COLONY BANKCORP INC

Previous wording

The purpose of this discussion and analysis is to focus on significant changes in the financial condition of Colony Bankcorp, Inc. and our wholly owned subsidiary, Colony Bank, from December 31, 2024 through June 30, 2025 and on our results of operations for the three and six months ended June 30, 2025 and 2024. This discussion and analysis should be read in conjunction with our audited consolidated financial statements and notes thereto in the Company's 2024 Form 10-K, and information presented elsewhere in this Quarterly Report on Form 10-Q, particularly the unaudited consolidated financial statements and related notes appearing in Item 1.

Current wording

The purpose of this discussion and analysis is to focus on significant changes in the financial condition of Colony Bankcorp, Inc. and our wholly owned subsidiary, Colony Bank, from December 31, 2024 through September 30, 2025 and on our results of operations for the three and nine months ended September 30, 2025 and 2024. This discussion and analysis should be read in conjunction with our audited consolidated financial statements and notes thereto in the Company's 2024 Form 10-K, and information presented elsewhere in this Quarterly Report on Form 10-Q, particularly the unaudited consolidated financial statements and related notes appearing in Item 1.

Previous wording

•a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, and uncertainties surrounding the debt ceiling and the federal budget; and

Current wording

•a deterioration of the credit rating for U.S. long-term sovereign debt, actions that the U.S. government may take to avoid exceeding the debt ceiling, and uncertainties surrounding the debt ceiling and the federal budget;

Previous wording

The following discussion and analysis presents the more significant factors affecting the Company’s financial condition as of June 30, 2025 and December 31, 2024, and results of operations for the three and six month periods ended June 30, 2025 and 2024. This discussion and analysis should be read in conjunction with the Company’s consolidated financial statements, notes thereto and other financial information appearing elsewhere in this report.

Current wording

The following discussion and analysis presents the more significant factors affecting the Company’s financial condition as of September 30, 2025 and December 31, 2024, and results of operations for the three and nine month periods ended September 30, 2025 and 2024. This discussion and analysis should be read in conjunction with the Company’s consolidated financial statements, notes thereto and other financial information appearing elsewhere in this report.

Previous wording

At June 30, 2025, the Company had total consolidated assets of $3.1 billion, total loans, net of $2.0 billion, total deposits of $2.6 billion, and stockholders’ equity of $293.9 million. The Company reported net income of $8.0 million, or $0.46 per diluted share, for the three months ended June 30, 2025 and $14.6 million, or $0.83 per diluted share, for the first six months of 2025 compared to net income of $5.5 million, or $0.31 per diluted share, for the three months ended June 30, 2024 and $10.8 million, or $0.62 per diluted share, for the first six months of 2024. The increase in net income for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 was primarily a result of increases in interest income, seen in the loan, investment securities and deposit in banks categories along with an increase in noninterest income and slight decrease in interest expense, that was partially offset by an increase in noninterest expense. The increase in net income for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily a result of increases in interest income, seen in the loan and deposit in banks categories as well as an increase in noninterest income and slight decrease in interest expense, that was partially offset by an increase in noninterest expense.

Current wording

At September 30, 2025, the Company had total consolidated assets of $3.2 billion, total loans, net of $2.0 billion, total deposits of $2.6 billion, and stockholders’ equity of $302.3 million. The Company reported net income of $5.8 million, or $0.33 per diluted share, for the three months ended September 30, 2025 and $20.4 million, or $1.17 per diluted share, for the first nine months of 2025, compared to net income of $5.6 million, or $0.32 per diluted share, for the three months ended September 30, 2024 and $16.4 million, or $0.94 per diluted share, for the first nine months of 2024. The increase in net income for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was primarily a result of an increase in interest income on loans, and a minimal increase in noninterest income, along with a decrease in interest expense, that was partially offset by an increase in noninterest expense. The increase in net income for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily a result of increases in interest income, reflected in the loan and deposit in banks categories, as well as an increase in noninterest income, along with a decrease in interest expense that was partially offset by an increase in noninterest expense.

Previous wording

Net interest income on a tax equivalent basis was $22.6 million for the second quarter of 2025 compared to $18.6 million for the second quarter of 2024, an increase of $4.0 million. Net interest income on a tax equivalent basis for the six months ended June 30, 2025 was $43.7 million, compared to $37.4 million for the six months ended June 30, 2024, an increase of $6.3 million. These increases are the result of an increase in income on interest earning assets along with a decrease in expense on interest bearing liabilities. Income on interest earning assets increased $3.5 million to $37.0 million for the second quarter of 2025 compared to the respective period in 2024. Expense on interest bearing liabilities decreased $477,000 to $14.5 million for the second quarter of 2025 compared to the respective period in 2024. Income on interest earning assets increased $5.7 million to $72.7 million for the first six months of 2025 compared to the respective period in 2024. Expense on interest bearing liabilities decreased $559,000 to $29.0 million for the first six months of 2025 compared to the respective period in 2024.

