10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-K

x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Fee Required)

For the Fiscal Year Ended December 31, 2013

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  (No Fee Required)

 For the Transition Period from _____________to ______________

Commission File Number 000-12436

COLONY BANKCORP, INC.

(Exact Name of Registrant Specified in its Charter)

Georgia	58-1492391
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)
115 South Grant Street
Fitzgerald, Georgia	31750
(Address of Principal Executive Offices)	(Zip Code)

(229) 426-6000

Issuer’s Telephone Number, Including Area Code

Securities Registered Pursuant to Section 12(b) of the Act:  None.

Securities Registered Pursuant to Section 12(g) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, Par Value $1.00	The NASDAQ Stock Market

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x   No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a nonaccelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o	Accelerated Filer o
Nonaccelerated Filer o  (Do not check if a smaller reporting company)	Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act):   Yes o   No x

State the aggregate market value of the voting and non-voting common equity held by nonaffiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked prices of such common equity, as of June 30, 2013:  $42,188,188 based on stock price of $6.81.

Indicate the number of shares outstanding of each of the registrant’s classes of common equity, as of the latest practicable date:  8,439,258 shares of $1.00 par value common stock as of March 14, 2014.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the information required by Part III of this Annual Report are incorporated by reference from the Registrant’s definitive Proxy Statement for the 2013 annual meeting of shareholders to be filed with Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report.

TABLE OF CONTENTS

			Page
PART I
	Forward Looking Statement Disclosure		3
	Item 1.	Business	5
	Item 1A.	Not Applicable	25
	Item 1B.	Not Applicable	25
	Item 2.	Properties	25
	Item 3.	Legal Proceedings	25
	Item 4.	Not Applicable	25
PART II
	Item 5.	Market for Registrant’s Common Equity, Related Stockholder  Matters and Issuer Purchases of Equity Securities	26
	Item 6.	Selected Financial Data	27
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	60
	Item 8.	Financial Statements and Supplementary Data	60
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	61
	Item 9A.	Controls and Procedures	62
	Item 9B.	Other Information	63
PART III
	Item 10.	Directors and Executive Officers and Corporate Governance	63
	Item 11.	Executive Compensation	63
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	64
	Item 13.	Certain Relationships and Related Transactions and Director Independence	64
	Item 14.	Principal Accounting Fees and Services	64
PART IV
	Item 15.	Exhibits, Financial Statement Schedules	65
	Signatures		68

- 2-

Forward-Looking Statements and Factors that Could Affect Future Results

Certain statements contained in this Annual Report that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the Act), notwithstanding that such statements are not specifically identified. In addition, certain statements may be contained in the Company’s future filings with the SEC, in press releases, and in oral and written statements made by or with the approval of the Company that are not statements of historical fact and constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans and objectives of Colony Bankcorp, Inc. or its management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

· Local and regional economic conditions and the impact they may have on the Company and its customers and the Company’s assessment of that impact.

· Changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements.

· The effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board.

· Inflation, interest rate, market and monetary fluctuations.

· Political instability.

· Acts of war or terrorism.

· The timely development and acceptance of new products and services and perceived overall value of these products and services by users.

· Changes in consumer spending, borrowings and savings habits.

· Technological changes.

· Acquisitions and integration of acquired businesses.

· The ability to increase market share and control expenses.

- 3-

Forward-Looking Statements and Factors that Could Affect Future Results (Continued)

· The effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which the Company and its subsidiary must comply.

· The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Financial Accounting Standards Board and other accounting standard setters.

· Changes in the Company’s organization, compensation and benefit plans.

· The costs and effects of litigation and of unexpected or adverse outcomes in such litigation.

· Greater than expected costs or difficulties related to the integration of new lines of business.

· The Company’s success at managing the risks involved in the foregoing items.

· Restrictions or conditions imposed by our regulators on our operations, including the terms of our Board Resolution.

Forward-looking statements speak only as of the date on which such statements are made.  The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events.

Readers should carefully review all disclosures we file from time to time with the Securities and Exchange Commission (SEC).

- 4-

Part I

Item 1

Business

COLONY BANKCORP, INC.

General

Colony Bankcorp, Inc. (the “Company” or “Colony”) is a Georgia business corporation which was incorporated on November 8, 1982. The Company was organized for the purpose of operating as a bank holding company under the Federal Bank Holding Company Act of 1956, as amended, and the bank holding company laws of Georgia (Georgia Laws 1976, p. 168, et. seq.). On July 22, 1983, the Company, after obtaining the requisite regulatory approvals, acquired 100 percent of the issued and outstanding common stock of Colony Bank (formerly Colony Bank of Fitzgerald and The Bank of Fitzgerald), Fitzgerald, Georgia, through the merger of the Bank with a subsidiary of the Company which was created for the purpose of organizing the Bank into a one-bank holding company.  Since that time, Colony Bank has operated as a wholly-owned subsidiary of the Company.  Our business is conducted primarily through our wholly-owned subsidiary, which provides a broad range of banking services to its retail and commercial customers.  The company headquarters are located at 115 South Grant Street, Fitzgerald, Georgia 31750, its telephone number is 229-426-6000 and its Internet address is http://www.colonybank.com.  We operate twenty-nine domestic banking offices and one corporate operations office and, at December 31, 2013, we had approximately $1.15 billion in total assets, $751.22 million in total loans, $987.53 million in total deposits and $89.95 million in stockholder’s equity.  Deposits are insured, up to applicable limits, by the Federal Deposit Insurance Corporation.

The Parent Company

Because Colony Bankcorp, Inc. is a bank holding company, its principal operations are conducted through its subsidiary bank, Colony Bank (the “Bank”).  It has 100 percent ownership of its subsidiary and maintains systems of financial, operational and administrative controls that permit centralized evaluation of the operations of the subsidiary bank in selected functional areas including operations, accounting, marketing, investment management, purchasing, human resources, computer services, auditing, compliance and credit review.  As a bank holding company, we perform certain stockholder and investor relations functions.

Colony Bank - Banking Services

Our principal subsidiary is the Bank.  The Bank, headquartered in Fitzgerald, Georgia, offers traditional banking products and services to commercial and consumer customers in our markets.  Our product line includes, among other things, loans to small and medium-sized businesses, residential and commercial construction and land development loans, commercial real estate loans, commercial loans, agri-business and production loans, residential mortgage loans, home equity loans, consumer loans and a variety of demand, savings and time deposit products.  We also offer internet banking services, electronic bill payment services, safe deposit box rentals, telephone banking, credit and debit card services, remote depository products and access to a network of ATMs to our customers.  Colony Bank conducts a general full service commercial, consumer and mortgage banking business through twenty-nine offices located in central, south and coastal Georgia cities of Fitzgerald, Warner Robins, Centerville, Ashburn, Leesburg, Cordele, Albany, Thomaston, Columbus, Sylvester, Tifton, Moultrie, Douglas, Broxton, Savannah, Eastman, Chester, Soperton, Rochelle, Pitts, Quitman and Valdosta, Georgia.

For additional discussion of our loan portfolio and deposit accounts, see “Management’s Discussion of Financial Condition and Results of Operations - Loans and Deposits.”

- 5-

Part I (Continued)

Item 1 (Continued)

Subordinated Debentures (Trust Preferred Securities)

During the second quarter of 2004, the Company formed Colony Bankcorp Statutory Trust III for the sole purpose of issuing $4,500,000 in Trust Preferred Securities through a pool sponsored by FTN Financial Capital Market.  The securities have a maturity of thirty years and are redeemable after five years with certain exceptions.

During the second quarter of 2006, the Company formed Colony Bankcorp Capital Trust I for the sole purpose of issuing $5,000,000 in Trust Preferred Securities through a pool sponsored by SunTrust Bank Capital Markets.  The securities have a maturity of thirty years and are redeemable after five years with certain exceptions.

During the first quarter of 2007, the Company formed Colony Bankcorp Capital Trust II for the sole purpose of issuing $9,000,000 in Trust Preferred Securities through a pool sponsored by Trapeza Capital Management, LLC.  The securities have a maturity of thirty years and are redeemable after five years with certain exceptions.  Proceeds from this issuance were used to pay off trust preferred securities issued on March 26, 2002 through Colony Bankcorp Statutory Trust I.

During the third quarter of 2007, the Company formed Colony Bankcorp Capital Trust III for the sole purpose of issuing $5,000,000 in Trust Preferred Securities through a pool sponsored by Trapeza Capital Management, LLC.  The securities have a maturity of thirty years and are redeemable after five years with certain exceptions.  Proceeds from this issuance were used to pay off trust preferred securities issued on December 19, 2002 through Colony Bankcorp Statutory Trust II.

Corporate Restructuring and Business Combinations

On April 30, 1984, after acquiring the requisite regulatory approvals, the Company acquired 100 percent of the issued and outstanding stock of Colony Bank Wilcox (formerly Community Bank of Wilcox and Pitts Banking Company), Pitts, Wilcox County, Georgia.  As part of the transaction, Colony issued an additional 17,872 shares of its $10.00 par value common stock, all of which was exchanged with the holders of shares of common stock of Pitts Banking Company for 100 percent of the 250 issued and outstanding shares of common stock of Pitts Banking Company.  Since the date of acquisition, Colony Bank Wilcox operated as a wholly-owned subsidiary of the Company until it was merged into Colony Bank effective August 1, 2008.

On November 1, 1984, after obtaining the requisite regulatory approvals, the Company acquired 100 percent of the issued and outstanding common stock of Colony Bank Ashburn (formerly Ashburn Bank), Ashburn, Turner County, Georgia, for a combination of cash and interest-bearing promissory notes.  Since the date of acquisition, Colony Bank Ashburn operated as a wholly-owned subsidiary of the Company until it was merged into Colony Bank effective August 1, 2008.

On September 30, 1985, after obtaining the requisite regulatory approvals, the Company acquired 100 percent of the issued and outstanding common stock of Colony Bank of Dodge County, (formerly The Bank of Dodge County), Chester, Dodge County, Georgia.  The stock was acquired in exchange for the issuance of 3,500 shares of common stock of Colony.  Since the date of acquisition, Colony Bank of Dodge County operated as a wholly-owned subsidiary of the Company until it was merged into Colony Bank effective August 1, 2008.

- 6-

Part I (Continued)

Item 1 (Continued)

On July 31, 1991, after obtaining the requisite regulatory approvals, the Company acquired 100 percent of the issued and outstanding common stock of Colony Bank Worth, (formerly Worth Federal Savings and Loan Association and Bank of Worth), Sylvester, Worth County, Georgia.  The stock was acquired in exchange for cash and the issuance of 7,661 shares of common stock of Colony for an aggregate purchase price of approximately $718,000.  Since the date of acquisition, Colony Bank Worth operated as a wholly-owned subsidiary of the Company until it was merged into Colony Bank effective August 1, 2008.

On November 8, 1996, Colony organized Colony Management Services, Inc. to provide support services to each subsidiary.  Services provided include loan and compliance review, internal audit and data processing. Colony Management Services, Inc. operated as a wholly-owned subsidiary of the Company until it was merged into Colony Bank effective August 1, 2008.

On November 30, 1996, after obtaining the requisite regulatory approvals, the Company acquired 100 percent of the issued and outstanding common stock of Colony Bank Southeast (formerly Broxton State Bank), Broxton, Coffee County, Georgia in a business combination accounted for as a pooling of interests.  Broxton State Bank became a wholly-owned subsidiary of the Company through the exchange of 157,735 shares of the Company’s common stock for all of the outstanding stock of Broxton State Bank.  Since the date of acquisition, Colony Bank Southeast operated as a wholly-owned subsidiary of the Company until it was merged into Colony Bank effective August 1, 2008.

On March 2, 2000, Colony Bank Ashburn purchased the capital stock of Colony Mortgage Corp (formerly Georgia First Mortgage Company) in a business combination accounted for as a purchase.  The purchase price of $346,725 was the fair value of the net assets of Georgia First Mortgage Company at the date of purchase.  Colony Mortgage Corp is primarily engaged in residential real estate mortgage lending in the state of Georgia. Colony Mortgage Corp operated as a subsidiary of Colony Bank effective with the August 1, 2008 merger until October 1, 2012 when the corporation was dissolved.

On March 29, 2002, after obtaining the requisite regulatory approvals, the Company acquired 100 percent of the issued and outstanding stock of Colony Bank Quitman, FSB, (formerly Quitman Federal Saving Bank), Quitman, Brooks County, Georgia.  Quitman Federal Savings Bank became a wholly-owned subsidiary of the Company through the exchange of 367,093 shares of the Company’s common stock and cash for an aggregate acquisition price of $7,446,163.  Since the date of acquisition, Colony Bank Quitman, FSB operated as a wholly-owned subsidiary of the Company until it was merged into Colony Bank effective August 1, 2008.

On March 19, 2004, Colony Bank Ashburn purchased Flag Bank - Thomaston office in a business combination accounted for as a purchase.  Since the date of acquisition, the Thomaston office operated as an office of Colony Bank Ashburn until August 1, 2008 when it became an office of Colony Bank.

On August 1, 2008, the Company effected a merger of its seven banking subsidiaries and its one nonbank subsidiary into one surviving bank subsidiary, Colony Bank (formerly Colony Bank of Fitzgerald).

- 7-

Part I (Continued)

Item 1 (Continued)

Markets and Competition

The banking industry in general is highly competitive.  Our market areas of central, south and coastal Georgia have experienced good economic and population growth the past several years, however the current downturn in the housing and real estate market that began in late 2007 along with recessionary fears has proven to be quite challenging - not only for Colony but the entire banking industry.  In our markets, we face competitive pressures in attracting deposits and making loans from larger regional banks and smaller community banks, thrift institutions, credit unions, consumer finance companies, mortgage bankers, brokerage firms and insurance companies.  The principal factors in competing for deposits and loans include interest rates, fee structures, range of products and services offered and convenience of office and ATM locations.  The banking industry is also experiencing increased competition for deposits from less traditional sources such as money market and mutual funds.  In addition, intense market demands, economic concerns, volatile interest rates and customer awareness of product and services have forced banks to be more competitive - often resulting in margin compression and a decrease in operating efficiency.

In response to competitive issues, the Company merged all of its operations into one operating subsidiary, Colony Bank, effective August 1, 2008.  This consolidation effort enabled the Company to align products, pricing and marketing efforts while re-allocating resources to support management’s future growth strategies.

Correspondents

Colony Bank has correspondent relationships with the following banks: Federal Reserve Bank in Atlanta, Georgia; SunTrust Bank in Atlanta, Georgia; FTN Financial in Memphis, Tennessee, CenterState Bank in Lake Wales, Florida and Federal Home Loan Bank in Atlanta, Georgia.  The correspondent relationships facilitate the transactions of business by means of loans, collections, investment services, lines of credit and exchange services.  As compensation for these services, the Bank maintains balances with its correspondents in noninterest-bearing accounts and pays some service charges.

Employees

On December 31, 2013, the Company had a total of 311 full-time and 17 part-time employees.  We consider our relationship with our employees to be satisfactory.

The Company has a noncontributory profit-sharing plan covering all employees subject to certain minimum age and service requirements.  No Company contributions were made in 2013 due to performance.  In addition, the Company maintains a comprehensive employee benefit program providing, among other benefits, hospitalization, major medical, life insurance and disability insurance.  Management considers these benefits to be competitive with those offered by other financial institutions in our market area.  Colony’s employees are not represented by any collective bargaining group.

- 8-

Part I (Continued)

Item 1 (Continued)

SUPERVISION AND REGULATION

BANK HOLDING COMPANY REGULATION

General

Colony is a bank holding company within the meaning of the Bank Holding Company Act of 1956, as amended (BHCA).  We are extensively regulated under federal and state law.  Generally, these laws and regulations are intended to protect our depositors, not necessarily our shareholders or our creditors.  As a bank holding company registered with the Federal Reserve under the BHCA and the Georgia Department of Banking and Finance (“the Georgia Department”) under the Financial Institutions Code of Georgia, we are subject to supervision, examination and reporting by the Federal Reserve and the Georgia Department.  Our activities are limited to banking, managing or controlling banks, furnishing services to or performing services for its subsidiaries, or engaging in any other activity that the Federal Reserve determines to be so closely related to banking, or managing or controlling banks, as to be a proper incident to these activities.

Colony is required to file with the Federal Reserve and the Georgia Department periodic reports and any additional information as they may require.  The Federal Reserve and Georgia Department will also regularly examine the Company.  The Federal Deposit Insurance Corporation (“FDIC”) and Georgia Department also examine the Bank.

The following is a summary of certain provisions of certain laws that affect the regulation of bank holding companies and banks.  The discussion is qualified in its entirety by reference to applicable laws and regulations.  Changes in such laws and regulations may have a material effect on our business and prospects.

Activity Limitations

The BHCA requires prior Federal Reserve approval for, among other things:

· the acquisition by a bank holding company of direct or indirect ownership or control of more than 5 percent of the voting shares or substantially all of the assets of any bank, or

· a merger or consolidation of a bank holding company with another bank holding company.

Similar requirements are imposed by the Georgia Department.

A bank holding company may acquire direct or indirect ownership or control of voting shares of any company that is engaged directly or indirectly in banking, or managing or controlling banks, or performing services for its authorized subsidiaries.  A bank holding company may also engage in or acquire an interest in a company that engages in activities that the Federal Reserve has determined by regulation or order to be so closely related to banking as to be a proper incident to these activities.  The Federal Reserve normally requires some form of notice or application to engage in or acquire companies engaged in such activities.  Under the BHCA, Colony will generally be prohibited from engaging in or acquiring direct or indirect control of more than 5 percent of the voting shares of any company engaged in activities other than those referred to above.

The BHCA permits a bank holding company located in one state to lawfully acquire a bank located in any other state, subject to deposit percentage, aging requirements and other restrictions.  The Riegle-Neal Interstate Banking and Branching Efficiency Act also generally provides that national and state chartered banks may, subject to applicable state law, branch interstate through acquisitions of banks in other states.

- 9-

Part I (Continued)

Item 1 (Continued)

In November 1999, Congress enacted the Gramm-Leach-Bliley Act, which made substantial revisions to the statutory restrictions separating banking activities from other financial activities.  Under the Gramm-Leach-Bliley Act, bank holding companies that are well capitalized, well managed and meet other conditions can elect to become “financial holding companies.”  As financial holding companies, they and their subsidiaries are permitted to acquire or engage in activities that were not previously allowed bank holding companies, such as insurance underwriting, securities underwriting and distribution, travel agency activities, broad insurance agency activities, merchant banking and other activities that the Federal Reserve determines to be financial in nature or complementary to these activities.  Financial holding companies continue to be subject to the overall oversight and supervision of the Federal Reserve, but the Gramm-Leach-Bliley Act applies the concept of functional regulation to the activities conducted by subsidiaries.  For example, insurance activities would be subject to supervision and regulation by state insurance authorities.  While Colony has not elected to become a financial holding company in order to exercise the broader activity powers provided by the Gramm-Leach-Bliley Act, it may elect to do so in the future.

Limitations on Acquisitions of Bank Holding Companies

As a general proposition, other companies seeking to acquire control of a bank holding company would require the approval of the Federal Reserve under the BHCA.  In addition, individuals or groups of individuals seeking to acquire control of a bank holding company would need to file a prior notice with the Federal Reserve (which the Federal Reserve may disapprove under certain circumstances) under the Change in Bank Control Act.  Control is conclusively presumed to exist if an individual or company acquires 25 percent or more of any class of voting securities of the bank holding company.  Control may exist under the Change in Bank Control Act if the individual or company acquires 10 percent or more of any class of voting securities of the bank holding company.

Source of Strength Doctrine

In accordance with Federal Reserve Board policy, the holding company is expected to act as a source of financial and managerial strength to the Bank. Under this policy, the holding company is expected to commit resources to support its bank subsidiary, including at times when the holding company may not be in a financial position to provide it. As discussed below, the holding company could be required to guarantee the capital plan of the Bank if it becomes undercapitalized for purposes of banking regulations. Any capital loans by a bank holding company to its subsidiary bank are subordinate in right of payment to deposits and to certain other indebtedness of such subsidiary bank. The BHC Act provides that, in the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a bank subsidiary will be assumed by the bankruptcy trustee and entitled to priority of payment.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) has added additional guidance regarding the source of strength doctrine and has directed the regulatory agencies to promulgate new regulations to increase the capital requirements for bank holding companies to a level that matches those of banking institutions.

- 10-

Part I (Continued)

Item 1 (Continued)

Sale of TARP Securities

On January 9, 2009, the Company, pursuant to the TARP CPP, issued and sold to the Treasury, for an aggregate cash purchase price of $28 million, (i) 28,000 shares (the “Preferred Shares”) of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A, having a liquidation preference of $1,000 per share, and (ii) a ten-year warrant (the “Warrant”) to purchase up to 500,000 shares of our common stock, par value $1.00 per share, at an exercise price of $8.40 per share.  On January 29, 2013, the Company’s 28,000 shares of Cumulative Perpetual Preferred Stock, Series A was sold by the Treasury to the public through a modified dutch auction. This auction was part of the Treasury’s ongoing efforts to wind down its remaining TARP bank investments. On June 5, 2013, the Company’s Warrant for 500,000 shares of common stock was also sold by the Treasury to the public through an auction. Neither the sale of the Preferred Stock nor the sale of the Warrant to new investors resulted in any accounting entries and neither transaction had an impact of the Company’s capital position.

Cumulative dividends on the Preferred Shares will continue to accrue at a rate of 5 percent per annum for the first five years from initial issuance and at a rate of 9 percent per annum thereafter. The Preferred Shares continue to have no maturity date and rank senior to the Company’s Common Stock. The Preferred Shares continue to be redeemable at the option of the Company at 100 percent of their liquidation preference, plus any accrued and unpaid dividends.

Capital; Dividends; Source of Strength

The Federal Reserve imposes certain capital requirements on bank holding companies under the Bank Holding Company Act, including a minimum leverage ratio and a minimum ratio of “qualifying” capital to risk-weighted assets. These requirements are described below under “Capital Regulations.” Subject to its capital requirements and certain other restrictions, we are able to borrow money to make a capital contribution to Colony Bank, and such loans may be repaid from dividends paid from Colony Bank to us.

The ability of Colony Bank to pay dividends, however, will be subject to regulatory restrictions that are described below under “Dividends.” We are also able to raise capital for contributions to Colony Bank by issuing securities without having to receive regulatory approval, subject to compliance with federal and state securities laws.

In accordance with Federal Reserve policy, which has been codified by the Dodd-Frank Act, we are expected to act as a source of financial strength to Colony Bank and to commit resources to support Colony Bank in circumstances in which we might not otherwise do so. In furtherance of this policy, the Federal Reserve may require a financial holding company to terminate any activity or relinquish control of a nonbank subsidiary (other than a nonbank subsidiary of a bank) upon the Federal Reserve’s determination that such activity or control constitutes a serious risk to the financial soundness or stability of any subsidiary depository institution of the bank holding company. Further, federal bank regulatory authorities have additional discretion to require a financial holding company to divest itself of any bank or nonbank subsidiary if the agency determines that divestiture may aid the depository institution’s financial condition.

- 11-

Part I (Continued)

Item 1 (Continued)

BANK REGULATION

General

The Bank is a commercial bank chartered under the laws of the State of Georgia, and as such is subject to supervision, regulation and examination by the Georgia Department of Banking and Finance (DBF). The Bank is a member of the FDIC, and their deposits are insured by the FDIC’s Deposit Insurance Fund up to the amount permitted by law.  The FDIC and the Georgia Department routinely examine the Bank and monitor and regulate all of the Bank’s operations, including such things as adequacy of reserves, quality and documentation of loans, payments of dividends, capital adequacy, adequacy of systems and controls, credit underwriting and asset liability management, compliance with laws and establishment of branches.  Interest and other charges collected or contracted for by the Bank is subject to state usury laws and certain federal laws concerning interest rates.  The Bank files periodic reports with the FDIC and the Georgia Department.

BUSINESS

Recent Developments

On October 21, 2010, the Board of Directors of the Company’s subsidiary bank, Colony Bank (the “Bank”), received notification from its primary regulators, the DBF and the FDIC that the Bank’s latest examination results required a program of corrective action as outlined in a proposed Memorandum of Understanding (“MOU”).  An MOU is characterized by the supervising authorities as an informal action that is neither published nor made publically available by the supervising authorities and is used when circumstances do not warrant formal supervisory action.  An MOU is not a “written agreement” for purposes of Section 8 of the Federal Deposit Insurance Act.  The Board of Directors entered into the MOU at its regularly scheduled monthly meeting on November 16, 2010 with the effective date of the MOU being November 23, 2010.

The MOU requires the Bank to develop, implement and maintain various processes to improve the Bank’s risk management of its loan portfolio, reduce adversely classified loans subject to certain exceptions, adopt a written plan to properly monitor and reduce the Bank’s commercial real estate concentration, continue to maintain the Bank’s loan loss provision and review its adequacy at least quarterly, and formulate and implement a written plan to improve and maintain earnings to be forwarded for review by the Georgia Department and FDIC.  The Bank is also required to obtain approval before any cash dividends can be paid.

The Bank has also agreed to have and maintain minimum capital ratios at specified levels higher than those otherwise required by applicable regulations as follows:  Tier 1 capital to total average assets of 8 percent and total risk-based capital to total risk-weighted assets of 10 percent.  At December 31, 2013, the Bank’s capital ratios were 10.72 percent and 17.29 percent, respectively.

The MOU was lifted by regulatory agencies effective October 1, 2013 and replaced with a Board Resolution to ensure that the Bank’s overall condition remains satisfactory.  At December 31, 2013, the Bank is in compliance with terms of the Board Resolution.

- 12-

Part I (Continued)

Item 1 (Continued)

Transactions with Affiliates and Insiders

The Company is a legal entity separate and distinct from the Bank.  Various legal limitations restrict the Bank from lending or otherwise supplying funds to the Company and other nonbank subsidiaries of the Company, all of which are deemed to be “affiliates” of the Bank for the purposes of these restrictions.  The Company and the Bank are subject to Section 23A of the Federal Reserve Act.  Section 23A defines “covered transactions,” which include extensions of credit, and limits a bank’s covered transactions with any affiliate to 10 percent of such bank’s capital and surplus and with all affiliates to 20 percent of such bank’s capital and surplus.  All covered and exempt transactions between a bank and its affiliates must be on terms and conditions consistent with safe and sound banking practices, and banks and their subsidiaries are prohibited from purchasing low-quality assets from the bank’s affiliates.  Finally,   Section 23 A requires that all of a bank’s extensions of credit to an affiliate be appropriately secured by acceptable collateral, generally United States government or agency securities.  The Company and the Bank are also subject to Section 23B of the Federal Reserve Act, which generally limits covered and other transactions between a bank and its affiliates to terms and under circumstances, including credit standards, that are substantially the same or at least as favorable to the bank as prevailing at the time for transactions with unaffiliated companies.  The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) enhances the requirements for certain transactions with affiliates under Section 23A and 23B, including an expansion of the definition of “covered transactions” and increasing the amount of time for which collateral requirements regarding covered transactions must be maintained.  The Bank is also subject to restrictions on extensions of credit to its executive officers, directors, principal shareholders and their related interests. These extensions of credit (1) must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with third parties, and (2) must not involve more than the normal risk of repayment or present other unfavorable features. Effective July 21, 2011, an insured depository institution is prohibited from engaging in asset purchases or sales transactions with its officers, directors or principal shareholders unless on market terms and, if the transaction represents greater than 10 percent of the capital and surplus of the bank, it has been approved by a majority of the disinterested directors.

Dividends

The Company is a legal entity separate and distinct from the Bank.  The principal source of the Company’s cash flow, including cash flow to pay dividends to its stockholders, is dividends that the Bank pays to it.  Statutory and regulatory limitations apply to the Bank’s payment of dividends to the Company as well as to the Company’s payment of dividends to its stockholders.  Pursuant to the Board Resolution entered into with the Georgia Department and the FDIC, the Bank is required to obtain approval from these regulators before any cash dividends can be paid.  Currently, the Company is likewise unable to declare or pay any cash dividend to its shareholders or to pay interest on its junior subordinated debentures without first obtaining prior written consent from the applicable regulators.

As of December 31, 2013, the Company has obtained approval from its regulators to declare and pay scheduled dividend payments on its equity securities and interest on its junior subordinated debentures in each instance where it has sought such approval, except for the requests to pay (i) the dividend payment on the TARP preferred stock due on February 15, 2012 and (ii) the interest payments on its four series of junior subordinated debentures due on March 19, 2012, March 30, 2012, April 2, 2012 and April 30, 2012, respectively, all of which were denied by the regulators because of a lack of funds at the Company to make such payments. Since that time, the Company has not sought regulatory approval to pay a dividend on the Securities or interest on its junior subordinated debentures but has plans to seek such regulatory approval to do so after the first quarter of 2014.

- 13-

Part I (Continued)

Item 1 (Continued)

As of December 31, 2013, the Bank had twice sought regulatory approval to declare and pay a cash dividend to the Company. On one occasion, in the first quarter of 2012, the Bank’s request was denied. On the second occasion, in the fourth quarter of 2012, the Bank’s request was approved. The Bank therefore declared and paid a cash dividend to the Company in the first quarter of 2013. Such regulatory approval provided that the Company may not use the dividend proceeds to pay dividends on its equity securities or to make interest payments on its junior subordinated debentures.

The Company used the dividend proceeds for general corporate purposes. The Bank expects to request regulatory approval to pay dividends to the Company in the future, but cannot give any assurances that such future requests will receive approval or whether such approvals will contain similar restrictions that the proceeds therefrom may not be used to pay dividends on the Company’s equity securities or interest on its junior subordinated debentures.

Furthermore, while the Company is deferring interest payments on its junior subordinated debentures, the Company may not declare or pay any dividends on any of its capital stock. During 2014, the Company intends to seek regulatory approval to declare and pay any scheduled interest payments on its junior subordinated debentures.

The Company has not paid scheduled dividend payments on the TARP preferred stock since the payment made on November 15, 2011, and for the foreseeable future reasonably expects to be unable to declare and pay any scheduled dividend payments on the TARP preferred stock.

A variety of federal and state laws and regulations affect the ability of the Bank and the Company to pay dividends.  A depository institution may not pay any dividend if payment would cause it to become undercapitalized or if it already is undercapitalized.  The federal banking agencies may prevent the payment of a dividend if they determine that the payment would be an unsafe and unsound banking practice.  Moreover, the federal agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings.  In addition, regulations promulgated by the Georgia Department limit the Bank’s payment of dividends.

Enforcement Policies and Actions

Federal law gives the Federal Reserve and FDIC substantial powers to enforce compliance with laws, rules and regulations.  Bank or individuals may be ordered to cease and desist from violations of law or other unsafe or unsound practices.  The agencies have the power to impose civil money penalties against individuals or institutions of up to $1,000,000 per day for certain egregious violations.  Persons who are affiliated with depository institutions can be removed from any office held in that institution and banned from participating in the affairs of any financial institution.  The banking regulators have not hesitated to use the enforcement authorities provided in federal law.

- 14-

Part I (Continued)

Item 1 (Continued)

Current Capital Adequacy Requirements

Bank holding companies and banks are currently subject to various regulatory capital requirements administered by state and federal banking agencies that apply until the increased capital requirements of the new capital rules are effective and fully phased-in. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weighting, and other factors.  The current risk-based capital guidelines for bank holding companies and banks require capital ratios that vary based on the perceived degree of risk associated with a banking organization’s operations for both transactions reported on the balance sheet as assets, such as loans, and those recorded as off-balance sheet items, such as commitments, letters of credit and recourse arrangements. The risk-based capital ratio is determined by classifying assets and certain off-balance sheet financial instruments into weighted categories, with higher levels of capital being required for those categories perceived as representing greater risks and dividing its qualifying capital by its total risk-adjusted assets and off-balance sheet items. Bank holding companies and banks engaged in significant trading activity may also be subject to the market risk capital guidelines and be required to incorporate additional market and interest rate risk components into their risk-based capital standards.

The currently effective risk-based capital guidelines of the regulatory agencies were based upon the 1988 capital accord (“Basel I”) of the Basel Committee on Bank Supervision (“Basel Committee”), a committee of central banks and bank supervisors/regulators from the major industrialized countries that develops broad policy guidelines, which each country’s supervisors can use to determine the supervisory policies they apply to their home jurisdiction. In 2004, the Basel Committee proposed a new capital accord (“Basel II”) to replace Basel I that provided approaches for setting capital standards for credit risk and capital requirements for operational risk and refining the existing capital requirements for market risk exposures. U.S. banking regulators published a final rule for Basel II implementation for certain banks, but a definitive rule was not issued, and instead the new capital rules to implement Basel III were first proposed in 2010.

Under the current capital requirements, there are three fundamental capital ratios: a total risk-based capital ratio, a Tier 1 risk-based capital ratio, and a Tier 1 leverage ratio. To be deemed “well capitalized” a bank must have a total risk-based capital ratio, a Tier 1 risk-based capital ratio, and a Tier 1 leverage ratio of at least ten percent, six percent, and five percent, respectively. There is currently no Tier 1 leverage requirement for a holding company to be deemed well-capitalized. At December 31, 2013, the respective capital ratios of the Company and the Bank exceeded the minimum percentage requirements to be deemed “well-capitalized” for regulatory purposes.

- 15-

Part I (Continued)

Item 1 (Continued)

	December 31, 2013
	Amount		Percent
Leverage Ratio
Actual	$	120,048		10.57	%
Well-Capitalized Requirement		56,774		5.00
Minimum Required (1)(2)		45,419		4.00
Risk Based Capital:
Tier 1 Capital
Actual		120,048		15.81
Well-Capitalized Requirement		45,563		6.00
Minimum Required (1)		30,396		4.00
Total Capital
Actual		129,569		17.06
Well-Capitalized Requirement		75,939		10.00
Minimum Required (1)(2)		60,791		8.00

(1) Represents the minimum requirement. Institutions that are contemplating acquisitions or anticipating or experiencing significant growth may be required to maintain a substantially higher leverage ratio.

(2) As discussed in Note 21 of the consolidated financial statements as of December 31, 2013, the Bank has agreed to have and maintain a minimum Tier 1 Capital to average assets ratio of 8 percent and a minimum Total Capital to risk-weighted assets ratio of 10 percent as a result of the Bank’s Board Resolution (BR).  Refer to Note 21.

The federal banking agencies may require banks and bank holding companies subject to enforcement actions to maintain capital ratios in excess of the minimum ratios otherwise required to be deemed well capitalized, in which case institutions may no longer be deemed to be well capitalized and may therefore be subject to applicable restrictions.

Prompt Corrective Action Provisions

The Federal Deposit Insurance Act requires the federal bank regulatory agencies to take “prompt corrective action” with respect to a depository institution if that institution does not meet certain capital adequacy standards, including requiring the prompt submission of an acceptable capital restoration plan. Depending on the bank’s capital ratios, the agencies’ regulations define five categories in which an insured depository institution will be placed: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. At each successive lower capital category, an insured bank is subject to more restrictions, including restrictions on the bank’s activities, operational practices or the ability to pay dividends or executive bonuses. Based upon its capital levels, a bank that is classified as well-capitalized, adequately capitalized, or undercapitalized may be treated as though it were in the next lower capital category if the appropriate federal banking agency, after notice and opportunity for hearing, determines that an unsafe or unsound condition, or an unsafe or unsound practice, warrants such treatment.

- 16-

Part I (Continued)

Item 1 (Continued)

Legislative and Regulatory Developments

The implementation and effect of legislation and regulations enacted since 2008 in response to the U.S. economic downturn and financial industry instability continued in 2013 as modest recovery returned to many institutions in the banking sector. Many institutions, including the Company, have exited Treasury investments under the TARP, and certain provisions of the Dodd-Frank Act are effective and have been fully implemented, including the revisions in the deposit insurance assessment base for FDIC insurance and the permanent increase in coverage to $250,000; the permissibility of paying interest on business checking accounts; the removal of barriers to interstate branching and required disclosure and shareholder advisory votes on executive compensation. Action in 2013 to implement the final Dodd-Frank Act provisions included (i) final new capital rules, (ii) a final rule to implement the so called Volcker Rule restrictions on certain proprietary trading and investment activities and (iii) final rules and increased enforcement action by the CFPB.

The New Capital Rule and Minimum Capital Ratios

In July 2013, the federal bank regulatory agencies adopted final regulations which revised their risk-based and leverage capital requirements for banking organizations to meet requirements of the Dodd–Frank Act and to implement international agreements reached by the Basel Committee on Banking Supervision intended to improve both the quality and quantity of banking organizations’ capital (“Basel III”). Although many of the rules contained in these final regulations are applicable only to large, internationally active banks, some of them will apply on a phased-in basis to all banking organizations, including the Company and the Bank.

The following are among the new requirements that will be phased-in beginning January 1, 2015:

• an increase in the minimum Tier 1 capital ratio from 4.00% to 6.00% of risk-weighted assets;

• a new category and a required 4.50% of risk-weighted assets ratio is established for “common equity Tier 1” as a subset of Tier 1 capital limited to common equity;

• a minimum non-risk-based leverage ratio is set at 4.00% eliminating a 3.00% exception for higher rated banks;

• changes in the permitted composition of Tier 1 capital to exclude trust preferred securities, mortgage servicing rights and certain deferred tax assets and include unrealized gains and losses on available for sale debt and equity securities;

• the risk-weights of certain assets for purposes of calculating the risk-based capital ratios are changed for high volatility commercial real estate acquisition, development and construction loans, certain past due non-residential mortgage loans and certain mortgage-backed and other securities exposures;

• an additional “countercyclical capital buffer” is required for larger and more complex institutions; and

- 17-

Part I (Continued)

Item 1 (Continued)

• The prompt corrective action standards will change when the new capital rule ratios become effective. Under the new standards, in order to be considered well-capitalized, the Bank would be required to meet the new common equity Tier 1 ratio of 6.5%, an increased Tier 1 ratio of 8% (increased from 6%), a total capital ratio of 10% (unchanged) and a leverage ratio of 5% (unchanged).

Management believes that, as of December 31, 2013, the Company and the Bank would meet all applicable capital requirements under the new capital rules on a fully phased-in basis if such requirements were currently in effect (see “Legislative and Regulatory Developments”).

An additional capital conservation buffer of 2.5% of risk weighted assets above the regulatory minimum capital ratios established under the new final capital rule will be phased-in from 2016 to 2019 and must be met to avoid limitations on the ability of the Bank to pay dividends, repurchase shares or pay discretionary bonuses. Including the capital conservation buffer of 2.5%, the new final capital rule would result in the following minimum ratios: (i) a Tier 1 capital ratio of 8.5%, (ii) a common equity Tier 1 capital ratio of 7.0%, and (iii) a total capital ratio of 10.5%. The new capital conservation buffer requirement would be phased-in beginning in January 2016 at 0.625% of risk-weighted assets and would increase each year until fully implemented in January 2019. While the new final capital rule sets higher regulatory capital standards for the Company and the Bank, bank regulators may also continue their past policies of expecting banks to maintain additional capital beyond the new minimum requirements. The implementation of the new capital rules or more stringent requirements to maintain higher levels of capital or to maintain higher levels of liquid assets could adversely affect the Company’s net income and return on equity, restrict the ability to pay dividends or executive bonuses and require the raising of additional capital.

Final Volcker Rule

In December 2013, the federal bank regulatory agencies adopted final rules that implement a part of the Dodd-Frank Act commonly referred to as the “Volcker Rule.” Under these rules and subject to certain exceptions, banking entities, including the Company and the Bank, will be restricted from engaging in activities that are considered proprietary trading and from sponsoring or investing in certain entities, including hedge or private equity funds that are considered “covered funds.” These rules will become effective on April 1, 2014. Certain collateralized debt obligations (“CDO”) securities backed by trust preferred securities were initially defined as covered funds subject to the investment prohibitions of the final rule. Action taken by the Federal Reserve in January 2014 exempted many such securities to address the concern that many community banks holding such CDO securities may have been required to recognize losses on those securities.

- 18-

Part I (Continued)

Item 1 (Continued)

CFPB Actions

The Dodd-Frank Act provided for the creation of the CFPB as an independent entity within the Federal Reserve with broad rulemaking, supervisory and enforcement authority over consumer financial products and services, including deposit products, residential mortgages, home-equity loans, credit cards, and other consumer loans. The CFPB’s functions include investigating consumer complaints, conducting market research, rulemaking, supervising and examining bank consumer transactions, and enforcing rules related to consumer financial products and services. CFPB regulations and guidance apply to all financial institutions and banks with $10 billion or more in assets and are subject to examination by the CFPB. Banks with less than $10 billion in assets, including the Bank, will continue to be examined for compliance by their primary federal banking agency. Significant recent CFPB developments that may affect the Bank’s operations and compliance costs include:

• the issuance of final rules for residential mortgage lending, which became effective January 10, 2014, including definitions for “qualified mortgages” and detailed standards by which lenders must satisfy themselves of the borrower’s ability to repay the loan and revised forms of disclosure under the Truth in Lending Act and the Real Estate Settlement Procedures Act;

• the issuance of a policy report on arbitration clauses which could result in the restriction or prohibition of lenders including arbitration clauses in consumer financial services contracts;

• actions taken to regulate and supervise credit bureaus and debt collections; and

• positions taken by the CFPB on fair lending, including applying the disparate impact theory in auto financing, which could make it harder for lenders to charge different rates or apply different terms to loans to different customers.

Bank Holding Company Regulation

As contained in both federal and state banking laws and regulations, a wide range of requirements and restrictions apply to bank holding companies and their subsidiaries which:

• require periodic reports and such additional information as the Federal Reserve may require bank holding companies to meet or exceed minimum capital requirements (see “Legislative and Regulatory Developments” and “Current Capital Adequacy Requirements”);

• require that bank holding companies serve as a source of financial and managerial strength to subsidiary banks and commit resources as necessary to support each subsidiary bank. The source-of-strength doctrine most directly affects bank holding companies where a bank holding company’s subsidiary bank fails to maintain adequate capital levels. In such a situation, the subsidiary bank will be required by the Bank’s federal regulator to take “prompt corrective action” (see “Prompt Corrective Action Provisions”);

• limit dividends payable to shareholders and restrict the ability of bank holding companies to obtain dividends or other distributions from their subsidiary banks;

- 19-

Part I (Continued)

Item 1 (Continued)

• require a bank holding company to terminate an activity or terminate control of or liquidate or divest certain subsidiaries, affiliates or investments if the Federal Reserve believes the activity or the control of the subsidiary or affiliate constitutes a significant risk to the financial safety, soundness or stability of any bank subsidiary;

• require the prior approval for changes in senior executive officer or directors and prohibit golden parachute payments, including change in control agreements, or new employment agreements with such payment terms, which are contingent upon termination when a bank holding company is deemed to be in troubled condition;

• regulate provisions of certain bank holding company debt, including the authority to impose interest ceilings and reserve requirements on such debt and require prior approval to purchase or redeem securities in certain situations; and

• require prior approval of acquisitions and mergers with other banks or bank holding companies and consider certain competitive, management, financial, and anti-money laundering compliance impact on the U.S.

Other Restrictions on the Company’s Activities

Subject to prior notice or Federal Reserve approval, bank holding companies may generally engage in, or acquire shares of companies engaged in, activities determined by the Federal Reserve to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Bank holding companies that elect and retain “financial holding company” status pursuant to the Gramm-Leach-Bliley Act of 1999 (“GLBA”) may engage in these nonbanking activities and broader securities, insurance, merchant banking and other activities that are determined to be “financial in nature” or are incidental or complementary to activities that are financial in nature without prior Federal Reserve approval. Pursuant to the GLBA and the Dodd-Frank Act, in order to elect and retain financial holding company status, a bank holding company and all depository institution subsidiaries of that bank holding company must be well capitalized and well managed, and, except in limited circumstances, depository subsidiaries must be in satisfactory compliance with the Community Reinvestment Act (“CRA”), which requires banks to help meet the credit needs of the communities in which they operate. Failure to sustain compliance with these requirements or correct any non-compliance within a fixed time period could lead to the required divestiture of subsidiary banks or the termination of all activities that do not conform to those permissible for a bank holding company. The Company has not elected financial holding company status and neither Company nor the Bank has engaged in any activities determined by the Federal Reserve to be financial in nature or incidental or complementary to activities that are financial in nature.

Sarbanes-Oxley Act

The Company is subject to the accounting oversight and corporate governance requirements of the Sarbanes-Oxley Act of 2002, including, among other things, required executive certification of financial presentations, requirements for board audit committees and their members, and disclosure of controls and procedures and internal control over financial reporting.

- 20-

Part I (Continued)

Item 1 (Continued)

Regulation of the Bank

As a Georgia-chartered commercial bank whose deposits are insured by the FDIC, the Bank is subject to regulation, supervision, and regular examination by the Georgia Department of Banking and Finance and by the FDIC as a nonmember state bank, as the Bank’s primary Federal regulator. Specific federal and state laws and regulations which are applicable to banks regulate, among other things, the scope of their business, their investments, their reserves against deposits, the timing of the availability of deposited funds, their activities relating to dividends, investments, loans, the nature and amount of and collateral for certain loans, servicing and foreclosing on loans, borrowings, capital requirements, certain check-clearing activities, branching, and mergers and acquisitions.

Enforcement Authority

The federal and Georgia regulatory structures give the bank regulatory agencies extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes. The regulatory agencies have adopted guidelines to assist in identifying and addressing potential safety and soundness concerns before an institution’s capital becomes impaired. The guidelines establish operational and managerial standards generally relating to: (1) internal controls, information systems, and internal audit systems; (2) loan documentation; (3) credit underwriting; (4) interest-rate exposure; (5) asset growth and asset quality; and (6) compensation, fees, and benefits. Further, the regulatory agencies have adopted safety and soundness guidelines for asset quality and for evaluating and monitoring earnings to ensure that earnings are sufficient for the maintenance of adequate capital and reserves. If, as a result of an examination, the DBF or the FDIC should determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, or other aspects of the Bank’s operations are unsatisfactory or that the Bank or its management is violating or has violated any law or regulation, the DBF and the FDIC, and separately the FDIC as insurer of the Bank’s deposits, have residual authority to:

• require affirmative action to correct any conditions resulting from any violation or practice;

• direct an increase in capital and the maintenance of higher specific minimum capital ratios, which may preclude the Bank from being deemed well capitalized and restrict its ability to accept certain brokered deposits;

• restrict the Bank’s growth geographically, by products and services, or by mergers and acquisitions, including bidding in FDIC receiverships for failed banks;

• enter into or issue informal or formal enforcement actions, including required Board resolutions, memoranda of understanding, written agreements and consent or cease and desist orders or prompt corrective action orders to take corrective action and cease unsafe and unsound practices;

• require prior approval of senior executive officer or director changes; remove officers and directors and assess civil monetary penalties; and

• terminate FDIC insurance, revoke the charter and/or take possession of and close and liquidate the Bank or appoint the FDIC as receiver.

- 21-

Part I (Continued)

Item 1 (Continued)

Deposit Insurance

The FDIC is an independent federal agency that insures deposits through the Deposit Insurance Fund (the “DIF”) up to prescribed statutory limits of federally insured banks and savings institutions and safeguards the safety and soundness of the banking and savings industries. The amount of FDIC assessments paid by each DIF member institution is based on its relative risk of default as measured by regulatory capital ratios and other supervisory factors. The FDIC may terminate a depository institution’s deposit insurance upon a finding that the institution’s financial condition is unsafe or unsound or that the institution has engaged in unsafe or unsound practices that pose a risk to the DIF or that may prejudice the interest of the Bank’s depositors. The termination of deposit insurance for a bank would also result in the revocation of the Bank’s charter by the DBF.  The Bank’s FDIC insurance expense totaled $1.32 million for 2013. We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance. If there are additional bank or financial institution failures or if the FDIC otherwise determines, we may be required to pay even higher FDIC premiums. Any future increases in FDIC insurance premiums may have a material and adverse effect on our earnings and could have a material adverse effect on the value of, or market for, our common stock.

Dividends

It is the Federal Reserve’s policy that bank holding companies should generally pay dividends on common stock only out of income available over the past year, and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. It is also the Federal Reserve’s policy that bank holding companies should not maintain dividend levels that undermine their ability to be a source of strength to its banking subsidiaries. The Federal Reserve has also discouraged payment ratios that are at maximum allowable levels unless both asset quality and capital are very strong.

The Bank is a legal entity that is separate and distinct from the Company. The Company is dependent on the performance of the Bank for funds which may be received as dividends from the Bank for use in the operation of the Company and the ability of the Company to pay dividends to shareholders. Subject to the regulatory restrictions which currently further restrict the ability of the Bank to declare and pay dividends under applicable Georgia law, future cash dividends by the Bank will depend upon management’s assessment of future capital requirements, contractual restrictions and other factors. When effective, the new minimum capital rule may restrict dividends by the Bank if the additional capital conservation buffer is not achieved.

Operations and Consumer Compliance Laws

The Bank must comply with numerous federal and state anti-money laundering and consumer protection and privacy statutes and implementing regulations, including the USA Patriot Act of 2001, GLBA, the Bank Secrecy Act, the Foreign Account Tax Compliance Act (effective 2013), the CRA, the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act, the Equal Credit Opportunity Act, the Truth in Lending Act, the Fair Housing Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the National Flood Insurance Act, and various federal and state privacy protection laws. Noncompliance with these laws could subject the Bank to lawsuits and could also result in administrative penalties, including, fines and reimbursements. The Bank and the Company are also subject to federal and state laws prohibiting unfair or fraudulent business practices, untrue or misleading advertising and unfair competition.

- 22-

Part I (Continued)

Item 1 (Continued)

These laws and regulations mandate certain disclosure and reporting requirements and regulate the manner in which financial institutions must deal with customers when taking deposits, making loans, servicing, collecting, and foreclosure of loans, and providing other services. Failure to comply with these laws and regulations can subject the Bank to various penalties, including but not limited to enforcement actions, injunctions, fines or criminal penalties, punitive damages to consumers, and the loss of certain contractual rights.

The Dodd-Frank Act provided for the creation of the CFPB as an independent entity within the Federal Reserve. The CFPB is a new regulatory agency for United States banks. The CFPB has broad rulemaking, supervisory, and enforcement authority over consumer financial products and services, including deposit products, residential mortgages, home-equity loans, credit cards, and other consumer loans. The CFPB’s functions include investigating consumer complaints, conducting market research, rulemaking, supervising and examining banks consumer transactions, and enforcing rules related to consumer financial products and services. Pursuant to the Dodd-Frank Act, banks (such as the Bank) with less than $10 billion in assets will continue to be examined for compliance with the consumer laws and the regulations of the CFPB by their primary federal banking agency.

The CFPB has adopted revisions to Regulation Z, which implements the Truth in Lending Act (“TILA”). The revisions took effect on January 10, 2014 and apply to all consumer mortgages (except home equity lines of credit, timeshare plans, reverse mortgages, or temporary loans). The revisions mandate specific underwriting criteria for home loans in order for creditors to make a reasonable, good faith determination of a consumer’s ability to repay and establish certain protections from liability under this requirement for “qualified mortgages” meeting certain standards. In particular, it will prevent banks from making “no doc” and “low doc” home loans, as the rules require that banks determine a consumer’s ability to pay based in part on verified and documented information. Because we do not originate “no doc” or “low doc” loans, we do not believe this regulation will have a significant effect on our operations.

