コロニー・バンク（CBAN）2026年第3四半期決算説明会：マージン拡大、ファースト・リライアンスの買収完了が間近

主要なポイント

• 営業純利益は1,160万ドルに増加し、営業貸倒引当金控除前純収入は約1,630万ドルに達しました。
• 純金利マージンは前四半期比7ベーシスポイント拡大して3.59%となり、収益資産利回りの上昇や、新規および更新貸出金の加重平均金利が7.26%となったことに支えられました。
• 年率換算の貸出増加率は当四半期が約2%、年初来が5.4%となりました。経営陣は2027年の成長率を約5%と予想しており、長期目標である8%〜12%を下回る見込みです。
• コロニー・バンクは当四半期に営業ROA 1.25%を上回りました。経営陣は、ファースト・リライアンスとの統合期間中にROAが10〜15ベーシスポイント低下すると予想していますが、コスト削減効果が出始めるにつれて目標である1.35%以上に向かって向上すると見込んでいます。
• ファースト・リライアンスの統合案件は11月1日に法的に完了する予定であり、システム移行は2027年第2四半期後半、合併によるコスト削減効果は2027年第3四半期に開始する見通しです。
• コロニー・バンクは3店舗のセール・アンド・リースバックを1,990万ドルで完了し、約1,500万ドルの税引前利益を見込んでおり、これをパフォーマンスの低い有価証券の売却によって相殺する計画です。

主要財務データ

事業および営業業績

貸出利回りの向上を引き続きマージン拡大の要因として捉えており、コロニー・バンクは平均利回り5.21%の固定金利貸出金2億2,300万ドルおよび利回り1.77%の有価証券7,600万ドルを2027年の金利改定に伴う上振れ要因として特定しました。

営業非金利収入は、預金関連手数料、インターチェンジ手数料、およびSBA関連収入の増加が寄与しました。SBSL部門では、貸出実行額が増加するとともにSBAローン売却益も拡大しました。経営陣によると、現在のSBSL部門による貸出の大部分は建設ローンであり、2027年に売却される見込みです。

住宅ローン取扱額は、高金利の継続と季節的要因により減速しました。経営陣は、足元の取扱量減少に合わせて費用および営業能力を調整しつつも、将来的に統合後の住宅ローン・プラットフォームを拡大できる体制を維持しています。

船舶・RVローンは当四半期中に約1,000万ドル増加し、関連する受取利息は19万ドル増加しました。コロニー・ファイナンシャル・アドバイザーズの受託運用資産は1,700万ドル増加し、これは年率換算で約11%の成長に相当します。

コロニー・バンクは、高コストで金利感応度の高い預金よりも、顧客関係に基づく決済用口座の確保を優先する姿勢を維持しています。経営陣は、ファースト・リライアンスとの統合を、サウスカロライナ州における法人・個人向け営業、トレジャリーマネジメント、ウェルスマネジメント、預金調達能力を拡大する好機と位置付けています。

業績予想（ガイダンス）

経営陣は、ファースト・リライアンスの買収完了後、購買会計およびアクレションを反映し、2026年第4四半期の純金利マージンが上昇すると見込んでいます。またアクレションを除いたベースでも、低利回りの貸出金および有価証券のリプライシングが進むことで、コアマージンが緩やかに改善すると予想しています。

同社は価格設定の規律と収益性を最優先課題として維持するため、2027年の貸出成長率を約5%と予想しています。経営陣は、長期金利の見通しが明確になりマージンがより健全な水準に達すれば、成長率は最終的に長期目標である8%〜12%のレンジに戻る可能性があると述べています。

統合後の会社は2027年第2四半期後半まで2つの基幹システムで運用されるため、営業ROAは今後数四半期にわたり10〜15ベーシスポイント低下する見込みです。経営陣は引き続き1.35%以上のROAを目標としており、合併に伴うコスト削減効果は2027年第3四半期から発現し始めると予想しています。

バランスシートの再構成について、コロニー・バンクは約利回り約2%の有価証券1億ドルの売却を見込んでいます。再投資の想定利回りは5.5%で、主に期間5年以下の貸出金を通じて行われ、売却代金の過半は数四半期をかけて貸出金に移行する見込みです。経営陣は、この取引により最終的にマージンとROAが数ベーシスポイント押し上げられると期待していますが、その全効果が表れるのは2027年後半になると予想しています。

