that was better than our expectations for the quarter. We still believe margin will start to expand in the second half of the year, but the exact timing will depend on several factors, including deposit competition and cost loan fundings as well as any interest rate changes.
Derek Shelnutt: With margin declining only one basis point per quarter since the fourth quarter of 2023, we feel comfortable that we are at or very close to the bottom. Any further decline is likely to only be a basis point or so, but we feel better about margin being in the midst of turning the quarter and seeing the next quarter's margin being flat or up a few basis points. Operating non-interest income increased from the prior quarter by $77,000.
Derek Shelnutt: With margin declining only one basis point per quarter since the fourth quarter of 2023, we feel comfortable that we are at or very close to the bottom any further decline is likely to only be a basis point or so, but we feel better about margin being in the midst of turning the quarter and seeing the next quarter margin being flat or up a few basis points.
Derek Shelnutt: Operating noninterest income increased from the prior quarter by $77000, both our SBA and mortgage income increased quarter over quarter, while other noninterest income decline, but that was due to one time items in the first quarter related to boldly and Oreo.
Derek Shelnutt: Both our SPSL and mortgage income increased quarter over quarter, while other non-interest income declined, but that was due to one-time items in the first quarter related to BOLI and OREA. Non-interest expense remained stable, decreasing $67,000.
Heath: Noninterest expense remained stable quarter over quarter decreasing $67000 as Heath mentioned, we are still focused on appropriately managing expenses relative to our growth expectations and our operating net assets improved two basis points in the quarter and was four basis points better than our target of <unk>.
Derek Shelnutt: As Heath mentioned, we're still focused on appropriately managing expenses relative to our growth expectations. And our operating net NIA assets improved two basis points in the quarter and was four basis points better than our target of 1.40%. While we still look for efficiency with expenses, continued progress and our complementary lines of business should keep us close to, or better than, our net NIE target. Provision expense totaled $650,000 for the quarter.
Speaker Change: Four zero percent.
Speaker Change: While we still look for efficiency with expenses continued progress in our complementary lines of business should keep us close to or better than our net NII target.
Speaker Change: Provision expense totaled $650000 for the quarter slower loan growth in the quarter was a contributor but we also saw some credit improvement this quarter with the decrease in classified and criticized loans.
Derek Shelnutt: Slower loan growth in the quarter was a contributor, but we also saw some credit improvement this quarter with a decrease in classified and criticized loans. As Heath mentioned, past dues were at low levels, which included zero past dues on CRE loans on the bank side, and we've seen a decrease in non-performing loans since the end of last year. Net charge-offs were relatively flat and similar to last quarter.
Speaker Change: As Heath mentioned in past dues were at low levels, which includes zero past dues on CRE loans on the bank side and a decrease in nonperforming and we've seen a decrease in nonperforming loans since the end of last year.
Heath: Net charge offs were relatively flat and similar to last quarter.
Derek Shelnutt: The majority of the chargeoffs were related to the unguaranteed portion of SBA loans. SBA small dollar loans represent most of the chargeoffs, and these loans do have a higher premium when they're sold, which offsets the higher loss. Total loans held for investment increased $6.6 million from the prior quarter. As we mentioned on our last call, our pipeline suggests more growth in the second half of the year, but still at modest levels. Demand, credit appetite, rates, and funding are all going to influence the exact level of growth we end up seeing.
Speaker Change: The majority of the charge offs were related to the on guaranteed portion of SBA loans. The SBA small dollar loans represent most of the charge offs. In these loans do have a higher premium when they are sold which offsets the higher losses.
Speaker Change: Total loans held for investment increased $6 $6 million from the prior quarter as we mentioned on our last call. Our pipeline suggests more growth in the second half of the year, but still at modest levels.
Speaker Change: Demand credit appetite rates and funding are all going to influence the exact level of growth we end up seeing.
Derek Shelnutt: We still have opportunities this year for repricing on loans. There are about 50 to 60 million dollars with maturities through the end of the year that are currently priced at 5% or lower, so we should see some benefit from that going forward. Total deposits were lowered by about $62.5 million, of which $22 million were broker deposit paydowns.
Speaker Change: We still have opportunities this year for repricing on loans, there are about $50 million to $60 million with maturities through the end of the year that are currently priced at 5% or lower.
Speaker Change: So we should see some benefit from that going forward.
Speaker Change: Total deposits were lower by about 62, and a half million dollars of which $22 million or broker deposit pay down and.