Iran Sanctions Related Disclosure

Under the Iran Threat Reduction and Syrian Human Rights Act of 2012, which added Section 13(r) to the Securities Exchange Act of 1934, as amended, we are required to include certain disclosures in our periodic reports if we or any of our “affiliates” knowingly engaged in certain specified activities during the period covered by this Annual Report on Form 10-K. Because the SEC defines the term “affiliate” broadly, it includes any entity controlled by us as well as any person or entity that controls us or is under common control with us. We do not believe we and our consolidated subsidiaries have knowingly engaged in any transaction or dealing reportable under Section 13(r) of the Exchange Act during fiscal year 2013.

- 23-

Part I (Continued)

Item 1 (Continued)

Anti-Money Laundering and the USA Patriot Act

A major focus of governmental policy on financial institutions in recent years has been aimed at combating money laundering and terrorist financing. The USA PATRIOT Act of 2001 (the “USA Patriot Act”) substantially broadened the scope of United States anti-money laundering laws and regulations by imposing significant new compliance and due diligence obligations, creating new crimes and penalties and expanding the extra-territorial jurisdiction of the United States. The United States Treasury Department has issued and, in some cases, proposed a number of regulations that apply various requirements of the USA Patriot Act to financial institutions such as the Bank. These regulations impose obligations on financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identity of their customers. Certain of those regulations impose specific due diligence requirements on financial institutions that maintain correspondent or private banking relationships with non-U.S. financial institutions or persons. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences for the Company.

Office of Foreign Assets Control Regulation

The United States has imposed economic sanctions that affect transactions with designated foreign countries, nationals and others. These are typically known as the “OFAC” rules based on their administration by the U.S. Treasury Department Office of Foreign Assets Control (“OFAC”). The OFAC-administered sanctions targeting countries take many different forms. Generally, however, they contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country and prohibitions on “U.S. persons” engaging in financial transactions relating to making investments in, or providing investment-related advice or assistance to, a sanctioned country; and (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons). Blocked assets (e.g., property and bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC. Failure to comply with these sanctions could have serious legal and reputational consequences.

Legislative and Regulatory Initiatives

From time to time, various legislative and regulatory initiatives are introduced in Congress and state legislatures, as well as by regulatory agencies. Such initiatives may include proposals to expand or contract the powers of bank holding companies and depository institutions or proposals to substantially change the financial institution regulatory system. Such legislation could change banking statutes and the operating environment of the Company in substantial and unpredictable ways. If enacted, such legislation could increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions. The Company cannot predict whether any such legislation will be enacted, and, if enacted, the effect that it, or any implementing regulations, would have on the financial condition or results of operations of the Company. A change in statutes, regulations or regulatory policies applicable to the Company or any of its subsidiaries could have a material effect on the business of the Company.

- 24-

Item 1A

Risk Factors

Not Applicable.

Item 1B

Unresolved Staff Comments

Not Applicable.

Item 2

Properties

The principal properties of the Registrant consist of the properties of the Bank.  The Bank owns all of the banking offices occupied except two offices in Tifton, one office in Valdosta, and one office in Douglas which are leased.  In addition, the Company owns the corporate offices located in Fitzgerald, Georgia.

Item 3

Legal Proceedings

The Company and its subsidiary may become parties to various legal proceedings arising from the normal course of business.  As of December 31, 2013, there are no material pending legal proceedings to which Colony or its subsidiary are a party or of which any of its property is the subject.

Item 4

Mine Safety Disclosures

Not Applicable.

- 25-

Part II

Item 5

Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities

Effective April 2, 1998, Colony Bankcorp, Inc. common stock is quoted on the NASDAQ Global Market under the symbol “CBAN.”  Prior to this date, there was no public market for the common stock of the registrant.

The following table sets forth the high, low and close sale prices per share of the common stock as reported on the NASDAQ Global Market, and the dividends declared per share for the periods indicated.

Year Ended December 31, 2013	High		Low		Close
Fourth Quarter	$	6.40	$	5.81	$	6.10
Third Quarter		7.47		5.85		5.85
Second Quarter		7.50		5.21		6.81
First Quarter		5.95		3.55		5.45
Year Ended December 31, 2012
Fourth Quarter		4.50		3.42		3.60
Third Quarter		5.48		3.22		3.68
Second Quarter		8.06		3.70		4.73
First Quarter		5.83		1.90		3.75

No cash dividends were paid on its common stock in 2012 or 2013.  The Company’s board of directors suspended the payment of dividends in the third quarter of 2009.  For a description of the restrictions and limitations on the Company’s ability to pay dividends, please see “Dividends” on Page 18.

As of December 31, 2013, the Company had approximately 1,960 common stockholders of record.

On March 30, 2010, Colony Bankcorp, Inc. accepted the subscriptions of several investors in a private placement offering to accredited investors under an exemption from registration contained in Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D under the Securities Act.  The Company offered a maximum of 1,216,545 shares of its common stock at a price of $4.11-$4.50 per share.  The price for non-affiliates was determined using a twenty day average trading price as quoted on NASDAQ Stock Market immediately prior to the beginning of the offering.  All of the shares were purchased for a total of $5.08 million, less offering expenses of approximately $20,000.  The offering was closed March 30, 2010.

Issuer Purchase of Equity Securities

The Company purchased no shares of the Company’s common stock during the quarter ended December 31, 2013.

- 26-

Part II (Continued)

Item 6

Selected Financial Data

	Year Ended December 31,
	2013		2012		2011		2010			2009
	(Dollars in Thousands, except per share data)
Selected Balance Sheet Data
Total Assets	$	1,148,551	$	1,139,397	$	1,195,376	$	1,275,658		$	1,307,089
Total Loans, Net of Unearned Interest and Fees		750,857		746,816		716,264		813,189			931,252
Total Deposits		987,529		979,685		999,985		1,059,124			1,057,586
Investment Securities		263,295		268,342		303,937		303,886			267,300
Federal Home Loan Bank Stock		3,164		3,364		5,398		6,064			6,345
Stockholders’ Equity		89,954		95,759		96,613		92,959			89,275
Selected Income Statement Data
Interest Income		45,186		47,289		51,793		58,738			65,847
Interest Expense		7,497		11,016		16,806		21,523			26,281
Net Interest Income		37,689		36,273		34,987		37,215			39,566
Provision for Loan Losses		4,485		6,785		8,250		13,350			43,445
Other Income		8,377		9,733		9,951		10,006			9,544
Other Expense		34,617		35,379		33,051		33,856			34,844
Income (Loss) Before Tax		6,964		3,842		3,637		15			(29,179	)
Income Tax Expense (Benefit)		2,335		1,201		1,104		(459	)		(9,995	)
Net Income (Loss)		4,629		2,641		2,533		474			(19,184	)
Preferred Stock Dividends		1,509		1,435		1,400		1,400			1,365
Net Income (Loss) Available to Common Stockholders	$	3,120	$	1,206	$	1,133	$	(926	)	$	(20,549	)
Weighted Average Common Shares Outstanding		8,439		8,439		8,439		8,149			7,213
Shares Outstanding		8,439		8,439		8,439		8,443			7,229
Intangible Assets	$	188	$	224	$	259	$	295		$	331
Dividends Declared		-		-		-		-			1,057
Average Assets		1,118,071		1,139,814		1,205,891		1,269,607			1,286,418
Average Stockholders’ Equity		93,358		96,541		94,737		94,452			105,655
Net Charge-Offs		5,416		9,698		20,880		16,471			29,060
Reserve for Loan Losses		11,806		12,737		15,650		28,280			31,401
OREO		15,502		15,941		20,445		20,208			19,705
Nonperforming Loans		24,118		29,855		38,837		28,921			33,566
Nonperforming Assets		39,620		46,162		59,708		49,262			53,403
Average Interest-Earning Assets		1,048,185		1,066,333		1,132,523		1,199,216			1,218,153
Noninterest-Bearing Deposits		115,261		123,967		94,269		102,959			84,239

- 27-

Part II (Continued)

Item 6 (Continued)

	Year Ended December 31,
	2013			2012			2011			2010			2009
	(Dollars in Thousands, except per share data)
Per Share Data:
Net Income (Loss) Per Common Share (Diluted)	$	0.37		$	0.14		$	0.13		$	(0.11	)	$	(2.85	)
Common Book Value Per Share		7.34			8.05			8.17			7.75			8.57
Tangible Common Book Value Per Share		7.32			8.02			8.14			7.72			8.52
Dividends Per Common Share		0.00			0.00			0.00			0.00			0.15
Profitability Ratios:
Net Income (Loss) to Average Assets		0.28	%		0.11	%		0.09	%		(0.07	)%		(1.60	)%
Net Income (Loss) to Average Stockholders’ Equity		3.34			1.25			1.20			(0.98	)		(19.45	)
Net Interest Margin		3.61			3.41			3.11			3.12			3.27
Loan Quality Ratios:
Net Charge-Offs to Total Loans		0.72			1.30			2.92			2.03			3.12
Reserve for Loan Losses to Total Loans and OREO		1.54			1.67			2.12			3.39			3.30
Nonperforming Assets to Total Loans and OREO		5.17			6.05			8.10			5.91			5.62
Reserve for Loan Losses to Nonperforming Loans		48.95			42.66			40.30			97.78			93.55
Reserve for Loan Losses to Total Nonperforming Assets		29.80			27.59			26.21			57.41			58.80
Liquidity Ratios:
Loans to Total Deposits (2)		76.03			76.23			71.63			76.78			88.06
Loans to Average Earning Assets (2)		71.63			70.04			63.24			67.81			76.45
Noninterest-Bearing Deposits to Total Deposits		11.67			12.65			9.43			9.72			7.97
Capital Adequacy Ratios:
Common Stockholders’ Equity to Total Assets		5.39			5.96			5.77			5.13			4.74
Total Stockholders’ Equity to Total Assets		7.83			8.40			8.08			7.29			6.83
Dividend Payout Ratio		0.00			0.00			0.00		NM(1)			NM(1)

(1) Not meaningful due to net loss recorded.

(2) Total loans, net of unearned interest and fees.

- 28-

Part II (Continued)

Item 7

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements and Factors that Could Affect Future Results

Certain statements contained in this Annual Report that are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the Act), notwithstanding that such statements are not specifically identified.  In addition, certain statements may be contained in the Company’s future filings with the SEC, in press releases, and in oral and written statements made by or with the approval of the Company that are not statements of historical fact and constitute forward-looking statements within the meaning of the Act.  Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans and objectives of Colony Bankcorp, Inc. or its management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements.  Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

· Local and regional economic conditions and the impact they may have on the Company and its customers and the Company’s assessment of that impact.

· Changes in estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements.

· The effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board.

· Inflation, interest rate, market and monetary fluctuations.

· Political instability.

· Acts of war or terrorism.

· The timely development and acceptance of new products and services and perceived overall value of these products and services by users.

· Changes in consumer spending, borrowings and savings habits.

· Technological changes.

· Acquisitions and integration of acquired businesses.

· The ability to increase market share and control expenses.

- 29-

Part II (Continued)

Item 7 (Continued)

· The effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) with which the Company and its subsidiaries must comply.

· The effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Financial Accounting Standards Board and other accounting standard setters.

· Changes in the Company’s organization, compensation and benefit plans.

· The costs and effects of litigation and of unexpected or adverse outcomes in such litigation.

· Greater than expected costs or difficulties related to the integration of new lines of business.

· The Company’s success at managing the risks involved in the foregoing items.

· Restrictions or conditions imposed by our regulators on our operations, including the terms of our Board Resolution.

Forward-looking statements speak only as of the date on which such statements are made.  The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events.

The Company

Colony Bankcorp, Inc. (Colony) is a bank holding company headquartered in Fitzgerald, Georgia that provides, through its wholly-owned subsidiary (collectively referred to as the Company), a broad array of products and services throughout central, south and coastal Georgia markets. The Company offers commercial, consumer and mortgage banking services.

Application of Critical Accounting Policies and Accounting Estimates

The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States of America and conform to general practices within the banking industry.  The Company’s financial position and results of operations are affected by management’s application of accounting policies, including judgments made to arrive at the carrying value of assets and liabilities and amounts reported for revenues, expenses and related disclosures.  Different assumptions in the application of these policies could result in material changes in the Company’s financial position and/or results of operations.  Critical accounting policies are those policies that management believes are the most important to the portrayal of the Company’s financial condition and results of operations, and they require management to make estimates that are difficult and subjective or complete.

Allowance for Loan Losses - The allowance for loan losses provides coverage for probable losses inherent in the Company’s loan portfolio.  Management evaluates the adequacy of the allowance for loan losses quarterly based on changes, if any, in underwriting activities, the loan portfolio composition (including product mix and geographic, industry or customer-specific concentrations), trends in loan performance, regulatory guidance and economic factors.  This evaluation is inherently subjective, as it requires the use of significant management estimates.  Many factors can affect management’s estimates of specific and expected losses, including volatility of default probabilities, collateral values, rating migrations, loss severity and economic and political conditions.  The allowance is increased through provisions charged to operating earnings and reduced by net charge-offs.

- 30-

Part II (Continued)

Item 7 (Continued)

The Company determines the amount of the allowance based on relative risk characteristics of the loan portfolio.  The allowance recorded for loans is based on reviews of individual credit relationships and historical loss experience.  The allowance for losses relating to impaired loans is based on the loan’s observable market price, the discounted cash flows using the loan’s effective interest rate, or the value of collateral for collateral dependent loans.

Regardless of the extent of the Company’s analysis of customer performance, portfolio trends or risk management processes, certain inherent but undetected losses are probable within the loan portfolio.  This is due to several factors, including inherent delays in obtaining information regarding a customer’s financial condition or changes in their unique business conditions, the judgmental nature of individual loan evaluations, collateral assessments and the interpretation of economic trends.  Volatility of economic or customer-specific conditions affecting the identification and estimation of losses for larger nonhomogeneous credits and the sensitivity of assumptions utilized to establish allowances for homogeneous groups of loans are among other factors.  The Company estimates a range of inherent losses related to the existence of these exposures.  The estimates are based upon the Company’s evaluation of risk associated with the commercial and consumer levels and the estimated impact of the current economic environment.

Other Real Estate Owned and Foreclosed Assets

Other real estate owned (OREO) or other foreclosed assets acquired through loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.  The adjustment at the time of foreclosure is recorded through the allowance for loan losses.  Due to the subjective nature of establishing the fair value when the asset is acquired, the actual fair value of the other real estate owned or foreclosed asset could differ from the original estimate.  If it is determined that fair value declines subsequent to foreclosure, the valuation allowance is adjusted through a charge to noninterest expense.  Operating costs associated with the assets after acquisition are also recorded as noninterest expense. Gains and losses on the disposition of other real estate owned and foreclosed assets are netted and recognized in noninterest expense.  Management obtains appraisals performed by certified, third-parties within one year of placing a property into OREO.  The fair value of the property is then evaluated by management annually going forward, or more often if necessary.  Annual evaluations may be performed by certified third parties, or internally by management comparing recent sales of similar properties within the Company’s OREO portfolio.

Overview

The following discussion and analysis presents the more significant factors affecting the Company’s financial condition as of December 31, 2013 and 2012, and results of operations for each of the years in the three-year period ended December 31, 2013. 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.

Taxable-equivalent adjustments are the result of increasing income from tax-free loans and investments by an amount equal to the taxes that would be paid if the income were fully taxable based on a 34 percent  federal tax rate, thus making tax-exempt yields comparable to taxable asset yields.

Dollar amounts in tables are stated in thousands, except for per share amounts.

- 31-

Part II (Continued)

Item 7 (Continued)

Results of Operations

The Company’s results of operations are determined by its ability to effectively manage interest income and expense, to minimize loan and investment losses, to generate noninterest income and to control noninterest expense.  Since market forces and economic conditions beyond the control of the Company determine interest rates, the ability to generate net interest income is dependent upon the Company’s ability to obtain an adequate spread between the rate earned on earning assets and the rate paid on interest-bearing liabilities.  Thus, the key performance for net interest income is the interest margin or net yield, which is taxable-equivalent net interest income divided by average earning assets.  Net income (loss) available to common shareholders totaled $3.12 million, or $0.37 per diluted common share in 2013, compared to $1.21 million, or $0.14 per diluted common share in 2012, compared to $1.13 million, or $0.13 per diluted common share in 2011.

Selected income statement data, returns on average assets and average equity and dividends per share for the comparable periods were as follows:

	2013			2012			2011
Taxable-Equivalent Net Interest Income	$	37,859		$	36,417		$	35,178
Taxable-Equivalent Adjustment		170			144			191
Net Interest Income		37,689			36,273			34,987
Provision for Loan Losses		4,485			6,785			8,250
Noninterest Income		8,377			9,733			9,951
Noninterest Expense		34,617			35,379			33,051
Income Before Income Taxes		6,964			3,842			3,637
Income Taxes		2,335			1,201			1,104
Net Income	$	4,629		$	2,641		$	2,533
Preferred Stock Dividends		1,509			1,435			1,400
Net Income Available to Common Stockholders	$	3,120		$	1,206		$	1,133
Basic per Common Share:
Net Income	$	0.37		$	0.14		$	0.13
Diluted per Common Share:
Net Income	$	0.37		$	0.14		$	0.13
Return on Average Assets (1)		0.28	%		0.11	%		0.09	%
Return on Average Equity (1)		3.34	%		1.25	%		1.20	%

(1) Computed using net income available to common shareholders.

- 32-

Part II (Continued)

Item 7 (Continued)

Net income available to common shareholders for 2013 increased $1.91 million, or 158.71 percent, compared to 2012.  The increase was primarily the result of an increase of $1.42 million in net interest income, a decrease of $2.3 million in provision for loan losses and a decrease of $762 thousand in noninterest expense. The impact of these items was partly offset by a decrease of $1.36 million in noninterest income and an increase of $1.13 million in income tax expense.

Net income available to common shareholders for 2012 increased $73 thousand, or 6.44 percent, compared to 2011.  The increase was primarily the result of a $1.47 million decrease in provision for loan losses and an increase of $1.29 million in net interest income.  The impact of these items was partly offset by a $218 thousand decrease in noninterest income, an increase of $2.33 million in noninterest expense and an increase of $97 thousand in income tax expense.

Details of the changes in the various components of net income are further discussed below.

Net Interest Income

Net interest income is the difference between interest income on earning assets, such as loans and securities, and interest expense on liabilities, such as deposits and borrowings, which are used to fund those assets. Net interest income is the Company’s largest source of revenue, representing 81.82 percent of total revenue during 2013 and 78.84 percent during 2012.

Net interest margin is the taxable-equivalent net interest income as a percentage of average earning assets for the period.  The level of interest rates and the volume and mix of earning assets and interest-bearing liabilities impact net interest income and net interest margin.

The Federal Reserve Board influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. 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 is currently 3.25 percent and has been for the past four years.  The federal funds rate moved similar to prime rate with interest rates currently at 0.25 percent and has been for the past four years.  We anticipate the Federal Reserve maintaining its current interest rate policy in 2014, which should result in Colony’s net interest margin remaining stable.

The following table presents the changes in taxable-equivalent net interest income and identifies the changes due to differences in the average volume of earning assets and interest-bearing liabilities and the changes due to changes in the average interest rate on those assets and liabilities. The changes in net interest income due to changes in both average volume and average interest rate have been allocated to the average volume change or the average interest rate change in proportion to the absolute amounts of the change in each. The Company’s consolidated average balance sheets along with an analysis of taxable-equivalent net interest earnings are presented in the Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this report.

- 33-

Part II (Continued)

Item 7 (Continued)

Rate/Volume Analysis

The rate/volume analysis presented hereafter illustrates the change from year to year for each component of the taxable equivalent net interest income separated into the amount generated through volume changes and the amount generated by changes in the yields/rates.

	Changes From									Changes From
	2012 to 2013 (a)									2011 to 2012 (a)
	Volume			Rate			Total			Volume			Rate			Total
Interest Income
Loans, Net-Taxable	$	1,327		$	(1,908	)	$	(581	)	$	(2,406	)	$	(133	)	$	(2,539	)
Investment Securities
Taxable		(145	)		(1,263	)		(1,408	)		(377	)		(1,630	)		(2,007	)
Tax-Exempt		(20	)		4			(16	)		(2	)		(14	)		(16	)
Total Investment Securities		(165	)		(1,259	)		(1,424	)		(379	)		(1,644	)		(2,023	)
Interest-Bearing Deposits in Other Banks		(33	)		37			4			(4	)		34			30
Federal Funds Sold		(60	)		-			(60	)		(15	)		(1	)		(16	)
Other Interest - Earning Assets		(10	)		(6	)		(16	)		(12	)		9			(3	)
Total Interest Income		1,059			(3,136	)		(2,077	)		(2,816	)		(1,735	)		(4,551	)
Interest Expense
Interest-Bearing Demand and Savings Deposits		141			(64	)		77			253			(227	)		26
Time Deposits		(892	)		(2,101	)		(2,993	)		(1,762	)		(2,477	)		(4,239	)
Total Interest Expense On Deposits		(751	)		(2,165	)		(2,916	)		(1,509	)		(2,704	)		(4,213	)
Other Interest-Bearing Liabilities
Federal Funds Purchased and Repurchase Agreements		(136	)		(430	)		(566	)		(338	)		-			(338	)
Subordinated Debentures		-			(37	)		(37	)		-			46			46
Other Debt		-			-			-			(1,175	)		(110	)		(1,285	)
Total Interest Expense		(887	)		(2,632	)		(3,519	)		(3,022	)		(2,768	)		(5,790	)
Net Interest Income (Loss)	$	1,946		$	(504	)	$	1,442		$	206		$	1,033		$	1,239

(a) Changes in net interest income for the periods, based on either changes in average balances or changes in average rates for interest-earning assets and interest-bearing liabilities, are shown on this table. During each year there are numerous and simultaneous balance and rate changes; therefore, it is not possible to precisely allocate the changes between balances and rates. For the purpose of this table, changes that are not exclusively due to balance changes or rate changes have been attributed to rates.

Our financial performance is impacted by, among other factors, interest rate risk and credit risk.  We do not utilize derivatives to mitigate our credit risk, relying instead on an extensive loan review process and our allowance for loan losses.

- 34-

Part II (Continued)

Item 7 (Continued)

Interest rate risk is the change in value due to changes in interest rates.  The Company is exposed only to U.S. dollar interest rate changes and, accordingly, the Company manages exposure by considering the possible changes in the net interest margin. The Company does not have any trading instruments nor does it classify any portion of its investment portfolio as held for trading. The Company does not engage in any hedging activity or utilize any derivatives. The Company has no exposure to foreign currency exchange rate risk, commodity price risk and other market risks. Interest rate risk is addressed by our Asset & Liability Management Committee (ALCO) which includes senior management representatives. The ALCO monitors interest rate risk by analyzing the potential impact to the net portfolio of equity value and net interest income from potential changes to interest rates and considers the impact of alternative strategies or changes in balance sheet structure.

Interest rates play a major part in the net interest income of financial institutions.  The repricing of interest earnings assets and interest-bearing liabilities can influence the changes in net interest income.  The timing of repriced assets and liabilities is Gap management and our Company has established its policy to maintain a Gap ratio in the one-year time horizon of .80 to 1.20.

Our exposure to interest rate risk is reviewed at least quarterly by our Board of Directors and the ALCO.  Interest rate risk exposure is measured using interest rate sensitivity analysis to determine our change in net portfolio value in the event of assumed changes in interest rates.  In order to reduce the exposure to interest rate fluctuations, we have implemented strategies to more closely match our balance sheet composition. The Company has engaged FTN Financial to run a quarterly asset/liability model for interest rate risk analysis.  We are generally focusing our investment activities on securities with terms or average lives in the 2-5 year range.

The Company maintains about 14.7 percent of its loan portfolio in adjustable rate loans that reprice with prime rate changes, while the bulk of its other loans mature within 3 years.  The liabilities to fund assets are primarily in short term certificates of deposit that mature within one year.  This balance sheet composition allowed the Company to be relatively constant with its net interest margin until 2008.  During 2007, interest rates decreased 100 basis points and this decrease by the Federal Reserve in 2007 followed by 400 basis point decrease in 2008 resulted in significant pressure in net interest margins.  While the Federal Reserve rates have remained unchanged since 2008, we have seen the net interest margin increase to 3.61 percent for 2013, compared to 3.41 percent for 2012 and to 3.11 percent for 2011.  Given the Federal Reserve’s aggressive posture during 2008 that ended the year with a range of 0 - 0.25 percent federal funds target rate and remained the same for all of 2013, we have seen our net interest margin reach a low of 3.45 percent for first quarter 2013 to a high of 3.68 percent for fourth quarter 2013.

- 35-

Part II (Continued)

Item 7 (Continued)

Taxable-equivalent net interest income for 2013 increased by $1.44 million, or 3.96 percent, compared to 2012 while taxable-equivalent net interest income for 2012 increased by $1.24 million, or 3.52 percent, compared to 2011.  The average volume of earning assets during 2013 decreased $18.15 million compared to 2012 while over the same period the net interest margin increased to 3.61 from 3.41 percent.  Improvement in the net interest margin in 2013 was primarily driven by reduction in the cost of funds and maintaining longer term investments.  Similarly, the average volume of earning assets during 2012 decreased $66.19 million compared to 2011 while over the same period the net interest margin increased to 3.41 from 3.11 percent.  The decline in average earning assets in 2013 affected each category of assets except loans, while the significant decrease was primarily in average investment securities.  Reduction in average earning assets during 2012 and 2011 was primarily in loans and investment securities, even though each category declined.  The increase in the net interest margin in 2012 was primarily the result of the reduction in the cost of funds and maintaining longer term investments.

The average volume of loans increased $22.76 million in 2013 compared to 2012, and decreased $41.20 million in 2012 compared to 2011.  The average yield on loans decreased 26 basis points in 2013 compared to 2012 and decreased 1 basis point in 2012 compared to 2011. The average volume of deposits decreased $16.38 million while other borrowings decreased $3.41 million in 2013 compared to 2012.  The average volume of other borrowings decreased $37.83 million in 2012 compared to 2011 while average deposits decreased $31.03 million in 2012 compared to 2011.  Interest-bearing deposits made up 165.77 percent of the decrease in average deposits in 2013 and 125.76 percent of the decrease in average deposits in 2012. Accordingly, the ratio of average interest-bearing deposits to total average deposits was 88.2 percent in 2013, 89.5 percent in 2012 and 90.6 percent in 2011. This deposit mix, combined with a general decrease in interest rates, had the effect of (i) decreasing the average cost of total deposits by 29 basis points in 2013 compared to 2012 and decreasing the average cost of total deposits by 39 basis points in 2012 compared to 2011, and (ii) mitigating a portion of the impact of decreasing yields on earning assets on the Company’s net interest income.

The Company’s net interest spread, which represents the difference between the average rate earned on earning assets and the average rate paid on interest-bearing liabilities, was 3.50 percent in 2013 compared to 3.27 percent in 2012 and 2.93 percent in 2011. 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 Quantitative and Qualitative Disclosures About Interest Rate Sensitivity included elsewhere in this report.

Provision for Loan Losses

The provision for loan losses is determined by management as the amount to be added to the allowance for loan losses after net charge-offs have been deducted to bring the allowance to a level which, in management’s best estimate, is necessary to absorb probable losses within the existing loan portfolio. The provision for loan losses totaled $4.49 million in 2013 compared to $6.79 million in 2012 and $8.25 million in 2011.  See the section captioned “Allowance for Loan Losses” elsewhere in this discussion for further analysis of the provision for loan losses.

- 36-

Part II (Continued)

Item 7 (Continued)

Noninterest Income

The components of noninterest income were as follows:

	2013			2012		2011
Service Charges on Deposit Accounts	$	4,691		$	3,573	$	3,244
Other Charges, Commissions and Fees		1,725			1,515		1,312
Other		1,206			1,102		1,259
Mortgage Fee Income		484			400		265
Securities Gains (Losses)		(364	)		2,837		2,924
Gain on Sale of SBA Loans		635			306		947
	$	8,377		$	9,733	$	9,951

Total noninterest income for 2013 decreased $1.36 million, or 13.93 percent, compared to 2012 while total noninterest income for 2012 decreased $218 thousand, or 2.19 percent, compared to 2011.  The decrease in 2013 noninterest income compared to 2012 was primarily in securities gains while the decrease in 2012 noninterest income compared to 2011 was primarily in gain on sale of SBA loans.  Changes in these items and the other components of noninterest income are discussed in more detail below.

Service Charges on Deposit Accounts.  Service charges on deposit accounts for 2013 increased $1.12 million, or 31.29 percent, compared to 2012.  Service charges on deposit accounts for 2012 increased $329 thousand, or 10.14 percent, compared to 2011.  The increase in 2013 was primarily due to an increase in volume of consumer and business account overdraft fees.

Mortgage Fee Income.  Mortgage fee income for 2013 increased $84 thousand, or 21.00 percent, compared to 2012 while mortgage fee income for 2012 increased $135 thousand, or 50.94 percent, compared to 2011.  The increase in 2013 and 2012 was due to increased mortgage loan activity due to an initiative to increase mortgage lending opportunities given the low interest rate environment.

Security Gains.  The Company realized losses from the sale of securities of $364 thousand for 2013, which included approximately $360 thousand for other-than-temporary impairment (OTTI) on one investment, compared to gains of $2.83 million for 2012 and $2.92 million in 2011.

All Other Noninterest Income.  Other charges, commissions and fees, other income and gain on sale of SBA loans for 2013 increased $643 thousand, or 22.00 percent, compared to 2012.  The increase was primarily attributable to the rise in the gain on sale of SBA loans.  In 2012 other charges, commissions and fees, other income and gain on sale of SBA loans for 2012 decreased $595 thousand, or 16.91 percent, compared to 2011.  The decrease was primarily attributable to the decline in gain on sale of SBA loans for 2012 compared to 2011.

- 37-

Part II (Continued)

Item 7 (Continued)

Noninterest Expense

The components of noninterest expense were as follows:

	2013		2012		2011
Salaries and Employee Benefits	$	16,692	$	15,565	$	14,633
Occupancy and Equipment		3,795		3,878		3,998
Other		14,130		15,936		14,420
	$	34,617	$	35,379	$	33,051

Total noninterest expense for 2013 decreased $762 thousand, or 2.15 percent compared to 2012 while total noninterest expense increased $2.33 million, or 7.04 percent compared to 2011.  Reduction in noninterest expense in 2013 was primarily in all other noninterest expense and occupancy and equipment while the Company had a slight increase in salaries and employee benefits.  Growth in noninterest expense in 2012 was primarily in salaries and employee benefits and other noninterest expense while the Company had a slight decrease in occupancy and equipment.

Salaries and Employee Benefits.  Salaries and employee benefits expense for 2013 increased $1.13 million, or 7.24 percent, compared to 2012.  This increase is primarily attributable to an increase in headcount related to increased regulatory compliance demands.  Salaries and employee benefits expense for 2012 increased $932 thousand, or 6.37 percent, compared to 2011.

Occupancy and Equipment.  Occupancy expense for 2013 decreased $83 thousand compared to 2012, or a decrease of 2.14 percent.  Occupancy expense for 2012 decreased $120 thousand compared to 2011, or a decrease of 3.00 percent.  The decrease in occupancy expense in 2012 is primarily due to a reduction in depreciation expense of $113 thousand from 2011.

All Other Noninterest Expense.  All other noninterest expense for 2013 decreased $1.81 million, or 11.33 percent.  Significant changes in noninterest expense were:  FDIC insurance assessment fees decreased to $1.32 million for 2013 compared to $1.50 million for 2012, or a decrease of $176 thousand, legal and professional fees decreased to $721 thousand for 2013 in comparison to $1.1 million for 2012, or a decrease of $365 thousand, foreclosed property and repossession expense decreased to $3.9 million in 2013 compared to $5.6 million in 2012, or a decrease of $1.70 million, and advertising increased to $508 thousand in 2013 compared to $423 thousand in 2012, or an increase of $86 thousand.  All other noninterest expense for 2012 increased $1.52 million, or 10.51 percent.  Significant changes in noninterest expense were:  FDIC insurance assessment fees decreased to $1.50 million for 2012 compared to $1.83 million for 2011, or a decrease of $331 thousand; foreclosed property and repossession expense increased to $5.6 million for 2012 compared to $4.0 million for 2011, or an increase of $1.57 million, legal and professional fees decreased to $1.1 million for 2012 in comparison to $1.2 million for 2011, or a decrease of $101 thousand, and advertising decreased to $423 thousand in 2012 compared to $508 thousand, or 16.84 percent.

- 38-

Part II (Continued)

Item 7 (Continued)

Sources and Uses of Funds

The following table illustrates, during the years presented, the mix of the Company’s funding sources and the assets in which those funds are invested as a percentage of the Company’s average total assets for the period indicated. Average assets totaled $1.12 billion in 2013 compared to $1.14 billion in 2012 and $1.21 billion in 2011.

	2013				2012				2011
Sources of Funds:
Deposits:
Noninterest-Bearing	$	112,667	10.1	%	$	101,896	8.9	%	$	93,903	7.8	%
Interest-Bearing		840,646	75.2	%		867,794	76.1	%		906,816	75.2	%
Federal Funds Purchased and Repurchase Agreements		34	0.0	%		-	-	%		9,851	0.8	%
Subordinated Debentures and Other Borrowed Money		64,528	5.8	%		67,974	6.0	%		95,949	8.0	%
Other Noninterest-Bearing
Liabilities		6,838	0.6	%		5,609	0.5	%		4,635	0.4	%
Equity Capital		93,358	8.3	%		96,541	8.5	%		94,737	7.8	%
Total	$	1,118,071	100.0	%	$	1,139,814	100.0	%	$	1,205,891	100.0	%
Uses of Funds:
Loans (Net of Allowance)	$	731,280	65.4	%	$	706,091	62.0	%	$	742,482	61.6	%
Investment Securities		275,689	24.7	%		284,261	24.9	%		300,293	24.9	%
Federal Funds Sold		14,969	1.3	%		38,877	3.4	%		44,667	3.7	%
Interest-Bearing Deposits		9,625	0.9	%		17,046	1.5	%		18,715	1.5	%
Other Interest-Earning Assets		3,275	0.3	%		4,277	0.4	%		5,781	0.5	%
Other Noninterest-Earning Assets		83,233	7.4	%		89,262	7.8	%		93,953	7.8	%
Total	$	1,118,071	100.0	%	$	1,139,814	100.0	%	$	1,205,891	100.0	%

Deposits continue to be the Company’s primary source of funding.  Over the comparable periods, the relative mix of deposits continues to be high in interest-bearing deposits.  Interest-bearing deposits totaled 88.2 percent of total average deposits in 2013 compared to 89.5 percent in 2012 and 90.62 percent in 2011.

The Company primarily invests funds in loans and securities.  Loans continue to be the largest component of the Company’s mix of invested assets.  Loan demand increased in 2013 as total loans were $751.2 million at December 31, 2013, up 0.6 percent, compared to loans of $747.1 million at December 31, 2012, while total loans at December 31, 2012 were up 4.3 percent, compared to loans of $716.3 million at December 31, 2011.  See additional discussion regarding the Company’s loan portfolio in the section captioned “Loans” included below.  The majority of funds provided by deposits have been invested in loans.

- 39-

Part II (Continued)

Item 7 (Continued)

Loans

The following table presents the composition of the Company’s loan portfolio as of December 31 for the past five years.

	2013			2012			2011			2010			2009
Commercial, Financial and Agricultural	$	58,773		$	61,895		$	57,408		$	63,772		$	80,984
Real Estate
Construction		59,288			59,660			62,076			76,682			113,117
Mortgage, Farmland		47,034			49,057			48,225			52,778			54,965
Mortgage, Other		548,041			538,231			508,919			570,350			626,993
Consumer		25,676			29,778			30,449			33,564			38,383
Other		12,406			8,429			9,244			16,104			16,950
		751,218			747,050			716,321			813,250			931,392
Unearned Interest and Fees		(360	)		(234	)		(57	)		(61	)		(140	)
Allowance for Loan Losses		(11,806	)		(12,737	)		(15,650	)		(28,280	)		(31,401	)
Loans	$	739,052		$	734,079		$	700,614		$	784,909		$	899,851

The following table presents total loans as of December 31, 2013 according to maturity distribution and/or repricing opportunity on adjustable rate loans.

Maturity and Repricing Opportunity

One Year or Less	$	320,603
After One Year through Three Years		292,003
After Three Years through Five Years		71,745
Over Five Years		66,867
	$	751,218

Overview.  Loans totaled $751.2 million at December 31, 2013, up 0.6 percent from December 31, 2012 loans of $747.1 million.  The majority of the Company’s loan portfolio is comprised of the real estate loans-mortgage other, real estate construction and commercial financial and agricultural loans.  Real estate-other, which is primarily 1-4 family residential properties and nonfarm nonresidential properties, made up 72.95 percent and 72.05 percent of total loans, real estate construction made up 7.89 percent and 7.99 percent while commercial financial and agricultural loans made up 7.82 percent and 8.29 percent of total loans at December 31, 2013 and December 31, 2012, respectively.  Real estate loans-mortgage other include both commercial and consumer balances.

Loan Origination/Risk Management.  In accordance with the Company’s decentralized banking model, loan decisions are made at the local bank level.  The Company utilizes an Executive Loan Committee to assist lenders with the decision making and underwriting process of larger loan requests.  Due to the diverse economic markets served by the Company, evaluation and underwriting criterion may vary slightly by market.  Overall, loans are extended after a review of the borrower’s repayment ability, collateral adequacy, and overall credit worthiness.

- 40-

Part II (Continued)

Item 7 (Continued)

Commercial purpose, commercial real estate, and industrial loans are underwritten similar to other loans throughout the Company.  The properties securing the Company’s commercial real estate portfolio are diverse in terms of type and geographic location.  This diversity helps reduce the company’s exposure to adverse economic events that affect any single market or industry.  Management monitors and evaluates commercial real estate loans based on collateral, geography, and risk grade criteria.  The Company also utilizes information provided by third-party agencies to provide additional insight and guidance about economic conditions and trends affecting the markets it serves.

The Company extends loans to builders and developers that are secured by non-owner occupied properties.  In such cases, the Company reviews the overall economic conditions and trends for each market to determine the desirability of loans to be extended for residential construction and development.  Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim mini-perm loan commitment from the Company until permanent financing is obtained.  In some cases, loans are extended for residential loan construction for speculative purposes and are based on the perceived present and future demand for housing in a particular market served by the Company.  These loans are monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, general economic conditions and trends, the demand for the properties, and the availability of long-term financing.

The Company originates consumer loans at the bank level.  Due to the diverse economic markets served by the Company, underwriting criterion may vary slightly by market.  The Company is committed to serving the borrowing needs of all markets served and, in some cases, adjusts certain evaluation methods to meet the overall credit demographics of each market.  Consumer loans represent relatively small loan amounts that are spread across many individual borrowers to help minimize risk.  Additionally, consumer trends and outlook reports are reviewed by management on a regular basis.

The Company utilizes an independent third party company for loan review and validation of the credit risk program on an ongoing quarterly basis.  Results of these reviews are presented to management and the audit committee.  The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as the Company’s policies and procedures.

Commercial, Financial and Agricultural.  Commercial, financial and agricultural loans at December 31, 2013 decreased 5.0 percent from December 31, 2012 to $58.8 million. The Company’s commercial and industrial 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. 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.

Industry Concentrations. As of December 31, 2013 and December 31, 2012, there were no concentrations of loans within any single industry in excess of 10 percent of total loans, as segregated by Standard Industrial Classification code (“SIC code”). The SIC code is a federally designed standard industrial numbering system used by the Company to categorize loans by the borrower’s type of business.

- 41-

Part II (Continued)

Item 7 (Continued)

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, particularly with the current economic downturn in the real estate market.  At December 31, 2013, approximately 87.11 percent 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.  The downturn of the housing and real estate market that began in 2007 resulted in an increase of problem loans secured by real estate.  These loans are centered primarily in the Company’s larger Metropolitan Statistical Area (MSA) markets.  Declining collateral real estate values that secure land development, construction and speculative real estate loans in the Company’s larger MSA markets have resulted in high loan loss provisions in the last several years.  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 loan loss analysis.

Large Credit Relationships.   The Company is currently in eighteen counties in central, south and coastal Georgia and includes metropolitan markets in Dougherty, Lowndes, Houston, Chatham and Muscogee counties.  As a result, the Company originates and maintains large credit relationships with several commercial customers in the ordinary course of business.  The Company considers large credit relationships to be those with commitments equal to or in excess of $5.0 million prior to any portion being sold.  Large relationships also include loan participations purchased if the credit relationship with the agent is equal to or in excess of $5.0 million.  In addition to the Company’s normal policies and procedures related to the origination of large credits, the Company’s Executive Loan Committee and Director Loan Committee must approve all new and renewed credit facilities which are part of large credit relationships.  The following table provides additional information on the Company’s large credit relationships outstanding at December 31, 2013 and December 31, 2012.

	December 31, 2013						December 31, 2012
	Number of		Period End Balances				Number of		Period End Balances
	Relationships		Committed		Outstanding		Relationships		Committed		Outstanding
Large Credit Relationships:
$10 million and greater		1	$	10,023	$	10,023		1	$	10,276	$	10,276
$5 million to $9.9 million		11		76,306		69,672		13		88,248		72,179

Maturities and Sensitivities of Loans to Changes in Interest Rates.  The following table presents the maturity distribution of the Company’s loans at December 31, 2013. The table also presents the portion of loans that have fixed interest rates or 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.

	Due in One Year or Less		After One, but Within Three Years		After Three, but Within Five Years		After Five Years		Total
Loans with fixed interest rates	$	218,867	$	284,788	$	71,472	$	65,538	$	640,665
Loans with floating interest rates		101,736		7,215		273		1,329		110,553
Total	$	320,603	$	292,003	$	71,745	$	66,867	$	751,218

- 42-

Part II (Continued)

Item 7 (Continued)

The Company may renew loans at maturity when requested by a customer whose financial strength appears to support such renewal or when such renewal appears to be in the Company’s best interest. In such instances, the Company generally requires payment of accrued interest and may adjust the rate of interest, require a principal reduction or modify other terms of the loan at the time of renewal.

Nonperforming Assets and Potential Problem Loans

Year-end nonperforming assets and accruing past due loans were as follows:

	2013			2012			2011			2010			2009
Loans Accounted for on Nonaccrual	$	24,114		$	29,851		$	38,822		$	28,902		$	33,535
Loans Past Due 90 Days or More		4			4			15			19			31
Other Real Estate Foreclosed		15,502			15,941			20,445			20,208			19,705
Securities Accounted for on Nonaccrual		-			366			426			132			132
Total Nonperforming Assets	$	39,620		$	46,162		$	59,708		$	49,261		$	53,403
Nonperforming Assets as a Percentage of:
Total Loans and Foreclosed Assets		5.17	%		6.05	%		8.10	%		5.91	%		5.62	%
Total Assets		3.45	%		4.05	%		4.99	%		3.86	%		4.09	%
Supplemental Data:
Trouble Debt Restructured Loans In Compliance with Modified Terms	$	20,715		$	24,870		$	29,839		$	26,556		$	9,269
Trouble Debt Restructured Loans Past Due 30-89 Days		435			1,377			611			1,048			459
Accruing Past Due Loans:
30-89 Days Past Due		9,366			14,911			7,161			19,740			25,547
90 or More Days Past Due		4			4			15			19			31
Total Accruing Past Due Loans	$	9,370		$	14,915		$	7,176		$	19,759		$	25,578

Nonperforming assets include nonaccrual loans, loans past due 90 days or more, foreclosed real estate and nonaccrual securities.  Nonperforming assets at December 31, 2013 decreased 14.2 percent from December 31, 2012.

Generally, loans are placed on nonaccrual status if principal or interest payments become 90 days past due and/or management deems the collectibility of the principal and/or interest to be in question, as well as when required by regulatory requirements. Loans to a customer whose financial condition has deteriorated are considered for nonaccrual status whether or not the loan is 90 days or more past due. For consumer loans, collectibility and loss are generally determined before the loan reaches 90 days past due. Accordingly, losses on consumer loans are recorded at the time they are determined. Consumer loans that are 90 days or more past due are generally either in liquidation/payment status or bankruptcy awaiting confirmation of a plan. Once interest accruals are discontinued, accrued but uncollected interest is charged to current year operations. Subsequent receipts on nonaccrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Classification of a loan as nonaccrual does not preclude the ultimate collection of loan principal or interest.

- 43-

Part II (Continued)

Item 7 (Continued)

Troubled debt restructured loans are loans on which, due to deterioration in the borrower’s financial condition, the original terms have been modified in favor of the borrower or either principal or interest has been forgiven.

Foreclosed assets represent property acquired as the result of borrower defaults on loans. Foreclosed assets are recorded at estimated fair value, less estimated selling costs, at the time of foreclosure. Write-downs occurring at foreclosure are charged against the allowance for possible loan losses. On an ongoing basis, properties are appraised as required by market indications and applicable regulations. Write-downs are provided for subsequent declines in value and are included in other non-interest expense along with other expenses related to maintaining the properties.

Allowance for Loan Losses

The allowance for loan losses is a reserve established through a provision for loan losses charged to expense, which represents management’s best estimate of probable losses that have been incurred within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. The allowance for loan losses includes allowance allocations calculated in accordance with current U.S. accounting standards.  The level of the allowance reflects management’s continuing evaluation of industry concentrations, specific credit risks, loan loss experience, current loan portfolio quality, present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate adequacy of the allowance is dependent upon a variety of factors beyond the Company’s control, including the performance of the Company’s loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications.

The Company’s allowance for loan losses consists of specific valuation allowances established for probable losses on specific loans and historical valuation allowances, adjusted for qualitative factors, for other loans with similar risk characteristics.

The allowances established for probable losses on specific loans are based on a regular analysis and evaluation of classified loans.  Loans are classified based on an internal credit risk grading process that evaluates, among other things: (i) the obligor’s ability to repay; (ii) the underlying collateral, if any; and (iii) the economic environment and industry in which the borrower operates.  This analysis is performed at the subsidiary bank level and is reviewed at the parent Company level.  Once a loan is classified, it is reviewed to determine whether the loan is impaired and, if impaired, a portion of the allowance for possible loan losses is specifically allocated to the loan.  Specific valuation allowances are determined after considering the borrower’s financial condition, collateral deficiencies, and economic conditions affecting the borrower’s industry, among other things.

- 44-

Part II (Continued)

Item 7 (Continued)

Historical valuation allowances are calculated from loss factors applied to loans with similar risk characteristics.  The loss factors are based on loss ratios for groups of loans with similar risk characteristics.  The loss ratios are derived from the proportional relationship between actual loan losses and the total population of loans in the risk category.  The historical loss ratios are periodically updated based on actual charge-off experience.  The Company’s groups of similar loans include similarly risk-graded groups of loans not reviewed for individual impairment.  In addition, the Company has also segmented its’ real estate portfolio into thirteen separate categories and captured loan loss experience for each category.  Most of the Company’s charge-offs the past two years have been real estate dependent loans and we believe this segmentation provides more accuracy in determining allowance for loan loss adequacy.  During first quarter 2012, management refined the Company’s methodology used in estimating the amount of the Allowance for Loan and Lease Losses (ALLL) which is defined in the notes to the financial statements.  The effect of these changes on the ALLL during 2012 resulted in a reduction in the ALLL estimate of $2,154,639 for December 31, 2012 compared to December 31, 2011.  Management believes the adjustments made will result in a better estimation of losses incurred in the portfolio.

Management evaluates the adequacy of the allowance for each of these components on a quarterly basis.  Peer comparisons, industry comparisons, and regulatory guidelines are also used in the determination of the general valuation allowance.

Loans identified as losses by management, internal loan review, and/or bank examiners are charged off.

An allocation for loan losses has been made according to the respective amounts deemed necessary to provide for the possibility of incurred losses within the various loan categories.  The allocation is based primarily on previous charge-off experience adjusted for changes in experience among each category.  Additional amounts are allocated by evaluating the loss potential of individual loans that management has considered impaired.  The reserve for loan loss allocation is subjective since it is based on judgment and estimates, and therefore is not necessarily indicative of the specific amounts or loan categories in which the charge-offs may ultimately occur.  The following table shows a comparison of the allocation of the reserve for loan losses for the periods indicated.

	2013				2012				2011				2010				2009
	Reserve		%*		Reserve		%*		Reserve		%*		Reserve		%*		Reserve		%*
Commercial, Financial and Agricultural	$	1,311	8	%	$	1,277	8	%	$	1,368	8	%	$	5,113	8	%	$	4,710	9	%
Real Estate - Construction		1,920	8			2,028	8			3,261	9			4,646	9			7,850	12
Real Estate - Farmland		312	6			291	7			365	7			944	7			942	6
Real Estate - Other		7,658	73			8,569	72			10,143	71			13,972	70			13,816	67
Loans to Individuals		243	3			228	4			205	4			3,074	4			2,826	4
All Other Loans		362	2			344	1			308	1			531	2			1,257	2
Total	$	11,806	100	%	$	12,737	100	%	$	15,650	100	%	$	28,280	100	%	$	31,401	100	%

* Percentage represents the loan balance in each category expressed as a percentage of total end of period loans.

Activity in the allowance for loan losses is presented in the following table. There were no charge-offs or recoveries related to foreign loans during any of the periods presented.

- 45-

Part II (Continued)

Item 7 (Continued)

The following table presents an analysis of the Company’s loan loss experience for the periods indicated.

	2013			2012			2011			2010			2009
Allowance for Loan Losses at Beginning of Year	$	12,737		$	15,650		$	28,280		$	31,401		$	17,016
Charge-Offs
Commercial, Financial and Agricultural		155			656			1,297			725			768
Real Estate		5,671			9,618			21,215			15,309			27,545
Consumer		398			169			223			549			908
All Other		4			11			115			1,040			272
		6,228			10,454			22,850			17,623			29,493
Recoveries
Commercial, Financial and Agricultural		62			140			582			82			73
Real Estate		638			494			1,235			774			156
Consumer		94			82			145			246			191
All Other		18			40			8			50			13
		812			756			1,970			1,152			433
Net Charge-Offs		5,416			9,698			20,880			16,471			29,060
Provision for Loans Losses		4,485			6,785			8,250			13,350			43,445
Allowance for Loan Losses at End of Year	$	11,806		$	12,737		$	15,650		$	28,280		$	31,401
Ratio of Net Charge-Offs to Average Loans		0.73	%		1.34	%		2.74	%		1.90	%		3.02	%

The allowance for loan losses is maintained at a level considered appropriate by management, based on estimated probable losses within the existing loan portfolio.  The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio.  The provision for loan losses reflects loan quality trends, including the level of net charge-offs or recoveries, among other factors.  The provision for loan losses decreased $2.30 million from $6.79 million in 2012 to $4.49 million in 2013.  The provision for loan losses charged to earnings was based upon management’s judgment of the amount necessary to maintain the allowance at an adequate level to absorb losses inherent in the loan portfolio at year end.  The amount each period is dependent upon many factors, including changes in the risk ratings of the loan portfolio, net charge-offs, past due ratios, the value of collateral, and other environmental factors that include portfolio loan quality indicators; portfolio growth and composition of commercial real estate and concentrations; portfolio policies, procedures, underwriting standards, loss recognition, collection and recovery practices; local economic business conditions; and the experience, ability, and depth of lending management and staff.  Of significance to changes in the allowance during 2013 was the reduction in the net charge-offs in 2013 to $5.42 million from $9.70 million in 2012.  The Company believes that collection efforts have reduced impaired loans and the reduction in net charge-offs runs parallel with the improvement in the substandard assets.  As we begin to see stabilization in the economy and the housing and real estate market, we expect continued improvement in our substandard assets, including net charge-offs.