リスクと注目点

高金利により不動産プロジェクト活動が制限され、住宅ローン実行の減速や預金獲得競争の激化を招いています。また経営陣は、当四半期中に1株当たり有形純資産価格は増加したものの、有価証券の含み損やその他の包括利益累計額（AOCI）に対する圧力が一部増したことにも言及しました。

要注意・要管理債権が増加しましたが、その主因は約1,600万ドルの商業用建設ローン1件によるものです。経営陣は本件を借入人固有の問題と説明しており、直近の評価額では十分な担保保全が示されているものの、解決には1〜2四半期かかる可能性があるとしています。

同社は、旧TCフェデラルの貸出金の貸倒償却を行う前に57万5,000ドルの測定期間調整を計上しました。この項目を除いた第3四半期の貸倒償却額は、約110万ドルとなりました。

基幹システムの統合が完了するまで、合併統合費用は高水準にとどまる見込みです。また、セール・アンド・リースバックにより現在の減価償却費控除後の年間GAAP費用が約180万ドル増加するほか、初年度の基本賃料は165万ドルで年2%の値上げが適用されます。

アナリストQ&Aの要点

経営陣は、貸出成長見通しを慎重化した要因として、不動産活動の鈍化と自社の価格設定基準を満たさない融資案件の存在を挙げました。約5%の成長率が、バランスシートの拡大とマージン改善との間で適切なバランスを提供するとしています。

住宅ローン業務について、経営陣は手数料収入および預金関係における長期的な戦略的重要性を強調しました。統合後のプラットフォームは、ファースト・リライアンスの第三者買収・実行能力を含め、より高い営業上の柔軟性をもたらすと期待されていますが、足元の費用水準は取扱量の低下に合わせて調整されています。

経営陣は、ファースト・リライアンスの買収完了後に自己株式取得を再開する予定です。市場環境や株価水準に応じて機動的に対応しつつ、四半期ごとの計画的な自社株買いを検討する方針です。

有価証券ポートフォリオについて、経営陣はポートフォリオ再構築の目的がデュレーションの短縮、金利リスクの改善、および今後の貸出増加に向けた流動性の確保にあると説明しました。ファースト・リライアンスの保有有価証券は引き続き売却可能有価証券に分類される見通しです。

決算説明会（トランスクリプト）全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Hello, everyone. Thank you for joining us, and welcome to the Colony Bank Third Quarter 2026 Conference Call.

[Operator Instructions]

I will now hand the conference over to Brantley Collins, Communications Manager. Brantley, please go ahead.

Brantley Collins

Thanks, Megan. Before we get started, I would like to go through our standard disclosures. Certain statements we make on this call could be constituted as forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Current and prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance but involve known and unknown risks and uncertainties.

Factors that could cause these differences include, but are not limited to, pandemics, variations of the company's assets, businesses, cash flows, financial condition, prospects and other results of operations. Additional cautionary statements related to the First Reliance merger are located in our merger press release, merger investor presentation and SEC filings, all of which are available on our website. I would also like to add that during our call today, we will reference our third quarter earnings release and investor presentation, which were filed yesterday, so please have those available to reference.

And with that, I will turn the call over to our Chief Executive Officer, Heath Fountain.

T. Fountain

Thanks, Brantley, and thank you to everyone for joining our third quarter earnings call today. We are pleased to report improved financial performance for the quarter, and our team continues to make progress towards achieving our goals. We previously announced that regulatory and shareholder approvals have been obtained for our partnership with First Reliance, and we are expecting legal close to occur on November 1. Both teams have been working diligently toward ensuring a smooth transition for both the upcoming legal close in November and the scheduled systems conversion and customer integration that will occur in the second quarter of next year. We are proud of the progress both teams have made, and we remain on track with our time line.

We are pleased to have surpassed a 1.25% operating ROA this quarter and believe we are on a good long-term trajectory for continued growth and profitability. However, as we integrate First Reliance, we expect ROA to pull back by 10 to 15 basis points over the next few quarters due to higher expenses associated with operating the combined company on 2 core systems until conversion late in the second quarter of 2027. We still feel good about reaching our ROA target of 1.35% or better, but that will occur after we start to realize the full cost savings, which will begin in the third quarter of next year.

