CBAN 10-K & 10-Q changes, risk factors and insider trading

In addition to the other information contained in this Annual Report, you should carefully consider the risks described below, as well as the risk factors and uncertainties discussed in our other public filings with the SEC under the caption “Risk Factors” in evaluating us and our business and making or continuing an investment in our stock. Our operations and financial results are subject to various risks and uncertainties, including, but not limited to, the material risks described below. Many of these risks are beyond our control although efforts are made to manage those risks while simultaneously optimizing operational and financial results. The occurrence of any of the following risks, as well as risks of which we are currently unaware or currently deem immaterial, could materially and adversely affect our assets, business, cash flows, condition (financial or otherwise), liquidity, prospects, results of operations and the trading price of our common stock. It is impossible to predict or identify all such factors and, as a result, you should not consider the following factors to be a complete discussion of the risks, uncertainties and assumptions that could materially and adversely affect our assets, business, cash flows, condition (financial or otherwise), liquidity, prospects, results of operations and the trading price of our common stock.

Interest rates are highly sensitive to many factors including, without limitation: the rate of inflation; economic conditions; federal monetary policies; and stability of domestic and foreign markets. Interest rates decreasedremained byelevated aduring full2024, percentage point in 2024 aswith the Federal Reserve attemptedslowly todecreasing stimulateinterest economicrates growth and counteract a dropbeginning in inflationthe levels.fourth quarter of 2024 through the fourth quarter of 2025. Further changes in interest rates and monetary policy reportedly are dependent upon the Federal Reserve’s assessment of economic data as it becomes available, and the Company cannot predict the nature or timing of future changes in monetary, economic, or other policies or the effect that they may have on the Company's business activities, financial condition and results of operations.available. Increasing interest rates can have a negative impact on our business by reducing the amount of money our customers borrow or by adversely affecting their ability to repay outstanding loan balances that may increase due to adjustments in their variable rates.rates Thiswhich may lead to an increase in nonperforming assets and a reduction of income recognized, which could have a material adverse effect oncompress our results of operations and cash flows. In addition, in a rising interest rate environment we may have to offer more attractive interest rates to depositors to compete for deposits, or pursue other sources of liquidity, such as wholesale funds. Conversely, lower interest rates may reduce our realized yield on variable rate loans and investment securities and on new loans and securities, which would reduce our interest income and cause downward pressure on net interest incomemargin and net interest margin. Higher income volatility from changes in interest rates and spreads to benchmark indices could result in a decrease in net interest income and a decrease in current fair market values of our assets. Fluctuations in interest rates impacts both the level of income and expense recorded on most of our assets and liabilities and the market value of all interest-earning assets and interest-bearing liabilities, which in turn could have a material adverse effect on our net income, operating results, asset quality, liquidity, or financial condition. A prolonged period of volatile and unstable market conditions would likely increase our funding costs and negativelyadversely affect market risk mitigation strategies.liquidity.

Prolonged periods of inflation may impact our profitability by negatively impacting our fixed costs and expenses, including increasing funding costs and expense related to talent acquisition and retention, and negatively impacting the demand for our products and services. Inflation may also contribute to restrictive or volatile monetary policy and elevated interest rates, which could further increase our funding costs, reduce loan demand and adversely affect asset values. Additionally, inflation may lead to a decrease in consumer and clients purchasing power and negatively affect the need or demand for our products and services. If significant inflation continues, our business could be negatively affected by, among other things, increased default rates leading to credit losses which could decrease our appetite for new credit extensions. These inflationary pressures could result in missed earnings and budgetary projections causing our stock price to suffer. Additionally, the timing and magnitude of inflation’s effects may be difficult to predict and could persist or intensify depending on economic conditions and policy responses.

Liquidity is essential to our business. An inability to raise funds through deposits, borrowings, the sale of loans and/or investment securities and through other sources could have a substantial negative effect on our liquidity. Our most important source of funds consists of our customer deposits. Such deposit balances can decrease when customers perceive alternative investments, such as the stock market, as providing a better risk/return tradeoff. If customers move money out of bank deposits and into other investments, we could lose a relatively low cost source of funds, which would require us to seek wholesale funding alternatives in order to continue to grow, thereby increasing our funding costs and reducing our net interest income and net income.funds. Moreover, competition among U.S. banks and non-banks for customer deposits is intense and may increase the cost of deposits (particularly in an elevated rate environment) or prevent new deposits and may otherwise negatively affect our ability to grow our deposit base. In addition, our access to deposits may be affected by the liquidity and/or cash flow needs of depositors, which may be exacerbated in an inflationary, recessionary, or elevated rate environment. This may cause our deposit accounts to decrease in the future, and any such decrease could have a material adverse impact on our sources of funding.

Other primary sources of funds consist of cash from operations, investment maturities and sales, sale of loans and proceeds from the issuance and sale of our equity securities to investors. Additional liquidity is provided by our ability to borrow from the Federal Reserve Bank of Atlanta and the Federal Home Loan Bank of Atlanta. Recently proposed changes to the Federal Home Loan Bank system could adversely impact the Company's access to Federal Home Loan Bank borrowings or increase the cost of such borrowings. We also may borrow from third-party lenders from time to time. Our access to funding sources in amounts adequate to finance or capitalize our activities or on terms that are acceptable to us could be impaired by factors that affect us directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry. Our access to funding sources could also be affected by a decrease in the level of our business activity as a result of a downturn in our primary market area or by one or more adverse regulatory actions against us.

We are subject to the risk of losses resulting from the failure of borrowers, guarantors and related parties to pay us the interest and principal amounts due on their loans. Although we maintain well-defined credit policies and credit underwriting and monitoring and collection procedures, these policies and procedures may not prevent losses, as some of these risks are outside of our control, particularly during periods in which the local, regional or national economy suffers a general decline. Moreover,Our credit risk may be heightened by concentrations in certain loan types, industries, geographic areas or borrower profiles, which could result in correlated losses during adverse economic conditions. Our access to funding sources could also be affected by a decrease in the eventlevel of our business activity as a result of a returndownturn toin elevatedour inflationprimary market area or by one or more adverse regulatory actions against us. Deterioration in credit quality may not be immediately apparent, and interestlosses rates,may theemerge futureover effectstime onas economic activityconditions couldworsen negatively affect theor collateral values associated with our existing loans, the ability to liquidate the real estate collateral securing our residential and commercial real estate loans, our ability to maintain loan origination volume and to obtain additional financing, the future demand for or profitability of our lending and services, and the financial condition and credit risk of our customers.decline. Further, in the event of delinquencies, regulatory changes and policies designed to protect borrowers may slow or prevent us from making our business decisions or may result in a delay in our taking certain remediation actions, such as foreclosure. Our assessment of credit risk relies on management judgment, forecasts and assumptions, which may prove inaccurate, particularly during periods of economic stress or rapid market change. If borrowers fail to repay their loans, our financial condition and results of operations would be adversely affected. Additionally, potential future actions such as the proposed consumer credit card interest rate cap may lead to unprofitable products, especially for riskier borrowers, and could lead to cutting credit lines or eliminating cards, increased reliance on fees and increased debt burdens for those needing credit the most, thereby having the potential to negatively impact bank asset quality.

At December 31, 2024,2025, approximately 83.6%84.5% of our loan portfolio was comprised of loans with real estate as a primary or secondary component of collateral. As a result, adverse developments affecting real estate values in our market areas could increase the credit risk associated with our real estate loan portfolio. The market value of real estate can fluctuate significantly in a short period of time as a result of market conditions in the geographic area in which the real estate is located. Adverse changes affecting real estate values and the liquidity of real estate in one or more of our markets could increase the credit risk associated with our loan portfolio, significantly impair the value of property pledged as collateral on loans and affect our ability to sell the collateral upon foreclosure without a loss or additional losses, which could result in losses that would adversely affect credit quality, profitability, financial condition, and results of operation. Such declines and losses would have a material adverse impact on our business, results of operations and growth prospects. In addition, the value and salability of properties pledged as collateral could be adversely impacted as a result of the presence ofif hazardous or toxic substances are found on properties pledged as collateral, the value of the real estate could be impaired. If we foreclose on and take title to such properties, we may incurbe significantliable for remediation costs oras well as for personal injury and property damage. Environmental laws may also require us to incur substantial expenses asto aaddress result.unknown .liabilities and may materially reduce the affected property’s value or limit our ability to use or sell the affected property.