- 46-

Part II (Continued)

Item 7 (Continued)

Provisions continue to be higher than normal primarily due to the elevated risk of residential real estate and land development loans that began during 2007 with the housing and real estate downturn.  Nonperforming assets as a percentage of total loans and foreclosed assets decreased to 5.17 percent at December 31, 2013 compared to 6.05 percent at December 31, 2012.  Total nonperforming assets at December 31, 2013 were $39.6 million, of which $17.3 million were construction, land development and other land loans; $1.6 million were farmland properties; $5.9 million were 1-4 family residential properties; $0.3 million were multifamily properties; $12.5 million were nonfarm nonresidential properties; and the remainder of nonperforming assets totaling $2.0 million were commercial and consumer loans.  Total nonperforming assets at December 31, 2012 were $46.2 million, of which $23.9 million were construction, land development and other land loans; $7.2 million were 1-4 family residential properties; $0.6 million were multifamily properties; $10.4 million were nonfarm nonresidential properties; $2.4 million were farmland properties; and the remainder of nonperforming assets totaling $1.7 million were commercial and consumer loans.  All of the classified loans greater than $250 thousand, including the nonperforming loans, are reviewed each quarter for impairment.  The allowance for loan losses of $11.8 million at December 31, 2013 was 1.57 percent of total loans which compares to $12.7 million at December 31, 2012, or 1.70 percent of total loans and to $15.6 million at December 31, 2011, or 2.18 percent.  Unusually high levels of loan loss provision have been required over the past few years as Company management addresses asset quality deterioration.  While the nonperforming loans as a percentage of total loans was 3.21 percent, 4.00 percent, and 5.42 percent, respectively, as of December 31, 2013, December 31, 2012 and December 31, 2011, the Company’s allowance for loan losses as a percentage of nonperforming loans was 48.96 percent, 42.66 percent, and 40.29 percent, respectively as of December 31, 2013, December 31, 2012 and December 31, 2011.  We continue to identify new problem loans, even though we have less problem loans than the previous year.

While the allowance for loan losses decreased from $12.74 million, or 1.70 percent of total loans at December 31, 2012 to $11.81 million, or 1.57 percent of total loans at December 31, 2013, the Company also reflected a decrease in nonperforming loans from $29.86 million at December 31, 2012 to $24.11 million at December 31, 2013.  When a loan is performing, it is accounted for under the Company’s general loan loss reserve methodology.  Once the loan becomes impaired, it is removed from the pool of loans covered by the general reserve and reviewed individually for exposure.  In cases where the individual review reveals no exposure, no reserve is recorded for that loan, either through an individual reserve or through a general reserve.  If, however, the individual review of the loan does indicate some exposure, management often charges off this exposure, rather than recording a specific reserve.  In these instances, a loan which becomes nonperforming could actually reduce the allowance for loan losses.  The allowance for loan losses is inherently judgmental, nevertheless the Company’s methodology is consistently applied based on standards for current accounting by creditors for impairment of a loan and allowance allocations determined in accordance with accounting for contingencies.  Loans individually selected for impairment review consist of all loans classified substandard that are $250 thousand and over.  The remaining portfolio is analyzed based on historical loss data.  Historical loss rates are updated annually to provide the annual loss rate which is applied to the appropriate portfolio grades.  In addition, the Company has also segmented its real estate portfolio into thirteen separate categories and captured loan loss experience for each category.  Most of the Company’s charge-offs during the past four years have been real estate dependent loans and we believe this segmentation provides more accuracy in determining allowance for loan loss adequacy.

- 47-

Part II (Continued)

Item 7 (Continued)

In addition, environmental factors as discussed earlier are evaluated for any adjustments needed to the allowance for loan losses determination produced by individual loan impairment analysis and remaining portfolio segmentation analysis.  The allowance for loan losses determination is based on individual loan reviews throughout the year and an environmental analysis at quarter-end.

As part of our monitoring and evaluation of collateral values for nonperforming and problem loans in determining adequate allowance for loan losses, regional credit officers along with lending officers submit monthly problem loan reports for loans greater than $250 thousand in which impairment is identified.  This process typically determines collateral shortfall based upon local market real estate value estimates should the collateral be liquidated.  Once the loan is deemed uncollectible, it is transferred to our problem loan department for workout, foreclosure and/or liquidation.  The problem loan department gets a current appraisal on the property in order to record a fair market value (less selling expenses) when the property is foreclosed on and moved into other real estate.  Trends the past several quarters reflect a decrease in collateral values from two to three years ago on improved properties of fifteen to twenty five percent and on land development and land loans of thirty to fifty percent.

The allowance for loan losses is $931 thousand less than the prior year end, after factoring in net charge-offs, additional provisions, and the normal determination for an adequate funding level.  Restructuring of some substandard and non-performing loans during 2013 has resulted in significant charge-offs, but a strategy deemed prudent in bringing resolution with these credits and a return to performing status in the future.  Management believes the level of the allowance for loan losses was adequate as of December 31, 2013.  Should any of the factors considered by management in evaluating the adequacy of the allowance for loan losses change, the Company’s estimate of probable loan losses could also change, which could affect the level of future provisions for loan losses.

Investment Portfolio

The following table presents carrying values of investment securities held by the Company as of December 31, 2013, 2012 and 2011.

	2013		2012		2011
Obligations of States and Political Subdivisions	$	3,947	$	4,046	$	7,630
Corporate Obligations		-		1,105		2,114
Asset-Backed Securities		-		132		132
Investment Securities		3,947		5,283		9,876
Mortgage-Backed Securities		259,348		263,059		294,061
Total Investment Securities and
Mortgage-Backed Securities	$	263,295	$	268,342	$	303,937

- 48-

Part II (Continued)

Item 7 (Continued)

The following table represents expected maturities and weighted-average yields of investment securities held by the Company as of December 31, 2013.  (Mortgage-backed securities are based on the average life at the projected speed, while State and Political Subdivisions and Corporate Obligations reflect anticipated calls being exercised.)

						After 1 Year But					After 5 Years But
	Within 1 Year					Within 5 Years					Within 10 Years					After 10 Years
	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield
Mortgage-Backed Securities	$	-		-	%	$	66,241		1.39	%	$	181,452		1.73	%	$	11,655		2.41	%
Obligations of State and Political Subdivisions		790		3.75	%		1,711		3.04	%		1,446		2.06	%		-		-	%
Total Investment Portfolio	$	790		3.75	%	$	67,952		1.43	%	$	182,898		1.73	%	$	11,655		2.41	%

Securities are classified as held to maturity and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Securities are classified as available for sale when they might be sold before maturity. Securities available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income. The Company has 99.9 percent of its portfolio classified as available for sale.

At December 31, 2013, there were no holdings of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10 percent of the Company’s shareholders’ equity.

The average yield of the securities portfolio was 1.36 percent in 2013 compared to 1.82 percent in 2012 and 2.39 percent in 2011. The decrease in the average yield from 2013 to 2012 and from 2011 to 2012 primarily resulted from the turnover of the securities portfolio resulting in the investment of new funds at lower rates.

Deposits

The following table presents the average amount outstanding and the average rate paid on deposits by the Company for the years 2013, 2012 and 2011.

	2013					2012					2011
	Average		Average			Average		Average			Average		Average
	Amount		Rate			Amount		Rate			Amount		Rate
Noninterest-Bearing Demand Deposits	$	112,667				$	101,896				$	93,903
Interest-Bearing Demand and Savings		366,974		0.36	%		329,984		0.38	%		273,783		0.45	%
Time Deposits		473,672		0.95	%		537,810		1.39	%		633,033		1.85	%
Total Deposits	$	953,313		0.61	%	$	969,690		0.90	%	$	1,000,719		1.29	%

- 49-

Part II (Continued)

Item 7 (Continued)

The following table presents the maturities of the Company’s other time deposits as of December 31, 2013.

	Other Time		Other Time
	Deposits		Deposits
	$ 100,000		Less Than
	or Greater		$ 100,000		Total
Months to Maturity
3 or Less	$	35,549	$	53,181	$	88,730
Over 3 through 6		33,331		40,562		73,893
Over 6 through 12		74,509		85,839		160,348
Over 12 Months		77,284		60,628		137,912
	$	220,673	$	240,210	$	460,883

Average deposits decreased $16.38 million in 2013 compared to 2012 and decreased $31.03 million in 2012 compared to 2011.  The decrease in 2013 included $64.14 million, or 11.93 percent in time deposits while, at the same time, noninterest bearing deposits increased $10.77 million, or 10.57 percent and interest-bearing demand and savings deposits increased $36.99 million, or 11.21 percent.  The decrease in 2012 included $95.22 million, or 15.04 percent in time deposits while, at the same time, noninterest bearing deposits increased $10.77 million, or 10.57 percent and interest-bearing demand and savings deposits increased $56.20 million, or 11.21 percent.  Accordingly, the ratio of average noninterest-bearing deposits to total average deposits was 11.82 in 2013, 10.51 percent in 2012 and 9.4 percent in 2011.  The general decrease in market rates in 2013 had the effect of (i) decreasing the average cost of interest-bearing deposits by 32 basis points in 2013 compared to 2012 and (ii) mitigating a portion of the impact of decreasing yields on earning assets in the Company’s net interest income in 2013.  The general decrease in market rates in 2012 had the effect of (i) decreasing the average cost of interest-bearing deposits by 42 basis points in 2012 compared to 2011 and (ii) mitigating a portion of the impact of decreasing yields on earning assets in the Company’s net interest income in 2012.

Total average interest-bearing deposits decreased $27.1 million, or 3.1 percent in 2013 compared to 2012 and decreased $39.0 million, or 4.3 percent in 2012 compared to 2011.  The decrease in average deposits in 2013 compared to 2012 was time deposit accounts.

The Company supplements deposit sources with brokered deposits.  As of December 31, 2013, the Company had $26.6 million, or 2.69 percent of total deposits, in brokered certificates of deposit attracted by external third parties.  Additional information is provided in the Notes to Consolidated Financial Statements for Deposits.

- 50-

Part II (Continued)

Item 7 (Continued)

Off-Balance-Sheet Arrangements, Commitments, Guarantees, and Contractual Obligations

The following table summarizes the Company’s contractual obligations and other commitments to make future payments as of December 31, 2013. Payments for borrowings do not include interest. Payments related to leases are based on actual payments specified in the underlying contracts. Loan commitments and standby letters of credit are presented at contractual amounts; however, since many of these commitments are expected to expire unused or only partially used, the total amounts of these commitments do not necessarily reflect future cash requirements.

	Payments Due by Period
	1 Year or Less		More than 1 Year but Less Than 3 Years		3 Years or More but Less Than 5 Years		5 Years or More		Total
Contractual Obligations:
Subordinated Debentures	$	-	$	-	$	-	$	24,229	$	24,229
Federal Home Loan Bank Advances		-		-		9,000		31,000		40,000
Operating Leases		53		84		39		-		176
Deposits with Stated Maturity Dates		322,971		106,946		30,660		306		460,883
		323,024		107,030		39,699		55,535		525,288
Other Commitments:
Loan Commitments		65,688		-		-		-		65,688
Standby Letters of Credit		1,411		-		-		-		1,411
		67,099		-		-		-		67,099
Total Contractual Obligations and Other Commitments	$	390,123	$	107,030	$	39,699	$	55,535	$	592,387

In the ordinary course of business, the Company has entered into off-balance sheet financial instruments which are not reflected in the consolidated financial statements.  These instruments include commitments to extend credit, standby letters of credit, performance letters of credit, guarantees and liability for assets held in trust.

- 51-

Part II (Continued)

Item 7 (Continued)

Such financial instruments are recorded in the financial statements when funds are disbursed or the instruments become payable.  The Company uses the same credit policies for these off-balance sheet financial instruments as they do for instruments that are recorded in the consolidated financial statements.

Loan Commitments. The Company enters into contractual commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for specific purposes. Substantially all of the Company’s commitments to extend credit are contingent upon customers maintaining specific credit standards at the time of loan funding. The Company minimizes its exposure to loss under these commitments by subjecting them to credit approval and monitoring procedures. Management assesses the credit risk associated with certain commitments to extend credit in determining the level of the allowance for possible loan losses.

Loan commitments outstanding at December 31, 2013 are included in the preceding table.

Standby Letters of Credit.  Letters of credit are written conditional commitments issued by the Company to guarantee the performance of a customer to a third party. In the event the customer does not perform in accordance with the terms of the agreement with the third party, the Company would be required to fund the commitment. The maximum potential amount of future payments the Company could be required to make is represented by the contractual amount of the commitment. If the commitment is funded, the Company would be entitled to seek recovery from the customer. The Company’s policies generally require that standby letters of credit arrangements contain security and debt covenants similar to those contained in loan agreements. Standby letters of credit outstanding at December 31, 2013 are included in the preceding table.

Capital and Liquidity

At December 31, 2013, shareholders’ equity totaled $90.0 million compared to $95.8 million at    December 31, 2012. In addition to net income of $4.6 million, other significant changes in shareholders’ equity during 2013 included $1.5 million of dividends declared on preferred stock. The accumulated other comprehensive loss component of shareholders’ equity totaled $(9.1) million at December 31, 2013 compared to $(150) thousand at December 31, 2012. 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. Tier 1 capital consists of common stock and qualifying preferred stockholders’ equity less goodwill and disallowed deferred tax assets.  Tier 2 capital consists of certain convertible, subordinated and other qualifying debt and the allowance for loan losses up to 1.25 percent of risk-weighted assets.  The Company has no Tier 2 capital other than the allowance for loan losses.

Using the capital requirements presently in effect, the Tier 1 ratio as of December 31, 2013 was 15.81 percent and total Tier 1 and 2 risk-based capital was 17.06 percent.  Both of these measures compare favorably with the regulatory minimum of 4 percent for Tier 1 and 8 percent for total risk-based capital.  The Company’s Tier 1 leverage ratio as of December 31, 2013 was 10.57 percent, which exceeds the required ratio standard of 4 percent.

For 2013, average capital was $93.4 million, representing 8.35 percent of average assets for the year.  This compares to 8.47 percent for 2012.

- 52-

Part II (Continued)

Item 7 (Continued)

The Company did not pay any common stock dividends in 2013 or 2012.  The Company suspended dividend payments beginning in the third quarter of 2009.

The Company declared dividends of $1,509 and $1,435 on preferred stock during 2013 and 2012, respectively.  The Company deferred all dividend payments declared in 2013 on its preferred stock, as well as all interest payments on its TRUPS in order to preserve cash at the holding company level.  The Company had no preferred stock until January 2009 when shares were issued to U.S. Treasury.

The Company, primarily through the actions of its subsidiary bank, engages in liquidity management to ensure adequate cash flow for deposit withdrawals, credit commitments and repayments of borrowed funds.  Needs are met through loan repayments, net interest and fee income and the sale or maturity of existing assets.  In addition, liquidity is continuously provided through the acquisition of new deposits, the renewal of maturing deposits and external borrowings.

Management monitors deposit flow and evaluates alternate pricing structures to retain and grow deposits.   To the extent needed to fund loan demand, traditional local deposit funding sources are supplemented by the use of FHLB borrowings, brokered deposits and other wholesale deposit sources outside the immediate market area.  Internal policies have been updated to monitor the use of various core and non-core funding sources, and to balance ready access with risk and cost.  Through various asset/liability management strategies, a balance is maintained among goals of liquidity, safety and earnings potential.  Internal policies that are consistent with regulatory liquidity guidelines are monitored and enforced by the Bank.

The investment portfolio provides a ready means to raise cash if liquidity needs arise.  As of December 31, 2013, the available for sale bond portfolio totaled $263.3 million.  At December 31, 2012, the Company held $268.3 million in bonds (excluding FHLB stock), at current market value in the available for sale portfolio.  Only marketable investment grade bonds are purchased.  Although most of the Banks’ bond portfolios are encumbered as pledges to secure various public funds deposits, repurchase agreements, and for other purposes, management can restructure and free up investment securities for a sale if required to meet liquidity needs.

Management continually monitors the relationship of loans to deposits as it primarily determines the Company’s liquidity posture.  Colony had ratios of loans to deposits of 76.1 percent as of December 31, 2013 and 76.3 percent as of December 31, 2012.  Management employs alternative funding sources when deposit balances will not meet loan demands.  The ratios of loans to all funding sources (excluding Subordinated Debentures) at December 31, 2013 and December 31, 2012 were 73.1 percent and 73.6 percent, respectively.  Management continues to emphasize programs to generate local core deposits as our Company’s primary funding sources.  The stability of the Banks’ core deposit base is an important factor in Colony’s liquidity position.  A heavy percentage of the deposit base is comprised of accounts of individuals and small businesses with comprehensive banking relationships and limited volatility.  At December 31, 2013 and December 31, 2012, the Bank had $221 million and $211 million, respectively, in certificates of deposit of $100,000 or more.  These larger deposits represented 22.3 percent and 21.6 percent of respective total deposits.  Management seeks to monitor and control the use of these larger certificates, which tend to be more volatile in nature, to ensure an adequate supply of funds as needed.  Relative interest costs to attract local core relationships are compared to market rates of interest on various external deposit sources to help minimize the Company’s overall cost of funds.

- 53-

Part II (Continued)

Item 7 (Continued)

The Company supplemented deposit sources with brokered deposits.  As of December 31, 2013, the Company had $26.6 million, or 2.7 percent of total deposits, in brokered certificates of deposit attracted by external third parties.  Additionally, the bank uses external wholesale or Internet services to obtain out-of-market certificates of deposit at competitive interest rates when funding is needed. As of December 31, 2013, the Company had $24.1 million, or 2.4 percent of total deposits, in external wholesale or internet network deposits.

To plan for contingent sources of funding not satisfied by both local and out-of-market deposit balances, Colony and its subsidiary have established multiple borrowing sources to augment their funds management.  The Company has borrowing capacity through membership of the Federal Home Loan Bank program.  The bank has also established overnight borrowing for Federal Funds Purchased through various correspondent banks.  Management believes the various funding sources discussed above are adequate to meet the Company’s liquidity needs in the future without any material adverse impact on operating results.

Liquidity measures the ability to meet current and future cash flow needs as they become due. The liquidity of a financial institution reflects its ability to meet loan requests, to accommodate possible outflows in deposits and to take advantage of interest rate market opportunities. The ability of a financial institution to meet its current financial obligations is a function of balance sheet structure, the ability to liquidate assets, and the availability of alternative sources of funds. The Company seeks to ensure its funding needs are met by maintaining a level of liquid funds through asset/liability management.

Asset liquidity is provided by liquid assets which are readily marketable or pledgeable or which will mature in the near future. Liquid assets include cash, interest-bearing deposits in banks, securities available for sale, maturities and cash flow from securities held to maturity, and federal funds sold and securities purchased under resale agreements.

Liability liquidity is provided by access to funding sources which include core deposits.  Should the need arise, the Company also maintains relationships with the Federal Home Loan Bank, Federal Reserve Bank, two correspondent banks and repurchase agreement lines that can provide funds on short notice.

Since Colony is a bank holding Company and does not conduct operations, its primary sources of liquidity are dividends up streamed from the subsidiary bank and borrowings from outside sources.

The liquidity position of the Company is continuously monitored and adjustments are made to the balance between sources and uses of funds as deemed appropriate. Management is not aware of any events that are reasonably likely to have a material adverse effect on the Company’s liquidity, capital resources or operations. In addition, management is not aware of any regulatory recommendations regarding liquidity, which if implemented, would have a material adverse effect on the Company.

- 54-

Part II (Continued)

Item 7 (Continued)

Impact of Inflation and Changing Prices

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. 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.

Regulatory and Economic Policies

The Company’s business and earnings are affected by general and local economic conditions and by the monetary and fiscal policies of the United States government, its agencies and various other governmental regulatory authorities, among other things. The Federal Reserve Board regulates the supply of money in order to influence general economic conditions. Among the instruments of monetary policy available to the Federal Reserve Board are (i) conducting open market operations in United States government obligations, (ii) changing the discount rate on financial institution borrowings, (iii) imposing or changing reserve requirements against financial institution deposits, and (iv) restricting certain borrowings and imposing or changing reserve requirements against certain borrowing by financial institutions and their affiliates. These methods are used in varying degrees and combinations to affect directly the availability of bank loans and deposits, as well as the interest rates charged on loans and paid on deposits. For that reason alone, the policies of the Federal Reserve Board have a material effect on the earnings of the Company.

Governmental policies have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future; however, the Company cannot accurately predict the nature, timing or extent of any effect such policies may have on its future business and earnings.

Recently Issued Accounting Pronouncements

See Note 1 - Summary of Significant Accounting Policies under the section headed Changes in Accounting Principles and Effects of New Accounting Pronouncements included in the Notes to Consolidated Financial Statements.

- 55-

Part II (Continued)

Item 7 (Continued)

Quantitative and Qualitative Disclosures About Market Risk

AVERAGE BALANCE SHEETS

	2013								2012								2011
	Average			Income/		Yields/			Average			Income/		Yields/			Average			Income/		Yields/
	Balances			Expense		Rates			Balances			Expense		Rates			Balances			Expense		Rates
Assets
Interest-Earning Assets
Loans, Net of Unearned Income (1)	$	744,627		$	41,473		5.57	%	$	721,872		$	42,054		5.83	%	$	763,067		$	44,593		5.84	%
Investment Securities
Taxable		272,818			3,597		1.32			280,959			5,005		1.78			296,948			7,012		2.36
Tax-Exempt (2)		2,871			139		4.84			3,302			155		4.69			3,345			171		5.11
Total Investment Securities		275,689			3,736		1.36			284,261			5,160		1.82			300,293			7,183		2.39
Interest-Bearing Deposits		9,625			81		0.84			17,046			77		0.45			18,715			47		0.25
Federal Funds Sold		14,969			39		0.26			38,877			99		0.25			44,667			115		0.26
Other Interest-Earning Assets		3,275			27		0.82			4,277			43		1.01			5,781			46		0.80
Total Interest-Earning Assets		1,048,185			45,356		4.33			1,066,333			47,433		4.45			1,132,523			51,984		4.59
Noninterest-Earning Assets
Cash		19,401								18,474								19,057
Allowance for Loan Losses		(13,347	)							(15,781	)							(20,585	)
Other Assets		63,832								70,788								74,896
Total Noninterest-Earning Assets		69,886								73,481								73,368
Total Assets	$	1,118,071							$	1,139,814							$	1,205,891
Liabilities and Stockholders' Equity
Interest-Bearing Liabilities
Interest-Bearing Demand and Savings	$	366,974		$	1,335		0.36	%	$	329,984		$	1,258		0.38	%	$	273,783		$	1,232		0.45	%
Other Time		473,672			4,486		0.95			537,810			7,479		1.39			633,033			11,718		1.85
Total Interest-Bearing Deposits		840,646			5,821		0.69			867,794			8,737		1.01			906,816			12,950		1.43
Other Interest-Bearing Liabilities
Other Borrowed Money		40,299			1,159		2.88			43,745			1,725		3.94			71,720			3,010		4.20
Subordinated Debentures		24,229			517		2.13			24,229			554		2.29			24,229			508		2.10
Federal Funds Purchased and
Repurchase Agreements		34			-		-			-			-		-			9,851			338		3.43
Total Other Interest-Bearing
Liabilities		64,562			1,676		2.6			67,974			2,279		3.35			105,800			3,856		3.64
Total Interest-Bearing Liabilities		905,208			7,497		0.83			935,768			11,016		1.18			1,012,616			16,806		1.66
Noninterest-Bearing Liabilities and Stockholders' Equity
Demand Deposits		112,667								101,896								93,903
Other Liabilities		6,838								5,609								4,635
Stockholders' Equity		93,358								96,541								94,737
Total Noninterest-Bearing Liabilities and Stockholders' Equity		212,863								204,046								193,275
Total Liabilities and Stockholders' Equity	$	1,118,071							$	1,139,814							$	1,205,891
Interest Rate Spread							3.50	%							3.27	%							2.93	%
Net Interest Income				$	37,859							$	36,417							$	35,178
Net Interest Margin							3.61	%							3.41	%							3.11	%

(1) The average balance of loans includes the average balance of nonaccrual loans.  Income on such loans is recognized and recorded on the cash basis.  Taxable equivalent adjustments totaling $123, $91 and $133 for 2013, 2012 and 2011 respectively, are included in interest on loans.  The adjustments are based on a federal tax rate of 34 percent.

(2) Taxable-equivalent adjustments totaling $47, $53 and $58 for 2013, 2012 and 2011 respectively, are included in tax-exempt interest on investment securities. The adjustments are based on a federal tax rate of 34 percent with appropriate reductions for the effect of disallowed interest expense incurred in carrying tax-exempt obligations.

- 56-

Part II (Continued)

Item 7 (Continued)

Colony Bankcorp, Inc. and Subsidiaries

Interest Rate Sensitivity

The following table is an analysis of the Company’s interest rate-sensitivity position at December 31, 2013.  The interest-bearing rate-sensitivity gap, which is the difference between interest-earning assets and interest-bearing liabilities by repricing period, is based upon maturity or first repricing opportunity, along with a cumulative interest rate-sensitivity gap.  It is important to note that the table indicates a position at a specific point in time and may not be reflective of positions at other times during the year or in subsequent periods.  Major changes in the gap position can be, and are, made promptly as market outlooks change.

	Assets and Liabilities Repricing Within
	3 Months			4 to 12						1 to 5			Over 5
	or Less			Months			1 Year			Years			Years			Total
EARNING ASSETS:
Interest-Bearing Deposits	$	21,960		$	-		$	21,960		$	-		$	-		$	21,960
Federal Funds Sold		20,495			-			20,495			-			-			20,495
Investment Securities		-			274			274			62,135			200,886			263,295
Loans, Net of Unearned Income		185,440			134,983			320,423			363,568			66,867			750,858
Other Interest- Earning Assets		3,164			-			3,164			-			-			3,164
Total Interest-Earning Assets		231,059			135,257			366,316			425,703			267,753			1,059,772
INTEREST-BEARING LIABILITIES:
Interest-Bearing Demand Deposits (1)		357,291			-			357,291			-			-			357,291
Savings (1)		54,095			-			54,095			-			-			54,095
Time Deposits		88,730			234,241			322,971			137,606			306			460,883
Other Borrowings (2)		-			-			-			9,000			31,000			40,000
Subordinated Debentures		24,229			-			24,229			-			-			24,229
Total Interest-Bearing Liabilities		524,345			234,241			758,586			146,606			31,306			936,498
Interest Rate-Sensitivity Gap		(293,286	)		(98,984	)		(392,270	)		279,097			236,447		$	123,274
Cumulative Interest-Sensitivity Gap	$	(293,286	)	$	(392,270	)	$	(392,270	)	$	(113,173	)	$	123,274
Interest Rate-Sensitivity Gap as a Percentage of Interest-Earning Assets		(27.67	)%		(9.34	)%		(37.01	)%		26.34	%		22.31	%
Cumulative Interest Rate-Sensitivity as a Percentage of Interest-Earning Assets		(27.67	)%		(37.01	)%		(37.01	)%		(10.68	)%		11.63	%

(1) Interest-bearing Demand and Savings Accounts for repricing purposes are considered to reprice within 3 months or less.

(2) Short-term borrowings for repricing purposes are considered to reprice within 3 months or less.

- 57-

Part II (Continued)

Item 7 (Continued)

The foregoing table indicates that we had a one year negative gap of $392 thousand, or 37.01 percent of total interest-earning assets at December 31, 2013.  In theory, this would indicate that at December 31, 2013, $392 thousand more in liabilities than assets would reprice if there were a change in interest rates over the next 365 days.  Thus, if interest rates were to decline, the gap would indicate a resulting increase in net interest margin.  However, changes in the mix of earning assets or supporting liabilities can either increase or decrease the net interest margin without affecting interest rate sensitivity.  In addition, the interest rate spread between an asset and our supporting liability can vary significantly while the timing of repricing of both the assets and our supporting liability can remain the same, thus impacting net interest income.  This characteristic is referred to as a basis risk and, generally, relates to the repricing characteristics of short-term funding sources such as certificates of deposits.

Gap analysis has certain limitations.  Measuring the volume of repricing or maturing assets and liabilities does not always measure the full impact on the portfolio value of equity or net interest income.  Gap analysis does not account for rate caps on products; dynamic changes such as increasing prepay speeds as interest rates decrease, basis risk, or the benefit of non-rate funding sources.  The majority of our loan portfolio reprices quickly and completely following changes in market rates, while non-term deposit rates in general move slowly and usually incorporate only a fraction of the change in rates.  Products categorized as nonrate sensitive, such as our noninterest-bearing demand deposits, in the gap analysis behave like long term fixed rate funding sources.  Both of these factors tend to make our actual behavior more asset sensitive than is indicated in the gap analysis.  In fact, we experience higher net interest income when rates rise, opposite what is indicated by the gap analysis.  Therefore, management uses gap analysis, net interest margin analysis and market value of portfolio equity as our primary interest rate risk management tools.

The Company utilizes FTN Financial Asset/Liability Management Analysis for a more dynamic analysis of balance sheet structure.  The Company has established earnings at risk for net interest income in a +/- 200 basis point rate shock to be no more than a fifteen percent percentage change.  The most recent analysis as of December 31, 2013 indicates that net interest income would deteriorate 4.99 percent with a 200 basis point decrease and would deteriorate 2.73 percent with a 200 basis point increase.  The Company has established equity at risk in a +/- 200 basis point rate shock to be no more than a 20 percent percentage change.  The most recent analysis as of December 31, 2013 indicates that net economic value of equity percentage change would increase 6.22 percent with a 200 basis point increase and would decrease 12.55 percent with a 200 basis point decrease.  The Company has established its one year gap to be 80 percent to 120 percent.  The most recent analysis as of December 31, 2013 indicates a one year gap of 0.83 percent.  The analysis reflects slight net interest margin compression in both a declining and increasing interest rate environment.  Given that interest rates have basically “bottomed-out” with the recent Federal Reserve action, the Company is anticipating interest rates to increase in the future though we believe that interest rates will remain flat most of 2014.  The Company is focusing on areas to minimize margin compression in the future by minimizing longer term fixed rate loans, shortening on the yield curve with investments, securing longer term FHLB advances, securing certificates of deposit for longer terms and focusing on reduction of nonperforming assets.

- 58-

Part II (Continued)

Item 7 (Continued)

Return on Assets and Stockholder’s Equity

The following table presents selected financial ratios for each of the periods indicated.

	Years Ended December 31
	2013			2012			2011
Return on Average Assets(1)		0.28	%		0.11	%		0.09	%
Return on Average Equity(1)		3.34	%		1.25	%		1.20	%
Equity to Assets		7.83	%		8.40	%		8.08	%
Dividends Declared	$	0.00		$	0.00		$	0.00

(1) Computed using net income available to common shareholders.

Future Outlook

During the past four years, the financial services industry experienced tremendous adversities as a result of the collapse of the real estate markets across the country.  Colony, like most banking companies, has been affected by these economic challenges that started with a rapid stall of real estate sales and development throughout the country.  Focus during 2013 and again in 2014 will be directed toward addressing and bringing resolution to problem assets.

In response to the elevated risk of residential real estate and land development loans, management has extensively reviewed our loan portfolio with a particular emphasis on our residential and land development real estate exposure.  Senior management with experience in problem loan workouts have been identified and assigned responsibility to oversee the workout and resolution of problem loans.  The Company will continue to closely monitor our real estate dependent loans throughout the Company and focus on asset quality during this economic downturn.

Revenue enhancement initiatives to improve core non-interest income should be realized during 2014.  These initiatives include new product lines and services.

Business

Regulatory Action

On October 21, 2010, the Board of Directors of the Company’s subsidiary bank, Colony Bank (the “Bank”), received notification from its primary regulators, the Georgia Department of Banking and Finance (“the Georgia Department”) and the FDIC that the Bank’s latest examination results require a program of corrective action as outlined in a proposed Memorandum of Understanding (“MOU”).  An MOU is characterized by the supervising authorities as an informal action that is neither published nor made publically available by the supervising authorities and is used when circumstances do not warrant formal supervisory action.  An MOU is not a “written agreement” for purposes of Section 8 of the Federal Deposit Insurance Act.  The Board of Directors entered into the MOU at its regularly scheduled monthly meeting on November 16, 2010 with the effective date of the MOU being November 23, 2010.

- 59-

Part II (Continued)

Item 7 (Continued)

The MOU requires the Bank to develop, implement, and maintain various processes to improve the Bank’s risk management of its loan portfolio, reduce adversely classified assets in accordance with certain timeframes, limit the extension of additional credit to borrowers with adversely classified loans subject to certain exceptions, adopt a written plan to properly monitor and reduce the Bank’s commercial real estate concentration, continue to maintain the Bank’s loan loss provision and review its adequacy at least quarterly, and formulate and implement a written plan to improve and maintain earnings to be forwarded for review by the Georgia Department and FDIC.  The Bank is also required to obtain approval before any cash dividends can be paid.

The Bank has also agreed to have and maintain minimum capital ratios at specified levels higher than those otherwise required by applicable regulations as follows:  Tier 1 leverage capital to total assets of 8% and total risk-based capital to total risk-weighted assets of 10%.  At December 31, 2013, the Bank’s capital ratios were 10.72% and 17.29%, respectively.

The MOU was lifted by regulatory agencies effective October 1, 2013 and replaced with a Board Resolution to ensure that the Bank’s overall condition remains satisfactory.

Item 7A

Quantitative and Qualitative Disclosures about Market Risk

The information required by this item is located in Item 7 under the heading Interest Rate Sensitivity.

Item 8

Financial Statements and Supplemental Data

The following consolidated financial statements of the Registrant and its subsidiaries are included on Exhibit 13 of this Annual Report on Form 10-K:

Consolidated Balance Sheets - December 31, 2013 and 2012

Consolidated Statements of Income - Years Ended December 31, 2013, 2012 and 2011

Consolidated Statements of Comprehensive Income - Years Ended December 31, 2013, 2012 and 2011

Consolidated Statements of Stockholders’ Equity - Years Ended December 31, 2013, 2012 and 2011

Consolidated Statements of Cash Flows - Years Ended December 31, 2013, 2012 and 2011

Notes to Consolidated Financial Statements

- 60-

Part II (Continued)

Item 8 (Continued)

Quarterly Results of Operations (Unaudited)

The following is a summary of the unaudited quarterly results of operations for the years ended December 31, 2013 and 2012:

	Three Months Ended
	December 31			September 30		June 30		March 31
2013	($ in Thousands, Except Per Share Data)
Interest Income	$	11,466		$	11,260	$	11,296	$	11,164
Interest Expense		1,772			1,766		1,841		2,118
Net Interest Income		9,694			9,494		9,455		9,046
Provision for Loan Losses		285			1,500		1,200		1,500
Securities Gains		(362	)		-		6		(8	)
Noninterest Income		2,380			2,109		2,034		2,218
Noninterest Expense		8,998			8,488		8,739		8,392
Income Before Income Taxes		2,429			1,615		1,556		1,364
Provision for Income Taxes		803			535		570		427
Net Income		1,626			1,080		986		937
Preferred Stock Dividends		385			379		375		370
Net Income Available to Common Stockholders	$	1,241		$	701	$	611	$	567
Net Income Per Common Share
Basic	$	0.15		$	0.08	$	0.07	$	0.07
Diluted	$	0.15		$	0.08	$	0.07	$	0.07
2012
Interest Income	$	11,378		$	11,748	$	11,973	$	12,191
Interest Expense		2,302			2,526		2,882		3,307
Net Interest Income		9,076			9,222		9,091		8,884
Provision for Loan Losses		1,158			1,742		1,943		1,942
Securities Gains		770			1,187		743		137
Noninterest Income		1,872			1,716		1,631		1,677
Noninterest Expense		9,744			9,247		8,405		7,983
Income Before Income Taxes		816			1,136		1,117		773
Provision for Income Taxes		248			364		357		232
Net Income		568			772		760		541
Preferred Stock Dividends		365			361		357		352
Net Income Available to Common Stockholders	$	203		$	411	$	403	$	189
Net Income Per Common Share
Basic	$	0.02		$	0.05	$	0.05	$	0.02
Diluted	$	0.02		$	0.05	$	0.05	$	0.02

Item 9

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

There was no accounting or disclosure disagreement or reportable event with the current auditors that would have required the filing of a report on Form 8-K.

- 61-

Part II (Continued)

Item 9A

Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report, as required by paragraph (b) of Rules 13a-15 or 15d-15 of the Exchange Act.  Based on such evaluation, such officers have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective.

During the year ended December 31, 2013, there was not any change in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 of the Exchange Act that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Colony’s management is responsible for establishing and maintaining adequate internal control over financial reporting.  Colony’s internal control over financial reporting is a process designed under the supervision of the Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Colony’s financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Colony’s management assessed the effectiveness of Colony’s internal control over financial reporting as of December 31, 2013 based on the criteria for effective internal control over financial reporting established in Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on the assessment, management determined that Colony maintained effective internal control over financial reporting as of December 31, 2013.

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.  The Company’s registered public accounting firm was not required to issue an attestation on its internal controls over financial reporting pursuant to the rules of the SEC that permit the Company to provide only management’s report in this Annual Report on Form 10-K.

Colony Bankcorp, Inc.

March 14, 2014

Changes in Internal Controls

There were no changes made in our internal controls during the period covered by this report or, to our knowledge, in other factors that have materially affected, or are reasonably likely to materially affect these controls.

See the Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

- 62-

Part II (Continued)

Item 9B

Other Information

None.

Part III

Item 10

Directors and Executive Officers and Corporate Governance

Code of Ethics

Colony Bankcorp, Inc. has adopted a Code of Ethics that applies to the Company’s principal executive officer and principal accounting and financial officer.  A copy of the Code of Ethics will be provided to any person without charge, upon written request mailed to Terry Hester, Colony Bankcorp, Inc., 115 S. Grant Street, Fitzgerald, Georgia 31750.

The remaining information required by this item is incorporated by reference to the Company’s definitive Proxy Statements to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report.

Item 11

Executive Compensation

The information required by this item is incorporated by reference to the Company’s definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report.

- 63-

Part III (Continued)

Item 12

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

EQUITY COMPENSATION PLAN INFORMATION

Plan Category	Number of Securities to be Issued Upon Stock Grant, Exercise of Outstanding Options, Warrants and Rights (a)	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)	Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
Equity Compensation Plans Approved By Security Holders
2004 Restricted Stock Grant Plan				108,042
				108,042

The remaining information required by this item is incorporated by reference to the Company’s definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Annual Report.

Item 13

Certain Relationships and Related Transactions and Director Independence

The information required by this item is incorporated by reference to the Company’s definitive Proxy Statements to be filed with Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the fiscal year covered by this Annual Report.

Item 14

Principal Accounting Fees and Services

The information required by this item is incorporated by reference to the Company’s definitive Proxy Statements to be filed with Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the fiscal year covered by this Annual Report.

- 64-

Part IV

Item 15

Exhibits, Financial Statement Schedules

(a)	The following documents are filed as part of this report:
	(1)	Financial Statements
	(2)	Financial Statements Schedules:
			All schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or the related notes.
	(3)	A list of the exhibits required by Item 601 of Regulation S-K to be filed as a part of this report is shown on the “Exhibit Index” filed herewith.
Exhibit Index
3.1	Articles of Incorporation
		-filed as Exhibit 3(a) to the Registrant’s Registration Statement on Form 10 (File No. 0-18486), filed with the Commission on April 25, 1990 and incorporated herein by reference.
3.2	Bylaws, as Amended
		-filed as Exhibit 3(b) to the Registrant’s Registration Statement on Form 10 (File No. 0-18486), filed with the Commission on April 25, 1990 and incorporated herein by reference.
3.3	Articles of Amendment to the Company’s Articles of Incorporation Authorizing Additional Capital Stock in the Form of Ten Million Shares of Preferred Stock
		-filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 000-12436) filed with the Commission on January 13, 2009 and incorporated herein by reference.
3.4	Articles of Amendment to the Company’s Articles of Incorporation Establishing the Terms of the Series A Preferred Stock
		-filed as Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No. 000-12436) filed with the Commission on January 13, 2009 and incorporated herein by reference.
4.1	Instruments Defining the Rights of Security Holders
		-incorporated herein by reference to page 1 of the Company’s Definitive Proxy Statement for Annual Meeting of Stockholders to be held on April 26, 2005, filed with the Securities and Exchange Commission on March 2, 2005 (File No. 000-12436).
4.2	Warrant to Purchase up to 500,000 shares of Common Stock
		-filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K (File No. 000-12436), filed with the Commission on January 13, 2009 and incorporated herein by reference.

- 65-

Part IV (Continued)

Item 15 (Continued)

4.3	Form of Series A Preferred Stock Certificate
		-filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K (File No. 000-12436), filed with the Commission on January 13, 2009 and incorporated herein by reference.
10.1	Deferred Compensation Plan and Sample Director Agreement
		-filed as Exhibit 10(a) to the Registrant’s Registration Statement on Form 10 (File No. 0-18486), filed with the Commission on April 25, 1990 and incorporated herein by reference.
10.2	Profit-Sharing Plan Dated January 1, 1979
		-filed as Exhibit 10(b) to the Registrant’s Registration Statement on Form 10 (File No. 0-18486), filed with the Commission on April 25, 1990 and incorporated herein by reference.
10.3	1999 Restricted Stock Grant Plan and Restricted Stock Grant Agreement
		-filed as Exhibit 10© the Registrant’s Annual Report on Form 10-K (File 000-12436), filed with the Commission on March 30, 2001 and incorporated herein by reference.
10.4	2004 Restricted Stock Grant Plan and Restricted Stock Grant Agreement
		-filed as Exhibit C to the Registrant’s Definitive Proxy Statement for Annual Meeting of Stockholders held on April 27, 2004, filed with the Securities and Exchange Commission on March 3, 2004 (File No. 000-12436) and incorporated herein by reference.
10.5	Lease Agreement - Mobile Home Tracks, LLC c/o Stafford Properties, Inc. and Colony Bank Worth
		-filed as Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10Q (File No. 000-12436), filed with Securities and Exchange Commission on November 5, 2004 and incorporated herein by reference.
10.6	Letter Agreement, Dated January 9, 2009, Including Securities Purchase Agreement – Standard Terms Incorporated by Reference Therein, Between the Company and the United States Department of the Treasury
		-filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 000-12436), filed with the Commission on January 13, 2009 and incorporated herein by reference.
10.7	Form of Waiver, Executed by Each of Messrs Al D. Ross, Terry L. Hester, Henry F. Brown, Jr., Walter P. Patten and Larry E. Stevenson
		-filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K (File No. 000-12436), filed with the Commission on January 13, 2009 and incorporated herein by reference.
10.8	Employment Agreement, Dated April 27, 2012 Between Edward P. Loomis, Jr. and Colony Bankcorp, Inc.
		-filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 000-12436), filed with the Commission on May 2, 2012 and incorporated herein by reference.

- 66-

Part IV (Continued)

Item 15 (Continued)

13	Consolidated Financial Statements of Colony Bankcorp, Inc. as of December 31, 2013 and 2012
21	Subsidiaries of the Company
31.1	Certificate of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certificate of Chief Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certificate of the Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1	Certificate of the Chief Executive Officer and Chief Financial Officer Pursuant to Section 30.15 of 31 CFR Part 30
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.LAB	XBRL Label Linkbase Document
101.PRE	XBRL Presentation Linkbase Document

- 67-

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Colony Bankcorp, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized:

COLONY BANKCORP, INC.

/s/ Edward P. Loomis, Jr.

Edward P. Loomis, Jr.

President/Director/Chief Executive Officer

March 14, 2014

Date

/s/ Terry L. Hester

Terry L. Hester

Executive Vice-President/Chief Financial Officer/Director

March 14, 2014

Date

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

/s/ B. Gene Waldron	March 14, 2014
B. Gene Waldron, Director	Date
/s/ Edward J. Harrell	March 14, 2014
Edward J. Harrell, Director	Date
/s/ Mark H. Massee	March 14, 2014
Mark H. Massee, Director	Date

- 68-

/s/ Jonathan W. R. Ross	March 14, 2014
Jonathan W. R. Ross, Director	Date
/s/ M. Frederick Dwozan	March 14, 2014
M. Frederick Dwozan, Director	Date
/s/ Davis W. King, Sr.	March 14, 2014
Davis W. King, Sr., Director	Date
/s/ Scott Lowell Downing	March 14, 2014
Scott Lowell Downing, Director	Date

- 69-

EX-13

EXHIBIT NO. 13

MCNAIR, MCLEMORE, MIDDLEBROOKS & CO., LLC

CERTIFIED PUBLIC ACCOUNTANTS

389 Mulberry Street • Post Office Box One • Macon, GA 31202

Telephone (478) 746-6277 • Facsimile (478) 743-6858

www.mmmcpa.com

March 14, 2014

REPORT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Colony Bankcorp, Inc.

We have audited the accompanying consolidated balance sheets of Colony Bankcorp, Inc. and Subsidiary as of December 31, 2013 and 2012 and the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2013.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Colony Bankcorp, Inc. and Subsidiary as of December 31, 2013 and 2012, and the results of its operations and cash flows for each of the years in the three-year period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to examine management’s assessment of the effectiveness of Colony Bankcorp, Inc.’s internal control over financial reporting as of December 31, 2013 included under Item 9A, Controls and Procedures, in Colony Bankcorp, Inc.’s Annual Report on Form 10-K and, accordingly, we do not express an opinion thereon.

McNAIR, McLEMORE, MIDDLEBROOKS & CO., LLC

- 1-

COLONY BANKCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

DECEMBER 31

ASSETS

	2013			2012
Cash and Cash Equivalents
Cash and Due from Banks	$	25,691,605		$	29,243,927
Federal Funds Sold		20,495,060			20,001,906
		46,186,665			49,245,833
Interest-Bearing Deposits		21,960,291			21,795,341
Investment Securities
Available for Sale, at Fair Value		263,257,890			268,300,411
Held to Maturity, at Cost (Fair Value of $37,309 and $41,909 as of December 31, 2013 and 2012, Respectively)		37,062			41,467
		263,294,952			268,341,878
Federal Home Loan Bank Stock, at Cost		3,163,900			3,364,300
Loans		751,218,462			747,050,011
Allowance for Loan Losses		(11,805,986	)		(12,736,921	)
Unearned Interest and Fees		(360,522	)		(233,927	)
		739,051,954			734,079,163
Premises and Equipment		24,876,469			24,916,106
Other Real Estate (Net of Allowance of $3,985,920 and $4,561,099 in 2013 and 2012, Respectively)		15,502,462			15,940,693
Other Intangible Assets		187,761			223,510
Other Assets		34,326,432			21,489,957
Total Assets	$	1,148,550,886		$	1,139,396,781

See accompanying notes which are an integral part of these financial statements.

- 2-

COLONY BANKCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

DECEMBER 31

LIABILITIES AND STOCKHOLDERS’ EQUITY

	2013			2012
Deposits
Noninterest-Bearing	$	115,260,701		$	123,966,542
Interest-Bearing		872,268,779			855,718,349
		987,529,480			979,684,891
Borrowed Money
Subordinated Debentures		24,229,000			24,229,000
Other Borrowed Money		40,000,000			35,000,000
		64,229,000			59,229,000
Other Liabilities		6,838,167			4,723,723
Commitments and Contingencies
Stockholders’ Equity
Preferred Stock, Stated Value $1,000; Authorized 10,000,000 Shares, Issued 28,000 Shares		28,000,000			27,827,053
Common Stock, Par Value $1; Authorized 20,000,000 Shares, Issued 8,439,258 Shares as of December 31, 2013 and 2012		8,439,258			8,439,258
Paid-In Capital		29,145,094			29,145,094
Retained Earnings		33,444,913			30,497,576
Accumulated Other Comprehensive Loss, Net of Tax		(9,075,026	)		(149,814	)
		89,954,239			95,759,167
Total Liabilities and Stockholders’ Equity	$	1,148,550,886		$	1,139,396,781

See accompanying notes which are an integral part of these financial statements.

- 3-

COLONY BANKCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31

	2013			2012		2011
Interest Income
Loans, Including Fees	$	41,350,195		$	41,963,113	$	44,460,149
Federal Funds Sold and Securities Purchased Under Agreements to Resell		39,199			99,273		114,794
Deposits with Other Banks		26,704			42,903		45,646
Investment Securities
U.S. Government Agencies		3,516,978			4,824,423		6,873,296
State, County and Municipal		123,972			206,483		160,892
Corporate Obligations		47,275			76,029		91,034
Dividends on Other Investments		81,398			77,203		47,001
		45,185,721			47,289,427		51,792,812
Interest Expense
Deposits		5,821,366			8,737,281		12,950,229
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase		116			-		337,711
Borrowed Money		1,675,164			2,279,469		3,517,633
		7,496,646			11,016,750		16,805,573
Net Interest Income		37,689,075			36,272,677		34,987,239
Provision for Loan Losses		4,485,000			6,784,767		8,250,000
Net Interest Income After Provision for Loan Losses		33,204,075			29,487,910		26,737,239
Noninterest Income
Service Charges on Deposits		4,690,599			3,572,897		3,244,536
Other Service Charges, Commissions and Fees		1,725,271			1,514,898		1,311,758
Mortgage Fee Income		484,396			400,009		265,636
Securities Gains (Losses)		(363,804	)		2,837,464		2,923,601
Gain on Sale of SBA Loans		635,190			305,924		946,732
Other		1,205,631			1,102,077		1,258,813
		8,377,283			9,733,269		9,951,076
Noninterest Expenses
Salaries and Employee Benefits		16,691,972			15,564,893		14,632,693
Occupancy and Equipment		3,794,524			3,878,268		3,997,667
Directors’ Fees		416,972			465,220		466,075
Legal and Professional Fees		721,322			1,085,881		1,186,884
Foreclosed Property		3,918,128			5,613,316		4,045,245
FDIC Assessment		1,321,981			1,497,974		1,828,799
Advertising		508,292			422,718		508,329
Software		852,475			789,226		660,120
Telephone		778,151			744,930		735,758
ATM/Card Processing		641,228			511,186		348,221
Other		4,972,404			4,805,418		4,641,046
		34,617,449			35,379,030		33,050,837
Income Before Income Taxes		6,963,909			3,842,149		3,637,478
Income Taxes		2,334,864			1,200,851		1,103,883
Net Income		4,629,045			2,641,298		2,533,595
Preferred Stock Dividends		1,508,761			1,435,385		1,400,000
Net Income Available to Common Stockholders	$	3,120,284		$	1,205,913	$	1,133,595
Net Income Per Share of Common Stock, Basic and Diluted	$	0.37		$	0.14	$	0.13
Cash Dividends Declared Per Share of Common Stock	$	0.00		$	0.00	$	0.00
Weighted Average Shares Outstanding, Basic and Diluted		8,439,258			8,439,258		8,439,258

See accompanying notes which are an integral part of these financial statements.