Current wording

Net interest income on a tax equivalent basis was $22.9 million for the third quarter of 2025 compared to $18.7 million for the third quarter of 2024, an increase of $4.2 million. Net interest income on a tax equivalent basis for the nine months ended September 30, 2025 was $66.6 million, compared to $56.1 million for the nine months ended September 30, 2024, an increase of $10.5 million. These increases are the result of an increase in income on interest earning assets along with a decrease in expense on interest bearing liabilities. Income on interest earning assets increased $2.3 million to $37.1 million for the third quarter of 2025 compared to the respective period in 2024. Expense on interest bearing liabilities decreased $1.9 million to $14.2 million for the third quarter of 2025 compared to the respective period in 2024. Income on interest earning assets increased $8.1 million to $109.8 million for the first nine months of 2025 compared to the respective period in 2024. Expense on interest bearing liabilities decreased $2.4 million to $43.2 million for the first nine months of 2025 compared to the respective period in 2024.

Previous wording

Provision for credit losses for the three and six months ended June 30, 2025 was $450,000 and $2.0 million, which represents $205,000 and $1.8 million in provision for credit losses on loans and $245,000 and $122,000 in provision for credit losses on unfunded commitments, respectively. This is compared to $650,000 and $1.7 million for the three and six months ended June 30, 2024, which represents $816,000 and $1.8 million in provision for credit losses on loans and $166,000 and $116,000 in release of credit losses on unfunded commitments, respectively. For the second quarter of 2025, there were net charge-offs of $1.0 million compared to $667,000 for the same period in 2024. Net charge-offs for the first six months of 2025 were $1.7 million compared to $1.3 million for the same period in 2024. Colony’s allowance for credit losses on loans was $19.2 million, or 0.96% of total loans at June 30, 2025, compared to $19.0 million, or 1.03% of total loans, at December 31, 2024. At June 30, 2025 and December 31, 2024, nonperforming assets were $11.4 million and $11.3 million, or 0.37% and 0.36% of total assets, respectively.

Current wording

Provision for credit losses for the three and nine months ended September 30, 2025 was $900,000 and $2.9 million, which represents $760,000 and $2.6 million in provision for credit losses on loans and $140,000 and $262,000 in provision for credit losses on unfunded commitments, respectively. This is compared to $750,000 and $2.4 million for the three and nine months ended September 30, 2024, which represents $996,000 and $2.8 million in provision for credit losses on loans and $246,000 and $362,000 in release of credit losses on unfunded commitments, respectively. For the third quarter of 2025, there were net charge-offs of $1.8 million compared to $139,000 for the same period in 2024. Net charge-offs for the first nine months of 2025 were $3.5 million compared to $1.5 million for the same period in 2024. Colony’s allowance for credit losses on loans was $18.1 million, or 0.89% of total loans at September 30, 2025, compared to $19.0 million, or 1.03% of total loans, at December 31, 2024. Both periods experienced increases in net charge-offs primarily due to SBA loans in the SBSL portfolio related to loans originated prior to changes made in the Company's credit policy. Newly originated loans of this type have tighter credit requirements and higher SBA guarantee percentages. At September 30, 2025 and December 31, 2024, nonperforming assets were $15.2 million and $11.3 million, or 0.48% and 0.36% of total assets, respectively.

Previous wording

Noninterest income of $10.1 million for the second quarter of 2025 represents an increase of $601,000, or 6.33%, from the second quarter of 2024. Noninterest income of $19.1 million for the six months ended June 30, 2025 represents an increase of $158,000, or 0.83%, from the six months ended June 30, 2024. These increases are a result of increases in mortgage fee income, insurance commissions and reduced losses on sales of securities which were partially offset by decreases in service charges on deposit accounts, gain on sales of SBA loans and interchange fees. See "Table 3 - Noninterest income" for more detail and discussion on the primary drivers to the increase in noninterest income.

Current wording

Noninterest income of $10.1 million for the third quarter of 2025 represents an increase of $9,000, or 0.09%, from the third quarter of 2024. Noninterest income of $29.2 million for the nine months ended September 30, 2025 represents an increase of $167,000, or 0.57%, from the nine months ended September 30, 2024. These increases are a result of increases in mortgage fee income, insurance commissions, interchange fees and other noninterest income which were partially offset by a decrease in gain on sales of SBA loans. See "Table 3 - Noninterest Income" for more detail and discussion on the primary drivers to the increase in noninterest income.