Derek Shelnutt: And when you look at our deposit data pre-COVID, you typically see some seasonality and a lower second quarter average deposit. Then you see those deposits return in the later half of the year. We did see some large outflows for tax payments from some of our larger depositors. We've also seen seasonal supply and raw material purchases from our manufacturing and agricultural depositors. We are still focused heavily on the positive. FHLB's advance was increased in the quarter by $50 million.
Speaker Change: And when you look at our deposit data pre Covid, you typically see some seasonality and lower second quarter average deposits.
Speaker Change: Then you see those deposits returned in the later half of the year.
Speaker Change: We did see some large outflows for tax payments from some of our larger depositors. We've also seen seasonal supply and raw material purchases from our manufacturer manufacturing and agricultural depositors.
Speaker Change: We are still focused heavily on deposits.
Speaker Change: <unk> advances increased in the quarter about $50 million and we took advantage of the inverted curve, where we saw some opportunity to get some cheaper funding. Additionally, a portion of that was short term and the more attractive short term pricing allowed us to shift out of the higher rate brokered Cds.
Derek Shelnutt: We took advantage of the inverted curve, where we saw some opportunity to get some cheaper funding. Additionally, a portion of that was short-term, and the more attractive short-term pricing allowed us to shift out of the higher rate brokerage. This quarter, we continued our strategy of selling underperforming investments in the portfolio and redeploying those proceeds into higher-yielding assets, and those results are summarized on slide 29. We sold approximately $9.3 million worth of securities, which included a loss of $425,000.
Speaker Change: This quarter, we continued our strategy of selling underperforming investments in the portfolio and redeploying those proceeds into higher yielding assets and those results are summarized on slide 29.
Speaker Change: We sold approximately $9 $3 million worth of Securities, which included a loss of $425000. The book yield was three 6% and our earn back estimates are around two years or less.
Derek Shelnutt: The book yield was 3.26%, and our earn-back estimates are around two years or less. We expect to continue similar restructures in the future as appropriate and as market conditions allow. During the quarter, as part of our stock repurchase program, we repurchased 20,000 shares for an average price of $11.90 and a total value of about $238,000. Yesterday, the board declared a quarterly cash dividend of 11.25 cents per share.
Speaker Change: We expect the continued similar restructures in the future and as appropriate and as market conditions allow.
Speaker Change: During the quarter as part of our stock repurchase program, we repurchased 20000 shares for an average price of $11.90 and a total value of about 238000.
Speaker Change: Yesterday, the board declared a quarterly cash dividend of 11 25 cents per share.
Derek Shelnutt: We understand our dividend is important to many of our investors, and continuing our dividend represents the faith we have and the strength of our army. Mortgage net income was $138,000 for the second quarter, an increase of $152,000 from the prior quarter. We've seen some increase in volume during the home buying season, but being held back slightly by home affordability and inventory, we believe mortgages will continue to improve and be profitable on an affordable basis.
Speaker Change: We understand our dividend is important to many of our investors and continuing our dividend represents the faith, we have in the strength of our earnings.
Speaker Change: Mortgage net income was $138000 for the second quarter, an increase of $152000 from the prior quarter.
Derek Shelnutt: We've seen some increase in the volume during the home buying season.
Speaker Change: But being held back slightly by home affordability and inventory, we believe mortgage will continue to improve and be profitable on a go forward basis Theres a lot of potential due to pent up demand and if we see rates come down a little we would expect to see more profit growth along with an increase in volume.
Derek Shelnutt: There's a lot of potential due to pent-up demand, and if we see rates come down a little, we would expect to see more profit growth along with an increase in volume. Our Small Business Specialty Lending Division had a net income of $1.3 million during the quarter.
Derek Shelnutt: Our small business specialty lending division had a net income of $1 $3 million during the quarter, that's a $459000 increase from the prior quarter.
Derek Shelnutt: That's a $459,000 increase from the prior quarter. The small dollar program has been successful and will continue to be a great product for that line of business. But, as Heath mentioned, there have been new entrants to that market, and although premiums are still attractive, they've come down a little bit from their highs. Going forward, we think this is still going to be a great product, but the related revenue will likely be a touch soft.
Heath: Small dollar program has been successful and we will continue to be a great product for that line of business, but as Heath mentioned, there have been new entrance to that market and although premiums are still attractive.
Heath: Come down a little bit from their highs.
Heath: Going forward. We think this is still going to be a great product, but the related revenue will likely be attached software.