- 4-

COLONY BANKCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31

	2013			2012			2011
Net Income	$	4,629,045		$	2,641,298		$	2,533,595
Other Comprehensive Income (Loss), Net of Tax
Gains (Losses) on Securities Arising During the Year, Net of Tax Effect of $(4,597,836), $(1,060,984) and $1,292,789, Respectively		(9,165,323	)		(186,830	)		4,439,108
Impairment Loss on Securities, Net of Tax Effect of $(124,652), $(20,253) and $(18,040), Respectively		241,971			39,315			35,018
Realized Gains (Losses) on Sale of AFS Securities, Net of Tax Effect of $959, $984,991 and $1,012,064, Respectively		(1,860	)		(1,912,041	)		(1,964,595	)
Change in Net Unrealized Gains (Losses) on Securities Available for Sale, Net of Reclassification Adjustment and Tax Effects		(8,925,212	)		(2,059,556	)		2,509,531
Comprehensive Income (Loss)	$	(4,296,167	)	$	581,742		$	5,043,126

See accompanying notes which are an integral part of these financial statements.

- 5-

COLONY BANKCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011

	Preferred Stock		Shares Issued			Common Stock			Paid-In Capital			Retained Earnings			Restricted Stock - Unearned Compensation			Accumulated Other Comprehensive Income (Loss)			Total
Balance, December 31, 2010	$	27,505,910		8,442,958		$	8,442,958		$	29,171,087		$	28,479,211		$	(40,794	)	$	(599,789	)	$	92,958,583
Forfeiture of Restricted Stock				(3,700	)		(3,700	)		(25,993	)					29,693						-
Amortization of Unearned Compensation																11,101						11,101
Change in Net Unrealized Gains (Losses) on Securities Available for Sale, Net of Reclassification Adjustment and Tax Effects																			2,509,531			2,509,531
Accretion of Fair Value of Warrant		156,566											(156,566	)								-
Dividends on Preferred Shares													(1,400,000	)								(1,400,000	)
Net Income													2,533,595									2,533,595
Balance, December 31, 2011		27,662,476		8,439,258			8,439,258			29,145,094			29,456,240			-			1,909,742			96,612,810
Change in Net Unrealized Gains (Losses) on Securities Available for Sale, Net of Reclassification Adjustment and Tax Effects																			(2,059,556	)		(2,059,556	)
Accretion of Fair Value of Warrant		164,577											(164,577	)								-
Dividends on Preferred Shares													(1,435,385	)								(1,435,385	)
Net Income													2,641,298									2,641,298
Balance, December 31, 2012		27,827,053		8,439,258			8,439,258			29,145,094			30,497,576			-			(149,814	)		95,759,167
Change in Net Unrealized Gains (Losses) on Securities Available for Sale, Net of Reclassification Adjustment and Tax Effects																			(8,925,212	)		(8,925,212	)
Accretion of Fair Value of Warrant		172,947											(172,947	)								-
Dividends on Preferred Shares													(1,508,761	)								(1,508,761	)
Net Income													4,629,045									4,629,045
Balance, December 31, 2013	$	28,000,000		8,439,258		$	8,439,258		$	29,145,094		$	33,444,913		$	-		$	(9,075,026	)	$	89,954,239

See accompanying notes which are an integral part of these financial statements.

- 6-

COLONY BANKCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31

	2013			2012			2011
Cash Flows from Operating Activities
Net Income	$	4,629,045		$	2,641,298		$	2,533,595
Adjustments to Reconcile Net Income to Net Cash Provided from Operating Activities
Depreciation		1,527,392			1,676,820			1,790,041
Amortization and Accretion		2,667,404			4,180,158			3,487,124
Provision for Loan Losses		4,485,000			6,784,767			8,250,000
Deferred Income Taxes		2,178,222			1,204,439			867,006
Securities (Gains) Losses		363,804			(2,837,464	)		(2,923,601	)
(Gain) Loss on Sale of Premises and Equipment		(677	)		1,148			3,668
Loss on Sale of Other Real Estate and Repossessions		1,565,091			1,839,196			1,106,479
Provision for Losses on Other Real Estate		1,321,418			2,702,709			1,411,061
Increase in Cash Surrender Value of Life Insurance		(338,712	)		(185,341	)		(174,289	)
Change In
Interest Receivable		285,033			250,755			739,423
Prepaid Expenses		(168,060	)		1,741,834			1,861,810
Interest Payable		385,285			74,637			(398,903	)
Accrued Expenses and Accounts Payable		213,753			(95,972	)		(405,612	)
Other		(243,543	)		2,827,648			(2,987,906	)
		18,870,455			22,806,632			15,159,896
Cash Flows from Investing Activities
Interest-Bearing Deposits in Other Banks		(164,950	)		7,161,969			21,769,424
Purchase of Investment Securities Available for Sale		(132,419,073	)		(250,445,594	)		(381,284,748	)
Proceeds from Sale of Investment Securities Available for Sale		72,672,795			227,690,806			342,672,937
Proceeds from Maturities, Calls and Paydowns of Investment Securities Available for Sale		48,330,382			54,006,594			41,978,769
Held to Maturity		11,623			14,019			12,565
Proceeds from Sale of Premises and Equipment		2,500			1,500			1,605
Net Loans to Customers		(19,959,948	)		(50,126,252	)		63,267,200
Purchase of Premises and Equipment		(1,489,579	)		(845,338	)		(397,825	)
Proceeds from Sale of Other Real Estate and Repossessions		8,041,638			9,876,136			9,991,792
Proceeds from Sale of Federal Home Loan Bank Stock		200,400			2,033,900			665,300
Purchase of Bank-Owned Life Insurance		(10,000,000	)		-			-
		(34,774,212	)		(632,260	)		98,677,019
Cash Flows from Financing Activities
Interest-Bearing Customer Deposits		16,550,430			(49,998,012	)		(50,448,220	)
Noninterest-Bearing Customer Deposits		(8,705,841	)		29,697,631			(8,690,512	)
Proceeds from Other Borrowed Money		21,500,000			5,000,000			-
Principal Payments on Other Borrowed Money		(16,500,000	)		(41,000,000	)		(4,076,010	)
Dividends Paid on Preferred Stock		-			-			(1,400,000	)
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase		-			-			(20,000,000	)
		12,844,589			(56,300,381	)		(84,614,742	)
Net Increase (Decrease) in Cash and Cash Equivalents		(3,059,168	)		(34,126,009	)		29,222,173
Cash and Cash Equivalents, Beginning		49,245,833			83,371,842			54,149,669
Cash and Cash Equivalents, Ending	$	46,186,665		$	49,245,833		$	83,371,842

See accompanying notes which are an integral part of these financial statements.

- 7-

COLONY BANKCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Summary of Significant Accounting Policies

Principles of Consolidation

Colony Bankcorp, Inc. (the Company) is a bank holding company located in Fitzgerald, Georgia. The consolidated financial statements include the accounts of Colony Bankcorp, Inc. and its wholly-owned subsidiary, Colony Bank, Fitzgerald, Georgia.  All significant intercompany accounts have been eliminated in consolidation.  The accounting and reporting policies of Colony Bankcorp, Inc. conform to generally accepted accounting principles and practices utilized in the commercial banking industry.

Nature of Operations

The Company provides a full range of retail and commercial banking services for consumers and small- to medium-size businesses located primarily in central, south and coastal Georgia. Colony Bank is headquartered in Fitzgerald, Georgia with banking offices in Albany, Ashburn, Broxton, Centerville, Chester, Columbus, Cordele, Douglas, Eastman, Fitzgerald, Leesburg, Moultrie, Pitts, Quitman, Rochelle, Savannah, Soperton, Sylvester, Thomaston, Tifton, Valdosta and Warner Robins.  Lending and investing activities are funded primarily by deposits gathered through its retail banking office network.

Use of Estimates

In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet date and revenues and expenses for the period.  Actual results could differ significantly from those estimates.  Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans.

Reclassifications

In certain instances, amounts reported in prior years’ consolidated financial statements and note disclosures have been reclassified to conform to statement presentations selected for 2013.  Such reclassifications had no effect on previously reported stockholders’ equity or net income.

- 8-

(1) Summary of Significant Accounting Policies (Continued)

Concentrations of Credit Risk

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, particularly with the current economic downturn in the real estate market.  At December 31, 2013, approximately 87 percent 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.  The downturn of the housing and real estate market that began in 2007 resulted in an increase of problem loans secured by real estate, of which most are centered in the Company’s larger MSA markets.  Declining collateral real estate values that secure land development, construction and speculative real estate loans in the Company’s larger MSA markets have resulted in high loan loss provisions in recent years.  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 loan loss analysis.

The success of the Company is dependent, to a certain extent, upon the economic conditions in the geographic markets it serves.  Adverse changes in the economic conditions in these geographic markets would likely have a material adverse effect on the Company’s results of operations and financial condition.  The operating results of the Company depend primarily on its net interest income. Accordingly, operations are subject to risks and uncertainties surrounding the exposure to changes in the interest rate environment.

At times, the Company may have cash and cash equivalents at financial institutions in excess of federal deposit insurance limits.  The Company places its cash and cash equivalents with high credit quality financial institutions whose credit rating is monitored by management to minimize credit risk.

Investment Securities

The Company classifies its investment securities as trading, available for sale or held to maturity.  Securities that are held principally for resale in the near term are classified as trading.  Trading securities are carried at fair value, with realized and unrealized gains and losses included in noninterest income.  Currently, no securities are classified as trading.  Securities acquired with both the intent and ability to be held to maturity are classified as held to maturity and reported at amortized cost.  All securities not classified as trading or held to maturity are considered available for sale.  Securities available for sale are reported at estimated fair value.  Unrealized gains and losses on securities available for sale are excluded from earnings and are reported, net of deferred taxes, in accumulated other comprehensive income (loss), a component of stockholders’ equity.  Gains and losses from sales of securities available for sale are computed using the specific identification method.  Securities available for sale includes securities, which may be sold to meet liquidity needs arising from unanticipated deposit and loan fluctuations, changes in regulatory capital requirements, or unforeseen changes in market conditions.

- 9-

(1) Summary of Significant Accounting Policies (Continued)

Investment Securities (Continued)

The Company evaluates each held to maturity and available for sale security in a loss position for other-than-temporary impairment (OTTI).  In estimating other-than-temporary impairment losses, management considers such factors as the length of time and the extent to which the market value has been below cost, the financial condition of the issuer and the Company’s intent to sell and whether it is more likely than not that the Company will be required to sell the security before anticipated recovery of the amortized cost basis.  If the Company intends to sell or if it is more likely than not that the Company will be required to sell the security before recovery, the OTTI write-down is recognized in earnings.  If the Company does not intend to sell the security or it is not more likely than not that it will be required to sell the security before recovery, the OTTI write-down is separated into an amount representing credit loss, which is recognized in earnings, and an amount related to all other factors, which is recognized in other comprehensive income (loss).

Federal Home Loan Bank Stock

Investment in stock of a Federal Home Loan Bank (FHLB) is required for every federally insured institution that utilizes its services.  FHLB stock is considered restricted, as defined in the accounting standards.  The FHLB stock is reported in the consolidated financial statements at cost.  Dividend income is recognized when earned.

Loans

Loans that the Company has the ability and intent to hold for the foreseeable future or until maturity are recorded at their principal amount outstanding, net of unearned interest and fees.  Loan origination fees, net of certain direct origination costs, are deferred and amortized over the estimated terms of the loans using the straight-line method.  Interest income on loans is recognized using the effective interest method.

A loan is considered to be delinquent when payments have not been made according to contractual terms, typically evidenced by nonpayment of a monthly installment by the due date.

When management believes there is sufficient doubt as to the collectibility of principal or interest on any loan or generally when loans are 90 days or more past due, the accrual of applicable interest is discontinued and the loan is designated as nonaccrual, unless the loan is well secured and in the process of collection.  Interest payments received on nonaccrual loans are either applied against principal or reported as income, according to management’s judgment as to the collectibility of principal.  Loans are returned to an accrual status when factors indicating doubtful collectibility on a timely basis no longer exist.

Loans Modified in a Troubled Debt Restructuring (TDR)

Loans are considered to have been modified in a TDR when, due to a borrower’s financial difficulty, the Company makes certain concessions to the borrower that it would not otherwise consider for new debt with similar risk characteristics.  Modifications may include interest rate reductions, principal or interest forgiveness, forbearance, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of the collateral.  Generally, a nonaccrual loan that has been modified in a TDR remains on nonaccrual status for a period of six months to demonstrate that the borrower is able to meet the terms of the modified loan.  However, performance prior to the modification, or significant events that coincide with the modification, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of loan modification or after a shorter performance period.  If the borrower’s ability to meet the revised payment schedule is uncertain, the loan remains on nonaccrual status. Once a loan is modified in a troubled debt restructuring, it is accounted for as an impaired loan, regardless of its accrual status, until the loan is paid in full, sold or charged off.

- 10-

(1) Summary of Significant Accounting Policies (Continued)

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings.  Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.  Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions.  This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revisions as more information becomes available.

The allowance consists of specific, historical and general components.  The specific component relates to loans that are classified as either doubtful, substandard or special mention.  For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.  The historical component covers nonclassified loans and is based on historical loss experience adjusted for qualitative factors.  A general component is maintained to cover uncertainties that could affect management’s estimate of probable losses.  The general component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and historical losses in the portfolio.  General valuation allowances are based on internal and external qualitative risk factors such as (1) changes in the composition of the loan portfolio, (2) the extent of loan concentrations within the portfolio, (3) the effectiveness of the Company’s lending policies, procedures and internal controls, (4) the experience, ability and effectiveness of the Company’s lending management and staff, and (5) national and local economics and business conditions.

Loans identified as losses by management, internal loan review and/or Bank examiners are charged off.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due.  Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed.  Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent.

- 11-

(1) Summary of Significant Accounting Policies (Continued)

Allowance for Loan Losses (Continued)

A significant portion of the Company’s impaired loans are deemed to be collateral dependent.  Management therefore measures impairment on these loans based on the fair value of the collateral.  Collateral values are determined based on appraisals performed by qualified licensed appraisers hired by the Company or by senior members of the Company’s credit administration staff.  The decision whether or not to obtain an external third-party appraisal usually depends on the type of property being evaluated.  External appraisals are usually obtained on more complex, income producing properties such as hotels, shopping centers and businesses.  Less complex properties such as residential lots, farm land and single family houses may be evaluated internally by senior credit administration staff.  When the Company does obtain appraisals from external third-parties, the values utilized in the impairment calculation are “as is” or current market values.  The appraisals, whether prepared internally or externally, may utilize a single valuation approach or a combination of approaches including the comparable sales, income and cost approach.  Appraised amounts used in the impairment calculation are typically discounted 10 percent to account for selling and marketing costs, if the repayment of the loan is to come from the sale of the collateral.  Although appraisals may not be obtained each year on all impaired loans, the collateral values used in the impairment calculations are evaluated quarterly by management.  Based on management’s knowledge of the collateral and the current real estate market conditions, appraised values may be further discounted to reflect facts and circumstances known to management since the initial appraisal was performed.

Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are typically significant and result in a level 3 classification of the inputs for determining fair value.  Because of the high degree of judgment required in estimating the fair value of collateral underlying impaired loans and because of the relationship between fair value and general economic conditions, we consider the fair value of impaired loans to be highly sensitive to changes in market conditions.

Premises and Equipment

Premises and equipment are recorded at acquisition cost net of accumulated depreciation.

Depreciation is charged to operations over the estimated useful lives of the assets.  The estimated useful lives and methods of depreciation are as follows:

Description	Life in Years		Method
Banking Premises		15-40	Straight-Line and Accelerated
Furniture and Equipment		5-10	Straight-Line and Accelerated

Expenditures for major renewals and betterments are capitalized.  Maintenance and repairs are charged to operations as incurred.  When property and equipment are retired or sold, the cost and accumulated depreciation are removed from the respective accounts and any gain or loss is reflected in other income or expense.

Intangible Assets

Intangible assets consist of core deposit intangibles acquired in connection with a business combination.  The core deposit intangible is initially recognized based on an independent valuation performed as of the consummation date.  The core deposit intangible is amortized by the straight-line method over the average remaining life of the acquired customer deposits.

- 12-

(1) Summary of Significant Accounting Policies (Continued)

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered.  Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Statement of Cash Flows

For reporting cash flows, cash and cash equivalents include cash on hand, noninterest-bearing amounts due from banks, federal funds sold and securities purchased under agreement to resell.  Cash flows from demand deposits, interest-bearing checking accounts, savings accounts, loans and certificates of deposit are reported net.

Securities Purchased Under Agreement to Resell and Securities Sold Under Agreements to Repurchase

The Company purchases certain securities under agreements to resell.  The amounts advanced under these agreements represent short-term loans and are reflected as assets in the consolidated balance sheets.

The Company sells securities under agreements to repurchase.  These repurchase agreements are treated as borrowings.  The obligations to repurchase securities sold are reflected as a liability and the securities underlying the agreements are reflected as assets in the consolidated balance sheets.

Advertising Costs

The Company expenses the cost of advertising in the periods in which those costs are incurred.

Income Taxes

The provision for income taxes is based upon income for financial statement purposes, adjusted for nontaxable income and nondeductible expenses.  Deferred income taxes have been provided when different accounting methods have been used in determining income for income tax purposes and for financial reporting purposes.

Deferred tax assets and liabilities are recognized based on future tax consequences attributable to differences arising from the financial statement carrying values of assets and liabilities and their tax bases.  The differences relate primarily to depreciable assets (use of different depreciation methods for financial statement and income tax purposes) and allowance for loan losses (use of the allowance method for financial statement purposes and the direct write-off method for tax purposes).  In the event of changes in the tax laws, deferred tax assets and liabilities are adjusted in the period of the enactment of those changes, with effects included in the income tax provision.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The Company and its subsidiary file a consolidated federal income tax return.  The subsidiary pays its proportional share of federal income taxes to the Company based on its taxable income.

The Company’s federal and state income tax returns for tax years 2013, 2012, 2011 and 2010 are subject to examination by the Internal Revenue Service (IRS) and the Georgia Department of Revenue, generally for three years after filing.

- 13-

(1) Summary of Significant Accounting Policies (Continued)

Income Taxes (Continued)

Positions taken in the Company’s tax returns may be subject to challenge by the taxing authorities upon examination.  Uncertain tax positions are initially recognized in the consolidated financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities.  Such tax positions are both initially and subsequently measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon settlement with the tax authority, assuming full knowledge of the position and all relevant facts.  The Company provides for interest and, in some cases, penalties on tax positions that may be challenged by the taxing authorities. Interest expense is recognized beginning in the first period that such interest would begin accruing.  Penalties are recognized in the period that the Company claims the position in the tax return.  Interest and penalties on income tax uncertainties are classified within income tax expense in the consolidated statements of operations.

Other Real Estate

Other real estate generally represents real estate acquired through foreclosure and is initially recorded at estimated fair value at the date of acquisition less the cost of disposal.  Losses from the acquisition of property in full or partial satisfaction of debt are recorded as loan losses.  Properties are evaluated regularly to ensure the recorded amounts are supported by current fair values, and valuation allowances are recorded as necessary to reduce the carrying amount to fair value less estimated cost of disposal.  Routine holding costs and gains or losses upon disposition are included in foreclosed property expense.

Bank-Owned Life Insurance

The Company has purchased life insurance on the lives of certain key members of management and directors.  The life insurance policies are recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or amounts due that are probable at settlement, if applicable.  Increases in the cash surrender value are recorded as other income in the consolidated statements of income.The cash surrender value of the insurance contracts is recorded in other assets on the consolidated balance sheets in the amount of $13,940,176 and $3,601,464 as of December 31, 2013 and 2012, respectively.

Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income.  Certain changes in assets and liabilities, such as unrealized gains and losses on securities available for sale, represent equity changes from economic events of the period other than transactions with owners.  Such items are considered components of other comprehensive income (loss).  Accounting standards codification requires the presentation in the consolidated financial statements of net income and all items of other comprehensive income (loss) as total comprehensive income (loss).

Off-Balance Sheet Credit Related Financial Instruments

In the ordinary course of business, the Company has entered into commitments to extend credit, commercial letters of credit and standby letters of credit.  Such financial instruments are recorded on the balance sheet when they are funded.

- 14-

(1) Summary of Significant Accounting Policies (Continued)

Changes in Accounting Principles and Effects of New Accounting Pronouncements

Adoption of New Accounting Standards

ASU 2013-02, Comprehensive Income (Topic 220) - Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 amends recent guidance related to the reporting of comprehensive income to enhance the reporting of reclassifications out of accumulated other comprehensive income. ASU 2013-02 became effective for the Company on January 1, 2013 and did not have a significant impact on the Company’s consolidated financial statements.

ASU 2012-02, Intangibles - Goodwill and Other (Topic 350) - Testing Indefinite-Lived Intangible Assets for Impairment. ASU 2012-02 gives entities the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that an indefinite-lived intangible asset is impaired. If, after assessing the totality of events or circumstances, an entity determines it is more likely than not that an indefinite-lived intangible asset is impaired, then the entity must perform the quantitative impairment test. If, under the quantitative impairment test, the carrying amount of the intangible asset exceeds its fair value, an entity should recognize an impairment loss in the amount of that excess. Permitting an entity to assess qualitative factors when testing indefinite-lived intangible assets for impairment results in guidance that is similar to the goodwill impairment testing guidance in ASU 2011-08. ASU 2012-02 became effective for the Company on January 1, 2013 and did not have a significant impact on the Company’s consolidated financial statements.

ASU 2011-11, Balance Sheet (Topic 210) - Disclosures about Offsetting Assets and Liabilities.  ASU 2011-11 amends Topic 210, Balance Sheet, to require an entity to disclose both gross and net information about financial instruments, such as sales and repurchase agreements and reverse sale and repurchase agreements and securities borrowing/lending arrangements, and derivative instruments that are eligible for offset in the consolidated balance sheet and/or subject to a master netting arrangement or similar agreement.  ASU No. 2013-01, Balance Sheet (Topic 210) - Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, clarifies that ordinary trade receivables are not within the scope of ASU 2011-11.  ASU 2011-11 became effective for the Company on January 1, 2013 and did not have a significant impact on the Company’s consolidated financial statements.

(2) Cash and Balances Due from Banks

Components of cash and balances due from banks are as follows as of December 31:

	2013		2012
Cash on Hand and Cash Items	$	10,531,340	$	9,063,437
Noninterest-Bearing Deposits with Other Banks		15,160,265		20,180,490
	$	25,691,605	$	29,243,927

The Company is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank based on a percentage of deposits.  Reserve balances totaled approximately $1,252,000 and $6,065,000 at December 31, 2013 and 2012, respectively.

- 15-

(3) Investment Securities

Investment securities as of December 31, 2013 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale
U.S. Government Agencies Mortgage-Backed	$	273,029,073	$	118,843	$	(13,799,858	)	$	259,348,058
State, County and Municipal		3,978,857		14,963		(83,988	)		3,909,832
	$	277,007,930	$	133,806	$	(13,883,846	)	$	263,257,890
Securities Held to Maturity
State, County and Municipal	$	37,062	$	247	$	-		$	37,309

The amortized cost and fair value of investment securities as of December 31, 2013, by contractual maturity, are shown hereafter.  Expected maturities may differ from contractual maturities for certain investments because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.  This is often the case with mortgage-backed securities, which are disclosed separately in the table below.

	Securities
	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in One Year or Less	$	272,219	$	274,166	$	-	$	-
Due After One Year Through Five Years		1,755,607		1,768,121		37,062		37,309
Due After Five Years Through Ten Years		1,298,122		1,265,127		-		-
Due After Ten Years		652,909		602,418		-		-
		3,978,857		3,909,832		37,062		37,309
Mortgage-Backed Securities		273,029,073		259,348,058		-		-
	$	277,007,930	$	263,257,890	$	37,062	$	37,309

Investment securities as of December 31, 2012 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale
U.S. Government Agencies Mortgage-Backed	$	263,186,852	$	833,920	$	(961,698	)	$	263,059,074
State, County and Municipal		3,973,926		34,670		(4,586	)		4,004,010
Corporate Obligations		1,000,000		104,900		-			1,104,900
Asset-Backed Securities		366,623		-		(234,196	)		132,427
	$	268,527,401	$	973,490	$	(1,200,480	)	$	268,300,411
Securities Held to Maturity
State, County and Municipal	$	41,467	$	442	$	-		$	41,909

- 16-

(3) Investment Securities (Continued)

Proceeds from sales of investments available for sale were $72,672,795 in 2013, $227,690,806 in 2012 and $342,672,937 in 2011.  Gross realized gains totaled $442,124 in 2013, $3,084,666 in 2012 and $2,978,193 in 2011.  Gross realized losses totaled $805,928 in 2013, $247,202 in 2012 and $54,592 in 2011.

Nonaccrual securities are securities for which principal and interest are doubtful of collection in accordance with original terms and for which accruals of interest have been discontinued due to payment delinquency.  Fair value of securities on nonaccrual status totaled $0 and $132,427 as of December 31, 2013 and 2012, respectively.

Investment securities having a carrying value totaling $112,912,815 and $117,450,817 as of December 31, 2013 and 2012, respectively, were pledged to secure public deposits and for other purposes.

Information pertaining to securities with gross unrealized losses at December 31, 2013 and 2012 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
December 31, 2013
U.S. Government Agencies Mortgage-Backed	$	190,063,827	$	(9,440,663	)	$	63,193,601	$	(4,359,195	)	$	253,257,428	$	(13,799,858	)
State, County and Municipal		1,647,043		(83,988	)		-		-			1,647,043		(83,988	)
	$	191,710,870	$	(9,524,651	)	$	63,193,601	$	(4,359,195	)	$	254,904,471	$	(13,883,846	)
December 31, 2012
U.S. Government Agencies Mortgage-Backed	$	142,103,991	$	(961,698	)	$	-	$	-		$	142,103,991	$	(961,698	)
State, County and Municipal		1,430,512		(4,586	)		-		-			1,430,512		(4,586	)
Asset-Backed Securities		-		-			132,427		(234,196	)		132,427		(234,196	)
	$	143,534,503	$	(966,284	)	$	132,427	$	(234,196	)	$	143,666,930	$	(1,200,480	)

Management evaluates securities for other than temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.  Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

- 17-

(3) Investment Securities (Continued)

At December 31, 2013, the debt securities with unrealized losses have depreciated 5.17 percent from the Company’s amortized cost basis. These securities are guaranteed by either the U.S. Government, other governments or U.S. corporations.  In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred and the results of reviews of the issuer’s financial condition.  The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased.  As management has the ability to hold debt securities until maturity, or for the foreseeable future if classified as available-for-sale, no declines are deemed to be other than temporary.  However, the Company did own one asset-backed security at December 31, 2013 which has been completely written off.  This investment is comprised of one issuance of a trust preferred security and has a book value of $0.  Management evaluates this investment on a quarterly basis utilizing a third-party valuation model.  The results of this model revealed other-than-temporary impairment and as a result, $366,623, $59,568 and $53,058 were written off during the years ended December 31, 2013, 2012 and 2011, respectively.

(4) Loans

The following table presents the composition of loans, segregated by class of loans, as of December 31:

	2013		2012
Commercial and Agricultural
Commercial	$	48,107,448	$	55,684,492
Agricultural		10,665,938		6,210,953
Real Estate
Commercial Construction		52,738,783		53,808,056
Residential Construction		6,549,260		5,852,238
Commercial		341,783,538		334,386,177
Residential		206,257,927		203,844,522
Farmland		47,034,426		49,056,861
Consumer and Other
Consumer		25,675,560		29,777,776
Other		12,405,582		8,428,936
Total Loans	$	751,218,462	$	747,050,011

- 18-

(4) Loans (Continued)

Commercial and agricultural loans are extended to a diverse group of businesses within the Company’s market area.  These loans are often underwritten based on the borrower’s ability to service the debt from income from the business.  Real estate construction loans often require loan funds to be advanced prior to completion of the project.  Due to uncertainties inherent in estimating construction costs, changes in interest rates and other economic conditions, these loans often pose a higher risk than other types of loans.  Consumer loans are originated at the bank level.  These loans are generally smaller loan amounts spread across many individual borrowers to help minimize risk.

Credit Quality Indicators.  As part of the ongoing monitoring of the credit quality of the loan portfolio, management tracks certain credit quality indicators including trends related to (1) the risk grade assigned to commercial and consumer loans, (2) the level of classified commercial loans, (3) net charge-offs, (4) nonperforming loans, and (5) the general economic conditions in the Company’s geographic markets.

The Company uses a risk grading matrix to assign a risk grade to each of its loans.  Loans are graded on a scale of 1 to 8.  A description of the general characteristics of the grades is as follows:

· Grades 1 and 2 - Borrowers with these assigned grades range in risk from virtual absence of risk to minimal risk.  Such loans may be secured by Company-issued and controlled certificates of deposit or properly margined equity securities or bonds.  Other loans comprising these grades are made to companies that have been in existence for a long period of time with many years of consecutive profits and strong equity, good liquidity, excellent debt service ability and unblemished past performance, or to exceptionally strong individuals with collateral of unquestioned value that fully secures the loans.  Loans in this category fall into the “pass” classification.

· Grades 3 and 4 - Loans assigned these “pass” risk grades are made to borrowers with acceptable credit quality and risk.  The risk ranges from loans with no significant weaknesses in repayment capacity and collateral protection to acceptable loans with one or more risk factors considered to be more than average.

· Grade 5 - This grade includes “special mention” loans on management’s watch list and is intended to be used on a temporary basis for pass grade loans where risk-modifying action is intended in the short-term.

· Grade 6 - This grade includes “substandard” loans in accordance with regulatory guidelines.  This category includes borrowers with well-defined weaknesses that jeopardize the payment of the debt in accordance with the agreed terms.  Loans considered to be impaired are assigned this grade, and these loans often have assigned loss allocations as part of the allowance for loan and lease losses.  Generally, loans on which interest accrual has been stopped would be included in this grade.

· Grades 7 and 8 - These grades correspond to regulatory classification definitions of “doubtful” and “loss,” respectively.  In practice, any loan with these grades would be for a very short period of time, and generally the Company has no loans with these assigned grades.  Management manages the Company’s problem loans in such a way that uncollectible loans or uncollectible portions of loans are charged off immediately with any residual, collectible amounts assigned a risk grade of 6.

- 19-

(4) Loans (Continued)

The following tables present the loan portfolio by credit quality indicator (risk grade) as of December 31. Those loans with a risk grade of 1, 2, 3 or 4 have been combined in the pass column for presentation purposes.

2013	Pass		Special Mention		Substandard		Total Loans
Commercial and Agricultural
Commercial	$	41,759,281	$	2,770,284	$	3,577,883	$	48,107,448
Agricultural		10,637,705		16,830		11,403		10,665,938
Real Estate
Commercial Construction		42,668,320		1,512,301		8,558,162		52,738,783
Residential Construction		6,341,530		207,730		-		6,549,260
Commercial		317,567,749		10,759,954		13,455,835		341,783,538
Residential		182,977,361		13,523,478		9,757,088		206,257,927
Farmland		44,776,355		507,122		1,750,949		47,034,426
Consumer and Other
Consumer		24,608,175		320,473		746,912		25,675,560
Other		12,356,116		711		48,755		12,405,582
Total Loans	$	683,692,592	$	29,618,883	$	37,906,987	$	751,218,462
2012
Commercial and Agricultural
Commercial	$	49,947,552	$	1,417,735	$	4,319,205	$	55,684,492
Agricultural		6,155,864		-		55,089		6,210,953
Real Estate
Commercial Construction		37,256,301		1,663,588		14,888,167		53,808,056
Residential Construction		5,748,829		103,409		-		5,852,238
Commercial		298,222,139		9,759,473		26,404,565		334,386,177
Residential		183,222,020		11,412,973		9,209,529		203,844,522
Farmland		45,495,038		913,487		2,648,336		49,056,861
Consumer and Other
Consumer		28,839,058		293,467		645,251		29,777,776
Other		8,350,772		8,907		69,257		8,428,936
Total Loans	$	663,237,573	$	25,573,039	$	58,239,399	$	747,050,011

A loan’s risk grade is assigned at the inception of the loan and is based on the financial strength of the borrower and the type of collateral.  Loan risk grades are subject to reassessment at various times throughout the year as part of the Company’s ongoing loan review process.  Loans with an assigned risk grade of 6 or below and an outstanding balance of $250,000 or more are reassessed on a quarterly basis.  During this reassessment process individual reserves may be identified and placed against certain loans which are not considered impaired.

In assessing the overall economic condition of the markets in which it operates, the Company monitors the unemployment rates for its major service areas.  The unemployment rates are reviewed on a quarterly basis as part of the allowance for loan loss determination.

- 20-

(4) Loans (Continued)

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due.  Generally, loans are placed on nonaccrual status if principal or interest payments become 90 days past due or when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provision.  Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due.

The following table represents an age analysis of past due loans and nonaccrual loans, segregated by class of loans, as of December 31:

	Accruing Loans
2013	30-89 Days Past Due		90 Days or More Past Due		Total Accruing Loans Past Due		Nonaccrual Loans		Current Loans		Total Loans
Commercial and Agricultural
Commercial	$	581,281	$	-	$	581,281	$	1,646,418	$	45,879,749	$	48,107,448
Agricultural		81,036		-		81,036		-		10,584,902		10,665,938
Real Estate
Commercial Construction		139,826		-		139,826		8,221,745		44,377,212		52,738,783
Residential Construction		-		-		-		-		6,549,260		6,549,260
Commercial		2,287,341		-		2,287,341		7,366,703		332,129,494		341,783,538
Residential		5,273,586		-		5,273,586		4,933,420		196,050,921		206,257,927
Farmland		350,718		-		350,718		1,629,611		45,054,097		47,034,426
Consumer and Other
Consumer		453,580		3,991		457,571		307,456		24,910,533		25,675,560
Other		198,451		-		198,451		9,146		12,197,985		12,405,582
Total Loans	$	9,365,819	$	3,991	$	9,369,810	$	24,114,499	$	717,734,153	$	751,218,462
2012
Commercial and Agricultural
Commercial	$	797,612	$	-	$	797,612	$	1,033,371	$	53,853,509	$	55,684,492
Agricultural		28,228		-		28,228		39,213		6,143,512		6,210,953
Real Estate
Commercial Construction		1,309,618		-		1,309,618		14,032,580		38,465,858		53,808,056
Residential Construction		-		-		-		-		5,852,238		5,852,238
Commercial		3,771,106		-		3,771,106		6,629,789		323,985,282		334,386,177
Residential		8,223,174		-		8,223,174		5,429,971		190,191,377		203,844,522
Farmland		140,095		-		140,095		2,413,104		46,503,662		49,056,861
Consumer and Other
Consumer		636,888		4,355		641,243		255,216		28,881,317		29,777,776
Other		4,557		-		4,557		17,491		8,406,888		8,428,936
Total Loans	$	14,911,278	$	4,355	$	14,915,633	$	29,850,735	$	702,283,643	$	747,050,011

- 21-

(4) Loans (Continued)

During its review of impaired loans, the Company determined the majority of its exposures on these loans were known losses.  As a result, the exposures were charged off, reducing the specific allowances on impaired loans.  Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $968,700, $1,634,600 and $1,639,800 for the years ended December 31, 2013, 2012 and 2011, respectively.

The following table details impaired loan data as of December 31, 2013:

	Unpaid Contractual Principal Balance		Impaired Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized			Interest Income Collected
With No Related Allowance Recorded
Commercial	$	305,272	$	305,272	$	-	$	216,057	$	24,494		$	25,193
Agricultural		-		-		-		9,803		-			-
Commercial Construction		7,856,411		4,750,157		-		4,105,370		34,908			41,164
Commercial Real Estate		20,120,403		19,252,946		-		13,198,988		493,940			503,392
Residential Real Estate		7,836,718		6,361,592		-		4,564,666		224,439			209,330
Farmland		302,629		302,629		-		1,858,654		803			869
Consumer		313,194		307,456		-		252,944		18,469			21,109
Other		9,146		9,146		-		2,287		556			575
		36,743,773		31,289,198		-		24,208,769		797,609			801,632
With An Allowance Recorded
Commercial		1,452,798		1,452,798		433,714		1,689,125		14,845			20,748
Agricultural		-		-		-		-		-			-
Commercial Construction		5,922,674		3,471,587		830,546		5,025,176		(159	)		-
Commercial Real Estate		5,874,473		5,874,473		423,685		11,072,314		157,536			148,495
Residential Real Estate		1,949,301		1,849,301		526,005		3,661,706		25,739			24,414
Farmland		1,326,982		1,326,982		85,500		663,903		44,638			46,930
Consumer		-		-		-		-		-			-
Other		-		-		-		-		-			-
		16,526,228		13,975,141		2,299,450		22,112,224		242,599			240,587
Total
Commercial		1,758,070		1,758,070		433,714		1,905,182		39,339			45,941
Agricultural		-		-		-		9,803		-			-
Commercial Construction		13,779,085		8,221,744		830,546		9,130,546		34,749			41,164
Commercial Real Estate		25,994,876		25,127,419		423,685		24,271,302		651,476			651,887
Residential Real Estate		9,786,019		8,210,893		526,005		8,226,372		250,178			233,744
Farmland		1,629,611		1,629,611		85,500		2,522,557		45,441			47,799
Consumer		313,194		307,456		-		252,944		18,469			21,109
Other		9,146		9,146		-		2,287		556			575
	$	53,270,001	$	45,264,339	$	2,299,450	$	46,320,993	$	1,040,208		$	1,042,219

- 22-

(4) Loans (Continued)

The following table details impaired loan data as of December 31, 2012:

	Unpaid Contractual Principal Balance		Impaired Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Collected
With No Related Allowance Recorded
Commercial	$	1,508,236	$	1,041,938	$	-	$	1,052,916	$	27,407	$	28,410
Agricultural		39,213		39,213		-		58,056		-		-
Commercial Construction		10,624,917		6,414,986		-		9,194,360		27,377		51,820
Commercial Real Estate		16,565,971		15,505,907		-		26,482,274		430,339		420,549
Residential Real Estate		4,450,128		4,131,707		-		3,096,151		89,139		123,101
Farmland		2,828,539		2,413,103		-		2,326,180		42,588		55,258
Consumer		297,356		255,216		-		228,181		10,441		12,920
Other		17,491		17,491		-		24,414		1,191		1,291
		36,331,851		29,819,561		-		42,462,532		628,482		693,349
With An Allowance Recorded
Commercial		1,493,432		1,493,432		462,555		942,673		91,888		87,611
Agricultural		-		-		-		-		-		-
Commercial Construction		8,266,649		7,617,594		1,732,534		10,533,468		-		-
Commercial Real Estate		12,758,884		12,745,422		1,236,526		6,398,364		383,356		366,423
Residential Real Estate		5,514,994		4,421,809		840,492		4,288,062		144,661		117,266
Farmland		-		-		-		64,862		-		-
Consumer		-		-		-		-		-		-
Other		-		-		-		-		-		-
		28,033,959		26,278,257		4,272,107		22,227,429		619,905		571,300
Total
Commercial		3,001,668		2,535,370		462,555		1,995,589		119,295		116,021
Agricultural		39,213		39,213		-		58,056		-		-
Commercial Construction		18,891,566		14,032,580		1,732,534		19,727,828		27,377		51,820
Commercial Real Estate		29,324,855		28,251,329		1,236,526		32,880,638		813,695		786,972
Residential Real Estate		9,965,122		8,553,516		840,492		7,384,213		233,800		240,367
Farmland		2,828,539		2,413,103		-		2,391,042		42,588		55,258
Consumer		297,356		255,216		-		228,181		10,441		12,920
Other		17,491		17,491		-		24,414		1,191		1,291
	$	64,365,810	$	56,097,818	$	4,272,107	$	64,689,961	$	1,248,387	$	1,264,649

- 23-

(4) Loans (Continued)

Troubled Debt Restructurings (TDRs) are troubled loans on which the original terms of the loan have been modified in favor of the borrower due to deterioration in the borrower’s financial condition.  Each potential loan modification is reviewed individually and the terms of the loan are modified to meet the borrower’s specific circumstances at a point in time.  Not all loan modifications are TDRs.  Loan modifications are reviewed and approved by the Company’s senior lending staff, who then determine whether the loan meets the criteria for a TDR.  Generally, the types of concessions granted to borrowers that are evaluated in determining whether a loan is classified as a TDR include:

· Interest rate reductions - Occur when the stated interest rate is reduced to a nonmarket rate or a rate the borrower would not be able to obtain elsewhere under similar circumstances.

· Amortization or maturity date changes - Result when the amortization period of the loan is extended beyond what is considered a normal amortization period for loans of similar type with similar collateral.

· Principal reductions - These are often the result of commercial real estate loan workouts where two new notes are created.  The primary note is underwritten based upon our normal underwriting standards and is structured so that the projected cash flows are sufficient to repay the contractual principal and interest of the newly restructured note.  The terms of the secondary note vary by situation and often involve that note being charged off, or the principal and interest payments being deferred until after the primary note has been repaid.  In situations where a portion of the note is charged off during modification, there is often no specific reserve allocated to those loans.  This is due to the fact that the amount of the charge-off usually represents the excess of the original loan balance over the collateral value and the Company has determined there is no additional exposure on those loans.

- 24-

(4) Loans (Continued)

As discussed in Note 1, Summary of Significant Accounting Policies, once a loan is identified as a TDR, it is accounted for as an impaired loan.  The Company had no unfunded commitments to lend to a customer that has a troubled debt restructured loan as of December 31, 2013.  The following tables present the number of loan contracts restructured during the 12 months ended December 31, 2013 and the pre- and post-modification recorded investment as well as the number of contracts and the recorded investment for those TDRs modified during the previous 12 months which subsequently defaulted during the period.  Loans modified in a troubled debt restructuring are considered to be in default once the loan becomes 90 days past due.

Troubled Debt Restructurings

2013	# of Contracts		Pre-Modification		Post-Modification
Commercial		1	$	83,748	$	81,277
Commercial Construction		2		228,633		225,959
Commercial Real Estate		1		225,852		225,852
Residential Real Estate		4		1,885,700		1,764,399
Total Loans		8	$	2,423,933	$	2,297,487
2012
Commercial		1	$	107,749	$	107,749
Commercial Real Estate		1		56,835		56,835
Residential Real Estate		5		1,082,585		1,079,614
Total Loans		7	$	1,247,169	$	1,244,198
2011
Commercial		3	$	3,240,469	$	1,541,882
Commercial Construction		3		1,430,147		1,430,101
Commercial Real Estate		9		20,827,349		15,906,547
Residential Real Estate		8		1,505,356		1,456,878
Total Loans		23	$	27,003,321	$	20,335,408

- 25-

(4) Loans (Continued)

Troubled debt restructurings that subsequently defaulted as of December 31 are as follows:

	2013				2012				2011
	# of Contracts		Recorded Investment		# of Contracts		Recorded Investment		# of Contracts		Recorded Investment
Commercial		1	$	81,277		-	$	-		1	$	1,175,922
Commercial Construction		-		-		-		-		3		4,475,473
Commercial Real Estate		-		-		1		203,291		3		2,322,361
Residential Real Estate		-		-		1		10,000		-		-
Total Loans		1	$	81,277		2	$	213,291		7	$	7,973,756

At December 31, 2013, 2012 and 2011, all restructured loans were performing as agreed.  However, two restructured loans totaling $81,277 and $10,000 at December 31, 2013 and 2012 failed to continue to perform as agreed and, as a result, the loans were charged off in August 2013 and January 2012, respectively.  At December 31, 2011, two restructured loans totaling $999,133 and $51,998 failed to continue to perform as agreed and, as a result, the loans were charged off in March 2011 and December 2011, respectively.

(5) Allowance for Loan Losses

Changes in the allowance for loan losses for the years ended December 31 are as follows:

	2013			2012			2011
Balance, Beginning of Year	$	12,736,921		$	15,649,594		$	28,280,077
Provision for Loan Losses		4,485,000			6,784,767			8,250,000
Loans Charged Off		(6,227,716	)		(10,454,175	)		(22,850,673	)
Recoveries of Loans Previously Charged Off		811,781			756,735			1,970,190
Balance, End of Year	$	11,805,986		$	12,736,921		$	15,649,594

- 26-

(5) Allowance for Loan Losses (Continued)

The following tables detail activity in the allowance for loan losses, segregated by class of loan, for the years ended December 31.  Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other loan categories and periodically may result in reallocation within the provision categories.

2013	Beginning Balance		Charge-Offs			Recoveries		Provision		Ending Balance
Commercial and Agricultural
Commercial	$	981,021	$	(120,690	)	$	55,829	$	100,913	$	1,017,073
Agricultural		296,175		(34,502	)		6,200		26,013		293,886
Real Estate
Commercial Construction		1,890,200		(2,071,162	)		253,459		1,709,682		1,782,179
Residential Construction		138,092		-			-		-		138,092
Commercial		5,162,839		(2,872,408	)		297,984		1,790,861		4,379,276
Residential		3,405,947		(706,242	)		64,583		513,981		3,278,269
Farmland		290,526		(20,977	)		21,762		20,183		311,494
Consumer and Other
Consumer		227,774		(397,822	)		93,520		319,781		243,253
Other		344,347		(3,913	)		18,444		3,586		362,464
	$	12,736,921	$	(6,227,716	)	$	811,781	$	4,485,000	$	11,805,986
2012
Commercial and Agricultural
Commercial	$	1,070,560	$	(653,389	)	$	139,802	$	424,048	$	981,021
Agricultural		297,168		(3,028	)		-		2,035		296,175
Real Estate
Commercial Construction		3,122,594		(4,106,124	)		209,352		2,664,378		1,890,200
Residential Construction		138,092		-			-		-		138,092
Commercial		6,448,064		(4,325,642	)		232,880		2,807,537		5,162,839
Residential		3,695,357		(960,620	)		47,690		623,520		3,405,947
Farmland		364,663		(224,725	)		4,716		145,872		290,526
Consumer and Other
Consumer		205,154		(169,249	)		81,956		109,913		227,774
Other		307,942		(11,398	)		40,339		7,464		344,347
	$	15,649,594	$	(10,454,175	)	$	756,735	$	6,784,767	$	12,736,921

- 27-

(5) Allowance for Loan Losses (Continued)

2011	Beginning Balance		Charge-Offs			Recoveries		Provision			Ending Balance
Commercial and Agricultural
Commercial	$	4,414,817	$	(841,887	)	$	127,490	$	(2,629,860	)	$	1,070,560
Agricultural		698,637		(455,165	)		454,453		(400,757	)		297,168
Real Estate
Commercial Construction		4,126,043		(6,957,181	)		557,168		5,396,564			3,122,594
Residential Construction		519,766		(481	)		-		(381,193	)		138,092
Commercial		8,029,525		(12,492,097	)		527,996		10,382,640			6,448,064
Residential		5,941,696		(1,704,887	)		149,173		(690,625	)		3,695,357
Farmland		944,323		(60,447	)		411		(519,624	)		364,663
Consumer and Other
Consumer		3,074,220		(222,878	)		145,279		(2,791,467	)		205,154
Other		531,050		(115,650	)		8,220		(115,678	)		307,942
	$	28,280,077	$	(22,850,673	)	$	1,970,190	$	8,250,000		$	15,649,594

During 2012, the Company changed its loss history period used in calculating the ALLL from a one-year average to a rolling eight-quarter average.  Although at December 31, 2012 the loss history period used was based on the annual loss rate from calendar year 2011 and the first three quarters of 2012, whereas the loss history period used at December 31, 2013 was based on the loss rate from the eight quarters ended September 30, 2013.

During the third quarter, management implemented a change to its methodology for calculating the allowance for loan losses.  This change was intended to better reflect the current position of the loan portfolio.  Prior to the third quarter, the allowance for loan loss calculation incorporated a qualitative factor related to improvements in credit administration.  These improvements, which began in 2008, included organizational changes to credit administration, specifically related to managing past due loans, grading of loans, recognition of losses and underwriting of new loans.  Primary among the organizational changes was the appointment of experienced lending officers to oversee the lending function, as well as the appointment of a chief credit officer.  Management feels these organizational changes are now fully implemented, as evidenced by a lower charge-off rate, and therefore, the qualitative factor is no longer relevant.  The removal of this qualitative factor did not result in a significant adjustment to the recorded allowance for loan loss balance.

The Company determines its individual reserves during its quarterly review of substandard loans.  This process involves reviewing all loans with a risk grade of 6 or greater and an outstanding balance of $250,000 or more, regardless of the loans impairment classification.  Effective March 31, 2013, management increased the dollar threshold of this review process from $50,000 to $250,000.  The threshold change resulted in loans totaling $4.1 million at December 31, 2013 being removed from the individual impairment review process and being placed in the collective review process.  These loans are now subject to general reserves.

- 28-

(5) Allowance for Loan Losses (Continued)

Since not all loans in the substandard category are considered impaired, this quarterly review process may result in the identification of specific reserves on nonimpaired loans.  Management considers those loans graded substandard, but not classified as impaired, to be higher risk loans and, therefore, makes specific allocations to the allowance for those loans if warranted.  The total of such loans is $6.7 million and $10.8 million as of December 31, 2013 and 2012, respectively.  Specific allowance allocations were made for these loans totaling $261 thousand and $899 thousand as of December 31, 2013 and 2012, respectively.  Since these loans are not considered impaired, both the loan balance and related specific allocation are included in the “Collectively Evaluated for Impairment” column of the following tables.

At December 31, 2013, impaired loans totaling $2.82 million were below the $250 thousand review threshold and were not individually reviewed for impairment.  Those loans were subject to the bank’s general loan loss reserve methodology and are included in the “Collectively Evaluated for Impairment” column of the following tables.  Likewise, at December 31, 2012 and 2011, impaired loans totaling $1.03 million and $995 thousand, respectively, were below the $50 thousand review threshold and were subject to the bank’s general loan loss reserve methodology and are included in the “Collectively Evaluated for Impairment” column of the following tables.