We make various assumptions and judgments about the collectability of our loan and lease portfolio and utilize these assumptions and judgments when determining the provision and allowance for credit losses. The determination of the appropriate level of the provision and allowance for credit losses inherently involves a high degree of subjectivity and requires us to make significant estimates of current credit risks using existing qualitative and quantitative information and future trends, all of which may undergo material changes.changes, as we have experienced. Deterioration in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors,factors both within and outside of our control, may require an increase in the amount reserved in the allowance for credit losses. In addition, bank regulatory agencies periodically review our provision and the total allowance for credit losses and may require an increase in the allowance for credit losses or future provisions for credit losses, based on judgments different than those of management. Any increases in the provision or allowance for credit losses will result in a decrease in our net income and, potentially, capital, and could increase earnings volatility or constrain our ability to deploy capital, and may have a material adverse effect on our financial condition or results of operations.

A commitment to extend credit is a formal agreement to lend funds to a client as long as there is no violation of any condition established under the agreement. The borrowing needs of our customers may exceed our expected funding requirements, especially during a challenging economic environment when our client companies may be more dependent on our credit commitments due to the lack of available credit elsewhere, the increasing costs of credit, or the limited availability of financings from other sources. Unfunded credit commitments may be drawn at the same time by multiple borrowers, particularly during periods of economic or financial stress, which could significantly increase our liquidity demands. The timing and magnitude of draws on our unfunded credit commitments are difficult to predict, and actual utilization may exceed our expectations or stress assumptions. Any failure to meet our unfunded credit commitments in accordance with the borrowing needs of our customers may have a material adverse effect on our business, financial condition, results of operations or reputation. In addition, borrowers may draw on committed credit when their financial condition is deteriorating, increasing the risk that newly funded balances may not be repaid in accordance with their terms.

We use brokered deposits, as a source of funding to support our asset growth and augment deposits generated from our branch network, which are our principal source of funding. We have established policies and procedures with respect to the use of brokered deposits, which require, among other things, that (i) we limit the amount of brokered deposits as a percentage of total assets, and (ii) our asset liability committee monitors our use of brokered deposits on a regular basis, including interest rates and the total volume of such deposits in relation to our total assets. In the event that our funding strategies call for the use of brokered deposits, there can be no assurance that such sources will be available, or will remain available, or that the cost of such funding sources will be reasonable. Additionally, if the Bank is no longer considered well-capitalized, our ability to access new brokered deposits or retain existing brokered deposits could be affected by market conditions, regulatory requirements or a combination thereof, which could result in most, if not all, brokered deposit sources being unavailable. The inability to utilize brokered deposits as a source of funding could have an adverse effect on our financial position, results of operations and liquidity. In addition, significant reliance on brokered deposits could be perceived negatively by customers, counterparties or investors, which could further affect our funding costs or access to alternative sources of liquidity.

Changes in interest rates may negatively affect both the returns on and market value of our investment securities. Interest rate volatility can reduce unrealized gains or increase unrealized losses in our portfolio. Interest rates are highly sensitive to many factors including monetary policies, domestic and international economic and political issues, and other factors beyond our control. These changes can negatively impact our other comprehensive income and equity levels through accumulated other comprehensive income, which includes net unrealized gains and losses on our investment securities. Further, such losses could be realized into earnings should liquidity and/or business strategy necessitate the sales of securities in a loss position. Periods of market stress or deposit outflows could increase the likelihood that we would need to sell securities at unfavorable prices. Additionally, actual investment income and cash flows from investment securities that carry prepayment risk, such as mortgage-backed securities and callable securities, may materially differ from those anticipated at the time of investment or subsequently as a result of changes in interest rates and market conditions. In a rising-rate environment, slower prepayments or extensions of expected maturities could increase interest rate sensitivity and reduce portfolio liquidity. These occurrences could have a material adverse effect on our net interest income or our results of operations.

Our success depends, in large part, on our ability to attract and retain key personnel. Competition for the best personnel in most activities we engage in can be intense, as we compete with both smaller banks that may be able to offer bankers with more responsibility and autonomy and larger banks that may be able to offer bankers with higher compensation, resources and support, and we may not be able to hire personnel or to retain them. As a result, we may not be able to effectively compete for talent across our markets. Further, our bankers may leave us to work for our competitors and, in some instances, may take important banking and lending relationships with them to our competitors. If we are unable to attract and retain talented bankers in our markets, our business, growth prospects and financial results could be materially and adversely affected. In addition, theThe unexpected loss of services of one or more of our key personnel could have a material adverse impact on our business because of their skills, knowledge of our market, relationships in the communities we serve, years of industry experience and the difficulty of promptly finding qualified replacement personnel. Although we have employment agreements with certain of our executive officers, there is no guarantee that these officers and other key personnel will remain employed with the Company. If we are unable to successfully plan for and execute the transition or replacement of key members of our management team, our operations and strategic initiatives could be adversely affected.

We are a community bank and ourOur ability to maintain our reputation is critical to the success of our business and the failure to do so may materially adversely affect our performance.business and the value of our common stock.

OurWe are a community bank and our reputation is one of the most valuable components of our business. As such, we strive to conduct our business in a manner that enhances our reputation. This is done, in part, by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve, delivering superior service to our customers and caring about our customers and associates. Threats to our reputation can come from many sources, including adverse sentiment about financial institutions generally, unethical practices, employee misconduct, failure to deliver minimum standards of service or quality, compliance deficiencies, security breaches, litigation, investigations and other proceedings, and questionable or fraudulent activities of our customers. Negative publicity regarding our business, employees, or customers, with or without merit, may result in the loss of customers, investors and employees, costly litigation, a decline in revenues and increased governmentalgovernment regulation. If our reputation is negatively affected, by the actions of our employees or otherwise, our business and, therefore, our operating results and the value of our common stock may be materially adversely affected.

The financial services market is undergoing rapid technological changes with frequent introductions of new technology-driven products and services (including those related to or involving artificial intelligence, machine learning, blockchain and other distributed ledger technologies), and an established and growing demand for mobile and other phone and computer banking applications. In addition to better serving customers, the effective use of technology increases efficiency and enables financial institutions to reduce costs. Our future success will depend, in part, on our ability to keep pace with the technological changes and to use technology to satisfy and grow customer demand for our products and services that will satisfy customer demands for convenience as well as to create additional efficiencies in our operations as we continue to grow and expand our market area. We expect that we will need to make substantial investments in our technology and information systems to compete effectively and to stay current with technological changes. Many of our larger competitors have substantially greater resources to invest in technological improvements and have invested significantly more than us in technological improvements. As a result, they may be able to invest more heavily in developing and adopting new technologies, and offer additional or more convenient products compared to those that we will be able to provide, which would put us at a competitive disadvantage. Accordingly, weWe may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers, which could impair our growth and profitability. The implementation of new technologies may also require changes to existing systems, processes and controls and may increase our reliance on third‐party vendors, which could expose us to additional operational, regulatory or compliance risks. As a result, our ability to effectively compete to retain or acquire new business may be impaired, and the failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business, financial condition and results of operations.

The computer systems and network infrastructure we use, including those we maintain with our service providers and vendors, could be vulnerable to hardware and cyber security issues. Our operations are dependent upon our ability to protect our computer equipment against damage from fire, power loss, telecommunications failure, natural disasters such as earthquakes, tornadoes and hurricanes, or a similar catastrophic event. We could also experience a cybersecurity incident by intentional or negligent conduct on the part of employees or other internal or external sources, including our third-party vendors and cyber criminals through, for example, phishing attempts, brute force attacks, denial of service attacks, viruses or other malicious code, exploiting software vulnerabilities (including "zero-day attacks"), ransomware or other malware and supply chain attacks and other disruptive problems caused by criminal threat actors. Any damage or failure that causes an interruption in our operations could have an adverse effect on our financial condition and results of operations. In addition, our operations are dependent upon our ability to protect the computer systems and network infrastructure utilized by us, including our internet banking activities, against damage from physical break-ins, cyber security attackscyberattacks and other disruptive problems caused by criminal threat actors. Such cyberattacks and other technology disruptions would jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure, and those maintained by our service providers and vendors, which may result in significant liability, reputational damage our reputation and inhibit the use of our internet banking services by current and potential customers, any of which may result in a material adverse impact on our financial condition, results of operations or the market price of our common stock. As cyber threats continue to evolve,evolve and become more frequent, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities. In addition, as the regulatory environment related to information security, data collection and use, and privacy becomes increasingly rigorous, with new and constantly changing requirements applicable to our business, compliance with those requirements could also result in additional costs.