Loan growth for the third quarter was around 2% annualized, and that brings us to about 5.4% year-to-date annualized loan growth. Pricing discipline remains a priority for us, and the rising rate environment has tempered near-term loan growth compared to our long-term target of 8% to 12%. Repricing of loan renewals from lower rates will continue to provide opportunities to capture increased interest income and drive growth in earning asset yields even as near-term net loan growth is softer.

As we look out into next year, given the current economic environment and rate outlook, we think we'll be looking at loan growth around our current level of 5% for the coming year as we continue to prioritize improving profitability.

Margin improved 7 basis points from the prior quarter to 3.59% and reflects continued balance sheet improvement and a healthy weighted average rate on new and renewed loans. As illustrated on Slide 40, our expected base case repricing unlocks substantial value heading into 2027. The spread between our legacy asset yields and current origination rates will allow us to drive meaningful net interest income growth as those loans and investments reprice. Our noninterest income was strong this quarter, expanding over the prior quarter, thanks to disciplined execution and steady growth across our business lines. However, as the rate environment remains relatively elevated, we do expect mortgage origination volumes to moderate. Higher mortgage rates naturally create a cooling effect on home sales and refinance pipelines, and we are proactively managing that business to align with expected production levels.

As we look at the combined company, we expect mortgage production to be softer in the near term compared to our original projections. We are actively rightsizing expenses and operational infrastructure to match expected mortgage volumes while preserving the capacity needed to scale effectively over the long term.

Core deposits remain a strategic priority. While competition across our footprint has increased in this rate environment, our team remains disciplined by prioritizing relationship-driven low-cost operating accounts over high-cost rate-sensitive deposits that compromise our net interest margin. This approach aligns with our current lending posture and lower near-term loan growth expectations. Our focus is on an efficient balance of -- on efficient balance sheet growth to drive earnings improvement over the long term rather than funding growth at the expense of margin.

Treasury yields across the curve have reached multi-decade highs, creating some incremental pressure on our unrealized investment losses and AOCI. The impact today on our portfolio is less pronounced than what we experienced in prior cycles. Our efforts to downsize the bond portfolio and allow duration to shorten have positioned the balance sheet to be more resilient to rate volatility. Even after absorbing these marks this quarter, our tangible book value per share increased from the prior quarter and our TCE ratio held firm.

Yesterday, we also announced the sale-leaseback transaction for 3 of our retail branch locations with a lease agreement to lease back those branches for an initial 15-year term. There will be no closures or customer impacts as part of this transaction and the lease term represents a long-term commitment to those markets and to our customers there. We expect a gain on sale of the assets of approximately $15 million, which we plan to fully offset with a strategic sale of underperforming securities. We plan to redeploy proceeds primarily in loans over the next several quarters, providing liquidity for future growth and improving the position of the balance sheet. While we may be opportunistic in purchasing investments, reinvesting proceeds back into similar duration securities at higher yields is not part of our strategy.

The 2 primary considerations for us to consider a balance sheet restructure have been the ability to improve our net interest rate risk position and to deploy the funds into loans. Derek will provide more detail on the transaction and Slides 17 and 18 in our investor presentation gives an overview. We expect the net outcome will be accretive to tangible book value and to earnings.

Looking ahead to the fourth quarter, our primary focus is on execution. Completing our partnership with First Reliance is a transformative milestone that significantly elevates our scale and competitive positioning across the Southeast. We are executing from a position of financial strength, and we are excited about the significant value this combination will unlock heading into 2027.

With that, I'll turn it over to Derek to go over the financials in more detail.

Derek Shelnutt

Thank you, Heath. Operating net income increased to $11.6 million in the third quarter, and operating pre-provision net revenue increased to approximately $16.3 million. Earning asset yields increased for another consecutive quarter, leading to margin expansion of 7 basis points to 3.59%. Net interest income increased approximately $508,000, and the driver behind the increase is the new and renewed weighted average loan rate of 7.26% compared to 7.14% in the previous quarter and shown on Slide 38. Overall cost of funds ticked up slightly to 1.98% from 1.95% in the prior quarter and is representative of the current rate environment and rate outlook. We expect long-term deposit betas to be in line with the previous cycle, although the timing could be slightly different due to the competitive nature and sensitivity of depositors across the combined company's footprint.