Previous wording

For the three months ended June 30, 2025, noninterest expense was $22.0 million, an increase of $1.7 million, or 8.23%, from the same period in 2024. For the six months ended June 30, 2025, noninterest expense was $42.2 million, an increase of $1.5 million, or 3.68%, from the same period in 2024. Increases in noninterest expense for both periods were a result of increases in salaries and employee benefits, occupancy and equipment and information technology expenses which were partially offset by decreases in advertising and public relation expenses and communications expense. See "Table 4 - Noninterest expense" for more detail and discussion on the primary drivers to the increase in noninterest expense.

Current wording

For the three months ended September 30, 2025, noninterest expense was $24.6 million, an increase of $3.8 million, or 18.13%, from the same period in 2024. For the nine months ended September 30, 2025, noninterest expense was $66.8 million, an increase of $5.3 million, or 8.57%, from the same period in 2024. Increases in noninterest expense for both periods were a result of increases in salaries and employee benefits, occupancy and equipment, acquisition related expenses, information technology expenses, professional fees and other noninterest expenses, which includes a loss related to a wire fraud incident. See "Table 4 - Noninterest Expense" for more detail and discussion on the primary drivers to the increase in noninterest expense.

Previous wording

The Company’s uninsured deposits represented 32.42% of total Bank deposits at June 30, 2025 compared to 33.03% of total Bank deposits at December 31, 2024. The Company continues to maintain strong liquidity with available sources of funding of approximately $1.3 billion at June 30, 2025. Furthermore, the Company’s capital remains strong with common equity Tier 1 and total capital ratios of 12.34% and 16.06%, respectively, as of June 30, 2025.

Current wording

The Company’s uninsured deposits represented 31.52% of total Bank deposits at September 30, 2025 compared to 33.03% of total Bank deposits at December 31, 2024. The Company continues to maintain strong liquidity with available sources of funding of approximately $1.3 billion at September 30, 2025. Furthermore, the Company’s capital remains strong with common equity Tier 1 and total capital ratios of 12.37% and 16.00%, respectively, as of September 30, 2025.

Previous wording

We reported net income and diluted earnings per share of $8.0 million and $0.46, respectively, for the second quarter of 2025. This compares to net income and diluted earnings per share of $5.5 million and $0.31, respectively, for the same period in 2024. We reported net income and diluted earnings per share of $14.6 million and $0.83, respectively, for the first six months ended June 30, 2025. This compares to net income and diluted earnings per share of $10.8 million and $0.62, respectively, for the same period in 2024.

Current wording

We reported net income and diluted earnings per share of $5.8 million and $0.33, respectively, for the third quarter of 2025. This compares to net income and diluted earnings per share of $5.6 million and $0.32, respectively, for the same period in 2024. We reported net income and diluted earnings per share of $20.4 million and $1.17, respectively, for the first nine months ended September 30, 2025. This compares to net income and diluted earnings per share of $16.4 million and $0.94, respectively, for the same period in 2024.

Previous wording

Fully taxable equivalent net interest income for the second quarters of 2025 and 2024 was $22.6 million and $18.6 million, respectively. This increase quarter over quarter can be seen in increases in rates and volume on loans, net and rates on taxable investment securities as well as the decrease in rates paid on deposits and other borrowings. The net interest margin for the second quarter of 2025 and 2024 was 3.12% and 2.68%, respectively. This increase in the net interest margin for the second quarter of 2025 compared to the same period in 2024 is primarily a result of increases in rates on loans, net and taxable investment securities as well as the decrease in rates paid on deposits and other borrowings. Fully taxable equivalent net interest income for the six months ended June 30, 2025 and 2024 was $43.7 million and $37.4 million, respectively. This increase period over period can be seen in increases in rates and volume on loans, net and rates on taxable investment securities as well as the decrease in rates paid on deposits and other borrowings. The net interest margin for the six months ended June 30, 2025 and 2024 was 3.02% and 2.69%, respectively. This increase in the net interest margin is primarily a result of increases in rates on loans, net and taxable investment securities as well as the decrease in rates paid on deposits and other borrowings. Loan growth for both the quarter and six month period at disciplined pricing levels contributed to the improved net interest margin compared to the prior periods.

Current wording

Fully taxable equivalent net interest income for the third quarters of 2025 and 2024 was $22.9 million and $18.7 million, respectively. This increase quarter over quarter can be seen in increases in rates and volume on loans, net and the decrease in rates paid on deposits and other borrowings. The net interest margin for the third quarter of 2025 and 2024 was 3.17% and 2.64%, respectively. This increase in the net interest margin for the third quarter of 2025 compared to the same period in 2024 is primarily a result of increases in rates on loans, net and the decrease in rates paid on deposits and other borrowings. Fully taxable equivalent net interest income for the nine months ended September 30, 2025 and 2024 was $66.6 million and $56.1 million, respectively. This increase period over period primarily resulted from increases in rates and volume on loans, net and rates on taxable investment securities as well as the decrease in rates paid on deposits and other borrowings. The net interest margin for the nine months ended September 30, 2025 and 2024 was 3.07% and 2.67%, respectively. This increase in the net interest margin is primarily a result of increases in rates on loans, net and taxable investment securities as well as the decrease in rates paid on deposits and other borrowings. Disciplined relationship pricing, loan growth and repricing of deposits and assets for both the quarter and nine month period contributed to the improved net interest margin compared to the prior periods.