	Ending Allowance Balance						Ending Loan Balance
2013	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
Commercial and Agricultural
Commercial	$	433,714	$	583,359	$	1,017,073	$	1,542,058	$	46,565,390	$	48,107,448
Agricultural		-		293,886		293,886		-		10,665,938		10,665,938
Real Estate
Commercial Construction		830,546		951,633		1,782,179		7,971,298		44,767,485		52,738,783
Residential Construction		-		138,092		138,092		-		6,549,260		6,549,260
Commercial		423,685		3,955,591		4,379,276		24,757,942		317,025,596		341,783,538
Residential		526,005		2,752,264		3,278,269		6,545,490		199,712,437		206,257,927
Farmland		85,500		225,994		311,494		1,617,206		45,417,220		47,034,426
Consumer and Other
Consumer		-		243,253		243,253		-		25,675,560		25,675,560
Other		-		362,464		362,464		9,146		12,396,436		12,405,582
Total End of Year Balance	$	2,299,450	$	9,506,536	$	11,805,986	$	42,443,140	$	708,775,322	$	751,218,462

- 29-

(5) Allowance for Loan Losses (Continued)

	Ending Allowance Balance						Ending Loan Balance
2012	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
Commercial and Agricultural
Commercial	$	462,555	$	518,466	$	981,021	$	2,512,133	$	53,172,359	$	55,684,492
Agricultural		-		296,175		296,175		-		6,210,953		6,210,953
Real Estate
Commercial Construction		1,732,534		157,666		1,890,200		13,892,135		39,915,921		53,808,056
Residential Construction		-		138,092		138,092		-		5,852,238		5,852,238
Commercial		1,236,526		3,926,313		5,162,839		28,205,405		306,180,772		334,386,177
Residential		840,492		2,565,455		3,405,947		8,022,249		195,822,273		203,844,522
Farmland		-		290,526		290,526		2,393,775		46,663,086		49,056,861
Consumer and Other
Consumer		-		227,774		227,774		28,007		29,749,769		29,777,776
Other		-		344,347		344,347		17,491		8,411,445		8,428,936
Total End of Year Balance	$	4,272,107	$	8,464,814	$	12,736,921	$	55,071,195	$	691,978,816	$	747,050,011

	Ending Allowance Balance						Ending Loan Balance
2011	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
Commercial and Agricultural
Commercial	$	308,211	$	762,349	$	1,070,560	$	2,237,878	$	46,748,224	$	48,986,102
Agricultural		-		297,168		297,168		-		8,421,884		8,421,884
Real Estate
Commercial Construction		2,693,571		429,023		3,122,594		24,212,519		34,333,301		58,545,820
Residential Construction		-		138,092		138,092		-		3,530,502		3,530,502
Commercial		2,060,815		4,387,249		6,448,064		35,715,026		279,565,722		315,280,748
Residential		674,998		3,020,359		3,695,357		5,614,744		188,023,073		193,637,817
Farmland		11,878		352,785		364,663		486,683		47,738,723		48,225,406
Consumer and Other
Consumer		1,632		203,522		205,154		9,596		30,439,707		30,449,303
Other		-		307,942		307,942		-		9,243,739		9,243,739
Total End of Year Balance	$	5,751,105	$	9,898,489	$	15,649,594	$	68,276,446	$	648,044,875	$	716,321,321

- 30-

(6) Premises and Equipment

Premises and equipment are comprised of the following as of December 31:

	2013			2012
Land	$	7,790,167		$	7,780,167
Building		23,832,454			23,758,761
Furniture, Fixtures and Equipment		13,846,579			12,923,699
Leasehold Improvements		970,346			948,260
Construction in Progress		236,591			-
		46,676,137			45,410,887
Accumulated Depreciation		(21,799,668	)		(20,494,781	)
	$	24,876,469		$	24,916,106

Depreciation charged to operations totaled $1,527,392 in 2013, $1,676,820 in 2012 and $1,790,041 in 2011.

Certain Company facilities and equipment are leased under various operating leases.  Rental expense approximated $490,000 for 2013, $447,000 for 2012 and $376,000 for 2011.

Future minimum rental payments as of December 31, 2013 are as follows:

Year Ending December 31	Amount
2014	$	53,458
2015		42,000
2016		42,000
2017		38,500
	$	175,958

(7) Other Real Estate Owned

The aggregate carrying amount of Other Real Estate Owned (OREO) at December 31, 2013, 2012 and 2011 was $15,502,462, $15,940,693 and $20,445,805, respectively.  All of the Company’s other real estate owned represents properties acquired through foreclosure or deed in lieu of foreclosure.  The following table details the change in OREO during 2013, 2012 and 2011 as of December 31:

	2013			2012			2011
Balance, Beginning of Year	$	15,940,693		$	20,445,085		$	20,207,806
Additions		10,251,006			9,729,174			12,555,622
Sales of OREO		(7,804,080	)		(9,711,890	)		(9,804,669	)
Loss on Sale		(1,563,739	)		(1,818,967	)		(1,102,613	)
Provision for Losses		(1,321,418	)		(2,702,709	)		(1,411,061	)
Balance, End of Year	$	15,502,462		$	15,940,693		$	20,445,085

- 31-

(8) Intangible Assets

The following is an analysis of the core deposit intangible activity for the years ended December 31:

	Core Deposit Intangible		Accumulated Amortization			Net Core Deposit Intangible
Core Deposit Intangible
Balance, December 31, 2011	$	1,056,693	$	(797,435	)	$	259,258
Amortization Expense		-		(35,748	)		(35,748	)
Balance, December 31, 2012		1,056,693		(833,183	)		223,510
Amortization Expense		-		(35,749	)		(35,749	)
Balance, December 31, 2013	$	1,056,693	$	(868,932	)	$	187,761

Amortization expense related to the core deposit intangible was $35,749, $35,748 and $35,749 for the years ended December 31, 2013, 2012 and 2011.  Amortizations expense will continue at an annual rate of approximately $35,749 through the first quarter of 2019, at which point the core deposit will be fully amortized.

(9) Income Taxes

The components of income tax (benefit) expense for the years ended December 31 are as follows:

	2013		2012			2011
Current Federal (Benefit) Expense	$	156,642	$	(6,114	)	$	311,174
Deferred Federal (Benefit) Expense		2,178,222		1,204,439			867,006
Federal Income Tax (Benefit) Expense		2,334,864		1,198,325			1,178,180
Current State Income Tax (Benefit) Expense		-		2,526			(74,297	)
	$	2,334,864	$	1,200,851		$	1,103,883

The federal income tax (benefit) expense of $2,334,864 in 2013, $1,198,325 in 2012 and $1,178,180 in 2011 is different than the income taxes computed by applying the federal statutory rates to income before income taxes.  The reasons for the differences are as follows:

	2013			2012			2011
Statutory Federal Income Taxes	$	2,367,729		$	1,306,331		$	1,228,538
Tax-Exempt Interest		(110,752	)		(94,891	)		(126,468	)
Interest Expense Disallowance		6,445			4,908			8,751
Premiums on Officers’ Life Insurance		(111,749	)		(59,603	)		(52,431	)
Meal and Entertainment Disallowance		26,549			25,567			20,693
Other		156,642			16,013			99,097
Actual Federal Income Taxes	$	2,334,864		$	1,198,325		$	1,178,180

- 32-

(9) Income Taxes (Continued)

Deferred taxes in the accompanying consolidated balance sheets as of December 31 include the following:

	2013			2012
Deferred Tax Assets
Allowance for Loan Losses	$	4,014,035		$	4,330,553
Other Real Estate		1,404,812			1,668,653
Deferred Compensation		303,380			342,547
Investments		340,000			-
Goodwill		301,238			345,762
Net Operating Loss Carryforward		730,484			2,310,708
Other		343,919			529,706
		7,437,868			9,527,929
Deferred Tax Liabilities
Premises and Equipment		(1,322,377	)		(1,232,905	)
Other		(2,874	)		(4,185	)
		(1,325,251	)		(1,237,090	)
Deferred Tax Assets (Liabilities) on Unrealized Securities Gains (Losses)		4,550,362			77,177
Net Deferred Tax Assets	$	10,662,979		$	8,368,016

The deferred tax assets are included in Other Assets in the consolidated balance sheets.  As discussed in Note 1, certain positions taken in the Company’s tax returns may be subject to challenge by the taxing authorities.  An analysis of activity related to unrecognized taxes as of December 31 follows.

	2013			2012			2011
Balance, Beginning	$	38,676		$	33,368		$	78,121
Positions Taken During the Current Year		7,247			11,794			14,275
Reductions Resulting from Lapse of Statutes of Limitation		(3,596	)		(6,486	)		(59,028	)
Balance, Ending	$	42,327		$	38,676		$	33,368

The net increase of $3,651 and $5,308 is included in income tax expense for the years ended December 31, 2013 and 2012, respectively.

The Company has cumulative federal net operating loss carryforwards of $2,148,335 at December 31, 2013 that expire beginning in 2022.

- 33-

(10) Deposits

The aggregate amount of overdrawn deposit accounts reclassified as loan balances totaled $400,552 and $389,331 as of December 31, 2013 and 2012, respectively.

Components of interest-bearing deposits as of December 31 are as follows:

	2013		2012
Interest-Bearing Demand	$	357,290,975	$	314,030,843
Savings		54,094,617		48,777,743
Time, $100,000 and Over		220,672,794		211,244,750
Other Time		240,210,393		281,665,013
	$	872,268,779	$	855,718,349

At December 31, 2013 and 2012, the Company had brokered deposits of $26,579,934 and $28,229,608, respectively.  Of the brokered deposits at December 31, 2013 and 2012, $26,579,934 and $28,229,608 represented Certificate of Deposits Account Registry Service (CDARS) reciprocal deposits in which customers placed core deposits into the CDARS program for FDIC insurance coverage and the Company received reciprocal brokered deposits in a like amount.  Thus, brokered deposits less the reciprocal deposits totaled $0 at December 31, 2013 and 2012.  The aggregate amount of short-term jumbo certificates of deposit, each with a minimum denomination of $100,000, was approximately $143,388,694 and $161,530,500 as of December 31, 2013 and 2012, respectively.

As of December 31, 2013, the scheduled maturities of certificates of deposit are as follows:

Year	Amount
2014	$	322,971,106
2015		69,000,752
2016		37,944,799
2017		12,974,997
2018 and Thereafter		17,991,533
	$	460,883,187

(11) Other Borrowed Money

Other borrowed money at December 31 is summarized as follows:

	2013		2012
Federal Home Loan Bank Advances	$	40,000,000	$	35,000,000

Advances from the Federal Home Loan Bank (FHLB) have maturities ranging from 2017 to 2020 and interest rates ranging from 0.49 percent to 4.75 percent.  As collateral on the outstanding FHLB advances, the Company has provided a blanket lien on its portfolio of qualifying residential first mortgage loans and commercial loans.  At December 31, 2013, the book value of those loans pledged approximated $90,000,000.  At December 31, 2013, the Company had remaining credit availability from the FHLB of approximately $126,490,000.  The Company may be required to pledge additional qualifying collateral in order to utilize the full amount of the remaining credit line.

- 34-

(11) Other Borrowed Money (Continued)

Other borrowed money of $9,000,000 matures in 2017, with the remainder of $31,000,000 maturing in 2018 and thereafter.  At December 31, 2013, $30,000,000 of FHLB advances are subject to fixed rates of interest, while the remaining $10,000,000 are subject to floating interest rates which will convert to fixed rates of interests after two years.

The Company also has available federal funds lines of credit with various financial institutions totaling $43,000,000, of which there were none outstanding at December 31, 2013.

The Company has the ability to borrow funds from the Federal Reserve Bank (FRB) of Atlanta utilizing the discount window.  The discount window is an instrument of monetary policy that allows eligible institutions to borrow money from the FRB on a short-term basis to meet temporary liquidity shortages caused by internal or external disruptions.  At December 31, 2013, the Company had borrowing capacity available under this arrangement, with no outstanding balances.  The Company would be required to pledge certain available-for-sale investment securities as collateral under this agreement.

In addition, at December 31, 2013, the Company had an available repurchase agreement line of credit with a third party totaling $50,000,000.  Use of this credit facility is subject to the underwriting and risk management policies of the third party in effect at the time of the request.  Such policies may take into consideration current market conditions, the current financial condition of the Company and the ability of the Company to provide adequate securities as collateral for the transaction, among other factors.

(12) Subordinated Debentures (Trust Preferred Securities)

Total

3-Month

Added

Interest

5-Year

Description

Date

Amount

Libor Rate

Points

Rate

Maturity

Call Option

(In Thousands)

Colony Bankcorp Statutory Trust III

6/17/2004

$

4,640

0.24385

2.68

2.92385

6/14/2034

6/17/2009

Colony Bankcorp Capital Trust I

4/13/2006

5,155

0.24660

1.50

1.74660

4/13/2036

4/13/2011

Colony Bankcorp Capital Trust II

3/12/2007

9,279

0.24685

1.65

1.89685

3/12/2037

3/12/2012

Colony Bankcorp Capital Trust III

9/14/2007

5,155

0.23585

1.40

1.63585

9/14/2037

9/14/2012

The Trust Preferred Securities are recorded as subordinated debentures on the consolidated balance sheets, but subject to certain limitations, qualify as Tier 1 Capital for regulatory capital purposes.  The proceeds from these offerings were used to fund certain acquisitions, pay off holding Company debt and inject capital into the bank subsidiary.

On February 13, 2012, the Company announced the suspension of the quarterly interest payments on the Trust Preferred Securities.  Under the terms of the trust documents, the Company may defer payments of interest for up to 20 consecutive quarterly periods without default or penalty.  The regularly scheduled interest payments will continue to be accrued for payment in the future and reported as an expense in the current period.  At December 31, 2013, accrued but unpaid interest expense totaled $1,069,769.

- 35-

(13) Preferred Stock

On January 9, 2009 the Company received $28.0 million of equity capital by issuing to the United States Department of the Treasury (Treasury) 28,000 shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the Preferred Stock) and a warrant (the Warrant) to purchase up to 500,000 shares of the Company’s common stock. The Preferred stock qualifies as Tier 1 capital and is nonvoting, other than class voting rights on certain matters that could adversely affect the Preferred Stock.  The Preferred Stock may be redeemed by the Company at the liquidation preference of $1,000 per share, plus any accrued and unpaid dividends.  The Warrant may be exercised on or before January 9, 2019 at an exercise price of $8.40 per share.  No voting rights may be exercised with respect to the shares of the Warrant until the Warrant has been exercised.

On January 29, 2013, the Company’s 28,000 shares of Preferred Stock was sold by the Treasury to the public through an auction.  On June 5, 2013, the Company’s Warrant for 500,000 shares of common stock was also sold by the Treasury to the public through an auction.  Neither the sale of the Preferred Stock nor the sale of the Warrant to new investors resulted in any accounting entries and neither transaction had an impact on the Company’s capital position.

The Preferred Stock requires a cumulative cash dividend be paid quarterly at a rate of 5 percent per annum for the first five years and at 9 percent per annum thereafter.  On February 13, 2012, the Company announced the suspension of dividends on Preferred Stock.  Unpaid dividends on the Preferred Stock must be declared and set aside for the benefit of the holders of the Preferred Stock before any dividend may be declared on common stock.  At December 31, 2013 there were accumulated dividends in arrears of $3.12 million, approximately $111 per share, including accrued interest.  Beginning January 9, 2014, cumulated dividends on the Preferred Shares will continue to accrue at a rate of 9 percent per annum.

(14) Restricted Stock - Unearned Compensation

In April 2004, the stockholders of Colony Bankcorp, Inc. adopted a restricted stock grant plan which awards certain executive officers common shares of the Company.  The maximum number of shares which may be subject to restricted stock awards (split-adjusted) is 143,500.  To date, 53,256 shares have been issued under this plan and 17,798 shares have been forfeited; thus, the remaining shares which may be issued are 108,042 at December 31, 2013.  During 2013, there were no shares of restricted stock issued or forfeited. The shares are recorded at fair market value (on the date granted) as a separate component of stockholders’ equity.  The cost of the shares, when issued, is amortized against earnings using the straight-line method over the restriction period, typically three years.

(15) Employee Benefit Plan

The Company offers a defined contribution 401(k) Profit Sharing Plan (the Plan) which covers substantially all employees who meet certain age and service requirements.  The Plan allows employees to make voluntary pre-tax salary deferrals to the Plan.  The Company, at its discretion, may elect to make an annual contribution to the Plan equal to a percentage of each participating employee’s salary.  Such discretionary contributions must be approved by the Company’s board of directors.  Employees are fully vested in the Company contributions after six years of service.  The Company made no discretionary contributions in 2013, 2012 or 2011.

- 36-

(16) Commitments and Contingencies

Credit-Related Financial Instruments.  The Company is a party to credit-related financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit, standby letters of credit and commercial letters of credit.  Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

The Company’s exposure to credit loss is represented by the contractual amount of these commitments.  The Company follows the same credit policies in making commitments as it does for on-balance sheet instruments.

At December 31, 2013 and 2012, the following financial instruments were outstanding whose contract amounts represent credit risk:

	Contract Amount
	2013		2012
Commitments to Extend Credit	$	65,688,000	$	64,147,000
Standby Letters of Credit		1,411,000		1,141,000

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.  The commitments for equity lines of credit may expire without being drawn upon.  Therefore, the total commitment amounts do not necessarily represent future cash requirements.  The amount of collateral obtained, if it is deemed necessary by the Company, is based on management’s credit evaluation of the customer.

Unfunded commitments under commercial lines of credit, revolving credit lines and overdraft protection agreements are commitments for possible future extensions of credit to existing customers.  These lines of credit are uncollateralized and usually do not contain a specified maturity date and may not be drawn upon to the total extent to which the Company is committed.

Standby and performance letters of credit are conditional lending commitments issued by the Company to guarantee the performance of a customer to a third party.  Those letters of credit are primarily issued to support public and private borrowing arrangements.  Essentially all letters of credit issued have expiration dates within one year.  The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

Legal Contingencies.  In the ordinary course of business, there are various legal proceedings pending against Colony and its subsidiary.  The aggregate liabilities, if any, arising from such proceedings would not, in the opinion of management, have a material adverse effect on Colony’s consolidated financial position.

- 37-

(17) Deferred Compensation Plan

Colony Bank, the wholly-owned subsidiary, has deferred compensation plans covering certain former directors and certain officers choosing to participate through individual deferred compensation contracts.  In accordance with terms of the contracts, the Bank is committed to pay the participant’s deferred compensation over a specified number of years, beginning at age 65.  In the event of a participant’s death before age 65, payments are made to the participant’s named beneficiary over a specified number of years, beginning on the first day of the month following the death of the participant.

Liabilities accrued under the plans totaled $892,294 and $1,007,490 as of December 31, 2013 and 2012, respectively.  Benefit payments under the contracts were $188,240 in 2013 and $203,904 in 2012.  Provisions charged to operations totaled $75,777 in 2013, $82,250 in 2012 and $98,901 in 2011.

Fee income recognized with deferred compensation plans totaled $164,073 in 2013, $175,302 in 2012 and $154,210 in 2011.

(18) Supplemental Cash Flow Information

Cash payments for the following were made during the years ended December 31:

	2013		2012		2011
Interest Expense	$	7,111,361	$	10,942,113	$	17,204,476
Income Taxes	$	-	$	-	$	390,152

Noncash financing and investing activities for the years ended December 31 are as follows:

	2013		2012		2011
Acquisitions of Real Estate Through Loan Foreclosures	$	10,251,006	$	9,729,174	$	12,555,622
Unrealized (Gain) Loss on Investment Securities	$	13,523,049	$	3,120,540	$	(3,802,320	)

(19) Related Party Transactions

The following table reflects the activity and aggregate balance of direct and indirect loans to directors, executive officers or principal holders of equity securities of the Company. All such loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than a normal risk of collectibility.  A summary of activity of related party loans is shown below:

	2013			2012
Balance, Beginning	$	4,776,492		$	5,504,230
New Loans		7,610,259			8,075,835
Repayments		(8,322,163	)		(10,510,517	)
Transactions Due to Changes in Directors		-			1,706,944
Balance, Ending	$	4,064,588		$	4,776,492

- 38-

(20) Fair Value of Financial Instruments and Fair Value Measurements

Generally accepted accounting standards in the U.S. require disclosure of fair value information about financial instruments, whether or not recognized on the face of the balance sheet, for which it is practicable to estimate that value.  The assumptions used in the estimation of the fair value of Colony Bankcorp, Inc. and Subsidiary’s financial instruments are detailed hereafter.  Where quoted prices are not available, fair values are based on estimates using discounted cash flows and other valuation techniques.  The use of discounted cash flows can be significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.  The following disclosures should not be considered a surrogate of the liquidation value of the Company, but rather a good-faith estimate of the increase or decrease in value of financial instruments held by the Company since purchase, origination or issuance.

Cash and Short-Term Investments - For cash, due from banks, bank-owned deposits and federal funds sold, the carrying amount is a reasonable estimate of fair value and is classified level 1.

Investment Securities - Fair values for investment securities are based on quoted market prices where available.  If quoted market prices are not available, estimated fair values are based on quoted market prices of comparable instruments.  If a comparable is not available, the investment securities are classified as level 3.

Federal Home Loan Bank Stock - The fair value of Federal Home Loan Bank stock approximates carrying value.

Loans - The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings.  For variable rate loans, the carrying amount is a reasonable estimate of fair value.

Bank-Owned Life Insurance - The carrying value of bank-owned life insurance policies approximates fair value.

Deposit Liabilities - The fair value of demand deposits, savings accounts and certain money market deposits is the amount payable on demand at the reporting date and is classified as level 1.  The fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities and is classified as level 2.

Subordinated Debentures - Fair value approximates carrying value due to the variable interest rates of the subordinated debentures.

Other Borrowed Money - The fair value of other borrowed money is calculated by discounting contractual cash flows using an estimated interest rate based on current rates available to the Company for debt of similar remaining maturities and collateral terms. Other borrowed money is classified as level 2 due to their expected maturities.

- 39-

(20) Fair Value of Financial Instruments and Fair Value Measurements (Continued)

The carrying amount and estimated fair values of the Company’s financial instruments as of December 31 are as follows:

	Carrying		Estimated		Level
2013	Amount		Fair Value			1		2		3
	(in Thousands)
Assets
Cash and Short-Term Investments	$	68,147	$	68,147	$	68,147	$	-	$	-
Investment Securities Available for Sale		263,258		263,258		-		262,317		941
Investment Securities Held to Maturity		37		37		-		37		-
Federal Home Loan Bank Stock		3,164		3,164		3,164		-		-
Loans, Net		739,052		741,112		-		729,436		11,676
Bank-Owned Life Insurance		10,165		10,165		10,165		-		-
Liabilities
Deposits		987,529		989,101		526,646		462,455		-
Subordinated Debentures		24,229		24,229		24,229		-		-
Other Borrowed Money		40,000		42,074		-		42,074		-
2012
Assets
Cash and Short-Term Investments	$	71,041	$	71,041	$	71,041	$	-	$	-
Investment Securities Available for Sale		268,300		268,300		-		267,162		1,138
Investment Securities Held to Maturity		41		42		-		42		-
Federal Home Loan Bank Stock		3,364		3,364		3,364		-		-
Loans, Net		734,079		735,115		-		713,109		22,006
Liabilities
Deposits		979,685		982,215		486,775		495,440		-
Subordinated Debentures		24,229		24,229		24,229		-		-
Other Borrowed Money		35,000		38,424		-		38,424		-

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument.  Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on many judgments.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.  Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment.  In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

- 40-

(20) Fair Value of Financial Instruments and Fair Value Measurements (Continued)

Fair Value Measurements

Generally accepted accounting principles related to Fair Value Measurements define fair value, establish a framework for measuring fair value, establish a three-level valuation hierarchy for disclosure of fair value measurement and enhance disclosure requirements for fair value measurements.  The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.  The three levels are defined as follows:

· Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

· Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

· Level 3 inputs to the valuation methodology are unobservable and represent the Company’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring and nonrecurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy:

Assets

Securities -Where quoted prices are available in an active market, securities are classified within level 1 of the valuation hierarchy.  Level 1 inputs include securities that have quoted prices in active markets for identical assets. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow.  Examples of such instruments, which would generally be classified within level 2 of the valuation hierarchy, include certain collateralized mortgage and debt obligations and certain high-yield debt securities.  In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within level 3 of the valuation hierarchy.  When measuring fair value, the valuation techniques available under the market approach, income approach and/or cost approach are used.  The Company’s evaluations are based on market data and the Company employs combinations of these approaches for its valuation methods depending on the asset class.

- 41-

(20) Fair Value of Financial Instruments and Fair Value Measurements (Continued)

Fair Value Measurements

Impaired Loans -Impaired loans are those loans which the Company has measured impairment generally based on the fair value of the loan’s collateral.  Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds.  These assets are included as level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

Other Real Estate - Other real estate owned assets are adjusted to fair value less estimated selling costs upon transfer of the loans to other real estate owned.  Typically, an external, third-party appraisal is performed on the collateral upon transfer into the other real estate owned account to determine the asset’s fair value.  Subsequent adjustments to the collateral’s value may be based upon either updated third-party appraisals or management’s knowledge of the collateral and the current real estate market conditions.   Appraised amounts used in determining the asset’s fair value, whether internally or externally prepared, are discounted 10 percent to account for selling and marketing costs.  Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are typically significant and result in a level 3 classification of the inputs for determining fair value.  Because of the high degree of judgment required in estimating the fair value of other real estate owned assets and because of the relationship between fair value and general economic conditions, we consider the fair value of other real estate owned assets to be highly sensitive to changes in market conditions.

- 42-

(20) Fair Value of Financial Instruments and Fair Value Measurements (Continued)

Fair Value Measurements (Continued)

Assets (Continued)

Assets and Liabilities Measured at Fair Value on a Recurring and Nonrecurring Basis -The following table presents the recorded amount of the Company’s assets measured at fair value on a recurring and nonrecurring basis as of December 31, 2013 and 2012, aggregated by the level in the fair value hierarchy within which those measurements fall.  The table below includes only impaired loans with a specific reserve and only other real estate properties with a valuation allowance at December 31, 2013.  Those impaired loans and other real estate properties are shown net of the related specific reserves and valuation allowances.

			Fair Value Measurements at Reporting Date Using
2013	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring
Securities Available for Sale
U.S. Government Agencies Mortgage-Backed	$	259,348,058	$	-	$	259,348,058	$	-
State, County and Municipal		3,909,832		-		2,968,567		941,265
	$	263,257,890	$	-	$	262,316,625		941,265
Nonrecurring
Impaired Loans	$	11,675,691	$	-	$	-	$	11,675,691
Other Real Estate	$	7,019,799	$	-	$	-	$	7,019,799
2012
Recurring
Securities Available for Sale
U.S. Government Agencies Mortgage-Backed	$	263,059,074	$	-	$	263,059,074	$	-
State, County and Municipal		4,004,010		-		2,998,199		1,005,811
Corporate Obligations		1,104,900		-		1,104,900		-
Asset-Backed Securities		132,427		-		-		132,427
	$	268,300,411	$	-	$	267,162,173	$	1,138,238
Nonrecurring
Impaired Loans	$	22,006,150	$	-	$	-	$	22,006,150
Other Real Estate	$	8,817,204	$	-	$	-	$	8,817,204

Liabilities

The Company did not identify any liabilities that are required to be presented at fair value.

- 43-

(20) Fair Value of Financial Instruments and Fair Value Measurements (Continued)

Fair Value Measurements (Continued)

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

The following tables present quantitative information about the significant unobservable inputs used in the fair value measurements for assets in level 3 of the fair value hierarchy measured on a nonrecurring basis at December 31, 2013 and 2012.  These tables are comprised primarily of collateral dependent impaired loans and other real estate owned:

	December 31, 2013		Valuation Techniques	Unobservable Inputs	Range (Weighted Avg)
Impaired Loans
Commercial	$	1,019,084	Sales Comparison	Adjustment for Differences Between the Comparable Sales		0.00%-15.00% (7.50%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		10.00%-50.00% (30.00%)
Real Estate
Commercial Construction		2,641,041	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(16.00)%-28.00% (6.00%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-10.00% (5.00%)
			Income Approach	Capitalization Rate		8.50%
Residential Real Estate		1,323,296	Sales Comparison	Adjustment for Differences Between the Comparable Sales		0.00%-46.00% (23.00%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-25.00% (12.50%)
Commercial Real Estate		5,450,788	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(27.20%)-216.80% (94.80%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		25.00%-90.00% (57.50%)
			Income Approach	Capitalization Rate		11.00%
Farmland		1,241,482	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(55.00%)-388.00% (166.50)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		10.00%-35.00% (22.50%)
Other Real Estate Owned		7,019,799	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(10.00%)-319.10% (154.55%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.36%-87.81% (29.99%)
			Income Approach	Discount Rate		10.00%

- 44-

(20) Fair Value of Financial Instruments and Fair Value Measurements (Continued)

Fair Value Measurements (Continued)

	December 31, 2012		Valuation Techniques	Unobservable Inputs	Range (Weighted Avg)
Impaired Loans
Commercial	$	1,030,877	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(45.00%)-80.00% (17.50%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-80.00% (40.00%)
			Income Approach	Capitalization Rate		8.50%
Real Estate
Commercial Construction		5,885,060	Sales Comparison	Adjustment for Differences Between the Comparable Sales		0.00%-45.00% (22.50%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-40.00% (20.00%)
			Income Approach	Discount Rate		7.94%
Residential Real Estate		3,581,317	Sales Comparison	Adjustment for Differences Between the Comparable Sales		0.00%-24.00% (12.00%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-40.00% (20.00%)
			Income Approach	Capitalization Rate		8.90%
Commercial Real Estate		11,508,896	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(7.40%)-73.70% (32.95%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-40.00% (20.00%)
			Income Approach	Capitalization Rate		9.50%
				Discount Rate		5.13%
Other Real Estate Owned		8,817,204	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(35.00%)-129.50% (47.25%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		3.10%-61.32% (32.33%)
			Income Approach	Discount Rate		3.00%

- 45-

(20) Fair Value of Financial Instruments and Fair Value Measurements (Continued)

Fair Value Measurements (Continued)

Fair Value Measurements Using Significant Unobservable Inputs (Level 3) (Continued)

The following table presents a reconciliation and statement of income classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (level 3) for the years ended December 31, 2013, 2012 and 2011.

	Available for Sale Securities
	2013			2012			2011
Balance, Beginning	$	1,138,238		$	1,122,427		$	1,016,997
Transfers into Level 3		-			788,933			-
Transfers out of Level 3		(41,908	)		-			-
Securities Purchased During the Year		-			-			-
Securities Called During the Year		-			(1,000,000	)		-
Loss on OTTI Impairment Included in Noninterest Income		(366,623	)		(59,568	)		(53,058	)
Unrealized Gains Included in Other Comprehensive Income		211,558			78,201			158,488
Balance, Ending	$	941,265		$	1,138,238		$	1,122,427

The Company’s policy is to recognize transfers in and transfers out of levels 1, 2 and 3 as of the end of a reporting period.  During the year ended December 31, 2013, the Company had transfers out of level 3 and into level 2.  The transfers out of level 3 were the result of increased market activity for these types of securities, as well as more current credit ratings on these securities.  During the year ended December 31, 2012, the Company transferred certain state, county and municipal securities out of level 2 and into     level 3.  The transfers into level 3 were the result of decreased market activity for these types of securities, as well as a lack of current credit ratings on these securities.  There were no gains or losses recognized as a result of the transfers.  There were no transfers of securities between level 1 and level 2 for the years ended December 31, 2013, 2012 or 2011.

The following table presents quantitative information about recurring level 3 fair value measurements as of December 31, 2013.

	Fair Value			Valuation Techniques	Unobservable Inputs		Range (Weighted Avg)
State, County and Municipal		$	941,265	Discounted Cash Flow		Discount Rate or Yield		N/A*

*  The Company relies on a third-party pricing service to value its municipal securities.  The details of the unobservable inputs and other adjustments used by the third-party pricing service were not readily available to the Company.

- 46-

(21) Regulatory Capital Matters

The amount of dividends payable to the parent company from the subsidiary bank is limited by various banking regulatory agencies.  Upon approval by regulatory authorities, the Bank may pay cash dividends to the parent company in excess of regulatory limitations.  Additionally, the Company suspended the payment of dividends to its stockholders in the third quarter of 2009.  At December 31, 2013, the Company is subject to certain regulatory restrictions that preclude the declaration of or payment of any dividends to its common stockholders, without prior approval from the Federal Reserve Bank.

The Company is subject to various regulatory capital requirements administered by the federal banking agencies.  Failure to meet minimum capital requirements can initiate certain mandatory and, possibly, additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices.  The Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of total and Tier I capital to risk-weighted assets, and of Tier I capital to average assets.  The amounts and ratios as defined in regulations are presented hereafter.  Management believes, as of December 31, 2013, the Company meets all capital adequacy requirements to which it is subject under the regulatory framework for prompt corrective action.  In the opinion of management, there are no conditions or events since prior notification of capital adequacy from the regulators that have changed the institution’s category.

- 47-

(21) Regulatory Capital Matters (Continued)

The following table summarizes regulatory capital information as of December 31, 2013 and 2012 on a consolidated basis and for its wholly-owned subsidiary, as defined.

											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2013	(In Thousands)
Total Capital to Risk-Weighted Assets
Consolidated	$	129,569		17.06	%	$	60,791		8.00	%		N/A		N/A
Colony Bank		131,024		17.29			60,638		8.00		$	75,797		10.00	%
Tier I Capital to Risk-Weighted Assets
Consolidated		120,048		15.81			30,396		4.00			N/A		N/A
Colony Bank		121,521		16.03			30,319		4.00			45,478		6.00
Tier I Capital to Average Assets
Consolidated		120,048		10.57			45,419		4.00			N/A		N/A
Colony Bank		121,521		10.72			45,333		4.00			56,666		5.00
As of December 31, 2012
Total Capital to Risk-Weighted Assets
Consolidated	$	122,630		16.47	%	$	59,548		8.00	%		N/A		N/A
Colony Bank		123,463		16.61			59,474		8.00		$	74,342		10.00	%
Tier I Capital to Risk-Weighted Assets
Consolidated		113,283		15.22			29,774		4.00			N/A		N/A
Colony Bank		114,128		15.35			29,737		4.00			44,605		6.00
Tier I Capital to Average Assets
Consolidated		113,283		10.22			44,343		4.00			N/A		N/A
Colony Bank		114,128		10.31			44,282		4.00			55,352		5.00

Effective October 1, 2013, the Memorandum of Understanding (MOU) the Bank had been operating under was lifted; however, the Bank remains subject to a Board Resolution (BR) which requires, among other things, that the Bank maintain minimum capital ratios at specified levels higher than those otherwise required by applicable regulations as follows: Tier 1 capital to total average assets of 8 percent and total risk-based capital to total risk-weighted assets of 10 percent during the life of the BR.  The BR also requires that, prior to declaring or paying any cash dividend to the Company, the Bank must obtain written consent of its regulators.  Additional requirements of the BR are discussed in Part 1, Item 1 of the Company’s December 31, 2013 Form 10-K filed with the Securities Exchange Commission on March 14, 2014.  Failure to comply with the terms of the BR could have an adverse impact on the Company’s consolidated financial condition.

- 48-

(22) Financial Information of Colony Bankcorp, Inc. (Parent Only)

The parent company’s balance sheets as of December 31, 2013 and 2012 and the related statements of operations and comprehensive income (loss) and cash flows for each of the years in the three-year period then ended are as follows:

COLONY BANKCORP, INC. (PARENT ONLY)

BALANCE SHEETS

DECEMBER 31

ASSETS

	2013			2012
Cash	$	1,422,289		$	494,432
Premises and Equipment, Net		1,272,965			1,284,968
Investment in Subsidiary, at Equity		114,559,866			119,646,209
Other		1,221,285			821,145
Total Assets	$	118,476,405		$	122,246,754
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Dividends Payable	$	3,119,146		$	1,610,385
Other		1,174,020			648,202
		4,293,166			2,258,587
Subordinated Debt		24,229,000			24,229,000
Stockholders’ Equity
Preferred Stock, Stated Value $1,000; Authorized 10,000,000 Shares, Issued 28,000 Shares		28,000,000			27,827,053
Common Stock, Par Value $1; Authorized 20,000,000 Shares, Issued 8,439,258 Shares as of December 31, 2013 and 2012		8,439,258			8,439,258
Paid-In Capital		29,145,094			29,145,094
Retained Earnings		33,444,913			30,497,576
Accumulated Other Comprehensive Loss, Net of Tax		(9,075,026	)		(149,814	)
		89,954,239			95,759,167
Total Liabilities and Stockholders’ Equity	$	118,476,405		$	122,246,754

- 49-

(22) Financial Information of Colony Bankcorp, Inc. (Parent Only) (Continued)

COLONY BANKCORP, INC. (PARENT ONLY)

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31

	2013		2012			2011
Income
Dividends from Subsidiary	$	1,515,549	$	17,372		$	15,265
Management Fees		581,334		590,422			505,414
Other		96,953		101,397			98,180
		2,193,836		709,191			618,859
Expenses
Interest		516,641		554,004			508,081
Amortization		2,250		2,250			2,250
Salaries and Employee Benefits		748,149		735,919			734,104
Other		543,139		558,151			656,914
		1,810,179		1,850,324			1,901,349
Income (Loss) Before Taxes and Equity in Undistributed Earnings of Subsidiary		383,657		(1,141,133	)		(1,282,490	)
Income Tax Benefits		406,518		365,691			425,605
Income (Loss) Before Equity in Undistributed Earnings of Subsidiary		790,175		(775,442	)		(856,885	)
Equity in Undistributed Earnings of Subsidiary		3,838,870		3,416,740			3,390,480
Net Income		4,629,045		2,641,298			2,533,595
Preferred Stock Dividends		1,508,761		1,435,385			1,400,000
Net Income Available to Common Stockholders	$	3,120,284	$	1,205,913		$	1,133,595

- 50-

(22) Financial Information of Colony Bankcorp, Inc. (Parent Only) (Continued)

COLONY BANKCORP, INC. (PARENT ONLY)

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31

	2013			2012			2011
Net Income	$	4,629,045		$	2,641,298		$	2,533,595
Other Comprehensive Income (Loss), Net of Tax
Gains (Losses) on Securities Arising During the Year, Net of Tax Effect of $(4,597,836), $(1,060,984) and $1,292,789, Respectively		(9,165,323	)		(186,830	)		4,439,108
Impairment Loss on Securities, Net of Tax Effect of $(124,652), $(20,253) and $(18,040), Respectively		241,971			39,315			35,018
Realized Gains (Losses) on Sale of AFS Securities, Net of Tax Effect of $959, $984,991 and $1,012,064, Respectively		(1,860	)		(1,912,041	)		(1,964,595	)
Change in Net Unrealized Gains (Losses) on Securities Available for Sale, Net of Reclassification Adjustment and Tax Effects		(8,925,212	)		(2,059,556	)		2,509,531
Comprehensive Income (Loss)	$	(4,296,167	)	$	581,742		$	5,043,126

- 51-

(22) Financial Information of Colony Bankcorp, Inc. (Parent Only) (Continued)

COLONY BANKCORP, INC. (PARENT ONLY)

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31

	2013			2012			2011
Cash Flows from Operating Activities
Net Income	$	4,629,045		$	2,641,298		$	2,533,595
Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities
Depreciation and Amortization		80,711			93,427			112,651
Equity in Undistributed Earnings of Subsidiary		(3,838,870	)		(3,416,740	)		(3,390,480	)
Other		125,679			124,543			24,977
		996,565			(557,472	)		(719,257	)
Cash Flows from Investing Activities
Purchases of Premises and Equipment		(68,708	)		-			(1,900	)
Cash Flows from Financing Activities
Dividends Paid on Preferred Stock		-			-			(1,400,000	)
Increase (Decrease) in Cash		927,857			(557,472	)		(2,121,157	)
Cash, Beginning		494,432			1,051,904			3,173,061
Cash, Ending	$	1,422,289		$	494,432		$	1,051,904

- 52-

(23) Earnings Per Share

Basic earnings per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during each period.  Diluted earnings per share reflects the potential dilution of restricted stock and common stock warrants.  Net income available to common stockholders represents net income (loss) after preferred stock dividends.  The following table presents earnings per share for the years ended December 31, 2013, 2012 and 2011:

	2013		2012		2011
Numerator
Net Income (Loss) Available to Common Stockholders	$	3,120,284	$	1,205,913	$	1,133,595
Denominator
Weighted Average Number of Common Shares Outstanding for Basic Earnings Per Common Share		8,439,258		8,439,258		8,439,258
Dilutive Effect of Potential Common Stock
Restricted Stock		-		-		-
Stock Warrants		-		-		-
Weighted-Average Number of Shares Outstanding for Diluted Earnings Per Common Share		8,439,258		8,439,258		8,439,258
Earnings (Loss) Per Share - Basic	$	0.37	$	0.14	$	0.13
Earnings (Loss) Per Share - Diluted	$	0.37	$	0.14	$	0.13

For the years ended December 31, 2013, 2012 and 2011, respectively, the Company has excluded 500,000, 500,000 and 501,855 common stock equivalents with strike prices that would cause them to be antidilutive.

- 53-

EX-21

EXHIBIT NO. 21

SUBSIDIARIES OF THE COMPANY

Name of Subsidiary	State of Incorporation
Colony Bank	Georgia
Colony Bankcorp Statutory Trust III	Delaware
Colony Bankcorp Capital Trust I	Delaware
Colony Bankcorp Capital Trust II	Delaware
Colony Bankcorp Capital Trust III	Delaware

EX-31.1

EXHIBIT NO. 31.1

CERTIFICATIONS PURSUANT TO RULE 13a-14(a)/15d-14(a) UNDER THE

SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Edward P. Loomis, Jr., certify that:

1. I have reviewed this Form 10-K of Colony Bankcorp, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report.

4. The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

March 14, 2014	/s/ Edward P. Loomis, Jr.
	EDWARD P. LOOMIS, JR.
	President and Chief Executive Officer

EX-31.2

EXHIBIT NO. 31.2

CERTIFICATIONS PURSUANT TO RULE 13a-14(a)/15d-14(a) UNDER THE

SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Terry L. Hester, certify that:

1. I have reviewed this Form 10-K of Colony Bankcorp, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report.

4. The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

March 14, 2014	/s/ Terry L. Hester
	TERRY L. HESTER
	Executive Vice President and
	Chief Financial Officer

EX-32

EXHIBIT NO. 32

CERTIFICATION OF CEO AND CFO PURSUANT TO

18 U.S.C. §1350

AS ADOPTED PURSUANT TO

§906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Form 10-K of Colony Bankcorp, Inc. (the Company) for the year ended    December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Edward P. Loomis, Jr., President and Chief Executive Officer of the Company, and Terry L. Hester, Chief Financial and Accounting Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, to the best of our knowledge and belief that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Edward P. Loomis, Jr.

Edward P. Loomis, Jr.

President and Chief Executive Officer

March 14, 2014

/s/ Terry L. Hester

Terry L. Hester

Chief Financial and Accounting Officer

March 14, 2014

This certification accompanies this Report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

EX-99.1

EXHIBIT NO. 99.1

COLONY BANKCORP, INC.

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 30.15 OF 31 CFR PART 30

The undersigned, Edward P. Loomis, Jr. and Terry L. Hester, Chief Executive Officer and Chief Financial Officer of Colony Bankcorp, Inc. (the “Company”) respectively, do hereby certify, based on our knowledge, that:

i. The Compensation Committee of the Company has discussed, reviewed, and evaluated with senior risk officers at least every six months during any part of the most recently completed fiscal year that was a TARP period, senior executive officer (“SEO”) compensation plans and employee compensation plans and the risks these plans pose to the Company;

ii. The Compensation Committee of the Company has identified and limited during any part of the most recently completed fiscal year that was a TARP period any features of the SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of the Company and has identified any features of the employee compensation plans that pose risks to the Company and has limited those features to ensure that the Company is not unnecessarily exposed to risks;

iii. The Compensation Committee has reviewed, at least every six months during any part of the most recently completed fiscal year that was a TARP period, the terms of each employee compensation plan and identified any features of the plan that could encourage the manipulation of reported earnings of the Company to enhance the compensation of an employee, and has limited any such features;

iv. The Compensation Committee of the Company will certify to the reviews of the SEO compensation plans and employee compensation plans required under (i) and (iii) above;

v. The Compensation Committee of the Company will provide a narrative description of how it limited during any part of the most recently completed fiscal year that was a TARP period the features in:

a. SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of the Company;

b. Employee compensation plans that unnecessarily expose the Company to risks; and

c. Employee compensation plans that could encourage the manipulation of reported earnings of the Company to enhance the compensation of an employee;

vi. The Company has required that bonus payments to SEOs or any of the next twenty most highly compensated employees, as defined in the regulations and guidance established under Section 111 of EESA (bonus payments), be subject to a recovery or “clawback” provision during any part of the most recently completed fiscal year that was a TARP period if the bonus payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria;

vii. The Company has prohibited any golden parachute payment, as defined in the regulations and guidance established under Section 111 of EESA, to a SEO or any of the next five most highly compensated employees during any part of the most recently completed fiscal year that was a TARP period;

viii. The Company has limited bonus payments to its applicable employees in accordance with Section 111 of EESA and the regulations and guidance established thereunder during any part of the most recently completed fiscal year that was a TARP period;

ix. The Company and its employees have complied with the excessive or luxury expenditures policy, as defined in the regulations and guidance established under Section 111 of EESA, during any part of the most recently completed fiscal year that was a TARP period; and any expenses that, pursuant to the policy, required approval of the board of directors, a committee of the board of directors, an SEO, or an executive officer with a similar level of responsibility were properly approved;

x. The Company will permit a non-binding shareholder resolution in compliance with any applicable federal securities rules and regulations on the disclosures provided under the federal securities laws related to SEO compensation paid or accrued during any part of the most recently completed fiscal year that was a TARP period;

xi. The Company will disclose the amount, nature, and justification for the offering, during any part of the most recently completed fiscal year that was a TARP period, of any perquisites, as defined in the regulations and guidance established under Section 111 of EESA, whose total value exceeds $25,000 for any employee who is subject to the bonus payment limitations identified in paragraph (viii);

xii. The Company will disclose whether the Company, the board of directors of the Company, or the Compensation Committee of the Company has engaged during any part of the most recently completed fiscal year that was a TARP period a compensation consultant; and the services the compensation consultant or any affiliate of the compensation consultant provided during this period;

xiii. The Company has prohibited the payment of any gross-ups, as defined in the regulations and guidance established under Section 111 of EESA, to the SEOs and the next twenty most highly compensated employees during any part of the most recently completed fiscal year that was a TARP period;

xiv. The Company has substantially complied with all other requirements related to employee compensation that are provided in the agreement between the Company and Treasury, including any amendments;

xv. The Company has submitted to Treasury a complete and accurate list of the SEOs and the twenty next most highly compensated employees for the current fiscal year, with the non-SEOs ranked in descending order of level of annual compensation, and with the name, title, and employer of each SEO and most highly compensated employee identified; and

xvi. I understand that a knowing and willful false or fraudulent statement made in connection with this certification may be punished by fine, imprisonment, or both. (See, for example, 18 USC 1001).

	COLONY BANKCORP, INC.
March 14, 2014	/s/ Edward P. Loomis, Jr.
	EDWARD P. LOOMIS, JR.
	President and Chief Executive Officer
	/s/ Terry L. Hester
March 14, 2014	TERRY L. HESTER
	Chief Financial Officer

XML

Other Real Estate Owned (Tables)

12 Months Ended

Dec. 31, 2013

Other Real Estate Owned [Abstract]

Change in other real estate owned

The following table details the change in OREO during 2013, 2012 and 2011 as of December 31:

	2013			2012			2011
Balance, Beginning of Year	$	15,940,693		$	20,445,085		$	20,207,806
Additions		10,251,006			9,729,174			12,555,622
Sales of OREO		(7,804,080	)		(9,711,890	)		(9,804,669	)
Loss on Sale		(1,563,739	)		(1,818,967	)		(1,102,613	)
Provision for Losses		(1,321,418	)		(2,702,709	)		(1,411,061	)
Balance, End of Year	$	15,502,462		$	15,940,693		$	20,445,085

XML

Investment Securities (Details) (USD $)	12 Months Ended
	Dec. 31, 2013 Security	Dec. 31, 2012	Dec. 31, 2011
Securities Available for Sale
Amortized Cost	$ 277,007,930	$ 268,527,401
Gross Unrealized Gains	133,806	973,490
Gross Unrealized Losses	(13,883,846)	(1,200,480)
Fair Value	263,257,890	268,300,411
Securities Held to Maturity
Fair Value	37,309	41,909
Available-for-sale Amortized Cost [Abstract]
Due in One Year or Less	272,219
Due After One Year Through Five Years	1,755,607
Due After Five Years Through Ten Years	1,298,122
Due After Ten Years	652,909
Total	3,978,857
Mortgage-Backed Securities	273,029,073
Amortized Cost	277,007,930
Available-for-sale Fair Value [Abstract]
Due in One Year or Less	274,166
Due After One Year Through Five Years	1,768,121
Due After Five Years Through Ten Years	1,265,127
Due After Ten Years	602,418
Total	3,909,832
Mortgage-Backed Securities	259,348,058
Fair Value	263,257,890
Held-to-maturity Amortized Cost [Abstract]
Due in One Year or Less	0
Due After One Year Through Five Years	37,062
Due After Five Years Through Ten Years	0
Due After Ten Years	0
Total	37,062
Mortgage-Backed Securities	0
Amortized Cost	37,062
Held-to-maturity Fair Value [Abstract]
Due in One Year or Less	0
Due After One Year Through Five Years	37,309
Due After Five Years Through Ten Years	0
Due After Ten Years	0
Total	37,309
Mortgage-Backed Securities	0
Fair Value	37,309
Proceeds from sale of investment securities available for sale	72,672,795	227,690,806	342,672,937
Available-for-sale securities, gross realized gains	442,124	3,084,666	2,978,193
Available-for-sale securities, gross realized losses	805,928	247,202	54,592
Fair value of securities on nonaccrual status	0	132,427
Investment securities pledged	112,912,815	117,450,817
Continuous unrealized loss position [Abstract]
Less Than 12 Months, Fair value	191,710,870	143,534,503
Less Than 12 Months, Gross Unrealized Losses	(9,524,651)	(966,284)
12 Months or Greater, Fair value	63,193,601	132,427
12 Months or Greater, Gross Unrealized Losses	(4,359,195)	(234,196)
Total, Fair Value	254,904,471	143,666,930
Total, Unrealized Losses	(13,883,846)	(1,200,480)
Debt securities with unrealized losses, depreciated (in hundredths)	5.17%
Number of asset-backed security owned	1
Number of issuance of trust preferred security	1
Book value of trust preferred security	0
Other than temporary impairment written off	366,623	59,568	53,058
US Government Agencies Mortgage-Backed [Member]
Securities Available for Sale
Amortized Cost	273,029,073	263,186,852
Gross Unrealized Gains	118,843	833,920
Gross Unrealized Losses	(13,799,858)	(961,698)
Fair Value	259,348,058	263,059,074
Continuous unrealized loss position [Abstract]
Less Than 12 Months, Fair value	190,063,827	142,103,991
Less Than 12 Months, Gross Unrealized Losses	(9,440,663)	(961,698)
12 Months or Greater, Fair value	63,193,601	0
12 Months or Greater, Gross Unrealized Losses	(4,359,195)	0
Total, Fair Value	253,257,428	142,103,991
Total, Unrealized Losses	(13,799,858)	(961,698)
State, County and Municipal [Member]
Securities Available for Sale
Amortized Cost	3,978,857	3,973,926
Gross Unrealized Gains	14,963	34,670
Gross Unrealized Losses	(83,988)	(4,586)
Fair Value	3,909,832	4,004,010
Securities Held to Maturity
Amortized Cost	37,062	41,467
Gross Unrealized Gains	247	442
Gross Unrealized Losses	0	0
Fair Value	37,309	41,909
Continuous unrealized loss position [Abstract]
Less Than 12 Months, Fair value	1,647,043	1,430,512
Less Than 12 Months, Gross Unrealized Losses	(83,988)	(4,586)
12 Months or Greater, Fair value	0	0
12 Months or Greater, Gross Unrealized Losses	0	0
Total, Fair Value	1,647,043	1,430,512
Total, Unrealized Losses	(83,988)	(4,586)
Corporate Obligations [Member]
Securities Available for Sale
Amortized Cost		1,000,000
Gross Unrealized Gains		104,900
Gross Unrealized Losses		0
Fair Value		1,104,900
Asset-Backed Securities [Member]
Securities Available for Sale
Amortized Cost		366,623
Gross Unrealized Gains		0
Gross Unrealized Losses		(234,196)
Fair Value		132,427
Continuous unrealized loss position [Abstract]
Less Than 12 Months, Fair value		0
Less Than 12 Months, Gross Unrealized Losses		0
12 Months or Greater, Fair value		132,427
12 Months or Greater, Gross Unrealized Losses		(234,196)
Total, Fair Value		132,427
Total, Unrealized Losses		$ (234,196)

XML

Fair Value of Financial Instruments and Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2013

Fair Value of Financial Instruments and Fair Value Measurements [Abstract]

Carrying amount and estimated fair values of financial instruments

The carrying amount and estimated fair values of the Company’s financial instruments as of December 31 are as follows:

	Carrying		Estimated		Level
2013	Amount		Fair Value			1		2		3
	(in Thousands)
Assets
Cash and Short-Term Investments	$	68,147	$	68,147	$	68,147	$	-	$	-
Investment Securities Available for Sale		263,258		263,258		-		262,317		941
Investment Securities Held to Maturity		37		37		-		37		-
Federal Home Loan Bank Stock		3,164		3,164		3,164		-		-
Loans, Net		739,052		741,112		-		729,436		11,676
Bank-Owned Life Insurance		10,165		10,165		10,165		-		-
Liabilities
Deposits		987,529		989,101		526,646		462,455		-
Subordinated Debentures		24,229		24,229		24,229		-		-
Other Borrowed Money		40,000		42,074		-		42,074		-
2012
Assets
Cash and Short-Term Investments	$	71,041	$	71,041	$	71,041	$	-	$	-
Investment Securities Available for Sale		268,300		268,300		-		267,162		1,138
Investment Securities Held to Maturity		41		42		-		42		-
Federal Home Loan Bank Stock		3,364		3,364		3,364		-		-
Loans, Net		734,079		735,115		-		713,109		22,006
Liabilities
Deposits		979,685		982,215		486,775		495,440		-
Subordinated Debentures		24,229		24,229		24,229		-		-
Other Borrowed Money		35,000		38,424		-		38,424		-

Assets and liabilities measured at fair value on a recurring and non recurring basis

Assets and Liabilities Measured at Fair Value on a Recurring and Nonrecurring Basis -The following table presents the recorded amount of the Company’s assets measured at fair value on a recurring and nonrecurring basis as of December 31, 2013 and 2012, aggregated by the level in the fair value hierarchy within which those measurements fall.  The table below includes only impaired loans with a specific reserve and only other real estate properties with a valuation allowance at December 31, 2013.  Those impaired loans and other real estate properties are shown net of the related specific reserves and valuation allowances.