Margin is expected to increase in the fourth quarter due to the impacts of purchase accounting and accretion after the close of the merger. We still expect that increase to be largely in line with our initial projections. Heath mentioned repricing in 2027, and we feel that will be a meaningful contributor to net interest income and margin as those dollars reprice. As shown on Slide 40, base case indicates $223 million of fixed rate loans currently at an average rate to date of 5.21% and $76 million of investments at an average of 1.77%. This provides the opportunity to pick up meaningful yield on the repricing of those assets at today's rates.

Operating noninterest income increased $702,000 from the previous quarter to $12.3 million. The quarter-over-quarter increase is primarily attributed to increased deposit-related fees, interchange income and SBA-related income. Slide 19 shows the pretax performance of our business lines. Mortgage production has slowed in the current rate environment and upon entering a seasonally lower period of activity. Marine and RV lending shows a decline in pretax income. However, we allocate funding costs based on market-driven funds transfer pricing, and those costs were higher in the quarter due to market dynamics. Those costs are eliminated on a consolidated basis, but are included in their stand-alone metrics. For marine and RV lending, interest income grew by $190,000 in the quarter and loans outstanding increased about $10 million.

Colony Financial Advisors pretax income slightly decreased quarter-over-quarter due to additional commission income in the second quarter. AUM increased $17 million quarter-over-quarter or about 11% annualized. The SBSL division improvement during the quarter is related to increased gain on sale of SBA loans. Production also increased during the quarter, but the production we are seeing in SBSL is primarily construction type loans that will be sold in the next year.

Additionally, in noninterest income, we received insurance proceeds related to a loss at one of our banking center locations, which is treated as a onetime gain under GAAP. We also sold a small amount of securities for a loss during the quarter. Both of these items are excluded from operating noninterest income. Operating noninterest expenses increased $950,000 in the third quarter. Roughly half the increase was in loan-related expenses for the SBSL division and the other driver was related to performance-based compensation. Overall, our operating net noninterest expense to average assets was 1.53%, up slightly from 1.51% in the second quarter. Our long-term goal on net NIE is still 1.45%, but it will take several quarters to shift back toward that number. After a legal close with First Reliance, we will have elevated expenses until core conversion late in the second quarter of 2027.

We still feel comfortable with our merger-related cost save projections, but we'll not begin to see those until the third quarter of 2027 after the systems conversion. Provision expense totaled $1.65 million and was a slight decrease from the prior quarter. Net charge-offs were slightly lower than last quarter and charge-offs from SBSL were lower in the third quarter by $450,000. Included in the charge-off number for the third quarter is a charge-off related to a legacy TC Federal loan. During the third quarter, we became aware of circumstances related to one loan that existed prior to the merger with Colony. Because the underlying conditions were present as of the merger date, we recognized a $575,000 measurement period adjustment to our credit loss reserve and goodwill. The amount was then charged off at the end of the quarter. And excluding that one item, charge-offs would have been approximately $1.1 million.

Criticized loans and classified loans increased during the quarter and are largely related to one commercial construction loan with one borrower totaling approximately $16 million. Based on recent appraisals, we are adequately collateralized, which should help mitigate our ultimate risk as we manage the credit towards resolution. This downgrade reflects circumstances specific to this individual borrower and is not indicative of any broader systemic trends across our loan portfolio.

The overall levels of criticized and classified loans represent a relatively low level compared to our total loans and below our targeted thresholds. First Reliance also has strong credit quality and when combined, those levels also represent a small percentage of total loans. Heath mentioned loan growth for the quarter. And on a year-to-date basis, loan growth is approximately 5.4% annualized. Looking ahead to repricing in 2027 as lower-yielding fixed rate loans approach maturity, we have the ability to be competitive on pricing while also capturing meaningful yield pickup on those loans and maintaining those loan relationships. As Heath mentioned, looking ahead to next year's loan growth, in the current environment, we are projecting a similar 5% growth as we continue to focus on pricing discipline and profitability.

Total deposits declined $14.5 million during the quarter and is representative of the seasonality of our deposit base. We prioritize growing core relationships over rate-sensitive high-cost deposits and believe this approach enhances our core deposit franchise. This week, the Board declared a quarterly cash dividend of $0.12 per share. TCE at the end of the quarter was 8.99%, which is flat compared to the second quarter. Tangible book value per share increased to $15.16, up from $15.12 in the prior quarter, both slightly impacted by an increased AOCI loss position. We paused stock repurchases during the quarter due to the pending merger with First Reliance. However, we do expect to be active again as appropriate after the close of the merger.