Previous wording

The following tables indicates the relationship between interest income and interest expense and the average amounts of assets and liabilities for the periods indicated. As shown in the tables, both average assets and average liabilities increased for the three months ended June 30, 2025 compared to the same period in 2024. The increase in average assets was primarily driven by the increase in loans of $80.3 million and deposits in banks of $72.2 million, which was partially offset by decreases in investment securities of $31.2 million. The increase in average liabilities was primarily attributed to an increase in interest bearing deposits of $116.4 million as well as an increase in Federal Home Loan Bank advances of $6.5 million. For the six months ended June 30, 2025, both average assets and average liabilities increased compared to the same period in 2024. The increase in average assets was primarily driven by the increase in the loan portfolio and deposits in banks of $38.8 million and $114.6 million, respectively, partially offset by a decrease in investment securities of $35.3 million. The increase in average liabilities was attributed to an increase in interest bearing deposits and Federal Home Loan Bank advances of $102.1 million and $17.3 million, respectively. The net interest spread, as well as the net interest margin, will continue to be impacted by future changes in short-term and long-term interest rate levels, as well as the impact from the competitive environment.

Current wording

The following tables indicate the relationship between interest income and interest expense and the average amounts of assets and liabilities for the periods indicated. As shown in the tables below, both average assets and average liabilities increased for the three months ended September 30, 2025 compared to the same period in 2024. The increase in average assets was primarily driven by the increase in loans of $124.8 million and deposits in banks of $140,000, which was partially offset by decreases in investment securities of $80.9 million. The increase in average liabilities was primarily attributed to an increase in interest bearing deposits of $36.2 million as well as an increase in other borrowings $1.8 million. For the nine months ended September 30, 2025, both average assets and average liabilities increased compared to the same period in 2024. The increase in average assets was primarily driven by the increase in the loan portfolio and deposits in banks of $67.8 million and $76.1 million, respectively, partially offset by a decrease in investment securities of $50.7 million. The increase in average liabilities was attributed to an increase in interest bearing deposits and Federal Home Loan Bank advances of $79.9 million and $11.5 million, respectively. The net interest spread, as well as the net interest margin, will continue to be impacted by future changes in short-term and long-term interest rate levels, as well as the impact from the competitive environment.

Previous wording

The yield on total interest-bearing liabilities decreased from 2.64% in the second quarter of 2024 to 2.42% in the second quarter of 2025. The yield on total interest-bearing liabilities decreased from 2.61% for the six months ended June 30, 2024 to 2.44% for the six months ended June 30, 2025. These decreases were primarily due to decreases in the federal funds interest rate of 100 basis points during the fourth quarter of 2024 along with low cost deposit growth during the first half of 2025, which illustrates the Company's continued focus on its deposit first culture and building customer relationships.

Current wording

The yield on total interest-bearing liabilities decreased from 2.76% in the third quarter of 2024 to 2.40% in the third quarter of 2025. The yield on total interest-bearing liabilities decreased from 2.66% for the nine months ended September 30, 2024 to 2.43% for the nine months ended September 30, 2025. These decreases were primarily due to decreases in the federal funds interest rate of 100 basis points during the fourth quarter of 2024 as well as an additional decrease of 25 basis points in September 2025, along with low cost deposit growth during the nine months of 2025, which illustrates the Company's continued focus on its deposit first culture and building customer relationships.

Previous wording

The average balance of loans includes the average balance of nonaccrual loans. Income on such loans is recognized and recorded on the cash basis. Taxable-equivalent adjustments totaling $102,000 and $56,000 for the three months ended June 30, 2025 and 2024, respectively, are calculated using the statutory federal tax rate and are included in income and fees on loans. Accretion income of $17,000 and $15,000 for the three months ended June 30, 2025 and 2024, respectively, are also included in income and fees on loans.

Current wording

The average balance of loans includes the average balance of nonaccrual loans. Income on such loans is recognized and recorded on the cash basis. Taxable-equivalent adjustments totaling $85,000 and $59,000 for the three months ended September 30, 2025 and 2024, respectively, are calculated using the statutory federal tax rate and are included in income and fees on loans. Accretion income of $25,000 and $25,000 for the three months ended September 30, 2025 and 2024, respectively, are also included in income and fees on loans.

Previous wording

Taxable-equivalent adjustments totaling $103,000 and $115,000 for the three months ended June 30, 2025 and 2024, respectively, are calculated using the statutory federal tax rate and are included in tax-exempt interest on investment securities.