			Fair Value Measurements at Reporting Date Using
2013	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring
Securities Available for Sale
U.S. Government Agencies Mortgage-Backed	$	259,348,058	$	-	$	259,348,058	$	-
State, County and Municipal		3,909,832		-		2,968,567		941,265
	$	263,257,890	$	-	$	262,316,625		941,265
Nonrecurring
Impaired Loans	$	11,675,691	$	-	$	-	$	11,675,691
Other Real Estate	$	7,019,799	$	-	$	-	$	7,019,799
2012
Recurring
Securities Available for Sale
U.S. Government Agencies Mortgage-Backed	$	263,059,074	$	-	$	263,059,074	$	-
State, County and Municipal		4,004,010		-		2,998,199		1,005,811
Corporate Obligations		1,104,900		-		1,104,900		-
Asset-Backed Securities		132,427		-		-		132,427
	$	268,300,411	$	-	$	267,162,173	$	1,138,238
Nonrecurring
Impaired Loans	$	22,006,150	$	-	$	-	$	22,006,150
Other Real Estate	$	8,817,204	$	-	$	-	$	8,817,204

Liabilities

The Company did not identify any liabilities that are required to be presented at fair value.

Quantitative information for financial instruments measured at fair value

The following tables present quantitative information about the significant unobservable inputs used in the fair value measurements for assets in level 3 of the fair value hierarchy measured on a nonrecurring basis at December 31, 2013 and 2012.  These tables are comprised primarily of collateral dependent impaired loans and other real estate owned:

	December 31, 2013		Valuation Techniques	Unobservable Inputs	Range (Weighted Avg)
Impaired Loans
Commercial	$	1,019,084	Sales Comparison	Adjustment for Differences Between the Comparable Sales		0.00%-15.00% (7.50%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		10.00%-50.00% (30.00%)
Real Estate
Commercial Construction		2,641,041	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(16.00)%-28.00% (6.00%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-10.00% (5.00%)
			Income Approach	Capitalization Rate		8.50%
Residential Real Estate		1,323,296	Sales Comparison	Adjustment for Differences Between the Comparable Sales		0.00%-46.00% (23.00%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-25.00% (12.50%)
Commercial Real Estate		5,450,788	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(27.20%)-216.80% (94.80%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		25.00%-90.00% (57.50%)
			Income Approach	Capitalization Rate		11.00%
Farmland		1,241,482	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(55.00%)-388.00% (166.50)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		10.00%-35.00% (22.50%)
Other Real Estate Owned		7,019,799	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(10.00%)-319.10% (154.55%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.36%-87.81% (29.99%)
			Income Approach	Discount Rate		10.00%

	December 31, 2012		Valuation Techniques	Unobservable Inputs	Range (Weighted Avg)
Impaired Loans
Commercial	$	1,030,877	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(45.00%)-80.00% (17.50%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-80.00% (40.00%)
			Income Approach	Capitalization Rate		8.50%
Real Estate
Commercial Construction		5,885,060	Sales Comparison	Adjustment for Differences Between the Comparable Sales		0.00%-45.00% (22.50%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-40.00% (20.00%)
			Income Approach	Discount Rate		7.94%
Residential Real Estate		3,581,317	Sales Comparison	Adjustment for Differences Between the Comparable Sales		0.00%-24.00% (12.00%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-40.00% (20.00%)
			Income Approach	Capitalization Rate		8.90%
Commercial Real Estate		11,508,896	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(7.40%)-73.70% (32.95%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-40.00% (20.00%)
			Income Approach	Capitalization Rate		9.50%
				Discount Rate		5.13%
Other Real Estate Owned		8,817,204	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(35.00%)-129.50% (47.25%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		3.10%-61.32% (32.33%)
			Income Approach	Discount Rate		3.00%

Fair value measurement using significant unobservable inputs (Level 3)

The following table presents a reconciliation and statement of income classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (level 3) for the years ended December 31, 2013, 2012 and 2011.

	Available for Sale Securities
	2013			2012			2011
Balance, Beginning	$	1,138,238		$	1,122,427		$	1,016,997
Transfers into Level 3		-			788,933			-
Transfers out of Level 3		(41,908	)		-			-
Securities Purchased During the Year		-			-			-
Securities Called During the Year		-			(1,000,000	)		-
Loss on OTTI Impairment Included in Noninterest Income		(366,623	)		(59,568	)		(53,058	)
Unrealized Gains Included in Other Comprehensive Income		211,558			78,201			158,488
Balance, Ending	$	941,265		$	1,138,238		$	1,122,427

The Company’s policy is to recognize transfers in and transfers out of levels 1, 2 and 3 as of the end of a reporting period.  During the year ended December 31, 2013, the Company had transfers out of level 3 and into level 2.  The transfers out of level 3 were the result of increased market activity for these types of securities, as well as more current credit ratings on these securities.  During the year ended December 31, 2012, the Company transferred certain state, county and municipal securities out of level 2 and into     level 3.  The transfers into level 3 were the result of decreased market activity for these types of securities, as well as a lack of current credit ratings on these securities.  There were no gains or losses recognized as a result of the transfers.  There were no transfers of securities between level 1 and level 2 for the years ended December 31, 2013, 2012 or 2011.

The following table presents quantitative information about recurring level 3 fair value measurements as of December 31, 2013.

	Fair Value			Valuation Techniques	Unobservable Inputs		Range (Weighted Avg)
State, County and Municipal		$	941,265	Discounted Cash Flow		Discount Rate or Yield		N/A*

*  The Company relies on a third-party pricing service to value its municipal securities.  The details of the unobservable inputs and other adjustments used by the third-party pricing service were not readily available to the Company.

XML

Preferred Stock (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2013
Class of Stock [Line Items]
Aggregate consideration	$ 28.0
Warrants to purchase shares (in shares)	500,000
Liquidation preference (in dollars per share)	$ 1,000
Exercise price (in dollars per share)	$ 8.40
Preferred stock dividend rate for first five years (in hundredths)	5.00%
Preferred stock dividend rate thereafter five years (in hundredths)	9.00%
Accumulated dividends in arrears	$ 3.12
Accumulated dividends in arrears, redemption price (in dollars per share)	$ 111
Cumulative Perpetual Preferred Stock, Series A [Member]
Class of Stock [Line Items]
Shares issued for cash during period (in shares)	28,000
Shares sold by treasury to public through an auction (in shares)	28,000
Warrant [Member]
Class of Stock [Line Items]
Shares sold by treasury to public through an auction (in shares)	500,000

XML

Loans (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 751,218,462	$ 747,050,011	$ 716,321,321
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	48,107,448	55,684,492
Agricultural [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	10,665,938	6,210,953	8,421,884
Commercial Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	52,738,783	53,808,056	58,545,820
Residential Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	6,549,260	5,852,238	3,530,502
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	341,783,538	334,386,177	315,280,748
Residential [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	206,257,927	203,844,522
Farmland [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	47,034,426	49,056,861	48,225,406
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	25,675,560	29,777,776
Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 12,405,582	$ 8,428,936

XML

Fair Value of Financial Instruments and Fair Value Measurements, Recurring and Nonrecurring Basis (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Available-for-Sale Securities [Member]
Fair Value Measured Using Significant Unobservable Inputs (Level 3) [Roll Forward]
Balance, Beginning	$ 1,138,238	$ 1,122,427	$ 1,016,997
Purchases, Sales, Issuances and Settlements
Transfers into Level 3	0	788,933	0
Transfers out of Level 3	(41,908)	0	0
Securities Purchased During the Year	0	0	0
Securities Called During the Year	0	(1,000,000)	0
Loss on OTTI Impairment Included in Noninterest Income	(366,623)	(59,568)	(53,058)
Unrealized Gains Included in Other Comprehensive Income	211,558	78,201	158,488
Balance, Ending	941,265	1,138,238	1,122,427
Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Government Agencies Mortgage-Backed	259,348,058	263,059,074
State, County & Municipal	3,909,832	4,004,010
Corporate Obligations		1,104,900
Asset-Backed Securities		132,427
Securities Available for Sale	263,257,890	268,300,411
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Government Agencies Mortgage-Backed	0	0
State, County & Municipal	0	0
Corporate Obligations		0
Asset-Backed Securities		0
Securities Available for Sale	0	0
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Government Agencies Mortgage-Backed	259,348,058	263,059,074
State, County & Municipal	2,968,567	2,998,199
Corporate Obligations		1,104,900
Asset-Backed Securities		0
Securities Available for Sale	262,316,625	267,162,173
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
U.S. Government Agencies Mortgage-Backed	0	0
State, County & Municipal	941,265	1,005,811
Corporate Obligations		0
Asset-Backed Securities		132,427
Securities Available for Sale	941,265	1,138,238
Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Loans	11,675,691	22,006,150
Other Real Estate	7,019,799	8,817,204
Nonrecurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Loans	0	0
Other Real Estate	0	0
Nonrecurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Loans	0	0
Other Real Estate	0	0
Nonrecurring [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Loans	11,675,691	22,006,150
Other Real Estate	$ 7,019,799	$ 8,817,204

XML

Supplemental Cash Flow Information (Tables)

12 Months Ended

Dec. 31, 2013

Supplemental Cash Flow Information [Abstract ]

Cash payments

Cash payments for the following were made during the years ended December 31:

	2013		2012		2011
Interest Expense	$	7,111,361	$	10,942,113	$	17,204,476
Income Taxes	$	-	$	-	$	390,152

Noncash financing and investing activities

Noncash financing and investing activities for the years ended December 31 are as follows:

	2013		2012		2011
Acquisitions of Real Estate Through Loan Foreclosures	$	10,251,006	$	9,729,174	$	12,555,622
Unrealized (Gain) Loss on Investment Securities	$	13,523,049	$	3,120,540	$	(3,802,320	)

XML

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2013

Summary of Significant Accounting Policies [Abstract]

Estimated useful lives and methods of depreciation

The estimated useful lives and methods of depreciation are as follows:

Description	Life in Years		Method
Banking Premises		15-40	Straight-Line and Accelerated
Furniture and Equipment		5-10	Straight-Line and Accelerated

XML

Fair Value of Financial Instruments and Fair Value Measurements, Quantitative Information (Details) (USD $)	12 Months Ended
	Dec. 31, 2013		Dec. 31, 2012
Impaired Loans [Member] | Commercial [Member] | Nonrecurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	$ 1,019,084		$ 1,030,877
Impaired Loans [Member] | Sales Comparison [Member] | Commercial [Member] | Nonrecurring [Member] | Minimum [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	0.00%		(45.00%)
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	10.00%		0.00%
Impaired Loans [Member] | Sales Comparison [Member] | Commercial [Member] | Nonrecurring [Member] | Maximum [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	15.00%		80.00%
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	50.00%		80.00%
Impaired Loans [Member] | Sales Comparison [Member] | Commercial [Member] | Nonrecurring [Member] | Weighted Average [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	7.50%		17.50%
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	30.00%		40.00%
Impaired Loans [Member] | Income Approach [Member] | Commercial [Member] | Nonrecurring [Member]
Unobservable Inputs [Abstract]
Capitalization Rate (in hundredths)			8.50%
Real Estate [Member] | Commercial Construction [Member] | Nonrecurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	2,641,041		5,885,060
Real Estate [Member] | Residential Real Estate [Member] | Nonrecurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	1,323,296		3,581,317
Real Estate [Member] | Commercial Real Estate [Member] | Nonrecurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	5,450,788		11,508,896
Real Estate [Member] | Farmland [Member] | Nonrecurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	1,241,482
Real Estate [Member] | Sales Comparison [Member] | Commercial Construction [Member] | Nonrecurring [Member] | Minimum [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	(16.00%)		0.00%
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	0.00%		0.00%
Real Estate [Member] | Sales Comparison [Member] | Commercial Construction [Member] | Nonrecurring [Member] | Maximum [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	28.00%		45.00%
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	10.00%		40.00%
Real Estate [Member] | Sales Comparison [Member] | Commercial Construction [Member] | Nonrecurring [Member] | Weighted Average [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	6.00%		22.50%
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	5.00%		20.00%
Real Estate [Member] | Sales Comparison [Member] | Residential Real Estate [Member] | Nonrecurring [Member] | Minimum [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	0.00%		0.00%
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	0.00%		0.00%
Real Estate [Member] | Sales Comparison [Member] | Residential Real Estate [Member] | Nonrecurring [Member] | Maximum [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	46.00%		24.00%
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	25.00%		40.00%
Real Estate [Member] | Sales Comparison [Member] | Residential Real Estate [Member] | Nonrecurring [Member] | Weighted Average [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	23.00%		12.00%
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	12.50%		20.00%
Real Estate [Member] | Sales Comparison [Member] | Commercial Real Estate [Member] | Nonrecurring [Member] | Minimum [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	(27.20%)		(7.40%)
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	25.00%		0.00%
Real Estate [Member] | Sales Comparison [Member] | Commercial Real Estate [Member] | Nonrecurring [Member] | Maximum [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	216.80%		73.70%
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	90.00%		40.00%
Real Estate [Member] | Sales Comparison [Member] | Commercial Real Estate [Member] | Nonrecurring [Member] | Weighted Average [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	94.80%		32.95%
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	57.50%		20.00%
Real Estate [Member] | Sales Comparison [Member] | Farmland [Member] | Nonrecurring [Member] | Minimum [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	(55.00%)
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	10.00%
Real Estate [Member] | Sales Comparison [Member] | Farmland [Member] | Nonrecurring [Member] | Maximum [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	388.00%
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	35.00%
Real Estate [Member] | Sales Comparison [Member] | Farmland [Member] | Nonrecurring [Member] | Weighted Average [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	166.50%
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	22.50%
Real Estate [Member] | Income Approach [Member] | Commercial Construction [Member] | Nonrecurring [Member]
Unobservable Inputs [Abstract]
Capitalization Rate (in hundredths)	8.50%
Discount Rate (in hundredths)			7.94%
Real Estate [Member] | Income Approach [Member] | Residential Real Estate [Member] | Nonrecurring [Member]
Unobservable Inputs [Abstract]
Capitalization Rate (in hundredths)			8.90%
Real Estate [Member] | Income Approach [Member] | Commercial Real Estate [Member] | Nonrecurring [Member]
Unobservable Inputs [Abstract]
Capitalization Rate (in hundredths)	11.00%		9.50%
Discount Rate (in hundredths)			5.13%
Other Real Estate Owned [Member] | Nonrecurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	7,019,799		8,817,204
Other Real Estate Owned [Member] | Sales Comparison [Member] | Nonrecurring [Member] | Minimum [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	(10.00%)		(35.00%)
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	0.36%		3.10%
Other Real Estate Owned [Member] | Sales Comparison [Member] | Nonrecurring [Member] | Maximum [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	319.10%		129.50%
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	87.81%		61.32%
Other Real Estate Owned [Member] | Sales Comparison [Member] | Nonrecurring [Member] | Weighted Average [Member]
Unobservable Inputs [Abstract]
Adjustment for Differences Between the Comparable Sales (in hundredths)	154.55%		47.25%
Management Adjustments for Age of Appraisals and/or Current Market Conditions (in hundredths)	29.99%		32.33%
Other Real Estate Owned [Member] | Income Approach [Member] | Nonrecurring [Member]
Unobservable Inputs [Abstract]
Discount Rate (in hundredths)	10.00%		3.00%
State, County and Municipal [Member] | Recurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value	$ 941,265
State, County and Municipal [Member] | Discounted Cash Flow Member] | Recurring [Member] | Weighted Average [Member]
Unobservable Inputs [Abstract]
Discount Rate (in hundredths)		[1]

[1] The Company relies on a third-party pricing service to value its municipal securities. The details of the unobservable inputs and other adjustments used by the third-party pricing service were not readily available to the Company.

XML

Commitments and Contingencies (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Contract Amount [Abstract]
Commitments to Extend Credit	$ 65,688,000	$ 64,147,000
Standby Letters of Credit	$ 1,411,000	$ 1,141,000
Expiration period of letter of credit issued	1 year

XML

Loans, Past Due (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment, Aging [Abstract]
Accruing Loans 30 to 89 Days Past Due	$ 9,365,819	$ 14,911,278
Accruing Loans 90 Days or More Past Due	3,991	4,355
Total Accruing Loans Past Due	9,369,810	14,915,633
Nonaccrual Loans	24,114,499	29,850,735
Current Loans	717,734,153	702,283,643
Total Loans	751,218,462	747,050,011	716,321,321
Interest income	968,700	1,634,600	1,639,800
Commercial [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Accruing Loans 30 to 89 Days Past Due	581,281	797,612
Accruing Loans 90 Days or More Past Due	0	0
Total Accruing Loans Past Due	581,281	797,612
Nonaccrual Loans	1,646,418	1,033,371
Current Loans	45,879,749	53,853,509
Total Loans	48,107,448	55,684,492
Agricultural [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Accruing Loans 30 to 89 Days Past Due	81,036	28,228
Accruing Loans 90 Days or More Past Due	0	0
Total Accruing Loans Past Due	81,036	28,228
Nonaccrual Loans	0	39,213
Current Loans	10,584,902	6,143,512
Total Loans	10,665,938	6,210,953	8,421,884
Commercial Construction [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Accruing Loans 30 to 89 Days Past Due	139,826	1,309,618
Accruing Loans 90 Days or More Past Due	0	0
Total Accruing Loans Past Due	139,826	1,309,618
Nonaccrual Loans	8,221,745	14,032,580
Current Loans	44,377,212	38,465,858
Total Loans	52,738,783	53,808,056	58,545,820
Residential Construction [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Accruing Loans 30 to 89 Days Past Due	0	0
Accruing Loans 90 Days or More Past Due	0	0
Total Accruing Loans Past Due	0	0
Nonaccrual Loans	0	0
Current Loans	6,549,260	5,852,238
Total Loans	6,549,260	5,852,238	3,530,502
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Accruing Loans 30 to 89 Days Past Due	2,287,341	3,771,106
Accruing Loans 90 Days or More Past Due	0	0
Total Accruing Loans Past Due	2,287,341	3,771,106
Nonaccrual Loans	7,366,703	6,629,789
Current Loans	332,129,494	323,985,282
Total Loans	341,783,538	334,386,177	315,280,748
Residential [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Accruing Loans 30 to 89 Days Past Due	5,273,586	8,223,174
Accruing Loans 90 Days or More Past Due	0	0
Total Accruing Loans Past Due	5,273,586	8,223,174
Nonaccrual Loans	4,933,420	5,429,971
Current Loans	196,050,921	190,191,377
Total Loans	206,257,927	203,844,522
Farmland [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Accruing Loans 30 to 89 Days Past Due	350,718	140,095
Accruing Loans 90 Days or More Past Due	0	0
Total Accruing Loans Past Due	350,718	140,095
Nonaccrual Loans	1,629,611	2,413,104
Current Loans	45,054,097	46,503,662
Total Loans	47,034,426	49,056,861	48,225,406
Consumer [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Accruing Loans 30 to 89 Days Past Due	453,580	636,888
Accruing Loans 90 Days or More Past Due	3,991	4,355
Total Accruing Loans Past Due	457,571	641,243
Nonaccrual Loans	307,456	255,216
Current Loans	24,910,533	28,881,317
Total Loans	25,675,560	29,777,776
Other [Member]
Financing Receivable, Recorded Investment, Aging [Abstract]
Accruing Loans 30 to 89 Days Past Due	198,451	4,557
Accruing Loans 90 Days or More Past Due	0	0
Total Accruing Loans Past Due	198,451	4,557
Nonaccrual Loans	9,146	17,491
Current Loans	12,197,985	8,406,888
Total Loans	$ 12,405,582	$ 8,428,936

XML

Related Party Transactions (Details) (Loans to directors, executive officers or principal holders [Member], USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Loans to directors, executive officers or principal holders [Member]
Activity of related party loans [Roll Forward]
Balance, Beginning	$ 4,776,492	$ 5,504,230
New Loans	7,610,259	8,075,835
Repayments	(8,322,163)	(10,510,517)
Transactions Due to Changes in Directors	0	1,706,944
Balance, Ending	$ 4,064,588	$ 4,776,492

XML

Financial Information of Colony Bankcorp, Inc (Parent Only) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
ASSETS [Abstract]
Cash	$ 10,531,340	$ 9,063,437
Premises and Equipment, Net	24,876,469	24,916,106
Other	34,326,432	21,489,957
Total Assets	1,148,550,886	1,139,396,781
Liabilities [Abstract]
Other	6,838,167	4,723,723
Subordinated Debt	24,229,000	24,229,000
Stockholders' Equity [Abstract]
Preferred Stock, Stated Value $1,000; Authorized 10,000,000 Shares, Issued 28,000 Shares	28,000,000	27,827,053
Common Stock, Par Value $1; Authorized 20,000,000 Shares, Issued 8,439,258 Shares as of December 31, 2013 and 2012	8,439,258	8,439,258
Paid-In Capital	29,145,094	29,145,094
Retained Earnings	33,444,913	30,497,576
Accumulated Other Comprehensive Loss, Net of Tax	(9,075,026)	(149,814)
Stockholders' Equity	89,954,239	95,759,167
Total Liabilities and Stockholders' Equity	1,148,550,886	1,139,396,781
Preferred Stock, Par Value (in dollars per share)	$ 1,000	$ 1,000
Preferred Stock, Authorized (in shares)	10,000,000	10,000,000
Preferred Stock, Issued (in shares)	28,000	28,000
Common Stock, Par Value (in dollars per share)	$ 1	$ 1
Common Stock, Authorized (in shares)	20,000,000	20,000,000
Common Stock, Issued (in shares)	8,439,258	8,439,258
Expenses [Abstract]
Salaries and Employee Benefits	16,691,972	15,564,893	14,632,693
Income Before Income Taxes	6,963,909	3,842,149	3,637,478
Income Tax Benefits	(2,334,864)	(1,200,851)	(1,103,883)
Net Income	4,629,045	2,641,298	2,533,595
Preferred Stock Dividends	1,508,761	1,435,385	1,400,000
Net Income Available to Common Stockholders	3,120,284	1,205,913	1,133,595
STATEMENTS OF COMPREHENSIVE INCOME (LOSS) [Abstract]
Net Income	4,629,045	2,641,298	2,533,595
Other Comprehensive Income (Loss), Net of Tax
Gains (Losses) on Securities Arising During the Year, Net of Tax Effect of $(4,597,836), $(1,060,984) and $1,292,789, Respectively	(9,165,323)	(186,830)	4,439,108
Impairment Loss on Securities, Net of Tax Effect of $(124,652), $(20,253) and $(18,040), Respectively	241,971	39,315	35,018
Realized Gains (Losses) on Sale of AFS Securities, Net of Tax Effect of $959, $984,991 and $1,012,064, Respectively	(1,860)	(1,912,041)	(1,964,595)
Change in Net Unrealized Gains (Losses) on Securities Available for Sale, Net of Reclassification Adjustment and Tax Effects	(8,925,212)	(2,059,556)	2,509,531
Comprehensive Income (Loss)	(4,296,167)	581,742	5,043,126
Gains (Losses) on Securities Arising During the Year, Tax	(4,597,836)	(1,060,984)	1,292,789
Impairment Loss on Securities, Tax	(124,652)	(20,253)	(18,040)
Realized Gains (Losses) on Sale of AFS Securities, Tax	959	984,991	1,012,064
Cash Flows from Operating Activities [Abstract]
Net Income	4,629,045	2,641,298	2,533,595
Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities [Abstract]
Cash Flow from Operating Activities	18,870,455	22,806,632	15,159,896
Cash Flows from Investing Activities [Abstract]
Purchases of Premises and Equipment	(1,489,579)	(845,338)	(397,825)
Cash Flows from Financing Activities [Abstract]
Net Increase (Decrease) in Cash and Cash Equivalents	(3,059,168)	(34,126,009)	29,222,173
Cash and Cash Equivalents, Beginning	49,245,833	83,371,842	54,149,669
Cash and Cash Equivalents, Ending	46,186,665	49,245,833	83,371,842
Colony Bankcorp, Inc. [Member]
ASSETS [Abstract]
Cash	1,422,289	494,432
Premises and Equipment, Net	1,272,965	1,284,968
Investment in Subsidiary, at Equity	114,559,866	119,646,209
Other	1,221,285	821,145
Total Assets	118,476,405	122,246,754
Liabilities [Abstract]
Dividends Payable	3,119,146	1,610,385
Other	1,174,020	648,202
Liabilities Total	4,293,166	2,258,587
Subordinated Debt	24,229,000	24,229,000
Stockholders' Equity [Abstract]
Preferred Stock, Stated Value $1,000; Authorized 10,000,000 Shares, Issued 28,000 Shares	28,000,000	27,827,053
Common Stock, Par Value $1; Authorized 20,000,000 Shares, Issued 8,439,258 Shares as of December 31, 2013 and 2012	8,439,258	8,439,258
Paid-In Capital	29,145,094	29,145,094
Retained Earnings	33,444,913	30,497,576
Accumulated Other Comprehensive Loss, Net of Tax	(9,075,026)	(149,814)
Stockholders' Equity	89,954,239	95,759,167
Total Liabilities and Stockholders' Equity	118,476,405	122,246,754
Preferred Stock, Par Value (in dollars per share)	$ 1,000	$ 1,000
Preferred Stock, Authorized (in shares)	10,000,000	10,000,000
Preferred Stock, Issued (in shares)	28,000	28,000
Common Stock, Par Value (in dollars per share)	$ 1	$ 1
Common Stock, Authorized (in shares)	20,000,000	20,000,000
Common Stock, Issued (in shares)	8,439,258	8,439,258
Income [Abstract]
Dividends from Subsidiary	1,515,549	17,372	15,265
Management Fees	581,334	590,422	505,414
Other	96,953	101,397	98,180
Income total	2,193,836	709,191	618,859
Expenses [Abstract]
Interest	516,641	554,004	508,081
Amortization	2,250	2,250	2,250
Salaries and Employee Benefits	748,149	735,919	734,104
Other	543,139	558,151	656,914
Expenses total	1,810,179	1,850,324	1,901,349
Income Before Income Taxes	383,657	(1,141,133)	(1,282,490)
Income Tax Benefits	406,518	365,691	425,605
Income (Loss) Before Equity in Undistributed Earnings of Subsidiary	790,175	(775,442)	(856,885)
Equity in Undistributed Earnings of Subsidiary	3,838,870	3,416,740	3,390,480
Net Income	4,629,045	2,641,298	2,533,595
Preferred Stock Dividends	1,508,761	1,435,385	1,400,000
Net Income Available to Common Stockholders	3,120,284	1,205,913	1,133,595
STATEMENTS OF COMPREHENSIVE INCOME (LOSS) [Abstract]
Net Income	4,629,045	2,641,298	2,533,595
Other Comprehensive Income (Loss), Net of Tax
Gains (Losses) on Securities Arising During the Year, Net of Tax Effect of $(4,597,836), $(1,060,984) and $1,292,789, Respectively	(9,165,323)	(186,830)	4,439,108
Impairment Loss on Securities, Net of Tax Effect of $(124,652), $(20,253) and $(18,040), Respectively	241,971	39,315	35,018
Realized Gains (Losses) on Sale of AFS Securities, Net of Tax Effect of $959, $984,991 and $1,012,064, Respectively	(1,860)	(1,912,041)	(1,964,595)
Change in Net Unrealized Gains (Losses) on Securities Available for Sale, Net of Reclassification Adjustment and Tax Effects	(8,925,212)	(2,059,556)	2,509,531
Comprehensive Income (Loss)	(4,296,167)	581,742	5,043,126
Gains (Losses) on Securities Arising During the Year, Tax	(4,597,836)	(1,060,984)	1,292,789
Impairment Loss on Securities, Tax	(124,652)	(20,253)	(18,040)
Realized Gains (Losses) on Sale of AFS Securities, Tax	959	984,991	1,012,064
Cash Flows from Operating Activities [Abstract]
Net Income	4,629,045	2,641,298	2,533,595
Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities [Abstract]
Depreciation and Amortization	80,711	93,427	112,651
Equity in Undistributed Earnings of Subsidiary	(3,838,870)	(3,416,740)	(3,390,480)
Other	125,679	124,543	24,977
Cash Flow from Operating Activities	996,565	(557,472)	(719,257)
Cash Flows from Investing Activities [Abstract]
Purchases of Premises and Equipment	(68,708)	0	(1,900)
Cash Flows from Financing Activities [Abstract]
Dividends Paid on Preferred Stock	0	0	(1,400,000)
Net Increase (Decrease) in Cash and Cash Equivalents	927,857	(557,472)	(2,121,157)
Cash and Cash Equivalents, Beginning	494,432	1,051,904	3,173,061
Cash and Cash Equivalents, Ending	$ 1,422,289	$ 494,432	$ 1,051,904

XML

Fair Value of Financial Instruments and Fair Value Measurements (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Liabilities [Abstract]
Discounted rate to account for selling and marketing costs (in hundredths)	10.00%
Recurring [Member]
Assets [Abstract]
Investment Securities Available for Sale	$ 263,257,890	$ 268,300,411
Recurring [Member] | Carrying Amount [Member]
Assets [Abstract]
Cash and Short-Term Investments	68,147,000	71,041,000
Investment Securities Available for Sale	263,258,000	268,300,000
Investment Securities Held to Maturity	37,000	41,000
Federal Home Loan Bank Stock	3,164,000	3,364,000
Loans, Net	739,052,000	734,079,000
Bank-Owned Life Insurance	10,165,000
Liabilities [Abstract]
Deposits	987,529,000	979,685,000
Subordinated Debentures	24,229,000	24,229,000
Other Borrowed Money	40,000,000	35,000,000
Recurring [Member] | Estimated Fair Value [Member]
Assets [Abstract]
Cash and Short-Term Investments	68,147,000	71,041,000
Investment Securities Available for Sale	263,258,000	268,300,000
Investment Securities Held to Maturity	37,000	42,000
Federal Home Loan Bank Stock	3,164,000	3,364,000
Loans, Net	741,112,000	735,115,000
Bank-Owned Life Insurance	10,165,000
Liabilities [Abstract]
Deposits	989,101,000	982,215,000
Subordinated Debentures	24,229,000	24,229,000
Other Borrowed Money	42,074,000	38,424,000
Level 1 [Member] | Recurring [Member]
Assets [Abstract]
Cash and Short-Term Investments	68,147,000	71,041,000
Investment Securities Available for Sale	0	0
Investment Securities Held to Maturity	0	0
Federal Home Loan Bank Stock	3,164,000	3,364,000
Loans, Net	0	0
Bank-Owned Life Insurance	10,165,000
Liabilities [Abstract]
Deposits	526,646,000	486,775,000
Subordinated Debentures	24,229,000	24,229,000
Other Borrowed Money	0	0
Level 2 [Member] | Recurring [Member]
Assets [Abstract]
Cash and Short-Term Investments	0	0
Investment Securities Available for Sale	262,316,625	267,162,173
Investment Securities Held to Maturity	37,000	42,000
Federal Home Loan Bank Stock	0	0
Loans, Net	729,436,000	713,109,000
Bank-Owned Life Insurance	0
Liabilities [Abstract]
Deposits	462,455,000	495,440,000
Subordinated Debentures	0	0
Other Borrowed Money	42,074,000	38,424,000
Level 3 [Member] | Recurring [Member]
Assets [Abstract]
Cash and Short-Term Investments	0	0
Investment Securities Available for Sale	941,265	1,138,238
Investment Securities Held to Maturity	0	0
Federal Home Loan Bank Stock	0	0
Loans, Net	11,676,000	22,006,000
Bank-Owned Life Insurance	0
Liabilities [Abstract]
Deposits	0	0
Subordinated Debentures	0	0
Other Borrowed Money	$ 0	$ 0

XML

Restricted Stock - Unearned Compensation (Details) (Restricted Stock [Member])	12 Months Ended
	Dec. 31, 2013
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock awards, maximum (in shares)	143,500
Issued shares (in shares)	53,256
Forfeited shares (in shares)	17,798
Remaining shares available for issue (in shares)	108,042
Cost recognition period	3 years

XML

Deferred Compensation Plan

12 Months Ended

Dec. 31, 2013

Deferred Compensation Plan [Abstract]

Deferred Compensation Plan

(17) Deferred Compensation Plan

Colony Bank, the wholly-owned subsidiary, has deferred compensation plans covering certain former directors and certain officers choosing to participate through individual deferred compensation contracts.  In accordance with terms of the contracts, the Bank is committed to pay the participant’s deferred compensation over a specified number of years, beginning at age 65.  In the event of a participant’s death before age 65, payments are made to the participant’s named beneficiary over a specified number of years, beginning on the first day of the month following the death of the participant.

Liabilities accrued under the plans totaled $892,294 and $1,007,490 as of December 31, 2013 and 2012, respectively.  Benefit payments under the contracts were $188,240 in 2013 and $203,904 in 2012.  Provisions charged to operations totaled $75,777 in 2013, $82,250 in 2012 and $98,901 in 2011.

Fee income recognized with deferred compensation plans totaled $164,073 in 2013, $175,302 in 2012 and $154,210 in 2011.

XML

Financial Information of Colony Bankcorp, Inc (Parent Only) (Tables)

12 Months Ended

Dec. 31, 2013

Financial Information of Colony Bankcorp, Inc. (Parent Only) [Abstract]

Balance Sheets

COLONY BANKCORP, INC. (PARENT ONLY)

BALANCE SHEETS

DECEMBER 31

ASSETS

	2013			2012
Cash	$	1,422,289		$	494,432
Premises and Equipment, Net		1,272,965			1,284,968
Investment in Subsidiary, at Equity		114,559,866			119,646,209
Other		1,221,285			821,145
Total Assets	$	118,476,405		$	122,246,754
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Dividends Payable	$	3,119,146		$	1,610,385
Other		1,174,020			648,202
		4,293,166			2,258,587
Subordinated Debt		24,229,000			24,229,000
Stockholders’ Equity
Preferred Stock, Stated Value $1,000; Authorized 10,000,000 Shares, Issued 28,000 Shares		28,000,000			27,827,053
Common Stock, Par Value $1; Authorized 20,000,000 Shares, Issued 8,439,258 Shares as of December 31, 2013 and 2012		8,439,258			8,439,258
Paid-In Capital		29,145,094			29,145,094
Retained Earnings		33,444,913			30,497,576
Accumulated Other Comprehensive Loss, Net of Tax		(9,075,026	)		(149,814	)
		89,954,239			95,759,167
Total Liabilities and Stockholders’ Equity	$	118,476,405		$	122,246,754

Statements of Operations

COLONY BANKCORP, INC. (PARENT ONLY)

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31

	2013		2012			2011
Income
Dividends from Subsidiary	$	1,515,549	$	17,372		$	15,265
Management Fees		581,334		590,422			505,414
Other		96,953		101,397			98,180
		2,193,836		709,191			618,859
Expenses
Interest		516,641		554,004			508,081
Amortization		2,250		2,250			2,250
Salaries and Employee Benefits		748,149		735,919			734,104
Other		543,139		558,151			656,914
		1,810,179		1,850,324			1,901,349
Income (Loss) Before Taxes and Equity in Undistributed Earnings of Subsidiary		383,657		(1,141,133	)		(1,282,490	)
Income Tax Benefits		406,518		365,691			425,605
Income (Loss) Before Equity in Undistributed Earnings of Subsidiary		790,175		(775,442	)		(856,885	)
Equity in Undistributed Earnings of Subsidiary		3,838,870		3,416,740			3,390,480
Net Income		4,629,045		2,641,298			2,533,595
Preferred Stock Dividends		1,508,761		1,435,385			1,400,000
Net Income Available to Common Stockholders	$	3,120,284	$	1,205,913		$	1,133,595

Statements of Comprehensive Income (Loss)

COLONY BANKCORP, INC. (PARENT ONLY)

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31

	2013			2012			2011
Net Income	$	4,629,045		$	2,641,298		$	2,533,595
Other Comprehensive Income (Loss), Net of Tax
Gains (Losses) on Securities Arising During the Year, Net of Tax Effect of $(4,597,836), $(1,060,984) and $1,292,789, Respectively		(9,165,323	)		(186,830	)		4,439,108
Impairment Loss on Securities, Net of Tax Effect of $(124,652), $(20,253) and $(18,040), Respectively		241,971			39,315			35,018
Realized Gains (Losses) on Sale of AFS Securities, Net of Tax Effect of $959, $984,991 and $1,012,064, Respectively		(1,860	)		(1,912,041	)		(1,964,595	)
Change in Net Unrealized Gains (Losses) on Securities Available for Sale, Net of Reclassification Adjustment and Tax Effects		(8,925,212	)		(2,059,556	)		2,509,531
Comprehensive Income (Loss)	$	(4,296,167	)	$	581,742		$	5,043,126

Statements of Cash Flows

COLONY BANKCORP, INC. (PARENT ONLY)

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31

	2013			2012			2011
Cash Flows from Operating Activities
Net Income	$	4,629,045		$	2,641,298		$	2,533,595
Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities
Depreciation and Amortization		80,711			93,427			112,651
Equity in Undistributed Earnings of Subsidiary		(3,838,870	)		(3,416,740	)		(3,390,480	)
Other		125,679			124,543			24,977
		996,565			(557,472	)		(719,257	)
Cash Flows from Investing Activities
Purchases of Premises and Equipment		(68,708	)		-			(1,900	)
Cash Flows from Financing Activities
Dividends Paid on Preferred Stock		-			-			(1,400,000	)
Increase (Decrease) in Cash		927,857			(557,472	)		(2,121,157	)
Cash, Beginning		494,432			1,051,904			3,173,061
Cash, Ending	$	1,422,289		$	494,432		$	1,051,904

XML

Deposits (Tables)

12 Months Ended

Dec. 31, 2013

Deposits [Abstract]

Components of interest-bearing deposits

Components of interest-bearing deposits as of December 31 are as follows:

	2013		2012
Interest-Bearing Demand	$	357,290,975	$	314,030,843
Savings		54,094,617		48,777,743
Time, $100,000 and Over		220,672,794		211,244,750
Other Time		240,210,393		281,665,013
	$	872,268,779	$	855,718,349

Scheduled maturities of certificates of deposits

As of December 31, 2013, the scheduled maturities of certificates of deposit are as follows:

Year	Amount
2014	$	322,971,106
2015		69,000,752
2016		37,944,799
2017		12,974,997
2018 and Thereafter		17,991,533
	$	460,883,187

XML

Supplemental Cash Flow Information (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Cash payments [Abstract]
Interest Expense	$ 7,111,361	$ 10,942,113	$ 17,204,476
Income Taxes	0	0	390,152
Noncash financing and investing activities [Abstract]
Acquisitions of Real Estate Through Loan Foreclosures	10,251,006	9,729,174	12,555,622
Unrealized (Gain) Loss on Investment Securities	$ 13,523,049	$ 3,120,540	$ (3,802,320)

XML

Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2013

Allowance for Loan Losses [Abstract]

Allowance for loan losses

Changes in the allowance for loan losses for the years ended December 31 are as follows:

	2013			2012			2011
Balance, Beginning of Year	$	12,736,921		$	15,649,594		$	28,280,077
Provision for Loan Losses		4,485,000			6,784,767			8,250,000
Loans Charged Off		(6,227,716	)		(10,454,175	)		(22,850,673	)
Recoveries of Loans Previously Charged Off		811,781			756,735			1,970,190
Balance, End of Year	$	11,805,986		$	12,736,921		$	15,649,594

The following tables detail activity in the allowance for loan losses, segregated by class of loan, for the years ended December 31.  Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other loan categories and periodically may result in reallocation within the provision categories.

2013	Beginning Balance		Charge-Offs			Recoveries		Provision		Ending Balance
Commercial and Agricultural
Commercial	$	981,021	$	(120,690	)	$	55,829	$	100,913	$	1,017,073
Agricultural		296,175		(34,502	)		6,200		26,013		293,886
Real Estate
Commercial Construction		1,890,200		(2,071,162	)		253,459		1,709,682		1,782,179
Residential Construction		138,092		-			-		-		138,092
Commercial		5,162,839		(2,872,408	)		297,984		1,790,861		4,379,276
Residential		3,405,947		(706,242	)		64,583		513,981		3,278,269
Farmland		290,526		(20,977	)		21,762		20,183		311,494
Consumer and Other
Consumer		227,774		(397,822	)		93,520		319,781		243,253
Other		344,347		(3,913	)		18,444		3,586		362,464
	$	12,736,921	$	(6,227,716	)	$	811,781	$	4,485,000	$	11,805,986
2012
Commercial and Agricultural
Commercial	$	1,070,560	$	(653,389	)	$	139,802	$	424,048	$	981,021
Agricultural		297,168		(3,028	)		-		2,035		296,175
Real Estate
Commercial Construction		3,122,594		(4,106,124	)		209,352		2,664,378		1,890,200
Residential Construction		138,092		-			-		-		138,092
Commercial		6,448,064		(4,325,642	)		232,880		2,807,537		5,162,839
Residential		3,695,357		(960,620	)		47,690		623,520		3,405,947
Farmland		364,663		(224,725	)		4,716		145,872		290,526
Consumer and Other
Consumer		205,154		(169,249	)		81,956		109,913		227,774
Other		307,942		(11,398	)		40,339		7,464		344,347
	$	15,649,594	$	(10,454,175	)	$	756,735	$	6,784,767	$	12,736,921

2011	Beginning Balance		Charge-Offs			Recoveries		Provision			Ending Balance
Commercial and Agricultural
Commercial	$	4,414,817	$	(841,887	)	$	127,490	$	(2,629,860	)	$	1,070,560
Agricultural		698,637		(455,165	)		454,453		(400,757	)		297,168
Real Estate
Commercial Construction		4,126,043		(6,957,181	)		557,168		5,396,564			3,122,594
Residential Construction		519,766		(481	)		-		(381,193	)		138,092
Commercial		8,029,525		(12,492,097	)		527,996		10,382,640			6,448,064
Residential		5,941,696		(1,704,887	)		149,173		(690,625	)		3,695,357
Farmland		944,323		(60,447	)		411		(519,624	)		364,663
Consumer and Other
Consumer		3,074,220		(222,878	)		145,279		(2,791,467	)		205,154
Other		531,050		(115,650	)		8,220		(115,678	)		307,942
	$	28,280,077	$	(22,850,673	)	$	1,970,190	$	8,250,000		$	15,649,594

Allowance for loan losses, segregated by impairment methodology

At December 31, 2013, impaired loans totaling $2.82 million were below the $250 thousand review threshold and were not individually reviewed for impairment.  Those loans were subject to the bank’s general loan loss reserve methodology and are included in the “Collectively Evaluated for Impairment” column of the following tables.  Likewise, at December 31, 2012 and 2011, impaired loans totaling $1.03 million and $995 thousand, respectively, were below the $50 thousand review threshold and were subject to the bank’s general loan loss reserve methodology and are included in the “Collectively Evaluated for Impairment” column of the following tables.

	Ending Allowance Balance						Ending Loan Balance
2013	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
Commercial and Agricultural
Commercial	$	433,714	$	583,359	$	1,017,073	$	1,542,058	$	46,565,390	$	48,107,448
Agricultural		-		293,886		293,886		-		10,665,938		10,665,938
Real Estate
Commercial Construction		830,546		951,633		1,782,179		7,971,298		44,767,485		52,738,783
Residential Construction		-		138,092		138,092		-		6,549,260		6,549,260
Commercial		423,685		3,955,591		4,379,276		24,757,942		317,025,596		341,783,538
Residential		526,005		2,752,264		3,278,269		6,545,490		199,712,437		206,257,927
Farmland		85,500		225,994		311,494		1,617,206		45,417,220		47,034,426
Consumer and Other
Consumer		-		243,253		243,253		-		25,675,560		25,675,560
Other		-		362,464		362,464		9,146		12,396,436		12,405,582
Total End of Year Balance	$	2,299,450	$	9,506,536	$	11,805,986	$	42,443,140	$	708,775,322	$	751,218,462

	Ending Allowance Balance						Ending Loan Balance
2012	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
Commercial and Agricultural
Commercial	$	462,555	$	518,466	$	981,021	$	2,512,133	$	53,172,359	$	55,684,492
Agricultural		-		296,175		296,175		-		6,210,953		6,210,953
Real Estate
Commercial Construction		1,732,534		157,666		1,890,200		13,892,135		39,915,921		53,808,056
Residential Construction		-		138,092		138,092		-		5,852,238		5,852,238
Commercial		1,236,526		3,926,313		5,162,839		28,205,405		306,180,772		334,386,177
Residential		840,492		2,565,455		3,405,947		8,022,249		195,822,273		203,844,522
Farmland		-		290,526		290,526		2,393,775		46,663,086		49,056,861
Consumer and Other
Consumer		-		227,774		227,774		28,007		29,749,769		29,777,776
Other		-		344,347		344,347		17,491		8,411,445		8,428,936
Total End of Year Balance	$	4,272,107	$	8,464,814	$	12,736,921	$	55,071,195	$	691,978,816	$	747,050,011

	Ending Allowance Balance						Ending Loan Balance
2011	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
Commercial and Agricultural
Commercial	$	308,211	$	762,349	$	1,070,560	$	2,237,878	$	46,748,224	$	48,986,102
Agricultural		-		297,168		297,168		-		8,421,884		8,421,884
Real Estate
Commercial Construction		2,693,571		429,023		3,122,594		24,212,519		34,333,301		58,545,820
Residential Construction		-		138,092		138,092		-		3,530,502		3,530,502
Commercial		2,060,815		4,387,249		6,448,064		35,715,026		279,565,722		315,280,748
Residential		674,998		3,020,359		3,695,357		5,614,744		188,023,073		193,637,817
Farmland		11,878		352,785		364,663		486,683		47,738,723		48,225,406
Consumer and Other
Consumer		1,632		203,522		205,154		9,596		30,439,707		30,449,303
Other		-		307,942		307,942		-		9,243,739		9,243,739
Total End of Year Balance	$	5,751,105	$	9,898,489	$	15,649,594	$	68,276,446	$	648,044,875	$	716,321,321

XML

Summary of Significant Accounting Policies (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Summary of Significant Accounting Policies [Abstract]
Percentage of loan portfolio concentrated in loans secured by real estate (in hundredths)	87.00%
Discounted percentage for selling and marketing cost (in hundredths)	10.00%
Income Taxes [Abstract]
Probability of uncertain tax positions of being realized upon settlement, minimum (in hundredths)	50.00%
Bank-Owned Life Insurance [Abstract]
Cash surrender value of insurance contracts	$ 13,940,176	$ 3,601,464
Banking Premises [Member]
Property, Plant and Equipment [Line Items]
Methods	Straight-Line and Accelerated
Banking Premises [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful lives of the assets	15 years
Banking Premises [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful lives of the assets	40 years
Furniture and Equipment [Member]
Property, Plant and Equipment [Line Items]
Methods	Straight-Line and Accelerated
Furniture and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Useful lives of the assets	5 years
Furniture and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Useful lives of the assets	10 years

XML

Deposits (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Deposits [Abstract]
Aggregate amount of overdrawn deposit accounts reclassified as loan balances	$ 400,552	$ 389,331
Components of interest-bearing deposits [Abstract]
Interest-Bearing Demand	357,290,975	314,030,843
Savings	54,094,617	48,777,743
Time, $100,000 and Over	220,672,794	211,244,750
Other Time	240,210,393	281,665,013
Total Interest bearing Deposits	872,268,779	855,718,349
Brokered deposits balances	26,579,934	28,229,608
CDARS balances	26,579,934	28,229,608
Brokered deposits less the reciprocal deposits	0	0
Certificates of deposits, $100,000 or more	143,388,694	161,530,500
Scheduled maturities of certificates of deposits [Abstract]
2014	322,971,106
2015	69,000,752
2016	37,944,799
2017	12,974,997
2018 and Thereafter	17,991,533
Total	$ 460,883,187

XML

Allowance for Loan Losses, by class of loan (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Activity in allowance for loan losses, segregated by class of loan [Roll Forward]
Beginning Balance	$ 12,736,921	$ 15,649,594	$ 28,280,077
Charge-Offs	(6,227,716)	(10,454,175)	(22,850,673)
Recoveries	811,781	756,735	1,970,190
Provision	4,485,000	6,784,767	8,250,000
Ending Balance	11,805,986	12,736,921	15,649,594
Loan balance for reviewing high risk loans minimum	250,000	50,000
Financing receivable transfer from individual impairment review to collective impairment review	4,100,000
Impaired loans below the $250,000 review threshold	2,820,000
Amount of impaired loans below old individual impairment review level of $50,000		1,030,000	995,000
Substandard [Member]
Activity in allowance for loan losses, segregated by class of loan [Roll Forward]
Substandard loans, not classified as impaired	6,700,000	10,800,000
Specific allocation associated with Substandard loans	261,000	899,000
Commercial [Member]
Activity in allowance for loan losses, segregated by class of loan [Roll Forward]
Beginning Balance	981,021	1,070,560	4,414,817
Charge-Offs	(120,690)	(653,389)	(841,887)
Recoveries	55,829	139,802	127,490
Provision	100,913	424,048	(2,629,860)
Ending Balance	1,017,073	981,021	1,070,560
Agricultural [Member]
Activity in allowance for loan losses, segregated by class of loan [Roll Forward]
Beginning Balance	296,175	297,168	698,637
Charge-Offs	(34,502)	(3,028)	(455,165)
Recoveries	6,200	0	454,453
Provision	26,013	2,035	(400,757)
Ending Balance	293,886	296,175	297,168
Commercial Construction [Member]
Activity in allowance for loan losses, segregated by class of loan [Roll Forward]
Beginning Balance	1,890,200	3,122,594	4,126,043
Charge-Offs	(2,071,162)	(4,106,124)	(6,957,181)
Recoveries	253,459	209,352	557,168
Provision	1,709,682	2,664,378	5,396,564
Ending Balance	1,782,179	1,890,200	3,122,594
Residential Construction [Member]
Activity in allowance for loan losses, segregated by class of loan [Roll Forward]
Beginning Balance	138,092	138,092	519,766
Charge-Offs	0	0	(481)
Recoveries	0	0	0
Provision	0	0	(381,193)
Ending Balance	138,092	138,092	138,092
Commercial Real Estate [Member]
Activity in allowance for loan losses, segregated by class of loan [Roll Forward]
Beginning Balance	5,162,839	6,448,064	8,029,525
Charge-Offs	(2,872,408)	(4,325,642)	(12,492,097)
Recoveries	297,984	232,880	527,996
Provision	1,790,861	2,807,537	10,382,640
Ending Balance	4,379,276	5,162,839	6,448,064
Residential Real Estate [Member]
Activity in allowance for loan losses, segregated by class of loan [Roll Forward]
Beginning Balance	3,405,947	3,695,357	5,941,696
Charge-Offs	(706,242)	(960,620)	(1,704,887)
Recoveries	64,583	47,690	149,173
Provision	513,981	623,520	(690,625)
Ending Balance	3,278,269	3,405,947	3,695,357
Farmland [Member]
Activity in allowance for loan losses, segregated by class of loan [Roll Forward]
Beginning Balance	290,526	364,663	944,323
Charge-Offs	(20,977)	(224,725)	(60,447)
Recoveries	21,762	4,716	411
Provision	20,183	145,872	(519,624)
Ending Balance	311,494	290,526	364,663
Consumer [Member]
Activity in allowance for loan losses, segregated by class of loan [Roll Forward]
Beginning Balance	227,774	205,154	3,074,220
Charge-Offs	(397,822)	(169,249)	(222,878)
Recoveries	93,520	81,956	145,279
Provision	319,781	109,913	(2,791,467)
Ending Balance	243,253	227,774	205,154
Other [Member]
Activity in allowance for loan losses, segregated by class of loan [Roll Forward]
Beginning Balance	344,347	307,942	531,050
Charge-Offs	(3,913)	(11,398)	(115,650)
Recoveries	18,444	40,339	8,220
Provision	3,586	7,464	(115,678)
Ending Balance	$ 362,464	$ 344,347	$ 307,942

XML

Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2013

Related Party Transactions [Abstract]

Activity of related party loans

A summary of activity of related party loans is shown below:

	2013			2012
Balance, Beginning	$	4,776,492		$	5,504,230
New Loans		7,610,259			8,075,835
Repayments		(8,322,163	)		(10,510,517	)
Transactions Due to Changes in Directors		-			1,706,944
Balance, Ending	$	4,064,588		$	4,776,492

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2013

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

(1) Summary of Significant Accounting Policies

Principles of Consolidation

Colony Bankcorp, Inc. (the Company) is a bank holding company located in Fitzgerald, Georgia. The consolidated financial statements include the accounts of Colony Bankcorp, Inc. and its wholly-owned subsidiary, Colony Bank, Fitzgerald, Georgia.  All significant intercompany accounts have been eliminated in consolidation.  The accounting and reporting policies of Colony Bankcorp, Inc. conform to generally accepted accounting principles and practices utilized in the commercial banking industry.