Heath mentioned we completed a sale-leaseback transaction this week and on Slide 17 and 18, we provide an overview. The aggregate sales price is $19.9 million with a total first year base rent of $1.65 million, subject to 2% annual escalations. On a GAAP basis under lease accounting, we expect expense to increase by $1.8 million annually, net of the current depreciation expense on those locations. That represents an expense that's less than 1.5% of the combined company's projected expense base. We expect a pretax gain of approximately $15 million, which will be offset with the sale of underperforming available-for-sale securities. The current tax adjusted unrealized losses on AFS securities are recorded in AOCI, but the gain on the building -- or the gain on the sale of the building is not. Therefore, will be accretive to tangible book value with neutral regulatory capital impacts. The purpose of the strategic repositioning is to improve our balance sheet health, improve our interest rate risk profile and give us flexibility while providing liquidity for future loan growth.

We expect to sell approximately $100 million of securities currently yielding around 2%. We expect the redeployment of the proceeds from both the security sale and the building sales to be in a combination of loans, cash or short-to-medium duration securities that provide liquidity and cash flow going forward. Redeployment in loans gives us the opportunity to be competitive on high-quality credit opportunities while realizing a meaningful pickup in yield compared to the securities sold. Our reinvest assumption is 5.5%, and we expect to redeploy more than half the proceeds into loans over the next several quarters while keeping the remainder for liquidity.

We expect this to ultimately result in accretion to margin and ROA of about a few basis points. However, the timing of that full realization will not happen until late next year. We will maintain appropriate on-hand cash but may purchase short-term T-bills to align with loan funding expectations and projections. We will be opportunistic on the purchase of investments that are short to medium duration, but this is secondary to lending and liquidity. Our objective is to unlock liquidity from underperforming securities to position us for future loan growth and improve our interest rate risk profile, not to reinvest back into similar duration bonds simply for the yield pickup. We expect the increased interest income to be greater than the lease expense, leading to increased overall earnings.

First Reliance reported their third quarter results yesterday, and they were largely in line with our expectations and projections. Our projections on the impact of the First Reliance merger remain in line with what we reported at announcement. Of course, since we made that announcement back in June, we've seen increases in medium- and long-term rates. Given the shorter duration of their loans and investments, we do not expect those to have a major impact on our initial projections on earnback. The slight increase we may see on day 1 marks would be offset by higher accretion.

That concludes my overview, and now I'll turn it back over to Heath before we take questions.

T. Fountain

Thanks, Derek, and thanks, everyone, again for being on the call today. We're pleased with our performance this quarter, which met our expectations for performance and exceeded external expectations. I'm proud of how our team executed on achieving our desired results from the TC Federal merger, which positions us well for our upcoming merger with First Reliance and demonstrates the strength of our M&A strategy to gain scale and improve operating performance. Further, our expense and pricing discipline set us up well to finish the year strong.

That wraps up our prepared remarks. And with that, I'll call on Megan to open up the floor for questions.

Operator

[Operator Instructions]

Your first question comes from the line of David Bishop with Hovde Group.

質疑応答

David Bishop

Heath, noted your comments regarding the expectations for loan growth sort of settling in the 5% range. And it sounds like your origination yields came up. Is that sort of the factor governing the growth? It's just less projects sort of -- you're maintaining your pricing discipline and that's sort of impacting some of the ability for some of these projects to pencil out? I guess are you sort of pricing above the market? Just curious what's sort of leading to that conservatism relative to loan growth versus the longer-term growth rate?

T. Fountain

Yes, Dave, good question. And I think it's really a couple of things. One is we are seeing some softening of real estate projects overall just in the higher rate environment. So you are seeing that pull back a little bit. We are seeing, though, plenty of volume to look at, but just isn't meeting our pricing parameters. I think we've seen as rates have gone up, that spread between where we wanted to be and maybe where the competition was has come in some. So I think that's a good thing and should help us with some loan growth going forward.