Current wording

Taxable-equivalent adjustments totaling $103,000 and $105,000 for the three months ended September 30, 2025 and 2024, respectively, are calculated using the statutory federal tax rate and are included in tax-exempt interest on investment securities.

Previous wording

The average balance of loans includes the average balance of nonaccrual loans. Income on such loans is recognized and recorded on the cash basis. Taxable-equivalent adjustments totaling $170,000 and $103,000 for the six months ended June 30, 2025 and 2024, respectively, are calculated using the statutory federal tax rate and are included in income and fees on loans. Accretion income of $36,000 and $10,000 for the six months ended June 30, 2025 and 2024, respectively, are also included in income and fees on loans.

Current wording

The average balance of loans includes the average balance of nonaccrual loans. Income on such loans is recognized and recorded on the cash basis. Taxable-equivalent adjustments totaling $254,000 and $163,000 for the nine months ended September 30, 2025 and 2024, respectively, are calculated using the statutory federal tax rate and are included in income and fees on loans. Accretion income of $61,000 and $35,000 for the nine months ended September 30, 2025 and 2024, respectively, are also included in income and fees on loans.

Previous wording

Taxable-equivalent adjustments totaling $207,000 and $242,000 for the six months ended June 30, 2025 and 2024, respectively, are calculated using the statutory federal tax rate and are included in tax-exempt interest on investment securities.

Current wording

Taxable-equivalent adjustments totaling $310,000 and $347,000 for the nine months ended September 30, 2025 and 2024, respectively, are calculated using the statutory federal tax rate and are included in tax-exempt interest on investment securities.

Previous wording

The following table presents the effect of net interest income for changes in the average outstanding volume amounts of interest-earning assets and interest-bearing liabilities and the rates earned and paid on these assets and liabilities for the three and six month periods ended June 30, 2025 compared to the three and six month periods ended June 30, 2024.

Current wording

The following table presents the effect of net interest income for changes in the average outstanding volume amounts of interest-earning assets and interest-bearing liabilities and the rates earned and paid on these assets and liabilities for the three and nine month periods ended September 30, 2025 compared to the three and nine month periods ended September 30, 2024.

Previous wording

The provision for credit losses recorded in each period is based on the amount required such that the total allowance for credit losses reflects the appropriate balance, in the estimation of management, sufficient to cover expected credit losses over the expected life of a loan exposure and unfunded commitments where the likelihood is that funding will occur. Provision for credit losses for the three and six months ended June 30, 2025 was $450,000 and $2.0 million, respectively, compared to $650,000 and $1.7 million, respectively, for the same period in 2024. The provision for credit losses for the three and six months ended June 30, 2025 includes $205,000 and $1.8 million, respectively, in credit losses on loans and $245,000 and $122,000, respectively in credit losses on unfunded commitments. The provision for credit losses for the three and six months ended June 30, 2024 includes $816,000 and $1.8 million, respectively, in credit losses on loans and $166,000 and $116,000, respectively, in release of credit losses on unfunded commitments. See the section captioned “Loans and Allowance for Credit Losses” elsewhere in this discussion for further analysis of the provision for credit losses.

Current wording

The provision for credit losses recorded in each period is based on the amount required such that the total allowance for credit losses reflects the appropriate balance, in the estimation of management, sufficient to cover expected credit losses over the expected life of a loan exposure and unfunded commitments where the likelihood is that funding will occur. Provision for credit losses for the three and nine months ended September 30, 2025 was $900,000 and $2.9 million, respectively, compared to $750,000 and $2.4 million, respectively, for the same period in 2024. The provision for credit losses for the three and nine months ended September 30, 2025 includes $760,000 and $2.6 million, respectively, in credit losses on loans and $140,000 and $262,000, respectively in credit losses on unfunded commitments. The provision for credit losses for the three and nine months ended September 30, 2024 includes $996,000 and $2.8 million, respectively, in credit losses on loans and $246,000 and $362,000, respectively, in release of credit losses on unfunded commitments. See the section captioned “Loans and Allowance for Credit Losses” elsewhere in this discussion for further analysis of the provision for credit losses.

Previous wording

Noninterest income increased for the three and six month periods ended June 30, 2025 as compared to the same periods in 2024. The increases in both periods is a result of increases in mortgage fee income, insurance commissions and reduced losses on sales of securities partially offset by decreases in service charges on deposit accounts, gain on sales of SBA loans and interchange fee income.

Current wording

Noninterest income increased for the three and nine month periods ended September 30, 2025 as compared to the same periods in 2024. The increases in both periods is primarily a result of increases in mortgage fee income, insurance commissions, interchange fees and other noninterest income partially offset by a decrease in gain on sales of SBA loans.