Nature of Operations

The Company provides a full range of retail and commercial banking services for consumers and small- to medium-size businesses located primarily in central, south and coastal Georgia. Colony Bank is headquartered in Fitzgerald, Georgia with banking offices in Albany, Ashburn, Broxton, Centerville, Chester, Columbus, Cordele, Douglas, Eastman, Fitzgerald, Leesburg, Moultrie, Pitts, Quitman, Rochelle, Savannah, Soperton, Sylvester, Thomaston, Tifton, Valdosta and Warner Robins.  Lending and investing activities are funded primarily by deposits gathered through its retail banking office network.

Use of Estimates

In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet date and revenues and expenses for the period.  Actual results could differ significantly from those estimates.  Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans.

Reclassifications

In certain instances, amounts reported in prior years’ consolidated financial statements and note disclosures have been reclassified to conform to statement presentations selected for 2013.  Such reclassifications had no effect on previously reported stockholders’ equity or net income.

Concentrations of Credit Risk

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, particularly with the current economic downturn in the real estate market.  At December 31, 2013, approximately 87 percent 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.  The downturn of the housing and real estate market that began in 2007 resulted in an increase of problem loans secured by real estate, of which most are centered in the Company’s larger MSA markets.  Declining collateral real estate values that secure land development, construction and speculative real estate loans in the Company’s larger MSA markets have resulted in high loan loss provisions in recent years.  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 loan loss analysis.

The success of the Company is dependent, to a certain extent, upon the economic conditions in the geographic markets it serves.  Adverse changes in the economic conditions in these geographic markets would likely have a material adverse effect on the Company’s results of operations and financial condition.  The operating results of the Company depend primarily on its net interest income. Accordingly, operations are subject to risks and uncertainties surrounding the exposure to changes in the interest rate environment.

At times, the Company may have cash and cash equivalents at financial institutions in excess of federal deposit insurance limits.  The Company places its cash and cash equivalents with high credit quality financial institutions whose credit rating is monitored by management to minimize credit risk.

Investment Securities

The Company classifies its investment securities as trading, available for sale or held to maturity.  Securities that are held principally for resale in the near term are classified as trading.  Trading securities are carried at fair value, with realized and unrealized gains and losses included in noninterest income.  Currently, no securities are classified as trading.  Securities acquired with both the intent and ability to be held to maturity are classified as held to maturity and reported at amortized cost.  All securities not classified as trading or held to maturity are considered available for sale.  Securities available for sale are reported at estimated fair value.  Unrealized gains and losses on securities available for sale are excluded from earnings and are reported, net of deferred taxes, in accumulated other comprehensive income (loss), a component of stockholders’ equity.  Gains and losses from sales of securities available for sale are computed using the specific identification method.  Securities available for sale includes securities, which may be sold to meet liquidity needs arising from unanticipated deposit and loan fluctuations, changes in regulatory capital requirements, or unforeseen changes in market conditions.

The Company evaluates each held to maturity and available for sale security in a loss position for other-than-temporary impairment (OTTI).  In estimating other-than-temporary impairment losses, management considers such factors as the length of time and the extent to which the market value has been below cost, the financial condition of the issuer and the Company’s intent to sell and whether it is more likely than not that the Company will be required to sell the security before anticipated recovery of the amortized cost basis.  If the Company intends to sell or if it is more likely than not that the Company will be required to sell the security before recovery, the OTTI write-down is recognized in earnings.  If the Company does not intend to sell the security or it is not more likely than not that it will be required to sell the security before recovery, the OTTI write-down is separated into an amount representing credit loss, which is recognized in earnings, and an amount related to all other factors, which is recognized in other comprehensive income (loss).

Federal Home Loan Bank Stock

Investment in stock of a Federal Home Loan Bank (FHLB) is required for every federally insured institution that utilizes its services.  FHLB stock is considered restricted, as defined in the accounting standards.  The FHLB stock is reported in the consolidated financial statements at cost.  Dividend income is recognized when earned.

Loans

Loans that the Company has the ability and intent to hold for the foreseeable future or until maturity are recorded at their principal amount outstanding, net of unearned interest and fees.  Loan origination fees, net of certain direct origination costs, are deferred and amortized over the estimated terms of the loans using the straight-line method.  Interest income on loans is recognized using the effective interest method.

A loan is considered to be delinquent when payments have not been made according to contractual terms, typically evidenced by nonpayment of a monthly installment by the due date.

When management believes there is sufficient doubt as to the collectibility of principal or interest on any loan or generally when loans are 90 days or more past due, the accrual of applicable interest is discontinued and the loan is designated as nonaccrual, unless the loan is well secured and in the process of collection.  Interest payments received on nonaccrual loans are either applied against principal or reported as income, according to management’s judgment as to the collectibility of principal.  Loans are returned to an accrual status when factors indicating doubtful collectibility on a timely basis no longer exist.

Loans Modified in a Troubled Debt Restructuring (TDR)

Loans are considered to have been modified in a TDR when, due to a borrower’s financial difficulty, the Company makes certain concessions to the borrower that it would not otherwise consider for new debt with similar risk characteristics.  Modifications may include interest rate reductions, principal or interest forgiveness, forbearance, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of the collateral.  Generally, a nonaccrual loan that has been modified in a TDR remains on nonaccrual status for a period of six months to demonstrate that the borrower is able to meet the terms of the modified loan.  However, performance prior to the modification, or significant events that coincide with the modification, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of loan modification or after a shorter performance period.  If the borrower’s ability to meet the revised payment schedule is uncertain, the loan remains on nonaccrual status. Once a loan is modified in a troubled debt restructuring, it is accounted for as an impaired loan, regardless of its accrual status, until the loan is paid in full, sold or charged off.

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings.  Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.  Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions.  This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revisions as more information becomes available.

The allowance consists of specific, historical and general components.  The specific component relates to loans that are classified as either doubtful, substandard or special mention.  For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.  The historical component covers nonclassified loans and is based on historical loss experience adjusted for qualitative factors.  A general component is maintained to cover uncertainties that could affect management’s estimate of probable losses.  The general component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and historical losses in the portfolio.  General valuation allowances are based on internal and external qualitative risk factors such as (1) changes in the composition of the loan portfolio, (2) the extent of loan concentrations within the portfolio, (3) the effectiveness of the Company’s lending policies, procedures and internal controls, (4) the experience, ability and effectiveness of the Company’s lending management and staff, and (5) national and local economics and business conditions.

Loans identified as losses by management, internal loan review and/or Bank examiners are charged off.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due.  Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed.  Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent.

A significant portion of the Company’s impaired loans are deemed to be collateral dependent.  Management therefore measures impairment on these loans based on the fair value of the collateral.  Collateral values are determined based on appraisals performed by qualified licensed appraisers hired by the Company or by senior members of the Company’s credit administration staff.  The decision whether or not to obtain an external third-party appraisal usually depends on the type of property being evaluated.  External appraisals are usually obtained on more complex, income producing properties such as hotels, shopping centers and businesses.  Less complex properties such as residential lots, farm land and single family houses may be evaluated internally by senior credit administration staff.  When the Company does obtain appraisals from external third-parties, the values utilized in the impairment calculation are “as is” or current market values.  The appraisals, whether prepared internally or externally, may utilize a single valuation approach or a combination of approaches including the comparable sales, income and cost approach.  Appraised amounts used in the impairment calculation are typically discounted 10 percent to account for selling and marketing costs, if the repayment of the loan is to come from the sale of the collateral.  Although appraisals may not be obtained each year on all impaired loans, the collateral values used in the impairment calculations are evaluated quarterly by management.  Based on management’s knowledge of the collateral and the current real estate market conditions, appraised values may be further discounted to reflect facts and circumstances known to management since the initial appraisal was performed.

Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are typically significant and result in a level 3 classification of the inputs for determining fair value.  Because of the high degree of judgment required in estimating the fair value of collateral underlying impaired loans and because of the relationship between fair value and general economic conditions, we consider the fair value of impaired loans to be highly sensitive to changes in market conditions.

Premises and Equipment

Premises and equipment are recorded at acquisition cost net of accumulated depreciation.

Depreciation is charged to operations over the estimated useful lives of the assets.  The estimated useful lives and methods of depreciation are as follows:

Description	Life in Years		Method
Banking Premises		15-40	Straight-Line and Accelerated
Furniture and Equipment		5-10	Straight-Line and Accelerated

Expenditures for major renewals and betterments are capitalized.  Maintenance and repairs are charged to operations as incurred.  When property and equipment are retired or sold, the cost and accumulated depreciation are removed from the respective accounts and any gain or loss is reflected in other income or expense.

Intangible Assets

Intangible assets consist of core deposit intangibles acquired in connection with a business combination.  The core deposit intangible is initially recognized based on an independent valuation performed as of the consummation date.  The core deposit intangible is amortized by the straight-line method over the average remaining life of the acquired customer deposits.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered.  Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Statement of Cash Flows

For reporting cash flows, cash and cash equivalents include cash on hand, noninterest-bearing amounts due from banks, federal funds sold and securities purchased under agreement to resell.  Cash flows from demand deposits, interest-bearing checking accounts, savings accounts, loans and certificates of deposit are reported net.

Securities Purchased Under Agreement to Resell and Securities Sold Under Agreements to Repurchase

The Company purchases certain securities under agreements to resell.  The amounts advanced under these agreements represent short-term loans and are reflected as assets in the consolidated balance sheets.

The Company sells securities under agreements to repurchase.  These repurchase agreements are treated as borrowings.  The obligations to repurchase securities sold are reflected as a liability and the securities underlying the agreements are reflected as assets in the consolidated balance sheets.

Advertising Costs

The Company expenses the cost of advertising in the periods in which those costs are incurred.

Income Taxes

The provision for income taxes is based upon income for financial statement purposes, adjusted for nontaxable income and nondeductible expenses.  Deferred income taxes have been provided when different accounting methods have been used in determining income for income tax purposes and for financial reporting purposes.

Deferred tax assets and liabilities are recognized based on future tax consequences attributable to differences arising from the financial statement carrying values of assets and liabilities and their tax bases.  The differences relate primarily to depreciable assets (use of different depreciation methods for financial statement and income tax purposes) and allowance for loan losses (use of the allowance method for financial statement purposes and the direct write-off method for tax purposes).  In the event of changes in the tax laws, deferred tax assets and liabilities are adjusted in the period of the enactment of those changes, with effects included in the income tax provision.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The Company and its subsidiary file a consolidated federal income tax return.  The subsidiary pays its proportional share of federal income taxes to the Company based on its taxable income.

The Company’s federal and state income tax returns for tax years 2013, 2012, 2011 and 2010 are subject to examination by the Internal Revenue Service (IRS) and the Georgia Department of Revenue, generally for three years after filing.

Positions taken in the Company’s tax returns may be subject to challenge by the taxing authorities upon examination.  Uncertain tax positions are initially recognized in the consolidated financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities.  Such tax positions are both initially and subsequently measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon settlement with the tax authority, assuming full knowledge of the position and all relevant facts.  The Company provides for interest and, in some cases, penalties on tax positions that may be challenged by the taxing authorities. Interest expense is recognized beginning in the first period that such interest would begin accruing.  Penalties are recognized in the period that the Company claims the position in the tax return.  Interest and penalties on income tax uncertainties are classified within income tax expense in the consolidated statements of operations.

Other Real Estate

Other real estate generally represents real estate acquired through foreclosure and is initially recorded at estimated fair value at the date of acquisition less the cost of disposal.  Losses from the acquisition of property in full or partial satisfaction of debt are recorded as loan losses.  Properties are evaluated regularly to ensure the recorded amounts are supported by current fair values, and valuation allowances are recorded as necessary to reduce the carrying amount to fair value less estimated cost of disposal.  Routine holding costs and gains or losses upon disposition are included in foreclosed property expense.

Bank-Owned Life Insurance

The Company has purchased life insurance on the lives of certain key members of management and directors.  The life insurance policies are recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or amounts due that are probable at settlement, if applicable.  Increases in the cash surrender value are recorded as other income in the consolidated statements of income.The cash surrender value of the insurance contracts is recorded in other assets on the consolidated balance sheets in the amount of $13,940,176 and $3,601,464 as of December 31, 2013 and 2012, respectively.

Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income.  Certain changes in assets and liabilities, such as unrealized gains and losses on securities available for sale, represent equity changes from economic events of the period other than transactions with owners.  Such items are considered components of other comprehensive income (loss).  Accounting standards codification requires the presentation in the consolidated financial statements of net income and all items of other comprehensive income (loss) as total comprehensive income (loss).

Off-Balance Sheet Credit Related Financial Instruments

In the ordinary course of business, the Company has entered into commitments to extend credit, commercial letters of credit and standby letters of credit.  Such financial instruments are recorded on the balance sheet when they are funded.

Changes in Accounting Principles and Effects of New Accounting Pronouncements

Adoption of New Accounting Standards

ASU 2013-02, Comprehensive Income (Topic 220) - Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 amends recent guidance related to the reporting of comprehensive income to enhance the reporting of reclassifications out of accumulated other comprehensive income. ASU 2013-02 became effective for the Company on January 1, 2013 and did not have a significant impact on the Company’s consolidated financial statements.

ASU 2012-02, Intangibles - Goodwill and Other (Topic 350) - Testing Indefinite-Lived Intangible Assets for Impairment. ASU 2012-02 gives entities the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that an indefinite-lived intangible asset is impaired. If, after assessing the totality of events or circumstances, an entity determines it is more likely than not that an indefinite-lived intangible asset is impaired, then the entity must perform the quantitative impairment test. If, under the quantitative impairment test, the carrying amount of the intangible asset exceeds its fair value, an entity should recognize an impairment loss in the amount of that excess. Permitting an entity to assess qualitative factors when testing indefinite-lived intangible assets for impairment results in guidance that is similar to the goodwill impairment testing guidance in ASU 2011-08. ASU 2012-02 became effective for the Company on January 1, 2013 and did not have a significant impact on the Company’s consolidated financial statements.

ASU 2011-11, Balance Sheet (Topic 210) - Disclosures about Offsetting Assets and Liabilities.  ASU 2011-11 amends Topic 210, Balance Sheet, to require an entity to disclose both gross and net information about financial instruments, such as sales and repurchase agreements and reverse sale and repurchase agreements and securities borrowing/lending arrangements, and derivative instruments that are eligible for offset in the consolidated balance sheet and/or subject to a master netting arrangement or similar agreement.  ASU No. 2013-01, Balance Sheet (Topic 210) - Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, clarifies that ordinary trade receivables are not within the scope of ASU 2011-11.  ASU 2011-11 became effective for the Company on January 1, 2013 and did not have a significant impact on the Company’s consolidated financial statements.

XML

Allowance for Loan Losses, evaluated for impairment (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Ending allowance balance [Abstract]
Individually evaluated for impairment	$ 2,299,450	$ 4,272,107	$ 5,751,105
Collectively evaluated for impairment	9,506,536	8,464,814	9,898,489
Total ending allowance balance	11,805,986	12,736,921	15,649,594	28,280,077
Ending loan balance [Abstract]
Individually evaluated for impairment	42,443,140	55,071,195	68,276,446
Collectively evaluated for impairment	708,775,322	691,978,816	648,044,875
Total Loans	751,218,462	747,050,011	716,321,321
Commercial [Member]
Ending allowance balance [Abstract]
Individually evaluated for impairment	433,714	462,555	308,211
Collectively evaluated for impairment	583,359	518,466	762,349
Total ending allowance balance	1,017,073	981,021	1,070,560	4,414,817
Ending loan balance [Abstract]
Individually evaluated for impairment	1,542,058	2,512,133	2,237,878
Collectively evaluated for impairment	46,565,390	53,172,359	46,748,224
Total Loans	48,107,448	55,684,492	48,986,102
Agricultural [Member]
Ending allowance balance [Abstract]
Individually evaluated for impairment	0	0	0
Collectively evaluated for impairment	293,886	296,175	297,168
Total ending allowance balance	293,886	296,175	297,168	698,637
Ending loan balance [Abstract]
Individually evaluated for impairment	0	0	0
Collectively evaluated for impairment	10,665,938	6,210,953	8,421,884
Total Loans	10,665,938	6,210,953	8,421,884
Commercial Construction [Member]
Ending allowance balance [Abstract]
Individually evaluated for impairment	830,546	1,732,534	2,693,571
Collectively evaluated for impairment	951,633	157,666	429,023
Total ending allowance balance	1,782,179	1,890,200	3,122,594	4,126,043
Ending loan balance [Abstract]
Individually evaluated for impairment	7,971,298	13,892,135	24,212,519
Collectively evaluated for impairment	44,767,485	39,915,921	34,333,301
Total Loans	52,738,783	53,808,056	58,545,820
Residential Construction [Member]
Ending allowance balance [Abstract]
Individually evaluated for impairment	0	0	0
Collectively evaluated for impairment	138,092	138,092	138,092
Total ending allowance balance	138,092	138,092	138,092	519,766
Ending loan balance [Abstract]
Individually evaluated for impairment	0	0	0
Collectively evaluated for impairment	6,549,260	5,852,238	3,530,502
Total Loans	6,549,260	5,852,238	3,530,502
Commercial Real Estate [Member]
Ending allowance balance [Abstract]
Individually evaluated for impairment	423,685	1,236,526	2,060,815
Collectively evaluated for impairment	3,955,591	3,926,313	4,387,249
Total ending allowance balance	4,379,276	5,162,839	6,448,064	8,029,525
Ending loan balance [Abstract]
Individually evaluated for impairment	24,757,942	28,205,405	35,715,026
Collectively evaluated for impairment	317,025,596	306,180,772	279,565,722
Total Loans	341,783,538	334,386,177	315,280,748
Residential Real Estate [Member]
Ending allowance balance [Abstract]
Individually evaluated for impairment	526,005	840,492	674,998
Collectively evaluated for impairment	2,752,264	2,565,455	3,020,359
Total ending allowance balance	3,278,269	3,405,947	3,695,357	5,941,696
Ending loan balance [Abstract]
Individually evaluated for impairment	6,545,490	8,022,249	5,614,744
Collectively evaluated for impairment	199,712,437	195,822,273	188,023,073
Total Loans	206,257,927	203,844,522	193,637,817
Farmland [Member]
Ending allowance balance [Abstract]
Individually evaluated for impairment	85,500	0	11,878
Collectively evaluated for impairment	225,994	290,526	352,785
Total ending allowance balance	311,494	290,526	364,663	944,323
Ending loan balance [Abstract]
Individually evaluated for impairment	1,617,206	2,393,775	486,683
Collectively evaluated for impairment	45,417,220	46,663,086	47,738,723
Total Loans	47,034,426	49,056,861	48,225,406
Consumer [Member]
Ending allowance balance [Abstract]
Individually evaluated for impairment	0	0	1,632
Collectively evaluated for impairment	243,253	227,774	203,522
Total ending allowance balance	243,253	227,774	205,154	3,074,220
Ending loan balance [Abstract]
Individually evaluated for impairment	0	28,007	9,596
Collectively evaluated for impairment	25,675,560	29,749,769	30,439,707
Total Loans	25,675,560	29,777,776	30,449,303
Other [Member]
Ending allowance balance [Abstract]
Individually evaluated for impairment	0	0	0
Collectively evaluated for impairment	362,464	344,347	307,942
Total ending allowance balance	362,464	344,347	307,942	531,050
Ending loan balance [Abstract]
Individually evaluated for impairment	9,146	17,491	0
Collectively evaluated for impairment	12,396,436	8,411,445	9,243,739
Total Loans	$ 12,405,582	$ 8,428,936	$ 9,243,739

XML

Other Borrowed Money (Tables)

12 Months Ended

Dec. 31, 2013

Other Borrowed Money [Abstract]

Other Borrowed Money

Other borrowed money at December 31 is summarized as follows:

	2013		2012
Federal Home Loan Bank Advances	$	40,000,000	$	35,000,000

XML

Regulatory Capital Matters

12 Months Ended

Dec. 31, 2013

Regulatory Capital Matters [Abstract]

Regulatory Capital Matters

(21) Regulatory Capital Matters

The amount of dividends payable to the parent company from the subsidiary bank is limited by various banking regulatory agencies.  Upon approval by regulatory authorities, the Bank may pay cash dividends to the parent company in excess of regulatory limitations.  Additionally, the Company suspended the payment of dividends to its stockholders in the third quarter of 2009.  At December 31, 2013, the Company is subject to certain regulatory restrictions that preclude the declaration of or payment of any dividends to its common stockholders, without prior approval from the Federal Reserve Bank.

The Company is subject to various regulatory capital requirements administered by the federal banking agencies.  Failure to meet minimum capital requirements can initiate certain mandatory and, possibly, additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices.  The Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of total and Tier I capital to risk-weighted assets, and of Tier I capital to average assets.  The amounts and ratios as defined in regulations are presented hereafter.  Management believes, as of December 31, 2013, the Company meets all capital adequacy requirements to which it is subject under the regulatory framework for prompt corrective action.  In the opinion of management, there are no conditions or events since prior notification of capital adequacy from the regulators that have changed the institution’s category.

The following table summarizes regulatory capital information as of December 31, 2013 and 2012 on a consolidated basis and for its wholly-owned subsidiary, as defined.

											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2013	(In Thousands)
Total Capital to Risk-Weighted Assets
Consolidated	$	129,569		17.06	%	$	60,791		8.00	%		N/A		N/A
Colony Bank		131,024		17.29			60,638		8.00		$	75,797		10.00	%
Tier I Capital to Risk-Weighted Assets
Consolidated		120,048		15.81			30,396		4.00			N/A		N/A
Colony Bank		121,521		16.03			30,319		4.00			45,478		6.00
Tier I Capital to Average Assets
Consolidated		120,048		10.57			45,419		4.00			N/A		N/A
Colony Bank		121,521		10.72			45,333		4.00			56,666		5.00
As of December 31, 2012
Total Capital to Risk-Weighted Assets
Consolidated	$	122,630		16.47	%	$	59,548		8.00	%		N/A		N/A
Colony Bank		123,463		16.61			59,474		8.00		$	74,342		10.00	%
Tier I Capital to Risk-Weighted Assets
Consolidated		113,283		15.22			29,774		4.00			N/A		N/A
Colony Bank		114,128		15.35			29,737		4.00			44,605		6.00
Tier I Capital to Average Assets
Consolidated		113,283		10.22			44,343		4.00			N/A		N/A
Colony Bank		114,128		10.31			44,282		4.00			55,352		5.00

Effective October 1, 2013, the Memorandum of Understanding (MOU) the Bank had been operating under was lifted; however, the Bank remains subject to a Board Resolution (BR) which requires, among other things, that the Bank maintain minimum capital ratios at specified levels higher than those otherwise required by applicable regulations as follows: Tier 1 capital to total average assets of 8 percent and total risk-based capital to total risk-weighted assets of 10 percent during the life of the BR.  The BR also requires that, prior to declaring or paying any cash dividend to the Company, the Bank must obtain written consent of its regulators.  Additional requirements of the BR are discussed in Part 1, Item 1 of the Company’s December 31, 2013 Form 10-K filed with the Securities Exchange Commission on March 14, 2014.  Failure to comply with the terms of the BR could have an adverse impact on the Company’s consolidated financial condition.

XML

Fair Value of Financial Instruments and Fair Value Measurements

12 Months Ended

Dec. 31, 2013

Fair Value of Financial Instruments and Fair Value Measurements [Abstract]

Fair Value of Financial Instruments and Fair Value Measurements

(20) Fair Value of Financial Instruments and Fair Value Measurements

Generally accepted accounting standards in the U.S. require disclosure of fair value information about financial instruments, whether or not recognized on the face of the balance sheet, for which it is practicable to estimate that value.  The assumptions used in the estimation of the fair value of Colony Bankcorp, Inc. and Subsidiary’s financial instruments are detailed hereafter.  Where quoted prices are not available, fair values are based on estimates using discounted cash flows and other valuation techniques.  The use of discounted cash flows can be significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.  The following disclosures should not be considered a surrogate of the liquidation value of the Company, but rather a good-faith estimate of the increase or decrease in value of financial instruments held by the Company since purchase, origination or issuance.

Cash and Short-Term Investments - For cash, due from banks, bank-owned deposits and federal funds sold, the carrying amount is a reasonable estimate of fair value and is classified level 1.

Investment Securities - Fair values for investment securities are based on quoted market prices where available.  If quoted market prices are not available, estimated fair values are based on quoted market prices of comparable instruments.  If a comparable is not available, the investment securities are classified as level 3.

Federal Home Loan Bank Stock - The fair value of Federal Home Loan Bank stock approximates carrying value.

Loans - The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings.  For variable rate loans, the carrying amount is a reasonable estimate of fair value.

Bank-Owned Life Insurance - The carrying value of bank-owned life insurance policies approximates fair value.

Deposit Liabilities - The fair value of demand deposits, savings accounts and certain money market deposits is the amount payable on demand at the reporting date and is classified as level 1.  The fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities and is classified as level 2.

Subordinated Debentures - Fair value approximates carrying value due to the variable interest rates of the subordinated debentures.

Other Borrowed Money - The fair value of other borrowed money is calculated by discounting contractual cash flows using an estimated interest rate based on current rates available to the Company for debt of similar remaining maturities and collateral terms. Other borrowed money is classified as level 2 due to their expected maturities.

The carrying amount and estimated fair values of the Company’s financial instruments as of December 31 are as follows:

	Carrying		Estimated		Level
2013	Amount		Fair Value			1		2		3
	(in Thousands)
Assets
Cash and Short-Term Investments	$	68,147	$	68,147	$	68,147	$	-	$	-
Investment Securities Available for Sale		263,258		263,258		-		262,317		941
Investment Securities Held to Maturity		37		37		-		37		-
Federal Home Loan Bank Stock		3,164		3,164		3,164		-		-
Loans, Net		739,052		741,112		-		729,436		11,676
Bank-Owned Life Insurance		10,165		10,165		10,165		-		-
Liabilities
Deposits		987,529		989,101		526,646		462,455		-
Subordinated Debentures		24,229		24,229		24,229		-		-
Other Borrowed Money		40,000		42,074		-		42,074		-
2012
Assets
Cash and Short-Term Investments	$	71,041	$	71,041	$	71,041	$	-	$	-
Investment Securities Available for Sale		268,300		268,300		-		267,162		1,138
Investment Securities Held to Maturity		41		42		-		42		-
Federal Home Loan Bank Stock		3,364		3,364		3,364		-		-
Loans, Net		734,079		735,115		-		713,109		22,006
Liabilities
Deposits		979,685		982,215		486,775		495,440		-
Subordinated Debentures		24,229		24,229		24,229		-		-
Other Borrowed Money		35,000		38,424		-		38,424		-

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument.  Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on many judgments.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.  Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment.  In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

Fair Value Measurements

Generally accepted accounting principles related to Fair Value Measurements define fair value, establish a framework for measuring fair value, establish a three-level valuation hierarchy for disclosure of fair value measurement and enhance disclosure requirements for fair value measurements.  The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.  The three levels are defined as follows:

· Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

· Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

· Level 3 inputs to the valuation methodology are unobservable and represent the Company’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring and nonrecurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy:

Assets

Securities -Where quoted prices are available in an active market, securities are classified within level 1 of the valuation hierarchy.  Level 1 inputs include securities that have quoted prices in active markets for identical assets. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flow.  Examples of such instruments, which would generally be classified within level 2 of the valuation hierarchy, include certain collateralized mortgage and debt obligations and certain high-yield debt securities.  In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within level 3 of the valuation hierarchy.  When measuring fair value, the valuation techniques available under the market approach, income approach and/or cost approach are used.  The Company’s evaluations are based on market data and the Company employs combinations of these approaches for its valuation methods depending on the asset class.

Impaired Loans -Impaired loans are those loans which the Company has measured impairment generally based on the fair value of the loan’s collateral.  Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds.  These assets are included as level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

Other Real Estate - Other real estate owned assets are adjusted to fair value less estimated selling costs upon transfer of the loans to other real estate owned.  Typically, an external, third-party appraisal is performed on the collateral upon transfer into the other real estate owned account to determine the asset’s fair value.  Subsequent adjustments to the collateral’s value may be based upon either updated third-party appraisals or management’s knowledge of the collateral and the current real estate market conditions.   Appraised amounts used in determining the asset’s fair value, whether internally or externally prepared, are discounted 10 percent to account for selling and marketing costs.  Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are typically significant and result in a level 3 classification of the inputs for determining fair value.  Because of the high degree of judgment required in estimating the fair value of other real estate owned assets and because of the relationship between fair value and general economic conditions, we consider the fair value of other real estate owned assets to be highly sensitive to changes in market conditions.

Assets and Liabilities Measured at Fair Value on a Recurring and Nonrecurring Basis -The following table presents the recorded amount of the Company’s assets measured at fair value on a recurring and nonrecurring basis as of December 31, 2013 and 2012, aggregated by the level in the fair value hierarchy within which those measurements fall.  The table below includes only impaired loans with a specific reserve and only other real estate properties with a valuation allowance at December 31, 2013.  Those impaired loans and other real estate properties are shown net of the related specific reserves and valuation allowances.

			Fair Value Measurements at Reporting Date Using
2013	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Recurring
Securities Available for Sale
U.S. Government Agencies Mortgage-Backed	$	259,348,058	$	-	$	259,348,058	$	-
State, County and Municipal		3,909,832		-		2,968,567		941,265
	$	263,257,890	$	-	$	262,316,625		941,265
Nonrecurring
Impaired Loans	$	11,675,691	$	-	$	-	$	11,675,691
Other Real Estate	$	7,019,799	$	-	$	-	$	7,019,799
2012
Recurring
Securities Available for Sale
U.S. Government Agencies Mortgage-Backed	$	263,059,074	$	-	$	263,059,074	$	-
State, County and Municipal		4,004,010		-		2,998,199		1,005,811
Corporate Obligations		1,104,900		-		1,104,900		-
Asset-Backed Securities		132,427		-		-		132,427
	$	268,300,411	$	-	$	267,162,173	$	1,138,238
Nonrecurring
Impaired Loans	$	22,006,150	$	-	$	-	$	22,006,150
Other Real Estate	$	8,817,204	$	-	$	-	$	8,817,204

Liabilities

The Company did not identify any liabilities that are required to be presented at fair value.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

The following tables present quantitative information about the significant unobservable inputs used in the fair value measurements for assets in level 3 of the fair value hierarchy measured on a nonrecurring basis at December 31, 2013 and 2012.  These tables are comprised primarily of collateral dependent impaired loans and other real estate owned:

	December 31, 2013		Valuation Techniques	Unobservable Inputs	Range (Weighted Avg)
Impaired Loans
Commercial	$	1,019,084	Sales Comparison	Adjustment for Differences Between the Comparable Sales		0.00%-15.00% (7.50%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		10.00%-50.00% (30.00%)
Real Estate
Commercial Construction		2,641,041	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(16.00)%-28.00% (6.00%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-10.00% (5.00%)
			Income Approach	Capitalization Rate		8.50%
Residential Real Estate		1,323,296	Sales Comparison	Adjustment for Differences Between the Comparable Sales		0.00%-46.00% (23.00%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-25.00% (12.50%)
Commercial Real Estate		5,450,788	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(27.20%)-216.80% (94.80%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		25.00%-90.00% (57.50%)
			Income Approach	Capitalization Rate		11.00%
Farmland		1,241,482	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(55.00%)-388.00% (166.50)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		10.00%-35.00% (22.50%)
Other Real Estate Owned		7,019,799	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(10.00%)-319.10% (154.55%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.36%-87.81% (29.99%)
			Income Approach	Discount Rate		10.00%

	December 31, 2012		Valuation Techniques	Unobservable Inputs	Range (Weighted Avg)
Impaired Loans
Commercial	$	1,030,877	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(45.00%)-80.00% (17.50%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-80.00% (40.00%)
			Income Approach	Capitalization Rate		8.50%
Real Estate
Commercial Construction		5,885,060	Sales Comparison	Adjustment for Differences Between the Comparable Sales		0.00%-45.00% (22.50%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-40.00% (20.00%)
			Income Approach	Discount Rate		7.94%
Residential Real Estate		3,581,317	Sales Comparison	Adjustment for Differences Between the Comparable Sales		0.00%-24.00% (12.00%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-40.00% (20.00%)
			Income Approach	Capitalization Rate		8.90%
Commercial Real Estate		11,508,896	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(7.40%)-73.70% (32.95%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		0.00%-40.00% (20.00%)
			Income Approach	Capitalization Rate		9.50%
				Discount Rate		5.13%
Other Real Estate Owned		8,817,204	Sales Comparison	Adjustment for Differences Between the Comparable Sales		(35.00%)-129.50% (47.25%)
				Management Adjustments for Age of Appraisals and/or Current Market Conditions		3.10%-61.32% (32.33%)
			Income Approach	Discount Rate		3.00%

The following table presents a reconciliation and statement of income classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (level 3) for the years ended December 31, 2013, 2012 and 2011.

	Available for Sale Securities
	2013			2012			2011
Balance, Beginning	$	1,138,238		$	1,122,427		$	1,016,997
Transfers into Level 3		-			788,933			-
Transfers out of Level 3		(41,908	)		-			-
Securities Purchased During the Year		-			-			-
Securities Called During the Year		-			(1,000,000	)		-
Loss on OTTI Impairment Included in Noninterest Income		(366,623	)		(59,568	)		(53,058	)
Unrealized Gains Included in Other Comprehensive Income		211,558			78,201			158,488
Balance, Ending	$	941,265		$	1,138,238		$	1,122,427

The Company’s policy is to recognize transfers in and transfers out of levels 1, 2 and 3 as of the end of a reporting period.  During the year ended December 31, 2013, the Company had transfers out of level 3 and into level 2.  The transfers out of level 3 were the result of increased market activity for these types of securities, as well as more current credit ratings on these securities.  During the year ended December 31, 2012, the Company transferred certain state, county and municipal securities out of level 2 and into level 3.  The transfers into level 3 were the result of decreased market activity for these types of securities, as well as a lack of current credit ratings on these securities.  There were no gains or losses recognized as a result of the transfers.  There were no transfers of securities between level 1 and level 2 for the years ended December 31, 2013, 2012 or 2011.

The following table presents quantitative information about recurring level 3 fair value measurements as of December 31, 2013.

	Fair Value			Valuation Techniques	Unobservable Inputs		Range (Weighted Avg)
State, County and Municipal		$	941,265	Discounted Cash Flow		Discount Rate or Yield		N/A*

*  The Company relies on a third-party pricing service to value its municipal securities.  The details of the unobservable inputs and other adjustments used by the third-party pricing service were not readily available to the Company.

XML

Loans, Credit Quality Indicator (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 751,218,462	$ 747,050,011	$ 716,321,321
Loan balance for reviewing high risk loans minimum	250,000	50,000
Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	48,107,448	55,684,492
Agricultural [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	10,665,938	6,210,953	8,421,884
Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	52,738,783	53,808,056	58,545,820
Residential Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	6,549,260	5,852,238	3,530,502
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	341,783,538	334,386,177	315,280,748
Residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	206,257,927	203,844,522
Farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	47,034,426	49,056,861	48,225,406
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	25,675,560	29,777,776
Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	12,405,582	8,428,936
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	683,692,592	663,237,573
Pass [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	41,759,281	49,947,552
Pass [Member] | Agricultural [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	10,637,705	6,155,864
Pass [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	42,668,320	37,256,301
Pass [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	6,341,530	5,748,829
Pass [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	317,567,749	298,222,139
Pass [Member] | Residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	182,977,361	183,222,020
Pass [Member] | Farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	44,776,355	45,495,038
Pass [Member] | Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	24,608,175	28,839,058
Pass [Member] | Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	12,356,116	8,350,772
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	29,618,883	25,573,039
Special Mention [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	2,770,284	1,417,735
Special Mention [Member] | Agricultural [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	16,830	0
Special Mention [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,512,301	1,663,588
Special Mention [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	207,730	103,409
Special Mention [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	10,759,954	9,759,473
Special Mention [Member] | Residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	13,523,478	11,412,973
Special Mention [Member] | Farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	507,122	913,487
Special Mention [Member] | Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	320,473	293,467
Special Mention [Member] | Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	711	8,907
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	37,906,987	58,239,399
Substandard [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	3,577,883	4,319,205
Substandard [Member] | Agricultural [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	11,403	55,089
Substandard [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	8,558,162	14,888,167
Substandard [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Substandard [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	13,455,835	26,404,565
Substandard [Member] | Residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	9,757,088	9,209,529
Substandard [Member] | Farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,750,949	2,648,336
Substandard [Member] | Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	746,912	645,251
Substandard [Member] | Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 48,755	$ 69,257

XML

Subordinated Debentures (Trust Preferred Securities) (Tables)

12 Months Ended

Dec. 31, 2013

Subordinated Debentures (Trust Preferred Securities) [Abstract]

Subordinated Debentures (Trust Preferred Securities)

Total

3-Month

Added

Interest

5-Year

Description

Date

Amount

Libor Rate

Points

Rate

Maturity

Call Option

(In Thousands)

Colony Bankcorp Statutory Trust III

6/17/2004

$

4,640

0.24385

2.68

2.92385

6/14/2034

6/17/2009

Colony Bankcorp Capital Trust I

4/13/2006

5,155

0.24660

1.50

1.74660

4/13/2036

4/13/2011

Colony Bankcorp Capital Trust II

3/12/2007

9,279

0.24685

1.65

1.89685

3/12/2037

3/12/2012

Colony Bankcorp Capital Trust III

9/14/2007

5,155

0.23585

1.40

1.63585

9/14/2037

9/14/2012

XML

Financial Information of Colony Bankcorp, Inc (Parent Only)

12 Months Ended

Dec. 31, 2013

Financial Information of Colony Bankcorp, Inc. (Parent Only) [Abstract]

Financial Information of Colony Bankcorp, Inc. (Parent Only)

(22) Financial Information of Colony Bankcorp, Inc. (Parent Only)

The parent company’s balance sheets as of December 31, 2013 and 2012 and the related statements of operations and comprehensive income (loss) and cash flows for each of the years in the three-year period then ended are as follows:

COLONY BANKCORP, INC. (PARENT ONLY)

BALANCE SHEETS

DECEMBER 31

ASSETS

	2013			2012
Cash	$	1,422,289		$	494,432
Premises and Equipment, Net		1,272,965			1,284,968
Investment in Subsidiary, at Equity		114,559,866			119,646,209
Other		1,221,285			821,145
Total Assets	$	118,476,405		$	122,246,754
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Dividends Payable	$	3,119,146		$	1,610,385
Other		1,174,020			648,202
		4,293,166			2,258,587
Subordinated Debt		24,229,000			24,229,000
Stockholders’ Equity
Preferred Stock, Stated Value $1,000; Authorized 10,000,000 Shares, Issued 28,000 Shares		28,000,000			27,827,053
Common Stock, Par Value $1; Authorized 20,000,000 Shares, Issued 8,439,258 Shares as of December 31, 2013 and 2012		8,439,258			8,439,258
Paid-In Capital		29,145,094			29,145,094
Retained Earnings		33,444,913			30,497,576
Accumulated Other Comprehensive Loss, Net of Tax		(9,075,026	)		(149,814	)
		89,954,239			95,759,167
Total Liabilities and Stockholders’ Equity	$	118,476,405		$	122,246,754

COLONY BANKCORP, INC. (PARENT ONLY)

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31

	2013		2012			2011
Income
Dividends from Subsidiary	$	1,515,549	$	17,372		$	15,265
Management Fees		581,334		590,422			505,414
Other		96,953		101,397			98,180
		2,193,836		709,191			618,859
Expenses
Interest		516,641		554,004			508,081
Amortization		2,250		2,250			2,250
Salaries and Employee Benefits		748,149		735,919			734,104
Other		543,139		558,151			656,914
		1,810,179		1,850,324			1,901,349
Income (Loss) Before Taxes and Equity in Undistributed Earnings of Subsidiary		383,657		(1,141,133	)		(1,282,490	)
Income Tax Benefits		406,518		365,691			425,605
Income (Loss) Before Equity in Undistributed Earnings of Subsidiary		790,175		(775,442	)		(856,885	)
Equity in Undistributed Earnings of Subsidiary		3,838,870		3,416,740			3,390,480
Net Income		4,629,045		2,641,298			2,533,595
Preferred Stock Dividends		1,508,761		1,435,385			1,400,000
Net Income Available to Common Stockholders	$	3,120,284	$	1,205,913		$	1,133,595

COLONY BANKCORP, INC. (PARENT ONLY)

STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31

	2013			2012			2011
Net Income	$	4,629,045		$	2,641,298		$	2,533,595
Other Comprehensive Income (Loss), Net of Tax
Gains (Losses) on Securities Arising During the Year, Net of Tax Effect of $(4,597,836), $(1,060,984) and $1,292,789, Respectively		(9,165,323	)		(186,830	)		4,439,108
Impairment Loss on Securities, Net of Tax Effect of $(124,652), $(20,253) and $(18,040), Respectively		241,971			39,315			35,018
Realized Gains (Losses) on Sale of AFS Securities, Net of Tax Effect of $959, $984,991 and $1,012,064, Respectively		(1,860	)		(1,912,041	)		(1,964,595	)
Change in Net Unrealized Gains (Losses) on Securities Available for Sale, Net of Reclassification Adjustment and Tax Effects		(8,925,212	)		(2,059,556	)		2,509,531
Comprehensive Income (Loss)	$	(4,296,167	)	$	581,742		$	5,043,126

COLONY BANKCORP, INC. (PARENT ONLY)

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31

	2013			2012			2011
Cash Flows from Operating Activities
Net Income	$	4,629,045		$	2,641,298		$	2,533,595
Adjustments to Reconcile Net Income to Net Cash Provided (Used) by Operating Activities
Depreciation and Amortization		80,711			93,427			112,651
Equity in Undistributed Earnings of Subsidiary		(3,838,870	)		(3,416,740	)		(3,390,480	)
Other		125,679			124,543			24,977
		996,565			(557,472	)		(719,257	)
Cash Flows from Investing Activities
Purchases of Premises and Equipment		(68,708	)		-			(1,900	)
Cash Flows from Financing Activities
Dividends Paid on Preferred Stock		-			-			(1,400,000	)
Increase (Decrease) in Cash		927,857			(557,472	)		(2,121,157	)
Cash, Beginning		494,432			1,051,904			3,173,061
Cash, Ending	$	1,422,289		$	494,432		$	1,051,904

XML

Earnings Per Share

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Earnings Per Share

(23) Earnings Per Share

Basic earnings per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during each period.  Diluted earnings per share reflects the potential dilution of restricted stock and common stock warrants.  Net income available to common stockholders represents net income (loss) after preferred stock dividends.  The following table presents earnings per share for the years ended December 31, 2013, 2012 and 2011:

	2013		2012		2011
Numerator
Net Income (Loss) Available to Common Stockholders	$	3,120,284	$	1,205,913	$	1,133,595
Denominator
Weighted Average Number of Common Shares Outstanding for Basic Earnings Per Common Share		8,439,258		8,439,258		8,439,258
Dilutive Effect of Potential Common Stock
Restricted Stock		-		-		-
Stock Warrants		-		-		-
Weighted-Average Number of Shares Outstanding for Diluted Earnings Per Common Share		8,439,258		8,439,258		8,439,258
Earnings (Loss) Per Share - Basic	$	0.37	$	0.14	$	0.13
Earnings (Loss) Per Share - Diluted	$	0.37	$	0.14	$	0.13

For the years ended December 31, 2013, 2012 and 2011, respectively, the Company has excluded 500,000, 500,000 and 501,855 common stock equivalents with strike prices that would cause them to be antidilutive.

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Cash Flows from Operating Activities
Net Income	$ 4,629,045	$ 2,641,298	$ 2,533,595
Adjustments to Reconcile Net Income to Net Cash Provided from Operating Activities
Depreciation	1,527,392	1,676,820	1,790,041
Amortization and Accretion	2,667,404	4,180,158	3,487,124
Provision for Loan Losses	4,485,000	6,784,767	8,250,000
Deferred Income Taxes	2,178,222	1,204,439	867,006
Securities (Gains) Losses	363,804	(2,837,464)	(2,923,601)
(Gain) Loss on Sale of Premises and Equipment	(677)	1,148	3,668
Loss on Sale of Other Real Estate and Repossessions	1,565,091	1,839,196	1,106,479
Provision for Losses on Other Real Estate	1,321,418	2,702,709	1,411,061
Increase in Cash Surrender Value of Life Insurance	(338,712)	(185,341)	(174,289)
Change In
Interest Receivable	285,033	250,755	739,423
Prepaid Expenses	(168,060)	1,741,834	1,861,810
Interest Payable	385,285	74,637	(398,903)
Accrued Expenses and Accounts Payable	213,753	(95,972)	(405,612)
Other	(243,543)	2,827,648	(2,987,906)
Cash Flow from Operating Activities	18,870,455	22,806,632	15,159,896
Cash Flows from Investing Activities
Interest-Bearing Deposits in Other Banks	(164,950)	7,161,969	21,769,424
Purchase of Investment Securities Available for Sale	(132,419,073)	(250,445,594)	(381,284,748)
Proceeds from Sale of Investment Securities Available for Sale	72,672,795	227,690,806	342,672,937
Proceeds from Maturities, Calls and Paydowns of Investment Securities Available for Sale	48,330,382	54,006,594	41,978,769
Proceeds from Maturities, Calls and Paydowns of Investment Securities Held for Maturity	11,623	14,019	12,565
Proceeds from Sale of Premises and Equipment	2,500	1,500	1,605
Net Loans to Customers	(19,959,948)	(50,126,252)	63,267,200
Purchase of Premises and Equipment	(1,489,579)	(845,338)	(397,825)
Proceeds from Sale of Other Real Estate and Repossessions	8,041,638	9,876,136	9,991,792
Proceeds from Sale of Federal Home Loan Bank Stock	200,400	2,033,900	665,300
Purchase of Bank-Owned Life Insurance	(10,000,000)	0	0
Cash Flow from Investing Activities	(34,774,212)	(632,260)	98,677,019
Cash Flows from Financing Activities
Interest-Bearing Customer Deposits	16,550,430	(49,998,012)	(50,448,220)
Noninterest-Bearing Customer Deposits	(8,705,841)	29,697,631	(8,690,512)
Proceeds from Other Borrowed Money	21,500,000	5,000,000	0
Principal Payments on Other Borrowed Money	(16,500,000)	(41,000,000)	(4,076,010)
Dividends Paid on Preferred Stock	0	0	(1,400,000)
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase	0	0	(20,000,000)
Net Cash Flows from Financing Activities	12,844,589	(56,300,381)	(84,614,742)
Net Increase (Decrease) in Cash and Cash Equivalents	(3,059,168)	(34,126,009)	29,222,173
Cash and Cash Equivalents, Beginning	49,245,833	83,371,842	54,149,669
Cash and Cash Equivalents, Ending	$ 46,186,665	$ 49,245,833	$ 83,371,842

XML

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2013

Summary of Significant Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

Colony Bankcorp, Inc. (the Company) is a bank holding company located in Fitzgerald, Georgia. The consolidated financial statements include the accounts of Colony Bankcorp, Inc. and its wholly-owned subsidiary, Colony Bank, Fitzgerald, Georgia.  All significant intercompany accounts have been eliminated in consolidation.  The accounting and reporting policies of Colony Bankcorp, Inc. conform to generally accepted accounting principles and practices utilized in the commercial banking industry.

Nature of Operations

Nature of Operations

The Company provides a full range of retail and commercial banking services for consumers and small- to medium-size businesses located primarily in central, south and coastal Georgia. Colony Bank is headquartered in Fitzgerald, Georgia with banking offices in Albany, Ashburn, Broxton, Centerville, Chester, Columbus, Cordele, Douglas, Eastman, Fitzgerald, Leesburg, Moultrie, Pitts, Quitman, Rochelle, Savannah, Soperton, Sylvester, Thomaston, Tifton, Valdosta and Warner Robins.  Lending and investing activities are funded primarily by deposits gathered through its retail banking office network.