We and our third-party vendors are under continuous threat of loss due to hacking and cyberattacks especially as we continue to expand client capabilities to utilize internet and other remote channels to transact business. These cyber risks include increased phishing, malware, and other cybersecurity attacks described above, vulnerability to disruptions of our and our third-party vendors' information technology infrastructure and telecommunications systems for remote operations, increased risk of unauthorized dissemination of confidential information, limited ability to restore the systems in the event of a systems failure or interruption, greater risk of a cybersecurity incident resulting in destruction or misuse of valuable information, and potential impairment of our ability to perform critical functions, including wiring funds, all of which could expose us to risks of data or financial loss, increased operational expenses, reputational damage, damaged customer relationships, diversion of the attention of management away from the operation of our business, increased cybersecurity protection and remediation costs, regulatory scrutiny, sanctions, fines or penalties (which may not be covered by our insurance policies), release of sensitive and/or confidential information, litigation and liability and could seriously disrupt our operations and the operations of any impacted customers.

To date, none of foregoing types of attacks have had a material effect on our business or operations and we maintain a system of internal controls and insurance coverage to mitigate against operational risks, including data processing system failures and errors and customer or employee fraud. However, no assurances can be provided that we (or our third-party vendors) may not suffer from such an attack in the future that may cause us material harm, especially in light of the risks being posed by changingthe proliferation of new technologies, including artificial intelligence, the use of the Internet and telecommunications technologies asto wellconduct asfinancial transactions, and the increased sophistication and activities of cybercriminals.cybercriminals and other external parties.

Colony Bankcorp, Inc. is a bank holding company headquartered in Fitzgerald, Georgia that provides, through its wholly-owned subsidiary Colony Bank (collectively referred to as the Company), a broad array of products and services throughout north, central, south and coastal Georgia markets, Birmingham, Alabama and Tallahassee,Santa Rosa Beach, Tallahassee and Jacksonville, Florida. The Company offers commercial and consumer banking services as well as specialized solutions including mortgage, government guaranteed lending, consumer insurance, credit cards, wealth management and merchant services.

The Company’s loan portfolio is significantly affected by changes in the prime interest rate. The prime interest rate, which is the rate offered on loans to borrowers with strong credit, was 6.75% as of December 31, 2025 and 7.50% as of December 31, 2024 and 8.50% as of December 31, 2023.2024. The Federal Reserve Board sets general market rates of interest, including the deposit and loan rates offered by many financial institutions. During 2025, the prime interest rate decreased 0.75%. During 2024, the prime interest rate decreased 1.00%. During 2023, the prime interest rate increased 1.00%.

The Company maintains about 21.74%41.60% of its loan portfolio in adjustable rate loans that reprice with prime rate changes, while a little over half of its other loans mature within 5 years. The liabilities to fund assets are primarily in non-maturing core deposits and short-term certificates of deposit that mature within one year. During 2025, Federal Reserve rates decreased 75 basis points. During 2024, Federal Reserve rates decreased 100 basis points. During 2023, Federal Reserve rates increased 100 basis points. We have seen the net interest margin decreaseincrease to 3.14% for 2025, compared to 2.72% for 2024, compared to 2.83% for 20232024 primarily due to thelower rates paid on interest bearing liabilities continuingwhile tomaintaining outpace theincreased rates on interest earning assets.loans.

Taxable-equivalent net interest income for 20242025 decreasedincreased by $2.2$15.9 million or 2.8%,20.7%, compared to 2023,2024, primarily due to increases in loan volume and rates,rates offsetalong bywith increasesdecreases in deposit rates and increases in borrowings to fund loan growth.rates. The average volume of interest-earning assets during 20242025 increased $36.8$127.1 million compared to 2023,2024, primarily related to increases in loans and deposits in banks and short-term investments. The total yield on interest-earning assets increased year over year with increases in loan and deposits in banks and short-term investments volume, partially offset by decreases in investment securities balances along with increased rates on loan and depositsloans in banks.

The average volume of loans increased $50.3$131.8 million in 20242025 compared to 2023,2024, which primarily reflects a combination of organic and acquired loan growth in the first half of 2024.2025. The average yield on loans increased by 5124 basis points in 20242025 compared to 2023,2024, primarily due to the increased loan volume in addition to the previous year's increase in rates.volume. The average volume of interest-bearing deposits increased $58.1$106.1 million in 20242025 compared to 2023.2024. Average savings and interest-bearing demand deposits increased $74.1$65.1 million offset by a decrease inand average time deposits ofincreased $16.0$41.0 million in 20242025 compared to 2023.2024. Increases in average balances attributable to the acquisition of TC Bancshares, Inc. on December 1, 2025, were $34.7 million in loans, $20.3 million in interest-bearing demand and savings deposits and $11.0 million in time deposits.

Accordingly, the ratio of average interest-bearing deposits to total average deposits was 83.01% in 2025 and 81.81% in 2024 and 79.47% in 2023.2024. For 2024,2025, this deposit mix, combined with ana increasedecrease in interest rates, had the effect of increasingdecreasing the average cost of total deposits by 6627 basis points in 20242025 compared to 2023.2024. ThisOther wasinterest-bearing partiallyliabilities offsetalso decreased by a decrease of 1311 basis points infor otherthe interest-bearingsame liabilities in 2024 compared to 2023 due to 2024 borrowings being at lower interest rates.periods.

The Company’s net interest spread, which represents the difference between the average rate earned on interest-earning assets and the average rate paid on interest-bearing liabilities, decreasedincreased to 2.70% in 2025 from 2.23% in 2024 from 2.42% in 2023 and was also a result of deposit rate increasesdecreases andas anwell increase in borrowings, partially offset byas increases in loan volume and rates. The net interest spread, as well as the net interest margin, will be impacted by future changes in short-term and long-term interest rate levels, as well as the impact from the competitive environment. A discussion of the effects of changing interest rates on net interest income is set forth in "Market Risk and Interest Rate Sensitivity" included elsewhere in this report.

Provision for credit losses totaled $4.5 million in 2025 compared to $3.1 million in 2024 compared to $3.6 million in 2023.2024. 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, 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. The provision for credit losses for the years ended December 31, 20242025 and 20232024 includes $3.6$4.5 million and $3.9$3.6 million, respectively, in credit losses on loans and $562,000$3,000 in provision for and $286,000, respectively,$562,000 in release ofof, respectively, credit losses on unfunded commitments. See the section captioned “Allowance for Credit Losses” elsewhere in this discussion for further analysis of the provision for credit losses. The decreaseincrease in provision for credit losses for the year ended December 31, 20242025 compared to 20232024 is primarily related to the change in our loan balances year over year.year which was impacted by the acquisition of TC Bancshares, Inc. on December 1, 2025, with the addition of $412.7 million in loan balances. See the sections captioned “Loans" and "Allowance for Credit Losses” elsewhere in this discussion for further analysis of the provision for credit losses. Net charge-offs for the year ended December 31, 20242025 were $3.0$5.1 million compared to $1.6$3.0 million for the same period in 2023.2024. As of December 31, 2024,2025, Colony’s allowance for credit losses was $23.0 million, or 0.97% of total loans, compared to $19.0 million, or 1.03% of total loans, compared to $18.4 million, or 0.98% of total loans, at December 31, 2023.2024. At December 31, 20242025 and 2023,2024, nonperforming assets were $11.3$24.7 million and $10.7$11.3 million, or 0.36%0.66% and 0.35%0.36% of total assets, respectively, with credit quality in the overall loan portfolio remaining strong.