Previous wording

Service charges on deposits. For thethree and six months ended June 30, 2025, service charges on deposits experienced a decrease compared to the same periods ended June 30, 2024. These decreases in service charges are primarily a result of lower NSF fees on deposit accounts in each respective period in 2025 compared to their prior periods in 2024.

Current wording

Service charges on deposits. For the three months ended September 30, 2025, service charges on deposits increased compared to the same period ended September 30, 2024. This increase was related to increases in deposit account fees implemented in June 2025. For the nine months ended September 30, 2025, service charges on deposits experienced a slight decrease compared to the same period ended September 30, 2024. This decrease in service charges was primarily a result of lower NSF fees on deposit accounts, partially offset by the increase in deposit account fees described above.

Previous wording

Mortgage Fee Income. For the three and six months ended June 30, 2025, mortgage fee income increased compared to the same periods ended June 30, 2024. These increases in mortgage fee income were the result of higher mortgage production in each respective period in 2025 compared to their prior periods in 2024.

Current wording

Mortgage Fee Income. For the three and nine months ended September 30, 2025, mortgage fee income increased compared to the same periods ended September 30, 2024. These increases in mortgage fee income were the result of higher mortgage production in each respective period in 2025 compared to their prior respective periods in 2024.

Previous wording

Gain on sales of SBA loans. For the three and six months ended June 30, 2025, net realized gains on the sale of the guaranteed portion of SBA loans decreased as compared to the same periods ended June 30, 2024. These decreases are related to decreased production and sales in 2025 in the Small Business Specialty Lending division.

Current wording

Gain on sales of SBA loans. For the three and nine months ended September 30, 2025, net realized gains on the sale of the guaranteed portion of SBA loans decreased as compared to the same periods ended September 30, 2024. These decreases are related to decreased loan production and sales in 2025 in the Small Business Specialty Lending division.

Previous wording

BOLI income. For the three months ended June 30, 2025, BOLI income was slightly higher when compared to the same period ended June 30, 2024 due to normal fluctuations in cash surrender value. For the six months ended June 30, 2025 compared to the same period in 2024, BOLI income decreased due to the payout of death benefits during the first quarter of 2024.

Current wording

BOLI income. For the three months ended September 30, 2025, BOLI income was slightly higher when compared to the same period ended September 30, 2024 due to normal fluctuations in cash surrender value. For the nine months ended September 30, 2025 compared to the same period in 2024, BOLI income decreased due to the payout of death benefits during the first quarter of 2024.

Previous wording

Interchange fees. For thethree and six months ended June 30, 2025, interchange fee income was slightly lower than the same periods ended June 30, 2024. This minimal decrease in interchange fees is the result of customer use of our card programs whose buying habits can fluctuate between periods.

Current wording

Interchange fees. For thethree and nine months ended September 30, 2025, interchange fee income was slightly higher than the same periods ended September 30, 2024. This increase in interchange fees is the result of customer use of our card programs and fluctuating purchasing habits between periods.

Previous wording

Insurance commissions. For thethree and six months ended June 30, 2025, insurance commissions increased compared to the same periods ended June 30, 2024. This variance is volume driven by activity in the Company's insurance division and was also impacted by the acquisition of the Ellerbee Insurance Agency in the second quarter of 2025.

Current wording

Insurance commissions. For thethree and nine months ended September 30, 2025, insurance commissions increased compared to the same periods ended September 30, 2024. This variance is volume driven by activity in the Company's insurance division and was also impacted by the acquisition of the Ellerbee Insurance Agency in the second quarter of 2025.

Previous wording

Other noninterest income. For thethree and six months ended June 30, 2025, other noninterest income increased ascompared tothe same periods ended June 30, 2024. The increase in other noninterest income for both periods ended June 30, 2025 was primarily attributable to increases in wealth advisory and merchant services, an increase due to the writedown of bank premises in the second quarter of 2024, and an increase in equity investment market valuation gains, offset by a decrease in gains on sales of other real estate.

Current wording

Other noninterest income. For thethree and nine months ended September 30, 2025, other noninterest income increased ascompared tothe same periods ended September 30, 2024. The increase in other noninterest income for both periods ended September 30, 2025 was primarily attributable to increases in wealth advisory and merchant services, SBSL related fees and income related to the Company's portion of a Fintech distribution, offset by a decrease in equity investment market valuation gains and decreases in gains on sales of other real estate and repossessed assets.

Previous wording

Noninterest expense increased for the three and six months ended June 30, 2025 compared to the same period in 2024.

Current wording

Noninterest expense increased for the three and nine months ended September 30, 2025 compared to the same periods in 2024.

Previous wording

Salaries and employee benefits. Salaries and employee benefits for the three and six months ended June 30, 2025 increased as compared to the same periods ended June 30, 2024. These increases in salaries and employee benefits expense were primarily due to the acquisition of the Ellerbee Insurance Agency on April 1, 2025 which were partially offset by a decrease in stock award expense and an increase in FAS91-deferred costs due to growth in loans.

