Colony Bankcorp, Inc.

Hello and a warm welcome to Colony Bank first quarter 2023 conference call. My name is Candice and I'll be your coordinator for today's call. All lines have been placed on mute during the presentation portion of the call with an opportunity for question and answer at the end. If you would like to ask a question, please press start followed by one on your telephone keypad. I would now like to hand the conference over to Derek Shelnut to begin. Derek, please go ahead.

Thanks, Candice. Before we get started, I would like to go through our standard disclosures. Certain statements we make on this call could be constituted as forward-looking statements within the meanings 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 guaranteed a future performance but involve known and unknown risks and uncertainties. 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, and other results of operation. 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 for reference. And with that, I will turn the call over to our Chief Executive Officer, Keith Fountain.

Thanks, everyone, for being on the call today. We're pleased to report solid results in what's turned out to be a very unusual environment this quarter. Following the failures of Silicon Valley and Signature Bank, our industry received a real test of liquidity and really a test of financial strength and confidence in the banking industry as a whole. And we passed that test, and I think the vast majority of the banking industry did. I do want to thank our team for all their hard work and extra effort in communicating and working with our customers during this uncertain time. I think that the disruption that we had during the quarter really highlighted the value in core deposit franchises like ours. We have not had to borrow from the Fed's bank term funding program, and we have no overnight borrowings outstanding at the end of the quarter. During the call, we're going to, and in our investor presentation, we'll highlight the strength of our deposit base and our liquidity and share some new information with you on that. I'm going to run through a quick overview today of the quarter, and then Derek's going to highlight our earnings and liquidity, and then Dee Copeland will give an update on our operating businesses. We did see... very good stability in our deposits this quarter despite the uncertainty in the marketplace, and we were pleased to see that. From an earnings perspective, earnings were down quarter over quarter, but excluding one-time items, our operating earnings were level with last quarter. Of course, Q1 is the shortest quarter of the year with less days to earn interest and fees, and it's a seasonally weak period for our for mortgage origination, so we're pleased to report operating earnings in line with last quarter. Again, this quarter, as in the last couple of quarters, all of our earnings came from our banking division, which highlights the strength of our core banking business. We're focused on improving the profitability of our mortgage and other operating businesses, and Dee will give you an update on the significant process we're making there. Loans this quarter grew at about a 14% annualized rate, but given the current economic outlook and decreased customer demand, we would expect loan growth to be flat or slightly up for the remainder of the year. Our margin did decline quarter over quarter as expected due to the continuing increase in deposit rates, which outpaced the growth in our earning asset yields. We expect that pressure to continue and expect margin to be in the low threes or high twos for the remainder of 2023 given current interest rate forecasts. Non-interest income remained fairly level this quarter. Again, this is a seasonally light quarter for us in non-interest income due to the last days and the seasonality of mortgage. Mortgage revenue was flat compared to last quarter, and insurance and other non-interest income helped offset the decreases that we also saw in our government guaranteed lending this quarter. We have a lot of opportunities to see non-interest income grow throughout the year. So we're very excited about that. One of the areas we saw significant improvement this quarter was in operating expenses, which were down $662,000 from last quarter and down about $1.3 million when you exclude one-time severance costs and contract termination costs related to the South Crest acquisition. So we were glad to see that. Asset quality remained strong. Levels were criticized and classified. Assets remained steady, as did net charge-offs. And then just in terms of capital management, we did not buy any shares back this quarter. We certainly think this is a very attractive level to be buying our shares. But given the uncertainty in the economy, the uncertainty In the regulatory environment, following the recent bank failures, we just think it's a better time to be building capital right now. So all in all, a good first quarter. It sets us up well to achieve our goals this year, which includes a focus to get to a 1% ROA run rate by the end of the year. So now I'm going to turn it over to Derek Shelnut, our Chief Accounting Officer, to go over the financials in more detail.