Derek Shelnutt: The pipeline for core loans is still in good shape and has remained an important part of that. On slide eight, we provide a breakdown of pre-tax income for our complementary lines of business. Our marine and RV division continues to see steady growth, although it is slower than what we originally expected due to sluggish sales in the industry. The division is still trending towards profitability, but that may not occur for another quarter.
Heath: The pipeline for core loans is still in good shape and has remained an important part of that business.
Speaker Change: On slide eight we provide a breakdown of pre tax income for our complementary lines of business.
Heath: Our marine and RV Division continues to see loan growth, although it is slower than what we originally expected due to sluggish sales in the industry. This season.
Speaker Change: The division is still trending towards profitability, but that may not occur for another quarter or two.
Derek Shelnutt: Merchant Services had its first profitable quarter, and referrals have been strong. We are excited about the progress and expect to see that continue. The second quarter was lighter for our insurance division. In the first quarter and early in the second quarter, the insurance industry overall saw tighter underwriting requirements and a lower risk appetite. We did see that relax near the end of the quarter, and we remain optimistic about the rest of the year.
Speaker Change: Merchant services had their first profitable quarter and referrals have been strong we are excited about the progress and expect to see that continue.
Speaker Change: The second quarter was lighter for our insurance division in the first quarter and early in the second quarter the insurance industry overall saw tighter underwriting requirements.
Speaker Change: And our lower risk appetite, we did see that relaxed near the end of the quarter and we remain optimistic about the rest of the year bank referrals have been increasing and we feel like we're going to start seeing the benefits of those the division also invested in growing the business during the second quarter, which had some upfront expenses associated with it.
Derek Shelnutt: Bank referrals have been increasing, and we feel like we're gonna start seeing the benefits of those. The division also invested and grew in the business during the second quarter, which had some upfront expenses associated. That concludes my overview, and now we'll turn it back over to Heath for any final comments before we take questions. Thanks, Derek.
Derek Shelnutt: That concludes my overview and now I will turn it back over to Heath for any final comments before we take questions.
Keith Fountain: Thanks Derek, that wraps up our remarks, and with that, I'll call on Nikki to open up the lines for questions. And at this time,
Heath: Derek that wraps, our remarks up and with that I'll call on Nicky to open up the lines for questions.
Operator: And at this time, if you would like to ask a question, please press star and 1 on your telephone keypad. You may withdraw your question by pressing star 2. Once again, to ask a question, please press star and 1 on your telephone keypad. We'll pause for a moment to allow questions to queue. And we'll take our first question from Justin Marko with Hope The Group. Please go ahead.
Nicky: And at this time, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: You may withdraw your question by pricing start to.
Heath: Once again to ask a question. Please press the star and one on your telephone keypad.
Speaker Change: I'll take a moment to allow questions to queue.
Speaker Change: And we will take our first question from Justin <unk> with Hovde Group. Please go ahead.
Justin Marko: Hey guys, good morning. I'm here on behalf of Dave Bishop today. So you mentioned in your prepared remarks that pipelines are increasing. Any particular segments where you're seeing good opportunities, and how are your
Operator: Hey, guys good morning on for David today.
Speaker Change: You mentioned in your prepared remarks.
Justin: Pipelines are increasing any particular segments, where you're seeing good opportunities in Howard your overall growth prospects looking for the next 18 months.
Keith Fountain: Yeah, it's really I think across the board, we are seeing a pretty diversified amount. We do have, obviously, you know, we're If you look at our portfolio, it's largely real estate, and so we do have some nice opportunities on the commercial real estate front, and we have the appetite and capacity there. You know, our ultimate goals are to try to grow 8-12% a year. Certainly, we don't expect to see that this year, I think.
Speaker Change: Yeah, It's really I think across the board we are seeing a pretty diversified amount we do have obviously.
Keith Fountain: If you look at our portfolio is largely real estate and so we do have some nice opportunities on the commercial real estate front, and we have the appetite and capacity there.
Speaker Change:
Keith Fountain: Our ultimate goals, we like to try to grow a 8% to 12% a year certainly we don't expect to see that this year ethane.
Keith Fountain: You know, bones were down in Q1 and then up slightly this quarter, maybe in the 1% annualized range. If we could potentially, in the next couple of quarters, maybe see closer 2-5% type annualized growth, likely and then, you know, given the economic outlook right now and what things look like, potentially leading into, you know, some higher single-digit growth, would go in the next.
Keith Fountain: Volumes were down in Q1, and then up slightly this quarter.
Keith Fountain: Maybe in the like 1% annualized range, if we could a.