Noninterest income in 20242025 increased $3.7 million,$905,000, or 10.50%2.30% from 2023.2024. TheAll Company's increasesvariances were primarilyimpacted by the acquisition of TC Bancshares, Inc. on December 1, 2025. Increases were seen in service charges on deposit accounts, gainsmortgage fee income, losses on sales of SBAinvestment loans,securities, interchange fees, BOLI incomeincome, insurance commission and other noninterest income, which included increases in equity investment income and income on wealth advisory and merchant services.services . These increases were offset by lossesa decrease in gain on sales of investmentSBA securities and decreases in mortgage fee income, interchange fees and insurance commissions.loans. The increase in service charges on deposit accounts canis beprimarily attributeda toresult of increased deposit account fees implemented in June 2025 as well as our ability to continue to grow deposits,deposits. particularlyThe lowerincrease costin transactionalmortgage depositfee accountsincome despitewas a result of higher mortgage production year over year and interchange fees increased as a result of customer use of our card programs and fluctuating purchase habits between periods. Insurance commissions increased $1.1 million which was driven by increased volume in the challengingCompany's rateinsurance environment.division, impacted by the acquisition of the Ellerbee Insurance Agency in the second quarter of 2025. The increase of $4.2 million in gain on sales of SBA loans is due to the sale of 451 loans in 2024 compared to 81 loans in 2023. The increase of $766,000$881,000 in other noninterest income was attributable to equity investment market valuation gains of $270,000$300,000 in 20242025 compared to $156,000$270,000 in 2023,2024, an increase of $235,000 in wealth advisory and merchant services along with increases in SBA servicing and other related fee income of $671,000, offset by a decrease in sales of assets of $446,000. The decrease in mortgage fee income was a result of lower mortgage production year over year and interchange fees decreased due to fluctuations in the buying habits of consumers.$156,000. Investment securities were sold in 2025 and 2024 for the purpose of restructuring underperforming assets in order to reinvest at higher yields and resulted in losses of $1.0 million and $1.8 million.million, Thererespectively. wereThe nodecrease of $3.9 million in gain on sales of investmentSBA securitiesloans is due to the sale of only 208 loans in 2023.2025 compared to 451 loans in 2024.

Overview. Loans totaled $2.4 billion at December 31, 2025, an increase of 29.2% from $1.8 billion at December 31, 2024, which was attributable to a decreasecombination of 2.1%organic fromgrowth $1.9and billionthe atTC DecemberBancshares, 31,Inc. 2023.acquisition. The majority of the Company’s loan portfolio is comprised of real estate loans. Commercial and residential real estate loans which is primarily for 1-4 family residential properties, nonfarm nonresidential properties and real estate construction loans made up 83.6%84.5% and 83.8%83.6% of total loans at December 31, 20242025 and December 31, 2023,2024, respectively. Commercial, financial and agriculture loans represents 11.6%9.2% of thetotal loans at December 31, 20242025 and 2023.11.6% at December 31, 2024. Consumer and other loans increased to 4.8%6.3% of total loans at December 31, 20242025 from 3.3%4.8% at December 31, 2023.2024. All categories of loans reflect increases as a result of the acquisition of TC Bancshares, Inc. in December 2025.

Commercial, financial & agricultural. Commercial, financial and agricultural loans at December 31, 20242025 decreasedincreased by $28.8$4.6 million, or 11.9%2.2% to $213.9$218.5 million from December 31, 20232024 at $242.8$213.9 million. This decreaseincrease was related to the acquisition of TC Bancshares, Inc. mentioned above partially offset by loan payoffs during 2024the of a small number of larger commercial and industrial loans.year. The Company’s commercial, financial and agricultural loans are a diverse group of loans to small, medium and large businesses. The purpose of these loans varies from supporting seasonal working capital needs to term financing of equipment. These agricultural lines typically reduce in size at year end as crops are sold. While some short-term loans may be made on an unsecured basis, most are secured by the assets being financed with collateral margins that are consistent with the Company’s loan policy guidelines.

Construction, land & land development. Construction, land and land development loans decreasedincreased by $42.1$97.5 million, or 17.0%,47.5%, at December 31, 20242025 to $205.0$302.5 million from $247.1$205.0 million at December 31, 2023.2024. This decreaseincrease was partiallyprimarily dueattributable to interestthe ratesacquisition remainingof atTC higherBancshares, levelsInc. throughoutand the firstcontinued nine monthsgrowth of 2024the resultingbusiness in a decrease in consumer residential construction loans.2025.

Other commercial real estate. Other commercial real estate loans increased by $16.3$259.1 million, or 1.7%,26.2%, at December 31, 20242025 to $990.6$1,249.7 million from $974.4$990.6 million at December 31, 2023.2024. This increase was primarily attributable to increasesthe acquisition of TC Bancshares, Inc. as well as growth of the business in owner2025 occupied commercial real estate and farmland loans partially offset by decreases in non-owner occupied commercial real estate and multifamily loans. Also,despite the increaseimpact was impacted byof the current lending environment,and rate environment, and the Company's lending appetite.environment. At December 31, 2024,2025, the Company's other commercial real estate loans were comprised of 58.7%61.6% of non-owner occupied loans and 41.3%38.4% of owner occupied loans.

The Company's non-owner occupied portfolio is well diversified as can be seen in the table below as of December 31, 2025 and 2024.

Residential Real Estate Loans. Residential real estate loans decreasedincreased by $12.1$115.4 million or 3.4%,33.5%, at December 31, 20242025 to $344.2$459.5 million from $356.2$344.2 million at December 31, 2023.2024. This decreaseincrease was primarily attributable to athe declineacquisition of TC Bancshares, Inc. and the continued growth of the business in portfolio 1-4 family residential real estate loans.2025. Residential real estate loans consist of revolving, open-end and closed-end loans as well as those secured by closed-end first and junior liens.

Consumer and other. Consumer and other loans include loans to individuals for personal and household purposes, including secured and unsecured installment loans and revolving lines of credit. Consumer and other loans at December 31, 20242025 increased $26.3$61.7 million or 41.7%69.2% to $89.2$150.9 million from $63.0$89.2 million at December 31, 2023.2024. This increase was primarily attributable to the acquisition of TC Bancshares, Inc. as well as increases in the Company's marine and RV lending division asand well as an increaseincreases in Upstart loans, consumer loans to individuals with no or limited credit history.

Collateral concentrations. Concentrations of credit risk can exist in relation to individual borrowers or groups of borrowers, certain types of collateral, certain types of industries, or certain geographic regions. The Company has a concentration in real estate loans as well as a geographic concentration that could pose an adverse credit risk. At December 31, 2024,2025, approximately 83.6%84.5% of the Company’s loan portfolio was concentrated in loans secured by real estate. A substantial portion of borrowers’ ability to honor their contractual obligations is dependent upon the viability of the real estate economic sector. In addition, a large portion of the Company’s foreclosed assets are also located in these same geographic markets, making the recovery of the carrying amount of foreclosed assets susceptible to changes in market conditions. Management continues to monitor these concentrations and has considered these concentrations in its allowance for credit loss analysis. In recent years, we have seen real estate values stabilizing in our markets. The stabilization of rates has resulted in a decrease in the number of loans being classified as impaired over the past several years.

Large credit relationships. The Company currently operates 34 locations in north, central, south and coastal Georgia and also expanded its presence in 2023 into Birmingham, Alabama as well as TallahasseeBirmingham, Alabama and theJacksonville, FloridaSanta panhandle.Rosa Beach and Tallahassee, Florida. As a result, the Company originates and maintains large credit relationships with several commercial customers in the ordinary course of business. The required approval of loans (new or renewal) is based on the total credit exposure of a borrower, the type of loan, combined with whether or not there are any material policy exceptions on the loan. For non-owner occupied commercial real estate loans, the DLC approves loans $18 million or greater with material exceptions and loans $26 million or greater without exceptions. For other loans that are not commercial real estate, the DLC approves loans $21 million or greater with material exceptions and loans $30 million or greater with no exceptions. At December 31, 2024,2025, our largest 20 relationships consisted of loans and loan commitments, where the total committed balance was $304.5$359.9 million with $286.1$312.0 million outstanding. At December 31, 2023,2024, our largest 20 relationships had total committed balance of $354.1$304.5 million with $266.7$286.1 million outstanding.

Asset quality experienced a slight decrease during the year ended December 31, 2024.2025. Nonperforming assets include nonaccrual loans, accruing loans contractually past due 90 days or more, repossessed personal property and other real estate owned ("OREO"). Nonaccrual loans totaled $23.4 million at December 31, 2025, an increase of $12.7 million, or 119.3%, from $10.7 million at December 31, 2024, an increase of $821,000, or 8.3%, from $9.8 million at December 31, 2023.2024. There were sixeight loans contractually past due 90 days or more and still accruing totaling $95,000 at December 31, 2025 and six loans totaling $152,000 at December 31, 20242024. andAt twoDecember loans31, totaling2025, $370,000OREO totaled $1.0 million, an increase of $846,000, or 418.8%, compared with $202,000 at December 31, 2023. At December 31, 2024, OREO totaled $202,000, a decrease of $246,000, or 54.9%, compared with $448,000 at December 31, 2023.2024. The change in OREO is primarily the result of fivefour properties added to other real estate totaling $1.2$1.15 million offset by $1.4 million$310,000 from the sale of sixtwo OREO properties. At the end of the year ended December 31, 2024,2025, total nonperforming assets as a percentage of total assets increased to 0.36%0.66% compared with 0.35%0.36% at December 31, 2023.2024. The increase in nonperforming assets was primarily the result of increases in commercial,construction, financialland & agriculturalland development, commercial real estate and residential real estate loans as well as SBSLthe governmentaddition guaranteedof $5.7 million of loans acquired in variousthe callacquisition codes,of TC Bancshares, Inc., partially offset by repayments, payoffs and charged off loans.

Nonperforming assets include nonaccrual loans, loans past due 90 days or more, foreclosed real estate,estate and repossessed assets and nonaccrual securities.assets. Nonperforming assets at December 31, 20242025 increased 6.4%117.9% from December 31, 2023,2024, as a result of the increase in nonaccrual loans and repossessedother assets,real estate, offset by decreases in loans accruing past due 90 days or more and otherrepossessed real estate owned property.assets.

The Company had ninefive loans modified due to financial difficulty during the year ended December 31, 2024.2025. See Note 3.4. Loans, for additional details on loan modifications.

The allowance for credit losses on loans increased from $18.4$19.0 million or 0.98% of total loans at December 31, 2023 to $19.0 million, or 1.03% of total loans at December 31, 2024.2024 to $23.0 million, or 0.97% of total loans at December 31, 2025. The provision for credit losses on loans reflects loan quality trends, including the level of net charge-offs or recoveries, among other factors. TheAlthough net charge-offs were slightly higher which impacted the provision for credit losses, the primary reason for the increase year over year increase was due to the increaseadoption of ASU 2025-08 which resulted in charge-offs.an These charge-offs represent a small numberaddition of loans$4.6 andmillion circumstances, and management has no concern that there are systemic issues acrossto the portfolio.allowance in 2025.

The average yield of the securities portfolio was 2.60% in 2025 and 2.61% in 2024 and 2.72% in 2023.2024. The slight decrease in the average yield from 20232024 to 20242025 was primarily attributed to the decrease in average balances of investment securities related to paydowns and the sales of investments securities during 2024.both periods.

Average deposits decreasedincreased $1.3$91.1 million in 20242025 compared to 2023.2024. The decreaseincrease in 20242025 included decreasesincreases of $16.0$41.0 million, or 2.6%6.8% in time deposits and $59.4 million, or 11.4% in noninterest-bearing deposits, which were partially offset by an increase in interest-bearing demand and savings deposits of $74.1$65.1 million, or 5.3%.4.4%, partially offset by a decrease of $15.0 million, or 3.3% in noninterest-bearing deposits. The increase in our overall deposits is due primarily to the Company'sacquisition of TC Bancshares, Inc The Company continues to focus on the importance of customer relationships and our ability to attract noninterest-bearing demand and interest-bearing demand and savings deposits despite the challenging interest rate environment.

As of December 31, 20232025 and 2022,2024, $857.6$980.0 million and $777.8$857.6 million, respectively, of our deposit portfolio was uninsured. The uninsured amounts are estimated based on the methodologies and assumptions used for the Bank's regulatory reporting requirements. The adjusted uninsured deposit estimate (which excludes deposits collateralized by public funds and internal accounts) was $576.5 million as of December 31, 2025 compared to $457.3 million as of December 31, 2024, Adjusted uninsured deposits represents a small percentage of our overall deposits, which increases the stability of our deposit base and lowers our overall funding risk.

At December 31, 2024,2025, shareholders’ equity totaled $278.7$375.9 million compared to $254.9$278.7 million at December 31, 2023.2024. The primary driver of the increase was the issuance of common stock of $65.9 million as a result of the acquisition of TC Bancshares, Inc. in December 2025. In addition to net income of $23.9$28.3 million, another significant change in shareholders’ equity during 20242025 included $7.9$8.0 million of dividends declared on common stock. The accumulated other comprehensive loss component of stockholders’ equity totaled $34.5 million at December 31, 2025 compared to $47.6 million at December 31, 2024 compared to $55.6 million at December 31, 2023.2024. This fluctuation was mostly related to the after-tax effect of changes in the fair value of securities available-for-sale. Under regulatory requirements, the unrealized gain or loss on securities available for sale does not increase or reduce regulatory capital and is not included in the calculation of risk-based capital and leverage ratios. Regulatory agencies for banks and bank holding companies utilize capital guidelines designed to measure Tier 1 and total capital and take into consideration the risk inherent in both on-balance sheet and off-balance sheet items.

A cash dividend of $7.9$8.0 million and $7.7$7.9 million was paid for the yearyears ended December 31, 20242025 and 2023,2024, respectively.

The investment portfolio provides a ready means to raise cash if liquidity needs arise. As of December 31, 2025, the available-for-sale bond portfolio totaled $383.8 million. At December 31, 2024, the available-for-sale bond portfolio totaled $366.0 million. At December 31, 2023, the available-for-sale bond portfolio totaled $407.4 million. This decreaseincrease is primarily attributable to salesavailable-for-sale alonginvestment withsecurities maturities,acquired calls and paydowns onin the portfolioacquisition duringof 2024.TC Bancshares, Inc. in December 2025. Only marketable investment grade bonds are purchased. Although approximately 56.7%51.5% of the Bank’s bond portfolio is encumbered as pledges to secure various public funds deposits, repurchase agreements, and for other purposes, management can restructure and free up investment securities for sale if required to meet liquidity needs.

The Company’s financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). GAAP presently requires the Company to measure financial position and operating results primarily in terms of historic dollars. Changes in the relative value of money due to inflation or recession are generally not considered. The primary effect of inflation on the operations of the Company is reflected in increased operating costs, and the Company has experienced material effects of inflation during the last fourfive fiscal years due to the government's monetary policies and the current economic climate. In management’s opinion, changes in interest rates affect the financial condition of a financial institution to a far greater degree than changes in the inflation rate. While interest rates are greatly influenced by changes in the inflation rate, they do not necessarily change at the same rate or in the same magnitude as the inflation rate. Interest rates are highly sensitive to many factors that are beyond the control of the Company, including changes in the expected rate of inflation, the influence of general and local economic conditions and the monetary and fiscal policies of the United States government, its agencies and various other governmental regulatory authorities, among other things, as further discussed in the next section.

The measured interest rate sensitivity indicates an asset sensitive position over the next year, which could serve to improve net interest income in a rising interest rate environment. The actual realized change in net interest income would depend on several factors, some of which could serve to reduce or eliminate the asset sensitivity noted above. These factors include a higher than projected level of deposit customer migration to higher cost deposits, such as certificates of deposit, which would increase total interest expense and serve to reduce the realized level of asset sensitivity. Another factor which could impact the realized interest rate sensitivity in a rising rate environment is the repricing behavior of interest-bearing non-maturity deposits. Assumptions for repricing are expressed as a beta relative to the change in the prime rate. For instance, a 25% beta would correspond to a deposit rate that would increase 0.25% for every 1% increase in the prime rate. Projected betas for interest bearing non-maturity deposit repricing are a key component of determining the Company's interest rate risk position. Should realized betas be higher than projected betas, the expected benefit from higher interest rates would be reduced.