And then as we talked about, as Derek did, with the repricing and the liquidity pulling some things off of our balance sheet from a lower yield allow us to, I guess, narrow the gap in that pricing we're seeing out there and allow us to generate, but just don't feel like at those 8% to 12% for a little bit, I think it's still going to be a little pullback in that 5% range. And we're okay with that just because we have those levers to see to pull margin up and overall yields up. So just trying to balance that tension between growth and profitability improvement. We think that around that 5% spot puts us in a nice place where we can achieve both.

David Bishop

Got it. And then you mentioned the ability to maintain the margin, and obviously, the restructuring helps here. It looks like looking at the -- I appreciate all the color in the slide deck related to the repricing. It looks like you guys are in a good position to continue to expand the margin into '27. Is that sort of your expectation you see a continued move up irrespective of what purchase accounting accretion does?

T. Fountain

Yes. I think our core margin without that accretion will continue to modestly move up just because of the structure of the balance sheet, getting that repricing. I think there's an opportunity there and even where current loan rates are relative to where we'll have stuff roll off, we should -- and even considering some increase in the deposit competition, but we feel pretty good about that core margin. And then on First Reliance and the accretion there, they're running a slightly higher margin than us already anyway. And then the ability to get that reprice, again, that helps us be able to see profitability improvement with maybe less modest loan growth than we've had in the past. And certainly feel like at some point, as we have more clarity on where long-term rates are going, I think we'll get back into the larger levels of loan growth more in that 8% to 12% range that we've -- I think, we've averaged about 12% organic growth over the last 8 years since I've been here at Colony. So we think we'll get back to that. We just don't want to do that at the expense of margin improvement until we get to a healthier margin.

David Bishop

Got it. And then I guess one final question. You noted the increase on the classified loans. Any more details you can share just in terms of that particular borrower? And it sounds like that's a pretty isolated incident, correct?

T. Fountain

Yes. Nothing that we see spilling over into other things, just kind of an isolated situation. I think it's a good project still and something that could potentially move forward. Just on some of these deals, you get to a situation where the project and the capital inputs from the borrowers didn't exactly align in the partners. And so I think over the next quarter or 2, we'll work through that and get that resolved. So we feel good about the collateral. We have multiple pieces of collateral on that, but we just got to work through that situation.

Operator

Your next question comes from the line of Chris Marinac with Brean Capital.

Christopher Marinac

Heath and Derek, I wanted to ask about the mortgage business real quick and just kind of your thought as a combined company. Does the external mortgage market have any sort of negative implications for the next year? Or can you kind of work around it and continue to grow at the core bank?

T. Fountain

Yes. I think in the long term, we love the mortgage business. I think it's a critical part of driving a solid community bank deposit franchise. There are just so many reasons that having a healthy mortgage business is good. Obviously, in the short term, it is a more cyclical and volatile business line, especially when you see rates move pretty quickly, which we've seen over the last several months. Having a larger combined company in mortgage gives you a better ability to ride out these rate challenges, just gives you more operating leverage, more things, more levers you can pull to manage that. And so we're working through that. We love the business in the long term. We've got a great team. The idea is we just have to manage that from an expense base so that it doesn't become a drag during times like this when it's a little tougher, but still be opportunistic for the long term.

Sometimes high rate environments are great recruiting periods for bringing on new LOs as well because they're not leaving behind a big pipeline in other places. So it's just managing that. And I think that it's -- that a larger platform just gives you more levers you can pull on that. And also First Reliance has the third-party origination platform, which is just another lever you can pull to optimize volume and expenses. So we're still very excited about that business and really think it's part of the core long term of how you build a good fee side of your business, but also how you build strong deposit base.

Christopher Marinac

That's helpful. I appreciate it. And then back to kind of your main business on loans and deposits. What do you see as sort of the deposit gathering outlook not just for Colony stand-alone, which still has a really low cost base, but also kind of combined and maybe the new opportunities that the South Carolina team brings you just on core funding in these next several quarters?

T. Fountain

Yes. Well, so I think both organizations have just a fantastic deposit base and a very similar deposit base and a really good mix of retail and commercial customers. This lower loan growth period has given us time to really focus on -- and focus our commercial bankers on deposits and deposit relationships. We certainly think that going into South Carolina and those bankers having a larger platform opens up larger lending opportunities. Those also -- that also opens up the ability to go after core operating businesses and their deposits that they may not have been able to go after before. And then I think we have an opportunity to invest as a combined company in more retail deposit growth strategies. Both companies have done a good job of growing retail deposits, but with a wider deposit base and more resources. I think investing in good technology, continue to make the deposit account opening process really smooth and easy.