Current wording

Salaries and employee benefits. Salaries and employee benefits for the three months ended September 30, 2025 increased as compared to the same period ended September 30, 2024. This increase was primarily related to increases in employee salaries, insurance and bonus partially offset by decreases in commission expense due to lower SBSL sales and an increase in FAS91-deferred costs due to growth in loans. Salaries and employee benefits for the nine months ended September 30, 2025 increased as compared to the same period ended September 30, 2024. This increase was primarily due to the acquisition of the Ellerbee Insurance Agency on April 1, 2025 as well as employee insurance and bonus expense which was partially offset by a decrease in stock award expense and an increase in FAS91-deferred costs due to growth in loans.

Previous wording

Occupancy and equipment. Occupancy and equipment expenses increased for the three and six months ended June 30, 2025 compared to the same periods ended June 30, 2024. These increases relate primarily to increases in repair and maintenance, real estate taxes and lease expenses.

Current wording

Occupancy and equipment. Occupancy and equipment expenses increased for the three and nine months ended September 30, 2025 compared to the same periods ended September 30, 2024. These increases relate primarily to increases in repair and maintenance, real estate taxes and lease expenses.

Previous wording

Information technology expenses. Information technology expenses increased for the three and six months ended June 30, 2025 compared to the same periods ended June 30, 2024. These increases relate primarily to increases in software expenses which are partially offset by decreases in data processing expenses.

Current wording

Information technology expenses. Information technology expenses increased for the three and nine months ended September 30, 2025 compared to the same periods ended September 30, 2024. These increases relate primarily to increases in software expenses which are partially offset by decreases in data processing expenses.

Previous wording

Professional fees. Professional fees increased and decreased for the three and six months ended June 30, 2025, respectively, compared to the same periods ended June 30, 2024. The increase for the three month comparison is related to increases in consulting fees partially offset by legal fees. The decrease for the six month comparison is the result of decreased legal fees partially offset by increased consulting fees.

Current wording

Professional fees. Professional fees increased for the three and nine months ended September 30, 2025 compared to the same periods ended September 30, 2024. These increases relate to increases in accounting and consulting fees partially offset by decreases in legal fees.

Previous wording

Advertising and public relations. Advertising and public relations expenses decreased for the three and six months ended June 30, 2025 compared to the same periods ended June 30, 2024. These decreases related primarily to the timing of donations during the first quarter of 2024 compared to first quarter of 2025 related to the Georgia Scholarship Program along with a decrease in appraisal fees.

Current wording

Advertising and public relations. Advertising and public relations expenses increased and decreased for the three and nine months ended September 30, 2025 compared to the same periods ended September 30, 2024, respectively. The quarter over quarter increase was related to increases in donations to various local community projects while the decrease year over year related primarily to the timing of donations during the first quarter of 2024 compared to first quarter of 2025 related to the Georgia Scholarship Program along with a decrease in appraisal fees.

Previous wording

Communications. Communications expense decreased for the three and six months ended June 30, 2025 compared to the same periods ended June 30, 2024. The change is related to fluctuations in data circuit fees.

Current wording

Communications. Communications expense increased and decreased for the three and nine months ended September 30, 2025 compared to the same periods ended September 30, 2024, respectively. The changes are related to fluctuations in data circuit fees.

Previous wording

Other noninterest expense. Other noninterest expense increased for the three and six months ended June 30, 2025 as compared to the same periods ended June 30, 2024. These increases relate primarily to an increase in the valuation of the SBSL servicing asset.

Current wording

Other noninterest expense. Other noninterest expense increased for the three and nine months ended September 30, 2025 as compared to the same periods ended September 30, 2024. These increases were primarily due to a nonrecoverable loss related to a wire fraud incident recorded in the third quarter of 2025 partially offset by increases in the valuation of the SBSL servicing asset.

Previous wording

Income tax expense for the three and six months ended June 30, 2025 was $2.1 million and $3.7 million, respectively, compared to $1.5 million and $2.9 million, respectively, for the same periods in 2024. The Company’s effective tax rate for the three and six months ended June 30, 2025 was 20.5% and 20.3%, respectively, compared to 21.0% and 20.9%, respectively, for the three and six months ended June 30, 2024. The largest driver of the difference is the tax-exempt income primarily from BOLI and tax exempt interest.

Current wording

Income tax expense for the three and nine months ended September 30, 2025 was $1.5 million and $5.2 million, respectively, compared to $1.4 million and $4.3 million, respectively, for the same periods in 2024. The Company’s effective tax rate for the three and nine months ended September 30, 2025 was 20.0% and 20.2%, respectively, compared to 20.0% and 20.6%, respectively, for the three and nine months ended September 30, 2024. The largest driver of the difference is the tax-exempt income primarily from BOLI and tax exempt interest.

