Colony Bankcorp, Inc.

Please stand by. Your program is about to begin. If you need audio assistance during today's program, please press star zero. Good day, everyone, and welcome to today's Colony Bank third quarter 2024 conference call. At this time, all participants are on a listening remote. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing star 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star 2. Today's call is being recorded. I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Mr. Derek Shellmutt.

Thanks, Marjorie. 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 meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Current prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance, but involve known and unknown risk 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 conditions, prospects, and other results of operations. I would also like to add that during our call today, we referenced 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, Heath Fountain.

Thanks, Derek, and thanks to all of you joining our third quarter earnings call today. Before we get started on the quarterly results, I just want to say a few words about the impact of Hurricane Helene on our team, our customers, and communities that happened right at the end of the third quarter. We were very fortunate that none of our team members were injured by the storm in spite of the fact that about 10% of our team were impacted by damage during the storm, or 10% or more. Several of our communities were impacted significantly with tree damage, wind damage, power outages, and the like. Today, those communities have power restored. They've moved back to some level of normalcy. I'm really proud of how our team stepped up to help each other and their communities, whether it was serving over 2,000 meals immediately after the storms, manning chainsaws to clear roadways and driveways, or making financial contributions to help their fellow team members and members of their community. Our team really went above and beyond my expectations, and in true community bank fashion, they stepped up, and I'm really proud of our response. While many of our communities were hit with that storm, we did not see near the level of devastation that was seen in some areas like eastern Tennessee and western North Carolina. And we don't expect any material financial impact from the storm at this time. But our thoughts and prayers are certainly with all those impacted by Hurricane Helene and other recent storms. So now I'll move into our operating results. We're really pleased with the quarter. Glad to see continued progress being made in our complementary lines of business, which are reported to us. Our operating net income increased $238,000 during the quarter, as we saw increases in both net interest income and non-interest income. All of our complementary lines of business were profitable in the third quarter and combined well. pre-tax net income increased over 20%. Net interest income increased approximately $132,000 in the third quarter, and this is the first quarter-over-quarter increase in the past year, and we saw that despite a slight decrease in margin during the quarter. With the rate environment changing in the latter part of the third quarter and the Fed beginning to ease, it has allowed us to focus on reducing our funding costs, and it's relieved a lot of pressure on both the pricing of deposits and the competition that we've seen for deposits. We still have a lot of opportunity, though, for earning asset yields to continue their climb So it leads us to a point where we do feel comfortable that we've seen the bottom of margin decline and expect margin to expand going forward. We'd expect that to be rather modest to start with and then improve further as we get into 2025. Total deposits grew in the third quarter, and we saw customer deposits return after some seasonality that we mentioned on last quarter's call. Along with deposit growth, there was some mixed shift that occurred where we saw CD and money market accounts increasing and DDAs decreasing, which had a negative impact on our margin for the quarter. We were pleased to see loan growth tick up a little bit, so we were around 4% on an annualized basis, a little over $20 million for the quarter. We are starting to see the pipeline pick up. But it does take some time to get stuff through the pipeline. We would expect to see similar loan activity in the fourth quarter. It could be down a little. We do expect some large payoffs in Q4 that could put pressure on our loan growth. But we do expect to get back to more normalized growth rates for us in 2025. In the second quarter, we did have some increases in non-performing loans. In the second quarter, non-performing loans and criticized were at historic lows. So we did see some increases this quarter. So it wasn't unusual coming off those lows, but we still feel good about credit quality, and we're not seeing anything pop up that gives us concern about any larger issues or systemic weaknesses. I mentioned our complementary lines earlier. Our increase in non-interest income was led by good quarters for both mortgage banking and for our SPSL. Mortgage rates did go down a little bit in the third quarter. They've ticked back up a little bit, as we've seen, especially even in the last few weeks. And so there's still a challenging environment there. There's inventory challenges, so mortgage may not see the kind of quarters that we saw this quarter, but it was good to see that improvement there. Our other lines of business are growing and we're excited about the opportunities for more growth going forward. Discipline around efficiency and expenses continued in the third quarter. The metric we've talked about a lot that we track, our operating net non-interest expense to average assets was 1.32% on operating basis, which has continued to improve quarter over quarter for the last seven quarters. We expect that to save around 140 or below, which will give us a lot of upside to net income as margin begins to expand. Earlier this week, we announced hiring of Sissy Giglio as our Director of Optimization, and this just highlights kind of the priority and commitment we have to efficiency and profitability. As we move back into margin expansion and growth again, we're going to keep our focus on efficiency and ensure that we're able to scale and improve earnings as we drive it. This past quarter, we launched a new digital online banking platform, which really came from our commitment to invest in and enhance our technology to improve our customer experience. Our teams really work hard to ensure a successful launch and a seamless transition. We're proud to have a platform that is state of the art, that has robust features that our customers can use to stay connected and take care of their banking needs. That's also going to support, this platform will also support our vision for where we want to go with growth and expansion and more abilities to do things from a digital perspective. This investment also opens up the opportunity to increase our marketing and business development efforts through the efficient use of data, so we're really excited about that as well. So to kind of summarize that with reduced pressure on cost of funds and the rate environment we're in, stable credit and asset quality, growing loan pipeline, we believe there's a lot of upside opportunity as we head into the fourth quarter and into 2025. And so with that, I'll turn it over to Derek to go into more details on the financials.