And then I think another big driver that I think is a long-term driver of deposit growth when you look at the ability to add our wealth platform across South Carolina. I think our wealth team does a good job of using those relationships that they have in and outside the bank to help grow the core deposits of the bank as well. So I think there's a lot of opportunities, new opportunities in South Carolina, but then opportunities as a larger organization with more resources to invest in that consumer and commercial deposit account experience is going to improve on, I think, our treasury and what we call -- we talked about in the past, Chris, our Banking Solutions group, the ability to have a deeper treasury platform to offer merchant services, credit cards from a payment perspective, not a balance perspective. Those are all new tools for those bankers in South Carolina or enhanced tools that are helpful in going out and originating deposit business.

Christopher Marinac

Great. That's good. And then just last quick question for Derek. On the securities portfolio, I think you said 5.50% is your yield assumption. What does that imply for duration? And then also was curious if you still have that same relationship on, let's say, AFS versus held to maturity or if that might change?

Derek Shelnutt

Yes. So a couple of things there. On the 5.5% reinvest assumption, that's primarily into loans. So right now, we're looking at lending 5 years or less. And so you're looking at a lower duration compared to ultimately what we're selling out of in the securities book. So that improves our interest rate risk position, and then we'll keep some of that in short-term liquidity just with the expectation of future growth there. I will comment and say that the 5.5% reinvestment assumption is over time. It will take us a couple of quarters to redeploy those net proceeds into loans just as we kind of see deals that we like over the next few quarters. So that's kind of the long-term benchmark on the 5.5%. But the ultimate goal there is ultimately shortening the duration compared to the securities that we're selling out of.

On the HTM AFS mix, we're selling legacy Colony AFS securities. And then next week, we're bringing on First Reliance's investment securities and marking those to market. Our intent is to keep those in AFS. So really, you should see a pretty similar mix on the other side of this that we're selling out of these AFS securities coming up soon, but we're also bringing on the First Reliance side through the merger.

Operator

Your next question comes from the line of David Bishop with Hovde Group.

David Bishop

Just a couple of follow-ups. I think you said you're out of the market on share repurchases with the close of the acquisition, you think you start to sort of re-up and get more active on that front?

T. Fountain

Yes. Good question, Dave. And we do expect to be active again. One of the things that improved profitability and lower growth allows you to do is have more levers you can pull on capital management. And so I think we have historically been opportunistic and we'll continue to be opportunistic if market situations give us the opportunity in pricing. But I think going forward, what we're also looking to do while we're in a period of really good profitability and a little bit lower growth is to be more systematic with our repurchases over time. And so what I think you can expect to see is some systematic repurchases each quarter and then being more opportunistic if overall macro market moves give us the opportunity to do that.

David Bishop

Got it. And then good quarter for the SBSL Group. Just curious, expectations heading into the final quarter into 2027.

T. Fountain

Yes. So the SBSL group has done a fantastic job. It's a great line of business, Darren Davis that runs that. It's one of the best leaders we have in the company and does a great job there. They've really strategically shifted that business over the last year to more traditional 7(a), more real estate based. And during that transition, we saw a little lighter production. We've seen that production pick back up. As Derek indicated, we are doing a decent amount of construction in some of those originations. So that will build up and some of those sales will come into next year, which is building a nice healthy revenue pipeline as we look at next year.

And then we've also seen -- Darren brought in some new sales management, and they've really done a great job of focusing on our bankers and our legacy markets and not just traditional SBA referral channels. And so it's been top of mind. We've seen some good increase in activity from our markets. And of course, adding South Carolina, that's just another tool that those bankers will have with a full-service SBA group that they haven't had in the past, and we think we should see activity pick up from that as well.

Operator

There are no further questions at this time. I will now turn the call back to Heath Fountain for closing remarks.

T. Fountain

Well, thank you again to everyone for being on the call today. Thanks for your support of Colony Bankcorp. We're excited about the opportunities ahead. We're pleased with how things are progressing, and we appreciate you being on the call today. Thank you for your support.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.