Keith Fountain: Potentially next couple of quarters, maybe see closer to 5% type annualized growth.
Speaker Change: Likely.
Keith Fountain: Likely and then you know given the economic outlook right now and what things look like potentially leading into some higher single digit growth.
Keith Fountain: As we go into next year.
Derek Shelnutt: Okay.
Keith Fountain: And it sounds like a NMTROP might be in sight. How are you feeling about overall deposit costs and loan yields for the second half and into 25? And do you have any rate cuts baked into those projections?
Speaker Change: And it sounded like a NIM trough might be inside.
Speaker Change: How are you feeling about overall deposit cost and loan yields for the second half and into 'twenty five.
Speaker Change: And do you have any rate cuts baked into those projections.
Keith Fountain: So we feel good about where we are. We don't try to predict the rate cut. So we feel like our NEM return is going to come back regardless of rate drops. So we're thinking rate stability in our outlook. And as Derek mentioned in his remarks, you know, a lot's just going to depend on funding pressure and on loan growth. We've got a lot of repricings coming up, so we have a lot of The pressure is lightening up on the deposit side, and on the loan side, we've got a lot that'll reprice anyway, and with a little bit of growth, that'll improve. Derek, do you have any other things to add to that? I agree, just to add some additional
Speaker Change: So we feel good about where we are or we don't try to predict.
Derek Shelnutt: The rate cut so.
Derek Shelnutt: We feel like our NIM return is going to come back regardless of.
Keith Fountain: Rate drops so we were thinking rates stability in in our outlook and as Derrek mentioned in his remarks, you know a lot its just going to depend on.
Derek Shelnutt: Funding pressure.
Derek Shelnutt: And on loan growth, we've got a lot of repricing is coming so we have a lot of.
Derek Shelnutt: Pressures lighting lighten up on the deposit side and on the loan side, we've got a lot that will reprice anyway, and with a little bit of growth.
Derek Shelnutt: That will improve there do you have any other thing to add to that I agree and just to add some additional color you know, we're continuing to see asset repricing through both the loan portfolio and the securities.
Derek Shelnutt: I agree. Just to add some additional color, you know, we're continuing to see asset repricing through both the loan portfolio and the securities portfolio, and that's been pretty steady. And we have a lot of opportunity there. Again, our cost of funds, our deposit cost, has been steadily slowing down in terms of the rate of increase. And any Fed rate cuts that we may or may not see will have an impact on that, probably not drop it, but definitely slow it down even further.
Derek Shelnutt: Portfolio and that's been pretty steady.
Derek Shelnutt: And we have a lot of opportunity there.
Derek Shelnutt: Again, our cost of funds our deposit costs have been steadily slowing down in terms of rate of increase in any fed.
Derek Shelnutt: Third rate cuts that we may or may not say will have an impact on that probably not drop it but definitely slow it down even further and so that's just going to help our overall.
Derek Shelnutt: And so that's just going to help our overall funding costs and allow the assets to reprice faster. And then, at that point, we'll start seeing margin expansion. And again, I think we expect that to happen probably in the second half of this year at some point, you know, even without any rate cuts and then continue on into 2025.
Derek Shelnutt: Funding cost and allow the assets to reprice faster and then at that point, we will start seeing margin expansion and again I think we expect that to happen probably in.
Derek Shelnutt: In the second half of this year at some point.
Derek Shelnutt: Even without any rate cuts and then continue on into 'twenty five.
Justin Marko: Great. Thanks for taking my questions today. Thank you.
Speaker Change: Great. Thanks for taking my questions today.
Derek Shelnutt: Thank you.
Operator: And once again, that is a star and one on your telephone keypad if you would like to join the queue. We'll pause for a moment to allow any further questions to queue. And with no further questions at this time, I will turn the program back to our presenters for any closing or additional remarks.
Speaker Change: And once again that is star one on your telly from Keybanc.
Operator: To join the queue.
Operator: Take a moment to allow any further questions to queue.
Operator: And I'm showing no further questions at this time I will turn the program back to our presenters for any closing or additional remarks.
Keith Fountain: Thanks again, everyone, for being on the call today. We appreciate your support of Colony Bancorp, and we appreciate you being on the call.
Speaker Change: Well, thanks again, everyone for being on the call today. We appreciate your support of colony Bancorp and we appreciate you being on the call.
Operator: And this does conclude today's program. Thank you for your participation. You may disconnect at any time.
Keith Fountain: And this does conclude today's program.
Speaker Change: Thank you for your participation you may disconnect at any time.
Operator: Okay.
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