Previous wording

At June 30, 2025, gross loans outstanding (excluding loans held for sale) were $1.99 billion, an increase of $150.6 million, or 8.17%, compared to $1.84 billion at December 31, 2024.

Current wording

At September 30, 2025, gross loans outstanding (excluding loans held for sale) were $2.04 billion, an increase of $194.1 million, or 10.53%, compared to $1.84 billion at December 31, 2024.

Previous wording

At June 30, 2025, approximately 65.1% of our loans were secured by commercial real estate. Our total commercial real estate loans have increased since December 31, 2024 as well as our residential real estate and consumer lending, while commercial, financial & agricultural saw a slight decrease. We continue to maintain loan growth at disciplined pricing levels which has contributed to an improved net interest margin.

Current wording

At September 30, 2025, approximately 64.1% of our loans were secured by commercial real estate. Our total commercial real estate loans have increased since December 31, 2024 as well as our residential real estate and consumer lending, while commercial, financial & agricultural saw a slight decrease. We continue to maintain loan growth at disciplined pricing levels which has contributed to an improved net interest margin.

Previous wording

The allowance for credit losses on loans was $19.2 million at June 30, 2025 compared to $18.8 million at June 30, 2024, an increase of $347,000, or 1.8%. The allowance for credit losses on loans as a percentage of loans was 0.96% and 1.01% at June 30, 2025 and 2024, respectively. The provision for credit losses was $450,000 compared to $650,000 for the three months ended June 30, 2025 and June 30, 2024, respectively. The provision for credit losses for the quarter ended June 30, 2025 includes $205,000 in credit losses on loans and $245,000 in credit losses on unfunded commitments. The provision for credit losses for the quarter ended June 30, 2024 includes $816,000 in credit losses on loans and a release of $166,000 in credit losses on unfunded commitments. The provision for credit losses was $1.95 million compared to $1.65 million for the six months ended June 30, 2025 and 2024, respectively. The provision for credit losses for the six months ended June 30, 2025 includes $1.83 million in credit losses on loans and $122,000 in credit losses on unfunded commitments. The provision for credit losses for the six months ended June 30, 2024 includes $1.77 million in credit losses on loans and a release of $116,000 in credit losses on unfunded commitments. The amount of provision expense recorded in each period was the amount required such that the total allowance for credit losses reflected the appropriate balance, in the estimation of management, that was sufficient to cover expected credit losses on loans over the expected life of a loan exposure and unfunded commitments where the likelihood is that funding will occur.

Current wording

The allowance for credit losses on loans was $18.1 million at September 30, 2025 compared to $19.7 million at September 30, 2024, a decrease of $1.6 million, or 8.0%. The allowance for credit losses on loans as a percentage of loans was 0.89% and 1.04% at September 30, 2025 and 2024, respectively. The provision for credit losses was $900,000 compared to $750,000 for the three months ended September 30, 2025 and September 30, 2024, respectively. The provision for credit losses for the quarter ended September 30, 2025 includes $760,000 in credit losses on loans and $140,000 in credit losses on unfunded commitments. The provision for credit losses for the quarter ended September 30, 2024 includes $996,000 in credit losses on loans and a release of $246,000 in credit losses on unfunded commitments. The provision for credit losses was $2.9 million compared to $2.4 million for the nine months ended September 30, 2025 and 2024, respectively. The provision for credit losses for the nine months ended September 30, 2025 includes $2.6 million in credit losses on loans and $262,000 in credit losses on unfunded commitments. The provision for credit losses for the nine months ended September 30, 2024 includes $2.8 million in credit losses on loans and a release of $362,000 in credit losses on unfunded commitments. For the three and nine month periods ended September 30, 2025, we experienced increases in net charge-offs primarily related to SBA loans in our SBSL portfolio which represented 70% and 67%, respectively, of total net charge-offs for each period. These charge-offs were related to loans originated prior to changes made in the Company's credit policy. Newly originated loans of this type have tighter credit requirements and higher SBA guarantee percentages. In addition to the increased net charge-offs, another impact to the allowance for credit losses was the reduction in loss rates for 1-4 family loans in the allowance model based on updated prepayment metrics which reduced our calculated loss rate before qualitative adjustments. Therefore, the amount of provision expense recorded in each period was the amount required such that the total allowance for credit losses reflected the appropriate balance, in the estimation of management, that was sufficient to cover expected credit losses on loans over the expected life of a loan exposure and unfunded commitments where the likelihood is that funding will occur.

Previous wording

The following table presents an analysis of the allowance for credit losses on loans as of and for the six months ended June 30, 2025 and 2024:

Current wording

The following table presents an analysis of the allowance for credit losses on loans as of and for the nine months ended September 30, 2025 and 2024: