CBAN Colony Bankcorp, Inc.

Management Discussion

• We reported net income and diluted earnings per share of $1.6 million and $0.17, respectively, for the first quarter of 2020. This compared to net income and diluted earnings per share of $2.8 million and $0.34, respectively, for the same period in 2019.
• We reported net operating income of $1.8 million for the first quarter 2020, compared to $2.9 million for the same period in 2019. For the first quarter of 2020 net operating income excludes acquisition-related expenses, which net of tax, totaled $227,000. For the first quarter of 2019, net operating income excludes acquisition-related expenses, which net of tax, totaled $101,000.
• Net interest income, which is the difference between interest earned on assets and the interest paid on deposits and borrowed funds, is the single largest component of total income. Management utilizes two key ratios to measure relative profitability of net interest income. The net interest spread measures the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities. The interest rate spread eliminates the effect of noninterest-bearing deposits and gives a direct perspective on the effect of market interest rate movements. The net interest margin is an indication of the profitability of a company's balance sheet and is defined as net interest income as a percent of average total interest-earning assets, which includes the positive effect of funding a portion of interest-earning assets with noninterest-bearing deposits and shareholders' equity. The net interest spread for the first quarters of 2020 and 2019 was 3.45% and 3.25%, respectively. The net interest margin for the first quarters 2020 and 2019 was 3.63% and 3.46%, respectively.