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, 2025 through MarchJune 31,30, 2026 and on our results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025. This discussion and analysis should be read in conjunction with our audited consolidated financial statements and notes thereto in the Company’s 2025 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.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance.performance, statements regarding the proposed merger of First Reliance Bancshares, Inc. (“First Reliance”) with the Company (the “Proposed Merger”) and expectations with regard to the benefits of the Proposed Merger, and statements regarding the completed acquisition of TC Bancshares, Inc. (“TC Bancshares”). These statements are often, but not always, made through the use of words or phrases such as “may,” “might,” “should,” “could,” “predict,” “potential,” “believe,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “strive,” “projection,” “goal,” “target,” “outlook,” “aim,” “would,” “annualized” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this Quarterly Report on Form 10-Q. Because of these risks and other uncertainties, our actual future results, performance or achievement, or industry results, may be materially different from the results indicated by the forward-looking statements in this Quarterly Report on Form 10-Q. In addition, our past results of operations are not necessarily indicative of our future results. You should not rely on any forward-Oklookingforward-looking statements, which represent our beliefs, assumptions and estimates only as of the dates on which they were made, as predictions of future events. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

The following discussion and analysis presents the more significant factors affecting the Company’s financial condition as of MarchJune 31,30, 2026 and December 31, 2025, and results of operations for the three and six month periods ended MarchJune 31,30, 2026 and 2025. 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.

At MarchJune 31,30, 2026, the Company had total consolidated assets of $3.7$3.6 billion, total loans, net of $2.4$2.5 billion, total deposits of $3.0 billion, and stockholders’ equity of $380.4$390.0 million. The Company reported net income of $8.2$10.9 million, or $0.39$0.51 per diluted share, for the three months ended MarchJune 31,30, 2026 and $19.1 million, or $0.90 per diluted share, for the six months ended June 30, 2026 compared to net income of $6.6$8.0 million, or $0.38$0.46 per diluted share, for the three months ended MarchJune 31,30, 2025 and $14.6 million, or $0.83 per diluted share, for the six months ended June 30, 2025. The increaseincreases in net income for the three monthsand six month periods ended MarchJune 31,30, 2026 compared to the three monthsand six month periods ended MarchJune 31,30, 2025 waswere a result of an increaseincreases in interest income on loans and an increaseincreases in noninterest income, partially offset by an increase in interest expense and an increase in noninterest expense as well as the impact from the acquisition of TC Bancshares in December 2025.

Net interest income on a tax equivalent basis was $29.3$30.0 million for the firstsecond quarter of 2026 compared to $21.1$22.6 million for the firstsecond quarter of 2025, an increase of $8.2$7.4 million. ThisNet interest income on a tax equivalent basis for the six months ended June 30, 2026 was $59.4 million, compared to $43.7 million for the six months ended June 30, 2025, an increase isof $15.7 million. These increases are the result of an increase in income on interest earning assets slightly offset with an increase in expense on interest bearing liabilities. Income on interest earning assets increased $9.3$8.9 million to $45.0$45.9 million for the firstsecond quarter of 2026 compared to the respective period in 2025. Expense on interest bearing liabilities increased $1.1$1.5 million to $15.7$15.9 million for the firstsecond quarter of 2026 compared to the respective period in 2025. Income on interest earning assets increased $18.2 million to $91.0 million for the first six months of 2026 compared to the respective period in 2025. Expense on interest bearing liabilities increased $2.6 million to $31.6 million for the first six months of 2026 compared to the respective period in 2025.

Provision for credit losses for the three and six months ended MarchJune 31,30, 2026 was $1.75$1.9 million and $3.7 million, which represents $1.5$2.1 million and $3.6 million in provision for credit losses on loans and $250,000$210,000 in release and $40,000 in provision for credit losses on unfunded commitments.commitments, respectively. This is compared to $1.5$450,000 and $2.0 million for the three and six months ended MarchJune 31,30, 2025, which represents $1.6$205,000 and $1.8 million in provision for credit losses on loans and $123,000$245,000 and $122,000 in releaseprovision offor credit losses on unfunded commitments.commitments, respectively. For the firstsecond quarter of 2026, there were net charge-offs of $1.7$1.8 million compared to $606,000$1.0 million for the same period in 2025. Net charge-offs for the first six months of 2026 were $3.5 million compared to $1.7 million for the same period in 2025. Colony’s allowance for credit losses on loans was $21.7$22.0 million, or 0.90%0.89% of total loans at MarchJune 31,30, 2026, compared to $23.0 million, or 1.04%0.97% of total loans, at December 31, 2025. The increase in net charge-offs was primarily due to SBA loans in the Small Business Specialty Lending (“ SBSL”) portfolio as well as increases in commercial, financial & agricultural and consumer loans. At MarchJune 31,30, 2026 and December 31, 2025, nonperforming assets were $19.9$20.9 million and $24.7 million, or 0.53%0.58% and 0.66% of total assets, respectively.

Noninterest income of $10.7$12.2 million for the firstsecond quarter of 2026 represents an increase of $1.7$2.1 million, or 18.5%,20.4%, from the firstsecond quarter of 2025. Noninterest income of $22.9 million for the six months ended June 30, 2026 represents an increase of $3.7 million, or 19.4% from the six months ended June 30, 2025. These increases are a result of increases in service charges on deposits, mortgage fee income, insurance commissions, interchange fees, and income from Colony Financial Advisors, which is included in other noninterest income. See “Table 3 - Noninterest Income” for more detail and discussion on the primary drivers to the increase in noninterest income.

For the three months ended MarchJune 31,30, 2026, noninterest expense was $27.7$26.4 million, an increase of $7.5$4.4 million, or 36.9%,20.1%, from the same period in 2025. For the six months ended June 30, 2026, noninterest expense was $54.1 million, an increase of $11.9 million, or 28.1%, from the same period in 2025. 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, and professional fees and other noninterest expenses.fees. See “Table 4 - Noninterest Expense” for more detail and discussion on the primary drivers to the increase in noninterest expense.

The Company’s uninsured deposits represented 32.21%32.45% of total Bank deposits at MarchJune 31,30, 2026 compared to 31.65% of total Bank deposits at December 31, 2025. Adjusted uninsured deposits (which excludes deposits collateralized by public funds and internal accounts) represented 20.35%20.66% of total Bank deposits at MarchJune 31,30, 2026 compared to 18.62% of total Bank deposits at December 31, 2025. The Company continues to maintain strong liquidity with available sources of funding of approximately $1.9$1.8 billion at MarchJune 31,30, 2026. Furthermore, the Company’s capital remains strong with common equity Tier 1 and total capital ratios of 12.5%13.0% and 15.8%,16.2%, respectively, as of MarchJune 31,30, 2026.

We reported net income and diluted earnings per share of $8.2$10.9 million and $0.39,$0.51, respectively, for the firstsecond quarter of 2026. This compares to net income and diluted earnings per share of $6.6$8.0 million and $0.38,$0.46, respectively, for the same period in 2025. We reported net income and diluted earnings per share of $19.1 million and $0.90, respectively, for the first six months of 2026. This compares to net income and diluted earnings per share of $14.6 million and $0.83, respectively, for the same period in 2025.

Fully taxable equivalent net interest income for the firstthree quartermonths ofended June 30, 2026 andcompared 2025to June 30, 2025, was $29.4$30.0 million and $21.1$22.6 million, respectively. ThisFully increasetaxable periodequivalent overnet periodinterest income for the six months ended June 30, 2026 compared to June 30, 2025, was $59.4 million and $43.7 million, respectively. These increases for both periods can be seen in increases in rates and volume on loans as well as a decreasedecreases in rates paid on deposits and other borrowings. The net interest margin for the firstthree quartermonths ofended June 30, 2026 andcompared 2025to 2025, was 3.48%3.52% and 2.93%,3.12%, respectively. ThisFor increasethe insix months ended June 30, 2026 compared to June 30, 2025, the net interest margin was 3.50% and 3.02%, respectively. These increases for theeach first quarter of 2026 compared to the samerespective period in 2025 isare the result of a combination of increased earnings asset yields through loan growth, repricing, and accretion income on acquired loansloans, which was partially accelerated due to prepayments of acquired loans during the quarter. Additionally, a reduction in the overall cost of funds contributed to the increase in net interest margin when compared to the same periodperiods in 2025.

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 MarchJune 31,30, 2026 compared to the same period in 2025. The increase in average assets was primarily driven by the increase in loans of $530.5$472.7 million and deposits in banks of $10.5$88.1 million, which was partially offset by decreases in investment securities of $41.3$51.5 million. The increase in average liabilities was primarily attributed to an increase in interest-bearing deposits of $410.5 million, which was partially offset by a decrease of $13.6 million in Federal Home Loan Bank advances. For the six months ended June 30, 2026 compared to the same period in 2025, both average assets and average liabilities increased. The increase in average assets was alsoprimarily attributabledriven toby the TCincrease Bancsharesin acquisition.loans of $501.4 million and deposits in banks of $50.0 million, which was partially offset by decreases in investment securities of $46.4 million. The increase in average liabilities of $396.8 million was primarily attributed to an increase in interest-bearing deposits of $398.7 million, which was partially offset by a decrease of $1.9 million in Federal Home Loan Bank advances. The increases for the above periods were also impacted by the TC Bancshares acquisition.acquisition in December 2025. 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.

The yield on total interest-bearing liabilities decreased from 2.46%2.42% in the second quarter of 2025 to 2.29% in the second quarter of 2026. The yield on total interest-bearing liabilities decreased from 2.44% in the first quartersix months of 2025 to 2.28% in the first quartersix months of 2026. ThisThese decreasedecreases waswere primarily due to decreases in the federal funds interest rate of 75 basis points during the fourth quarter of 2025, along with the addition of deposits from the TC Bancshares merger in December 2025.

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 MarchJune 31,30, 2026 was $1.75$1.9 million and $3.7 million, respectively, compared to $1.5$450,000 millionand $2.0 million, respectively, for the same period in 2025. The provision for credit losses for the three and six months ended MarchJune 31,30, 2026 includes $1.5$2.1 million and $3.6 million, respectively, in credit losses on loans and $250,000a release of $210,000 and provision of $40,000 in credit losses on unfunded commitments. The provision for credit losses for the three and six months ended MarchJune 31,30, 2025 includes $1.6$205,000 and $1.8 million in credit losses on loans and $123,000$245,000 and $122,000 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.

Noninterest income increased for the three and six month periodperiods ended MarchJune 31,30, 2026 as compared to the same periodperiods in 2025. TheThese increaseincreases waswere primarily a result of increases in service charges on deposits, mortgage fee income, insurance commissions, interchange fees and other noninterest income partially offset by a decrease in gain on sales of SBA loans.

Service charges on deposits. For the three and six months ended MarchJune 31,30, 2026, service charges on deposits increased compared to the same periodperiods ended MarchJune 31,30, 2025. ThisThese increaseincreases waswere related to increases in deposit account fees implemented during the last half of 2025 as well as the impact of the TC Bancshares acquisition.

Mortgage Fee Income. For the three and six months ended MarchJune 31,30, 2026, mortgage fee income increased compared to the same periodperiods ended MarchJune 31,30, 2025. ThisThese increaseincreases in mortgage fee income was the result of higher mortgage production in the second quarter and the first quartersix months of 2026 compared to the prior respective periodperiods in 2025.

Gain on sales of SBA loans. For the three and six months ended MarchJune 31,30, 2026, net realized gains on the sale of the guaranteed portion of SBA loans decreased as compared to the same periodperiods ended MarchJune 31,30, 2025. ThisThese decreasedecreases waswere related to decreased loan production and sales in the second quarter and the first quartersix months of 2026 in the SBSL division.

Other SBA income. For the three and six months ended MarchJune 31,30, 2026, other SBA income increased slightly as compared to the same periodperiods ended MarchJune 31,30, 2025, primarily related to an increase in servicing fee income.

BOLI income. For the three and six months ended MarchJune 31,30, 2026, BOLI income was slightly higherincreased when compared to the same periodperiods ended MarchJune 31,30, 20252025. dueThese toincreases were primarily the result of a tax-free gain received on a BOLI claim in the second quarter of 2026 along with normal fluctuations in cash surrender value as well as the addition of BOLI policespolicies from the TC Bancshares acquisition.

Interchange fees. For the three and six months ended MarchJune 31,30, 2026, interchange fee income was slightly higher than the same periodperiods ended MarchJune 31,30, 2025. ThisThese increaseincreases in interchange fees isare the result of customer use of our card programs and fluctuating purchasing habits between periods.

Insurance commissions. For the three and six months ended MarchJune 31,30, 2026, insurance commissions increased compared to the same periods ended MarchJune 31,30, 2025. ThisThese variancevariances isare volume driven by activity in the Company’s insurance division and waswere also impacted by the acquisition of the Ellerbee Insurance Agency in the second quarter of 2025.

Other noninterest income. For the three and six months ended MarchJune 31,30, 2026, other noninterest income increased as compared to the same periodperiods ended MarchJune 31,30, 2025. The increaseincreases in other noninterest income was primarily attributable to increases in wealth advisory and merchant services,services andas increaseswell inas gainsincome onreceived salesfrom ofa otherfintech realdistribution, estate and fixed assets along with decreased losses on repossessed assets,partially offset by a decrease in equity investment market valuation gains.

Noninterest expense increased for the three and six months ended MarchJune 31,30, 2026 compared to the same periods in 2025.

Salaries and employee benefits. Salaries and employee benefits for the three and six months ended MarchJune 31,30, 2026 increased as compared to the same periodperiods ended MarchJune 31,30, 2025. ThisThese increaseincreases waswere primarily due to the increaseincreases in salaries and employee benefits expenses attributed to the additional employees from the Ellerbee Insurance Agency acquisition in April 2025 and the TC Bancshares acquisition in December 2025.2025 Inalong addition, there werewith increases in commissions paid in 2026 related to SBSL and Colony Financial Advisors.

Occupancy and equipment. Occupancy and equipment expenses increased for the three and six months ended MarchJune 31,30, 2026 compared to the same periodperiods ended MarchJune 31,30, 2025. Increases for both periods occurred in utilities and lease expenses primarily due to the impact of the above listed acquisitionsacquisition in 2025.2025 as well as increases in repairs and maintenance.

Acquisition related expenses. Acquisition related expenses increased for the three and six months ended MarchJune 31,30, 2026 compared to the same periodperiods ended MarchJune 31,30, 2025 and consists primarily of professional fees, information technology expenses, advertising, and costs associated with a lease buyout, all attributable to the merger with TC Bancshares. In addition, the Company recorded professional fees during June 2026 related to the recently announced proposed acquisition of First Reliance.

Information technology expenses. Information technology expenses increased for the three and six months ended MarchJune 31,30, 2026 compared to the same periodperiods ended MarchJune 31,30, 2025. ThisThese increaseincreases relatesrelate primarily to increases in software, data processing and ATM expenses, which were all impacted by the above listed acquisitionsacquisition of TC Bancshares in 2025.

Professional fees. Professional fees increased for the three and six months ended MarchJune 31,30, 2026 compared to the same periods ended MarchJune 31,30, 2025. These increases relate to increases in legal and consulting fees impacted by the TC Bancshares acquisition.

Advertising and public relations. Advertising and public relations expenses increased for the three and six months ended MarchJune 31,30, 2026 compared to the same periodperiods ended MarchJune 31,30, 2025. TheThese quarterincreases over quarter increase waswere related to increases in subscriptions, marketing and advertising, which were all impacted by the TC Bancshares acquisition.

Communications. Communications expense increased for the three and six months ended MarchJune 31,30, 2026 compared to the same periodperiods ended MarchJune 31,30, 2025. The change is related to fluctuations in data circuit fees.

Other noninterest expense. Other noninterest expense decreased for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. This decrease was primarily due to a decrease in the valuation of the SBSL servicing asset along with a decrease in other losses. Other noninterest expense increased for the threesix months ended MarchJune 31,30, 2026 as compared to the samesix periodmonths ended MarchJune 31,30, 2025. TheThis increase was primarily duerelated to increases in travel, meals and entertainment, insurance, postage and stationery and supplies, all impacted by the above listed acquisitions.acquisition of TC Bancshares in 2025.

Income tax expense for the three and six months ended MarchJune 31,30, 2026 was $2.3$2.8 million and $5.1 million, respectively, compared to $1.7$2.1 million and $3.7 million, respectively, for the same periodperiods in 2025. The Company’s effective tax rate for the three and six months ended MarchJune 31,30, 2026 was 21.6%20.7% and 21.1%, respectively, compared to 20.1%20.5% and 20.3%, respectively, for the three and six months ended MarchJune 31,30, 2025. The largest driver of the difference is the tax-exempt income primarily from BOLI and tax-exempt interest as well as the impact related to the acquisition of TC Bancshares in the fourth quarter of 2025.

Total assets were $3.6 billion at June 30, 2026 and $3.7 billion at March 31, 2026 and December 31, 2025.

At MarchJune 31,30, 2026, gross loans outstanding (excluding loans held for sale) were $2.41$2.46 billion, an increase of $32.2$83.6 million, or 1.35%,3.51%, compared to $2.38 billion at December 31, 2025.

At MarchJune 31,30, 2026, approximately 64.2%63.2% of our loans were secured by commercial real estate. Our totalconstruction, commercialland real& estateland development loans have decreased slightly since December 31, 2025 while residential,all commercial,other financialcategories & agricultural and consumerof loans allexperienced increased.increases. We continue to maintain loan growth at disciplined pricing levels which has contributed to an improved net interest margin.

The following table presents a summary of the loan portfolio as of MarchJune 31,30, 2026 and December 31, 2025.

Loans totaled $2.41$2.46 billion at MarchJune 31,30, 2026, an increase of 1.4%3.5% from $2.38 billion at December 31, 2025, which was primarily attributable to organic loan growth. The majority of the Company’s loan portfolio is comprised of real estate loans. Commercial and residential real estate loans which is primarily for 1-4 family residential properties, nonfarm nonresidential properties and real estate construction loans made up 84.2%83.5% and 84.5% of total loans at MarchJune 31,30, 2026 and December 31, 2025, respectively. Commercial, financial and agricultural loans representsrepresent 9.1%9.3% of total loans at MarchJune 31,30, 2026 and 9.2% at December 31, 2025. Consumer and other loans increased to 6.6%7.2% of total loans at MarchJune 31,30, 2026 from 6.3% at December 31, 2025.

The following table presents total loans as of MarchJune 31,30, 2026 according to maturity distribution and/or repricing opportunity on adjustable rate loans.

The following table presents the maturity distribution of the Company’s loans at MarchJune 31,30, 2026 split between loans that have fixed interest rates or loans with variable interest rates that fluctuate over the life of the loans in accordance with changes in an interest rate index such as the prime rate.

The allowance for credit losses on loans was $21.7$22.0 million at MarchJune 31,30, 2026 compared to $20.0$19.2 million at MarchJune 31,30, 2025, an increase of $1.7$2.8 million, or 8.5%.15.0%. The allowance for credit losses on loans as a percentage of loans was 0.90%0.89% and 1.04%0.96% at MarchJune 31,30, 2026 and 2025, respectively. The provision for credit losses was $1.75$1.9 million compared to $1.5 million$450,000 for the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively. The provision for credit losses for the quarterthree months ended MarchJune 31,30, 2026 includes $1.5$2.1 million in credit losses on loans and $250,000a release of $210,000 in credit losses on unfunded commitments. The provision for credit losses for the quarterthree months ended MarchJune 31,30, 2025 includes $1.6$205,000 in credit losses on loans and $245,000 in credit losses on unfunded commitments. The provision for credit losses was $3.7 million compared to $2.0 million for the six months ended June 30, 2026 compared to the same period in 2025. The provision for credit losses for the six months ended June 30, 2026 includes $3.6 million in credit losses on loans and a$40,000 releasein ofcredit $123,000losses on unfunded commitments. The provision for credit losses for the six months ended June 30, 2025 includes $1.8 million in credit losses on loans and $122,000 in credit losses on unfunded commitments. For the three and six month periodperiods ended MarchJune 31,30, 2026, we experienced increases in net charge-offs primarily related to SBA loans in our SBSL portfolio which represented 55.1% of total net charge-offs for the period along with increases in commercial, financial & agricultural and consumer loans. Accordingly, 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.

Additional information about the Company’s allowance for credit losses is provided in Note 4 to our consolidated financial statements as of MarchJune 31,30, 2026, included elsewhere in this Quarterly Report on Form 10-Q.

The following table presents an analysis of the allowance for credit losses on loans as of andJune for the three months ended March 31,30, 2026 and June 30, 2025:

The following table presents a summary of allowance for credit loss for the three and six months ended MarchJune 31,30, 2026 and 2025.

Management believes the allowance for credit losses for loans is adequate to provide for losses expected in the loan portfolio as of MarchJune 31,30, 2026.

Asset quality experienced improvement during the first threesix months of 2026. Nonperforming assets include nonaccrual loans, accruing loans contractually past due 90 days or more, repossessed personal property and other real estate owned (“OREO”). Nonaccrual loans totaled $17.6$18.9 million at MarchJune 31,30, 2026, a decrease of $5.8$4.5 million, or 24.7%,19.1%, from $23.4 million at December 31, 2025. There were fourteenfive loans contractually past due 90 days or more and still accruing totaling $178,000$71,000 at MarchJune 31,30, 2026, compared to eight loans totaling $95,000 at December 31, 2025. There was $205,000$129,000 in repossessed personal property at MarchJune 31,30, 2026, and $190,000 at December 31, 2025. OREO totaled $1.9$1.8 million at MarchJune 31,30, 2026, compared to $1.0 million at December 31, 2025, which primarily represents the addition of seven properties totaling $1.7 million and the sale of twothree properties which totaled $659,000.$681,000. As of MarchJune 31,30, 2026, total nonperforming assets as a percent of total assets decreased to 0.53%0.58% compared with 0.66% at December 31, 2025. The decrease in nonperforming assets was primarily the result of decreases in all loan segments except residential real estate loans and consumer loans, partially offset by repayments, payoffs and charged off loans.

Nonperforming assets at MarchJune 31,30, 2026 and December 31, 2025 were as follows:

The Company had no loans modified due to financial difficulty during the three and six month periodperiods ended MarchJune 31,30, 2026. See Note 3 - Loans, included elsewhere in this Quarterly Report on Form 10-Q for additional details on loan modifications.

Deposits at MarchJune 31,30, 2026 and December 31, 2025 were as follows:

Total deposits decreased $19.1$95.3 million to $3.05$2.97 billion at MarchJune 31,30, 2026 from $3.07 billion at December 31, 2025. As of MarchJune 31,30, 2026, 16.2%15.6% of total deposits were comprised of noninterest-bearing accounts and 83.8%84.4% were comprised of interest-bearing deposit accounts, compared to 17.2% and 82.8% as of December 31, 2025, respectively. The overall decrease in our deposits was primarily due to a decrease in noninterest-bearing deposits, partially offset by increases in savings and money market deposits due to seasonality in customer deposit balances.balances that is normal for this time of year.

We had $136.9$123.5 million in brokered deposits at MarchJune 31,30, 2026 and $131.9 million at December 31, 2025. We use brokered deposits, subject to certain limitations and requirements, as a source of funding to support our asset growth and augment the deposits generated from our branch network, which are our principal source of funding. Our level of brokered deposits varies from time to time depending on competitive interest rate conditions and other factors, and tends to increase as a percentage of total deposits when the brokered deposits are less costly than issuing internet certificates of deposit or borrowing from the FHLB.

The Company’s estimated uninsured deposits were $989.4$975.4 million at MarchJune 31,30, 2026, or 32.21%32.45% of total Bank deposits, compared to $980.0 million at December 31, 2025, or 31.65% of total Bank deposits. Adjusted uninsured depositdeposits estimate (which excludes deposits collateralized by public funds and internal accounts) were $625.1$621.0 million at MarchJune 31,30, 2026, or 20.35%20.66% of total Bank deposits, compared to $576.5 million at December 31, 2025, or 18.62% of total Bank deposits. Adjusted uninsured deposits represent a small percentage of our overall deposits, which increases the stability of our deposit base and lowers our overall funding risk.