Use of Estimates

Use of Estimates

In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet date and revenues and expenses for the period.  Actual results could differ significantly from those estimates.  Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans.

Reclassifications

Reclassifications

In certain instances, amounts reported in prior years’ consolidated financial statements and note disclosures have been reclassified to conform to statement presentations selected for 2013.  Such reclassifications had no effect on previously reported stockholders’ equity or net income.

Concentrations of Credit Risk

Concentrations of Credit Risk

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, particularly with the current economic downturn in the real estate market.  At December 31, 2013, approximately 87 percent 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.  The downturn of the housing and real estate market that began in 2007 resulted in an increase of problem loans secured by real estate, of which most are centered in the Company’s larger MSA markets.  Declining collateral real estate values that secure land development, construction and speculative real estate loans in the Company’s larger MSA markets have resulted in high loan loss provisions in recent years.  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 loan loss analysis.

The success of the Company is dependent, to a certain extent, upon the economic conditions in the geographic markets it serves.  Adverse changes in the economic conditions in these geographic markets would likely have a material adverse effect on the Company’s results of operations and financial condition.  The operating results of the Company depend primarily on its net interest income. Accordingly, operations are subject to risks and uncertainties surrounding the exposure to changes in the interest rate environment.

At times, the Company may have cash and cash equivalents at financial institutions in excess of federal deposit insurance limits.  The Company places its cash and cash equivalents with high credit quality financial institutions whose credit rating is monitored by management to minimize credit risk.

Investment Securities

Investment Securities

The Company classifies its investment securities as trading, available for sale or held to maturity.  Securities that are held principally for resale in the near term are classified as trading.  Trading securities are carried at fair value, with realized and unrealized gains and losses included in noninterest income.  Currently, no securities are classified as trading.  Securities acquired with both the intent and ability to be held to maturity are classified as held to maturity and reported at amortized cost.  All securities not classified as trading or held to maturity are considered available for sale.  Securities available for sale are reported at estimated fair value.  Unrealized gains and losses on securities available for sale are excluded from earnings and are reported, net of deferred taxes, in accumulated other comprehensive income (loss), a component of stockholders’ equity.  Gains and losses from sales of securities available for sale are computed using the specific identification method.  Securities available for sale includes securities, which may be sold to meet liquidity needs arising from unanticipated deposit and loan fluctuations, changes in regulatory capital requirements, or unforeseen changes in market conditions.

The Company evaluates each held to maturity and available for sale security in a loss position for other-than-temporary impairment (OTTI).  In estimating other-than-temporary impairment losses, management considers such factors as the length of time and the extent to which the market value has been below cost, the financial condition of the issuer and the Company’s intent to sell and whether it is more likely than not that the Company will be required to sell the security before anticipated recovery of the amortized cost basis.  If the Company intends to sell or if it is more likely than not that the Company will be required to sell the security before recovery, the OTTI write-down is recognized in earnings.  If the Company does not intend to sell the security or it is not more likely than not that it will be required to sell the security before recovery, the OTTI write-down is separated into an amount representing credit loss, which is recognized in earnings, and an amount related to all other factors, which is recognized in other comprehensive income (loss).

Federal Home Loan Bank Stock

Federal Home Loan Bank Stock

Investment in stock of a Federal Home Loan Bank (FHLB) is required for every federally insured institution that utilizes its services.  FHLB stock is considered restricted, as defined in the accounting standards.  The FHLB stock is reported in the consolidated financial statements at cost.  Dividend income is recognized when earned.

Loans

Loans

Loans that the Company has the ability and intent to hold for the foreseeable future or until maturity are recorded at their principal amount outstanding, net of unearned interest and fees.  Loan origination fees, net of certain direct origination costs, are deferred and amortized over the estimated terms of the loans using the straight-line method.  Interest income on loans is recognized using the effective interest method.

A loan is considered to be delinquent when payments have not been made according to contractual terms, typically evidenced by nonpayment of a monthly installment by the due date.

When management believes there is sufficient doubt as to the collectibility of principal or interest on any loan or generally when loans are 90 days or more past due, the accrual of applicable interest is discontinued and the loan is designated as nonaccrual, unless the loan is well secured and in the process of collection.  Interest payments received on nonaccrual loans are either applied against principal or reported as income, according to management’s judgment as to the collectibility of principal.  Loans are returned to an accrual status when factors indicating doubtful collectibility on a timely basis no longer exist.

Loans Modified in a Troubled Debt Restructuring (TDR)

Loans Modified in a Troubled Debt Restructuring (TDR)

Loans are considered to have been modified in a TDR when, due to a borrower’s financial difficulty, the Company makes certain concessions to the borrower that it would not otherwise consider for new debt with similar risk characteristics.  Modifications may include interest rate reductions, principal or interest forgiveness, forbearance, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of the collateral.  Generally, a nonaccrual loan that has been modified in a TDR remains on nonaccrual status for a period of six months to demonstrate that the borrower is able to meet the terms of the modified loan.  However, performance prior to the modification, or significant events that coincide with the modification, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of loan modification or after a shorter performance period.  If the borrower’s ability to meet the revised payment schedule is uncertain, the loan remains on nonaccrual status. Once a loan is modified in a troubled debt restructuring, it is accounted for as an impaired loan, regardless of its accrual status, until the loan is paid in full, sold or charged off.

Allowance for Loan Losses

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings.  Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed.  Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions.  This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revisions as more information becomes available.

The allowance consists of specific, historical and general components.  The specific component relates to loans that are classified as either doubtful, substandard or special mention.  For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan.  The historical component covers nonclassified loans and is based on historical loss experience adjusted for qualitative factors.  A general component is maintained to cover uncertainties that could affect management’s estimate of probable losses.  The general component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and historical losses in the portfolio.  General valuation allowances are based on internal and external qualitative risk factors such as (1) changes in the composition of the loan portfolio, (2) the extent of loan concentrations within the portfolio, (3) the effectiveness of the Company’s lending policies, procedures and internal controls, (4) the experience, ability and effectiveness of the Company’s lending management and staff, and (5) national and local economics and business conditions.

Loans identified as losses by management, internal loan review and/or Bank examiners are charged off.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.  Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due.  Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.  Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed.  Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent.

A significant portion of the Company’s impaired loans are deemed to be collateral dependent.  Management therefore measures impairment on these loans based on the fair value of the collateral.  Collateral values are determined based on appraisals performed by qualified licensed appraisers hired by the Company or by senior members of the Company’s credit administration staff.  The decision whether or not to obtain an external third-party appraisal usually depends on the type of property being evaluated.  External appraisals are usually obtained on more complex, income producing properties such as hotels, shopping centers and businesses.  Less complex properties such as residential lots, farm land and single family houses may be evaluated internally by senior credit administration staff.  When the Company does obtain appraisals from external third-parties, the values utilized in the impairment calculation are “as is” or current market values.  The appraisals, whether prepared internally or externally, may utilize a single valuation approach or a combination of approaches including the comparable sales, income and cost approach.  Appraised amounts used in the impairment calculation are typically discounted 10 percent to account for selling and marketing costs, if the repayment of the loan is to come from the sale of the collateral.  Although appraisals may not be obtained each year on all impaired loans, the collateral values used in the impairment calculations are evaluated quarterly by management.  Based on management’s knowledge of the collateral and the current real estate market conditions, appraised values may be further discounted to reflect facts and circumstances known to management since the initial appraisal was performed.

Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are typically significant and result in a level 3 classification of the inputs for determining fair value.  Because of the high degree of judgment required in estimating the fair value of collateral underlying impaired loans and because of the relationship between fair value and general economic conditions, we consider the fair value of impaired loans to be highly sensitive to changes in market conditions.

Premises and Equipment

Premises and Equipment

Premises and equipment are recorded at acquisition cost net of accumulated depreciation.

Depreciation is charged to operations over the estimated useful lives of the assets.  The estimated useful lives and methods of depreciation are as follows:

Description	Life in Years		Method
Banking Premises		15-40	Straight-Line and Accelerated
Furniture and Equipment		5-10	Straight-Line and Accelerated

Expenditures for major renewals and betterments are capitalized.  Maintenance and repairs are charged to operations as incurred.  When property and equipment are retired or sold, the cost and accumulated depreciation are removed from the respective accounts and any gain or loss is reflected in other income or expense.

Intangible Assets

Intangible Assets

Intangible assets consist of core deposit intangibles acquired in connection with a business combination.  The core deposit intangible is initially recognized based on an independent valuation performed as of the consummation date.  The core deposit intangible is amortized by the straight-line method over the average remaining life of the acquired customer deposits.

Transfers of Financial Assets

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered.  Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Statement of Cash Flows

Statement of Cash Flows

For reporting cash flows, cash and cash equivalents include cash on hand, noninterest-bearing amounts due from banks, federal funds sold and securities purchased under agreement to resell.  Cash flows from demand deposits, interest-bearing checking accounts, savings accounts, loans and certificates of deposit are reported net.

Securities Purchased Under Agreement to Resell and Securities Sold Under Agreements to Repurchase

Securities Purchased Under Agreement to Resell and Securities Sold Under Agreements to Repurchase

The Company purchases certain securities under agreements to resell.  The amounts advanced under these agreements represent short-term loans and are reflected as assets in the consolidated balance sheets.

The Company sells securities under agreements to repurchase.  These repurchase agreements are treated as borrowings.  The obligations to repurchase securities sold are reflected as a liability and the securities underlying the agreements are reflected as assets in the consolidated balance sheets.

Advertising Costs

Advertising Costs

The Company expenses the cost of advertising in the periods in which those costs are incurred.

Income Taxes

Income Taxes

The provision for income taxes is based upon income for financial statement purposes, adjusted for nontaxable income and nondeductible expenses.  Deferred income taxes have been provided when different accounting methods have been used in determining income for income tax purposes and for financial reporting purposes.

Deferred tax assets and liabilities are recognized based on future tax consequences attributable to differences arising from the financial statement carrying values of assets and liabilities and their tax bases.  The differences relate primarily to depreciable assets (use of different depreciation methods for financial statement and income tax purposes) and allowance for loan losses (use of the allowance method for financial statement purposes and the direct write-off method for tax purposes).  In the event of changes in the tax laws, deferred tax assets and liabilities are adjusted in the period of the enactment of those changes, with effects included in the income tax provision.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The Company and its subsidiary file a consolidated federal income tax return.  The subsidiary pays its proportional share of federal income taxes to the Company based on its taxable income.

The Company’s federal and state income tax returns for tax years 2013, 2012, 2011 and 2010 are subject to examination by the Internal Revenue Service (IRS) and the Georgia Department of Revenue, generally for three years after filing.

Positions taken in the Company’s tax returns may be subject to challenge by the taxing authorities upon examination.  Uncertain tax positions are initially recognized in the consolidated financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities.  Such tax positions are both initially and subsequently measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon settlement with the tax authority, assuming full knowledge of the position and all relevant facts.  The Company provides for interest and, in some cases, penalties on tax positions that may be challenged by the taxing authorities. Interest expense is recognized beginning in the first period that such interest would begin accruing.  Penalties are recognized in the period that the Company claims the position in the tax return.  Interest and penalties on income tax uncertainties are classified within income tax expense in the consolidated statements of operations.

Other Real Estate

Other Real Estate

Other real estate generally represents real estate acquired through foreclosure and is initially recorded at estimated fair value at the date of acquisition less the cost of disposal.  Losses from the acquisition of property in full or partial satisfaction of debt are recorded as loan losses.  Properties are evaluated regularly to ensure the recorded amounts are supported by current fair values, and valuation allowances are recorded as necessary to reduce the carrying amount to fair value less estimated cost of disposal.  Routine holding costs and gains or losses upon disposition are included in foreclosed property expense.

Bank-Owned Life Insurance

Bank-Owned Life Insurance

The Company has purchased life insurance on the lives of certain key members of management and directors.  The life insurance policies are recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or amounts due that are probable at settlement, if applicable.  Increases in the cash surrender value are recorded as other income in the consolidated statements of income.The cash surrender value of the insurance contracts is recorded in other assets on the consolidated balance sheets in the amount of $13,940,176 and $3,601,464 as of December 31, 2013 and 2012, respectively.

Comprehensive Income

Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income.  Certain changes in assets and liabilities, such as unrealized gains and losses on securities available for sale, represent equity changes from economic events of the period other than transactions with owners.  Such items are considered components of other comprehensive income (loss).  Accounting standards codification requires the presentation in the consolidated financial statements of net income and all items of other comprehensive income (loss) as total comprehensive income (loss).

Off-Balance Sheet Credit Related Financial Instruments

Off-Balance Sheet Credit Related Financial Instruments

In the ordinary course of business, the Company has entered into commitments to extend credit, commercial letters of credit and standby letters of credit.  Such financial instruments are recorded on the balance sheet when they are funded.

Changes in Accounting Principles and Effects of New Accounting Pronouncements

Changes in Accounting Principles and Effects of New Accounting Pronouncements

Adoption of New Accounting Standards

ASU 2013-02, Comprehensive Income (Topic 220) - Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 amends recent guidance related to the reporting of comprehensive income to enhance the reporting of reclassifications out of accumulated other comprehensive income. ASU 2013-02 became effective for the Company on January 1, 2013 and did not have a significant impact on the Company’s consolidated financial statements.

ASU 2012-02, Intangibles - Goodwill and Other (Topic 350) - Testing Indefinite-Lived Intangible Assets for Impairment. ASU 2012-02 gives entities the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that an indefinite-lived intangible asset is impaired. If, after assessing the totality of events or circumstances, an entity determines it is more likely than not that an indefinite-lived intangible asset is impaired, then the entity must perform the quantitative impairment test. If, under the quantitative impairment test, the carrying amount of the intangible asset exceeds its fair value, an entity should recognize an impairment loss in the amount of that excess. Permitting an entity to assess qualitative factors when testing indefinite-lived intangible assets for impairment results in guidance that is similar to the goodwill impairment testing guidance in ASU 2011-08. ASU 2012-02 became effective for the Company on January 1, 2013 and did not have a significant impact on the Company’s consolidated financial statements.

ASU 2011-11, Balance Sheet (Topic 210) - Disclosures about Offsetting Assets and Liabilities.  ASU 2011-11 amends Topic 210, Balance Sheet, to require an entity to disclose both gross and net information about financial instruments, such as sales and repurchase agreements and reverse sale and repurchase agreements and securities borrowing/lending arrangements, and derivative instruments that are eligible for offset in the consolidated balance sheet and/or subject to a master netting arrangement or similar agreement.  ASU No. 2013-01, Balance Sheet (Topic 210) - Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, clarifies that ordinary trade receivables are not within the scope of ASU 2011-11.  ASU 2011-11 became effective for the Company on January 1, 2013 and did not have a significant impact on the Company’s consolidated financial statements.

XML

Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2013

Intangible Assets [Abstract]

Core deposit intangible activity

The following is an analysis of the core deposit intangible activity for the years ended December 31:

	Core Deposit Intangible		Accumulated Amortization			Net Core Deposit Intangible
Core Deposit Intangible
Balance, December 31, 2011	$	1,056,693	$	(797,435	)	$	259,258
Amortization Expense		-		(35,748	)		(35,748	)
Balance, December 31, 2012		1,056,693		(833,183	)		223,510
Amortization Expense		-		(35,749	)		(35,749	)
Balance, December 31, 2013	$	1,056,693	$	(868,932	)	$	187,761

XML

Cash and Balances Due from Banks (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Cash and Due from Banks [Abstract]
Cash on Hand and Cash Items	$ 10,531,340	$ 9,063,437
Noninterest-Bearing Deposits with Other Banks	15,160,265	20,180,490
Cash and balances due from banks	25,691,605	29,243,927
Reserve balances	$ 1,252,000	$ 6,065,000

XML

Employee Benefit Plan (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Employee Benefit Plan [Abstract]
Employee service period	6 years
Discretionary contributions by employer	$ 0	$ 0	$ 0

XML

CONSOLIDATED BALANCE SHEETS (USD $)	Dec. 31, 2013	Dec. 31, 2012
Cash and Cash Equivalents
Cash and Due from Banks	$ 25,691,605	$ 29,243,927
Federal Funds Sold	20,495,060	20,001,906
Cash and Cash Equivalents	46,186,665	49,245,833
Interest-Bearing Deposits	21,960,291	21,795,341
Investment Securities
Available for Sale, at Fair Value	263,257,890	268,300,411
Held to Maturity, at Cost (Fair Value of $37,309 and $41,909 as of December 31, 2013 and 2012, Respectively)	37,062	41,467
Investment Securities	263,294,952	268,341,878
Federal Home Loan Bank Stock, at Cost	3,163,900	3,364,300
Loans	751,218,462	747,050,011
Allowance for Loan Losses	(11,805,986)	(12,736,921)
Unearned Interest and Fees	(360,522)	(233,927)
Loans, net	739,051,954	734,079,163
Premises and Equipment	24,876,469	24,916,106
Other Real Estate (Net of Allowance of $3,985,920 and $4,561,099 in 2013 and 2012, Respectively)	15,502,462	15,940,693
Other Intangible Assets	187,761	223,510
Other Assets	34,326,432	21,489,957
Total Assets	1,148,550,886	1,139,396,781
Deposits
Noninterest-Bearing	115,260,701	123,966,542
Interest-Bearing	872,268,779	855,718,349
Deposits	987,529,480	979,684,891
Borrowed Money
Subordinated Debentures	24,229,000	24,229,000
Other Borrowed Money	40,000,000	35,000,000
Borrowed Money	64,229,000	59,229,000
Other Liabilities	6,838,167	4,723,723
Commitments and Contingencies
Stockholders' Equity
Preferred Stock, Stated Value $1,000; Authorized 10,000,000 Shares, Issued 28,000 Shares	28,000,000	27,827,053
Common Stock, Par Value $1; Authorized 20,000,000 Shares, Issued 8,439,258 Shares as of December 31, 2013 and 2012	8,439,258	8,439,258
Paid-In Capital	29,145,094	29,145,094
Retained Earnings	33,444,913	30,497,576
Accumulated Other Comprehensive Loss, Net of Tax	(9,075,026)	(149,814)
Stockholders' Equity	89,954,239	95,759,167
Total Liabilities and Stockholders' Equity	$ 1,148,550,886	$ 1,139,396,781

XML

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies [Abstract]

Financial instrument outstanding with contract amount representing credit risk

At December 31, 2013 and 2012, the following financial instruments were outstanding whose contract amounts represent credit risk:

	Contract Amount
	2013		2012
Commitments to Extend Credit	$	65,688,000	$	64,147,000
Standby Letters of Credit		1,411,000		1,141,000

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Other Comprehensive Income (Loss), Net of Tax
Gains (Losses) on Securities Arising During the Year, Tax	$ (4,597,836)	$ (1,060,984)	$ 1,292,789
Impairment Loss on Securities, Tax	(124,652)	(20,253)	(18,040)
Realized Gains (Losses) on Sale of AFS Securities, Tax	$ 959	$ 984,991	$ 1,012,064

XML

Loans, Troubled Debt Restructuring (Details) (USD $)	1 Months Ended
	Aug. 30, 2013	Jan. 31, 2012	Dec. 31, 2011 Security Loan	Mar. 31, 2011	Dec. 31, 2013 Security Loan	Dec. 31, 2012 Loan Security
Financing Receivable, Modifications [Line Items]
Troubled Debt Restructurings, # of Contracts			23		8	7
Troubled Debt Restructurings, Pre-Modification			$ 27,003,321		$ 2,423,933	$ 1,247,169
Troubled Debt Restructurings, Post-Modification			20,335,408		2,297,487	1,244,198
Troubled Debt Restructurings That Subsequently Defaulted, # of Contracts			7		1	2
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment			7,973,756		81,277	213,291
Number of restructured loans failed to continue to perform as agreed			2		1	1
Amount of restructured loans charged off	81,277	10,000	51,998	999,133
Commercial [Member]
Financing Receivable, Modifications [Line Items]
Troubled Debt Restructurings, # of Contracts			3		1	1
Troubled Debt Restructurings, Pre-Modification			3,240,469		83,748	107,749
Troubled Debt Restructurings, Post-Modification			1,541,882		81,277	107,749
Troubled Debt Restructurings That Subsequently Defaulted, # of Contracts			1		1	0
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment			1,175,922		81,277	0
Commercial Construction [Member]
Financing Receivable, Modifications [Line Items]
Troubled Debt Restructurings, # of Contracts			3		2
Troubled Debt Restructurings, Pre-Modification			1,430,147		228,633
Troubled Debt Restructurings, Post-Modification			1,430,101		225,959
Troubled Debt Restructurings That Subsequently Defaulted, # of Contracts			3		0	0
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment			4,475,473		0	0
Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Troubled Debt Restructurings, # of Contracts			9		1	1
Troubled Debt Restructurings, Pre-Modification			20,827,349		225,852	56,835
Troubled Debt Restructurings, Post-Modification			15,906,547		225,852	56,835
Troubled Debt Restructurings That Subsequently Defaulted, # of Contracts			3		0	1
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment			2,322,361		0	203,291
Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Troubled Debt Restructurings, # of Contracts			8		4	5
Troubled Debt Restructurings, Pre-Modification			1,505,356		1,885,700	1,082,585
Troubled Debt Restructurings, Post-Modification			1,456,878		1,764,399	1,079,614
Troubled Debt Restructurings That Subsequently Defaulted, # of Contracts			0		0	1
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment			$ 0		$ 0	$ 10,000

XML

Investment Securities (Tables)

12 Months Ended

Dec. 31, 2013

Investment Securities [Abstract]

Investment securities

Investment securities as of December 31, 2013 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale
U.S. Government Agencies Mortgage-Backed	$	273,029,073	$	118,843	$	(13,799,858	)	$	259,348,058
State, County and Municipal		3,978,857		14,963		(83,988	)		3,909,832
	$	277,007,930	$	133,806	$	(13,883,846	)	$	263,257,890
Securities Held to Maturity
State, County and Municipal	$	37,062	$	247	$	-		$	37,309

Amortized cost and fair value of investment securities by contractual maturity

The amortized cost and fair value of investment securities as of December 31, 2013, by contractual maturity, are shown hereafter.  Expected maturities may differ from contractual maturities for certain investments because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.  This is often the case with mortgage-backed securities, which are disclosed separately in the table below.

	Securities
	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in One Year or Less	$	272,219	$	274,166	$	-	$	-
Due After One Year Through Five Years		1,755,607		1,768,121		37,062		37,309
Due After Five Years Through Ten Years		1,298,122		1,265,127		-		-
Due After Ten Years		652,909		602,418		-		-
		3,978,857		3,909,832		37,062		37,309
Mortgage-Backed Securities		273,029,073		259,348,058		-		-
	$	277,007,930	$	263,257,890	$	37,062	$	37,309

Investment securities as of December 31, 2012 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale
U.S. Government Agencies Mortgage-Backed	$	263,186,852	$	833,920	$	(961,698	)	$	263,059,074
State, County and Municipal		3,973,926		34,670		(4,586	)		4,004,010
Corporate Obligations		1,000,000		104,900		-			1,104,900
Asset-Backed Securities		366,623		-		(234,196	)		132,427
	$	268,527,401	$	973,490	$	(1,200,480	)	$	268,300,411
Securities Held to Maturity
State, County and Municipal	$	41,467	$	442	$	-		$	41,909

Invested securities in a continuous unrealized loss position

Information pertaining to securities with gross unrealized losses at December 31, 2013 and 2012 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
December 31, 2013
U.S. Government Agencies Mortgage-Backed	$	190,063,827	$	(9,440,663	)	$	63,193,601	$	(4,359,195	)	$	253,257,428	$	(13,799,858	)
State, County and Municipal		1,647,043		(83,988	)		-		-			1,647,043		(83,988	)
	$	191,710,870	$	(9,524,651	)	$	63,193,601	$	(4,359,195	)	$	254,904,471	$	(13,883,846	)
December 31, 2012
U.S. Government Agencies Mortgage-Backed	$	142,103,991	$	(961,698	)	$	-	$	-		$	142,103,991	$	(961,698	)
State, County and Municipal		1,430,512		(4,586	)		-		-			1,430,512		(4,586	)
Asset-Backed Securities		-		-			132,427		(234,196	)		132,427		(234,196	)
	$	143,534,503	$	(966,284	)	$	132,427	$	(234,196	)	$	143,666,930	$	(1,200,480	)

XML

Intangible Assets (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Analysis of core deposit intangible activity [Abstract]
Annual rate of amortization expense till 2019	$ 35,749
Core Deposit Intangible [Member]
Analysis of core deposit intangible activity [Abstract]
Acquired intangible asset, Gross Beginning Balance	1,056,693	1,056,693
Accumulated Amortization, Beginning Balance	(833,183)	(797,435)
Acquired intangible asset, Net Beginning Balance	223,510	259,258
Amortization Expense	(35,749)	(35,748)	35,749
Acquired intangible asset, Gross Ending Balance	1,056,693	1,056,693	1,056,693
Accumulated Amortization, Ending Balance	(868,932)	(833,183)	(797,435)
Acquired intangible asset, Net Ending Balance	$ 187,761	$ 223,510	$ 259,258

XML

Restricted Stock - Unearned Compensation

12 Months Ended

Dec. 31, 2013

Restricted Stock - Unearned Compensation [Abstract]

Restricted Stock - Unearned Compensation

(14) Restricted Stock - Unearned Compensation

In April 2004, the stockholders of Colony Bankcorp, Inc. adopted a restricted stock grant plan which awards certain executive officers common shares of the Company.  The maximum number of shares which may be subject to restricted stock awards (split-adjusted) is 143,500.  To date, 53,256 shares have been issued under this plan and 17,798 shares have been forfeited; thus, the remaining shares which may be issued are 108,042 at December 31, 2013.  During 2013, there were no shares of restricted stock issued or forfeited. The shares are recorded at fair market value (on the date granted) as a separate component of stockholders’ equity.  The cost of the shares, when issued, is amortized against earnings using the straight-line method over the restriction period, typically three years.

XML

Loans (Tables)

12 Months Ended

Dec. 31, 2013

Loans [Abstract]

Loans segregated by class of loans

The following table presents the composition of loans, segregated by class of loans, as of December 31:

	2013		2012
Commercial and Agricultural
Commercial	$	48,107,448	$	55,684,492
Agricultural		10,665,938		6,210,953
Real Estate
Commercial Construction		52,738,783		53,808,056
Residential Construction		6,549,260		5,852,238
Commercial		341,783,538		334,386,177
Residential		206,257,927		203,844,522
Farmland		47,034,426		49,056,861
Consumer and Other
Consumer		25,675,560		29,777,776
Other		12,405,582		8,428,936
Total Loans	$	751,218,462	$	747,050,011

Loan portfolio by credit quality indicator (risk grade)

The following tables present the loan portfolio by credit quality indicator (risk grade) as of December 31. Those loans with a risk grade of 1, 2, 3 or 4 have been combined in the pass column for presentation purposes.

2013	Pass		Special Mention		Substandard		Total Loans
Commercial and Agricultural
Commercial	$	41,759,281	$	2,770,284	$	3,577,883	$	48,107,448
Agricultural		10,637,705		16,830		11,403		10,665,938
Real Estate
Commercial Construction		42,668,320		1,512,301		8,558,162		52,738,783
Residential Construction		6,341,530		207,730		-		6,549,260
Commercial		317,567,749		10,759,954		13,455,835		341,783,538
Residential		182,977,361		13,523,478		9,757,088		206,257,927
Farmland		44,776,355		507,122		1,750,949		47,034,426
Consumer and Other
Consumer		24,608,175		320,473		746,912		25,675,560
Other		12,356,116		711		48,755		12,405,582
Total Loans	$	683,692,592	$	29,618,883	$	37,906,987	$	751,218,462
2012
Commercial and Agricultural
Commercial	$	49,947,552	$	1,417,735	$	4,319,205	$	55,684,492
Agricultural		6,155,864		-		55,089		6,210,953
Real Estate
Commercial Construction		37,256,301		1,663,588		14,888,167		53,808,056
Residential Construction		5,748,829		103,409		-		5,852,238
Commercial		298,222,139		9,759,473		26,404,565		334,386,177
Residential		183,222,020		11,412,973		9,209,529		203,844,522
Farmland		45,495,038		913,487		2,648,336		49,056,861
Consumer and Other
Consumer		28,839,058		293,467		645,251		29,777,776
Other		8,350,772		8,907		69,257		8,428,936
Total Loans	$	663,237,573	$	25,573,039	$	58,239,399	$	747,050,011

Age analysis of past due loans and nonaccrual loans, segregated by class of loans

The following table represents an age analysis of past due loans and nonaccrual loans, segregated by class of loans, as of December 31:

	Accruing Loans
2013	30-89 Days Past Due		90 Days or More Past Due		Total Accruing Loans Past Due		Nonaccrual Loans		Current Loans		Total Loans
Commercial and Agricultural
Commercial	$	581,281	$	-	$	581,281	$	1,646,418	$	45,879,749	$	48,107,448
Agricultural		81,036		-		81,036		-		10,584,902		10,665,938
Real Estate
Commercial Construction		139,826		-		139,826		8,221,745		44,377,212		52,738,783
Residential Construction		-		-		-		-		6,549,260		6,549,260
Commercial		2,287,341		-		2,287,341		7,366,703		332,129,494		341,783,538
Residential		5,273,586		-		5,273,586		4,933,420		196,050,921		206,257,927
Farmland		350,718		-		350,718		1,629,611		45,054,097		47,034,426
Consumer and Other
Consumer		453,580		3,991		457,571		307,456		24,910,533		25,675,560
Other		198,451		-		198,451		9,146		12,197,985		12,405,582
Total Loans	$	9,365,819	$	3,991	$	9,369,810	$	24,114,499	$	717,734,153	$	751,218,462
2012
Commercial and Agricultural
Commercial	$	797,612	$	-	$	797,612	$	1,033,371	$	53,853,509	$	55,684,492
Agricultural		28,228		-		28,228		39,213		6,143,512		6,210,953
Real Estate
Commercial Construction		1,309,618		-		1,309,618		14,032,580		38,465,858		53,808,056
Residential Construction		-		-		-		-		5,852,238		5,852,238
Commercial		3,771,106		-		3,771,106		6,629,789		323,985,282		334,386,177
Residential		8,223,174		-		8,223,174		5,429,971		190,191,377		203,844,522
Farmland		140,095		-		140,095		2,413,104		46,503,662		49,056,861
Consumer and Other
Consumer		636,888		4,355		641,243		255,216		28,881,317		29,777,776
Other		4,557		-		4,557		17,491		8,406,888		8,428,936
Total Loans	$	14,911,278	$	4,355	$	14,915,633	$	29,850,735	$	702,283,643	$	747,050,011

Impaired loan data

The following table details impaired loan data as of December 31, 2013:

	Unpaid Contractual Principal Balance		Impaired Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized			Interest Income Collected
With No Related Allowance Recorded
Commercial	$	305,272	$	305,272	$	-	$	216,057	$	24,494		$	25,193
Agricultural		-		-		-		9,803		-			-
Commercial Construction		7,856,411		4,750,157		-		4,105,370		34,908			41,164
Commercial Real Estate		20,120,403		19,252,946		-		13,198,988		493,940			503,392
Residential Real Estate		7,836,718		6,361,592		-		4,564,666		224,439			209,330
Farmland		302,629		302,629		-		1,858,654		803			869
Consumer		313,194		307,456		-		252,944		18,469			21,109
Other		9,146		9,146		-		2,287		556			575
		36,743,773		31,289,198		-		24,208,769		797,609			801,632
With An Allowance Recorded
Commercial		1,452,798		1,452,798		433,714		1,689,125		14,845			20,748
Agricultural		-		-		-		-		-			-
Commercial Construction		5,922,674		3,471,587		830,546		5,025,176		(159	)		-
Commercial Real Estate		5,874,473		5,874,473		423,685		11,072,314		157,536			148,495
Residential Real Estate		1,949,301		1,849,301		526,005		3,661,706		25,739			24,414
Farmland		1,326,982		1,326,982		85,500		663,903		44,638			46,930
Consumer		-		-		-		-		-			-
Other		-		-		-		-		-			-
		16,526,228		13,975,141		2,299,450		22,112,224		242,599			240,587
Total
Commercial		1,758,070		1,758,070		433,714		1,905,182		39,339			45,941
Agricultural		-		-		-		9,803		-			-
Commercial Construction		13,779,085		8,221,744		830,546		9,130,546		34,749			41,164
Commercial Real Estate		25,994,876		25,127,419		423,685		24,271,302		651,476			651,887
Residential Real Estate		9,786,019		8,210,893		526,005		8,226,372		250,178			233,744
Farmland		1,629,611		1,629,611		85,500		2,522,557		45,441			47,799
Consumer		313,194		307,456		-		252,944		18,469			21,109
Other		9,146		9,146		-		2,287		556			575
	$	53,270,001	$	45,264,339	$	2,299,450	$	46,320,993	$	1,040,208		$	1,042,219

The following table details impaired loan data as of December 31, 2012:

	Unpaid Contractual Principal Balance		Impaired Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Collected
With No Related Allowance Recorded
Commercial	$	1,508,236	$	1,041,938	$	-	$	1,052,916	$	27,407	$	28,410
Agricultural		39,213		39,213		-		58,056		-		-
Commercial Construction		10,624,917		6,414,986		-		9,194,360		27,377		51,820
Commercial Real Estate		16,565,971		15,505,907		-		26,482,274		430,339		420,549
Residential Real Estate		4,450,128		4,131,707		-		3,096,151		89,139		123,101
Farmland		2,828,539		2,413,103		-		2,326,180		42,588		55,258
Consumer		297,356		255,216		-		228,181		10,441		12,920
Other		17,491		17,491		-		24,414		1,191		1,291
		36,331,851		29,819,561		-		42,462,532		628,482		693,349
With An Allowance Recorded
Commercial		1,493,432		1,493,432		462,555		942,673		91,888		87,611
Agricultural		-		-		-		-		-		-
Commercial Construction		8,266,649		7,617,594		1,732,534		10,533,468		-		-
Commercial Real Estate		12,758,884		12,745,422		1,236,526		6,398,364		383,356		366,423
Residential Real Estate		5,514,994		4,421,809		840,492		4,288,062		144,661		117,266
Farmland		-		-		-		64,862		-		-
Consumer		-		-		-		-		-		-
Other		-		-		-		-		-		-
		28,033,959		26,278,257		4,272,107		22,227,429		619,905		571,300
Total
Commercial		3,001,668		2,535,370		462,555		1,995,589		119,295		116,021
Agricultural		39,213		39,213		-		58,056		-		-
Commercial Construction		18,891,566		14,032,580		1,732,534		19,727,828		27,377		51,820
Commercial Real Estate		29,324,855		28,251,329		1,236,526		32,880,638		813,695		786,972
Residential Real Estate		9,965,122		8,553,516		840,492		7,384,213		233,800		240,367
Farmland		2,828,539		2,413,103		-		2,391,042		42,588		55,258
Consumer		297,356		255,216		-		228,181		10,441		12,920
Other		17,491		17,491		-		24,414		1,191		1,291
	$	64,365,810	$	56,097,818	$	4,272,107	$	64,689,961	$	1,248,387	$	1,264,649

Loans modified in troubled debt restructuring

Troubled Debt Restructurings

2013	# of Contracts		Pre-Modification		Post-Modification
Commercial		1	$	83,748	$	81,277
Commercial Construction		2		228,633		225,959
Commercial Real Estate		1		225,852		225,852
Residential Real Estate		4		1,885,700		1,764,399
Total Loans		8	$	2,423,933	$	2,297,487
2012
Commercial		1	$	107,749	$	107,749
Commercial Real Estate		1		56,835		56,835
Residential Real Estate		5		1,082,585		1,079,614
Total Loans		7	$	1,247,169	$	1,244,198
2011
Commercial		3	$	3,240,469	$	1,541,882
Commercial Construction		3		1,430,147		1,430,101
Commercial Real Estate		9		20,827,349		15,906,547
Residential Real Estate		8		1,505,356		1,456,878
Total Loans		23	$	27,003,321	$	20,335,408

Troubled debt restructurings that subsequently defaulted as of December 31 are as follows:

	2013				2012				2011
	# of Contracts		Recorded Investment		# of Contracts		Recorded Investment		# of Contracts		Recorded Investment
Commercial		1	$	81,277		-	$	-		1	$	1,175,922
Commercial Construction		-		-		-		-		3		4,475,473
Commercial Real Estate		-		-		1		203,291		3		2,322,361
Residential Real Estate		-		-		1		10,000		-		-
Total Loans		1	$	81,277		2	$	213,291		7	$	7,973,756

XML

Commitments and Contingencies

12 Months Ended

Dec. 31, 2013

Commitments and Contingencies [Abstract]

Commitments and Contingencies

(16) Commitments and Contingencies

Credit-Related Financial Instruments.  The Company is a party to credit-related financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit, standby letters of credit and commercial letters of credit.  Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

The Company’s exposure to credit loss is represented by the contractual amount of these commitments.  The Company follows the same credit policies in making commitments as it does for on-balance sheet instruments.

At December 31, 2013 and 2012, the following financial instruments were outstanding whose contract amounts represent credit risk:

	Contract Amount
	2013		2012
Commitments to Extend Credit	$	65,688,000	$	64,147,000
Standby Letters of Credit		1,411,000		1,141,000

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.  The commitments for equity lines of credit may expire without being drawn upon.  Therefore, the total commitment amounts do not necessarily represent future cash requirements.  The amount of collateral obtained, if it is deemed necessary by the Company, is based on management’s credit evaluation of the customer.

Unfunded commitments under commercial lines of credit, revolving credit lines and overdraft protection agreements are commitments for possible future extensions of credit to existing customers.  These lines of credit are uncollateralized and usually do not contain a specified maturity date and may not be drawn upon to the total extent to which the Company is committed.

Standby and performance letters of credit are conditional lending commitments issued by the Company to guarantee the performance of a customer to a third party.  Those letters of credit are primarily issued to support public and private borrowing arrangements.  Essentially all letters of credit issued have expiration dates within one year.  The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

Legal Contingencies.  In the ordinary course of business, there are various legal proceedings pending against Colony and its subsidiary.  The aggregate liabilities, if any, arising from such proceedings would not, in the opinion of management, have a material adverse effect on Colony’s consolidated financial position.

XML

Other Borrowed Money (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Other Borrowed Money [Abstract]
Federal Home Loan Bank Advances	$ 40,000,000	$ 35,000,000
Federal Home Loan Bank advances, earliest maturity	2017
Federal Home Loan Bank advances, last maturity	2020
Interest rate on Federal Home Loan Bank Advances, Minimum (in hundredths)	0.49%
Interest rate on Federal Home Loan Bank Advances, Maximum (in hundredths)	4.75%
Book value of loans pledged	90,000,000
Remaining credit availability from FHLB	126,490,000
Aggregate stated maturities of other borrowed money [Abstract]
2017	9,000,000
2018 and Thereafter	31,000,000
Federal Home Loan Bank Advances subject to fixed rate	30,000,000
Federal Home Loan Bank Advances subject to floating rate	10,000,000
Conversion period of interest from floating rate to fixed rate	2 years
Federal funds lines of credit	43,000,000
Federal funds lines of credit outstanding	0
Federal Reserve Bank of Atlanta [Member]
Short-term Debt [Line Items]
Borrowing outstanding	0
Repurchase Agreements [Member]
Short-term Debt [Line Items]
Available repurchase agreement line of credit	$ 50,000,000

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $)	Preferred Stock [Member]	Common Stock [Member]	Paid-in Capital [Member]	Retained Earnings [Member]	Restricted Stock - Unearned Compensation [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance at Dec. 31, 2010	$ 27,505,910	$ 8,442,958	$ 29,171,087	$ 28,479,211	$ (40,794)	$ (599,789)	$ 92,958,583
Balance (in shares) at Dec. 31, 2010		8,442,958
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Forfeiture of Restricted Stock		(3,700)	(25,993)		29,693		0
Forfeiture of Restricted Stock (in shares)		(3,700)
Amortization of Unearned Compensation					11,101		11,101
Change in Net Unrealized Gains (Losses) on Securities Available for Sale, Net of Reclassification Adjustment and Tax Effects						2,509,531	2,509,531
Accretion of Fair Value of Warrant	156,566			(156,566)			0
Dividends on Preferred Shares				(1,400,000)			(1,400,000)
Net Income				2,533,595			2,533,595
Balance at Dec. 31, 2011	27,662,476	8,439,258	29,145,094	29,456,240	0	1,909,742	96,612,810
Balance (in shares) at Dec. 31, 2011		8,439,258
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Change in Net Unrealized Gains (Losses) on Securities Available for Sale, Net of Reclassification Adjustment and Tax Effects						(2,059,556)	(2,059,556)
Accretion of Fair Value of Warrant	164,577			(164,577)			0
Dividends on Preferred Shares				(1,435,385)			(1,435,385)
Net Income				2,641,298			2,641,298
Balance at Dec. 31, 2012	27,827,053	8,439,258	29,145,094	30,497,576	0	(149,814)	95,759,167
Balance (in shares) at Dec. 31, 2012		8,439,258
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Change in Net Unrealized Gains (Losses) on Securities Available for Sale, Net of Reclassification Adjustment and Tax Effects						(8,925,212)	(8,925,212)
Accretion of Fair Value of Warrant	172,947			(172,947)			0
Dividends on Preferred Shares				(1,508,761)			(1,508,761)
Net Income				4,629,045			4,629,045
Balance at Dec. 31, 2013	$ 28,000,000	$ 8,439,258	$ 29,145,094	$ 33,444,913	$ 0	$ (9,075,026)	$ 89,954,239
Balance (in shares) at Dec. 31, 2013		8,439,258

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Investment Securities
Held to Maturity, Fair Value	$ 37,309	$ 41,909
Other Real Estate, Allowance	$ 3,985,920	$ 4,561,099
Stockholders' Equity
Preferred Stock, Par Value (in dollars per share)	$ 1,000	$ 1,000
Preferred Stock, Authorized (in shares)	10,000,000	10,000,000
Preferred Stock, Issued (in shares)	28,000	28,000
Common Stock, Par Value (in dollars per share)	$ 1	$ 1
Common Stock, Authorized (in shares)	20,000,000	20,000,000
Common Stock, Issued (in shares)	8,439,258	8,439,258

XML

Income Taxes

12 Months Ended

Dec. 31, 2013

Income Taxes [Abstract]

Income Taxes

(9) Income Taxes

The components of income tax (benefit) expense for the years ended December 31 are as follows:

	2013		2012			2011
Current Federal (Benefit) Expense	$	156,642	$	(6,114	)	$	311,174
Deferred Federal (Benefit) Expense		2,178,222		1,204,439			867,006
Federal Income Tax (Benefit) Expense		2,334,864		1,198,325			1,178,180
Current State Income Tax (Benefit) Expense		-		2,526			(74,297	)
	$	2,334,864	$	1,200,851		$	1,103,883

The federal income tax (benefit) expense of $2,334,864 in 2013, $1,198,325 in 2012 and $1,178,180 in 2011 is different than the income taxes computed by applying the federal statutory rates to income before income taxes.  The reasons for the differences are as follows:

	2013			2012			2011
Statutory Federal Income Taxes	$	2,367,729		$	1,306,331		$	1,228,538
Tax-Exempt Interest		(110,752	)		(94,891	)		(126,468	)
Interest Expense Disallowance		6,445			4,908			8,751
Premiums on Officers’ Life Insurance		(111,749	)		(59,603	)		(52,431	)
Meal and Entertainment Disallowance		26,549			25,567			20,693
Other		156,642			16,013			99,097
Actual Federal Income Taxes	$	2,334,864		$	1,198,325		$	1,178,180

Deferred taxes in the accompanying consolidated balance sheets as of December 31 include the following:

	2013			2012
Deferred Tax Assets
Allowance for Loan Losses	$	4,014,035		$	4,330,553
Other Real Estate		1,404,812			1,668,653
Deferred Compensation		303,380			342,547
Investments		340,000			-
Goodwill		301,238			345,762
Net Operating Loss Carryforward		730,484			2,310,708
Other		343,919			529,706
		7,437,868			9,527,929
Deferred Tax Liabilities
Premises and Equipment		(1,322,377	)		(1,232,905	)
Other		(2,874	)		(4,185	)
		(1,325,251	)		(1,237,090	)
Deferred Tax Assets (Liabilities) on Unrealized Securities Gains (Losses)		4,550,362			77,177
Net Deferred Tax Assets	$	10,662,979		$	8,368,016

The deferred tax assets are included in Other Assets in the consolidated balance sheets.  As discussed in Note 1, certain positions taken in the Company’s tax returns may be subject to challenge by the taxing authorities.  An analysis of activity related to unrecognized taxes as of December 31 follows.

	2013			2012			2011
Balance, Beginning	$	38,676		$	33,368		$	78,121
Positions Taken During the Current Year		7,247			11,794			14,275
Reductions Resulting from Lapse of Statutes of Limitation		(3,596	)		(6,486	)		(59,028	)
Balance, Ending	$	42,327		$	38,676		$	33,368

The net increase of $3,651 and $5,308 is included in income tax expense for the years ended December 31, 2013 and 2012, respectively.

The Company has cumulative federal net operating loss carryforwards of $2,148,335 at December 31, 2013 that expire beginning in 2022.

XML

Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2013	Mar. 14, 2014	Jun. 30, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	COLONY BANKCORP INC
Entity Central Index Key	0000711669
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 42,188,188
Entity Common Stock, Shares Outstanding		8,439,258
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2013

XML

Deposits

12 Months Ended

Dec. 31, 2013

Deposits [Abstract]

Deposits

(10) Deposits

The aggregate amount of overdrawn deposit accounts reclassified as loan balances totaled $400,552 and $389,331 as of December 31, 2013 and 2012, respectively.

Components of interest-bearing deposits as of December 31 are as follows:

	2013		2012
Interest-Bearing Demand	$	357,290,975	$	314,030,843
Savings		54,094,617		48,777,743
Time, $100,000 and Over		220,672,794		211,244,750
Other Time		240,210,393		281,665,013
	$	872,268,779	$	855,718,349

At December 31, 2013 and 2012, the Company had brokered deposits of $26,579,934 and $28,229,608, respectively.  Of the brokered deposits at December 31, 2013 and 2012, $26,579,934 and $28,229,608 represented Certificate of Deposits Account Registry Service (CDARS) reciprocal deposits in which customers placed core deposits into the CDARS program for FDIC insurance coverage and the Company received reciprocal brokered deposits in a like amount.  Thus, brokered deposits less the reciprocal deposits totaled $0 at December 31, 2013 and 2012.  The aggregate amount of short-term jumbo certificates of deposit, each with a minimum denomination of $100,000, was approximately $143,388,694 and $161,530,500 as of December 31, 2013 and 2012, respectively.

As of December 31, 2013, the scheduled maturities of certificates of deposit are as follows:

Year	Amount
2014	$	322,971,106
2015		69,000,752
2016		37,944,799
2017		12,974,997
2018 and Thereafter		17,991,533
	$	460,883,187

XML

Regulatory Capital Matters (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2013	Dec. 31, 2012
Ratios [Abstract]
Tier 1 capital to total average assets (in hundredths)	8.00%
Total risk-based capital to total risk-weighted assets (in hundredths)	10.00%
Consolidated [Member]
Total Capital to Risk-Weighted Assets [Abstract]
Actual Amount	$ 129,569	$ 122,630
For Capital Adequacy Purposes, Amount	60,791	59,548
Amount [Abstract]
Actual Amount	120,048	113,283
For Capital Adequacy Purposes, Amount	30,396	29,774
Ratios [Abstract]
Actual Ratio (in hundredths)	17.06%	16.47%
For Capital Adequacy Purposes, Ratio (in hundredths)	8.00%	8.00%
Actual Ratio (in hundredths)	15.81%	15.22%
For Capital Adequacy Purposes, Ratio (in hundredths)	4.00%	4.00%
Amount [Abstract]
Actual Amount	120,048	113,283
For Capital Adequacy Purposes, Amount	45,419	44,343
Ratios [Abstract]
Actual Ratio (in hundredths)	10.57%	10.22%
For Capital Adequacy Purposes, Ratio (in hundredths)	4.00%	4.00%
Colony Bank [Member]
Total Capital to Risk-Weighted Assets [Abstract]
Actual Amount	131,024	123,463
For Capital Adequacy Purposes, Amount	60,638	59,474
To be Well Capitalized Under Prompt Corrective Actions Provisions, Amount	75,797	74,342
Amount [Abstract]
Actual Amount	121,521	114,128
For Capital Adequacy Purposes, Amount	30,319	29,737
To be Well Capitalized Under Prompt Corrective Actions Provisions, Amount	45,478	44,605
Ratios [Abstract]
Actual Ratio (in hundredths)	17.29%	16.61%
For Capital Adequacy Purposes, Ratio (in hundredths)	8.00%	8.00%
To be Well Capitalized Under Prompt Corrective Actions Provisions, Ratio (in hundredths)	10.00%	10.00%
Actual Ratio (in hundredths)	16.03%	15.35%
For Capital Adequacy Purposes, Ratio (in hundredths)	4.00%	4.00%
To be Well Capitalized Under Prompt Corrective Actions Provisions, Ratio (in hundredths)	6.00%	6.00%
Amount [Abstract]
Actual Amount	121,521	114,128
For Capital Adequacy Purposes, Amount	45,333	44,282
To be Well Capitalized Under Prompt Corrective Actions Provisions, Amount	$ 56,666	$ 55,352
Ratios [Abstract]
Actual Ratio (in hundredths)	10.72%	10.31%
For Capital Adequacy Purposes, Ratio (in hundredths)	4.00%	4.00%
To be Well Capitalized Under Prompt Corrective Actions Provisions, Ratio (in hundredths)	5.00%	5.00%

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Interest Income
Loans, Including Fees	$ 41,350,195	$ 41,963,113	$ 44,460,149
Federal Funds Sold and Securities Purchased Under Agreements to Resell	39,199	99,273	114,794
Deposits with Other Banks	26,704	42,903	45,646
Investment Securities
U. S. Government Agencies	3,516,978	4,824,423	6,873,296
State, County and Municipal	123,972	206,483	160,892
Corporate Obligations	47,275	76,029	91,034
Dividends on Other Investments	81,398	77,203	47,001
Interest Income	45,185,721	47,289,427	51,792,812
Interest Expense
Deposits	5,821,366	8,737,281	12,950,229
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase	116	0	337,711
Borrowed Money	1,675,164	2,279,469	3,517,633
Interest Expense	7,496,646	11,016,750	16,805,573
Net Interest Income	37,689,075	36,272,677	34,987,239
Provision for Loan Losses	4,485,000	6,784,767	8,250,000
Net Interest Income After Provision for Loan Losses	33,204,075	29,487,910	26,737,239
Noninterest Income
Service Charges on Deposits	4,690,599	3,572,897	3,244,536
Other Service Charges, Commissions and Fees	1,725,271	1,514,898	1,311,758
Mortgage Fee Income	484,396	400,009	265,636
Securities Gains (Losses)	(363,804)	2,837,464	2,923,601
Gain on Sale of SBA Loans	635,190	305,924	946,732
Other	1,205,631	1,102,077	1,258,813
Noninterest Income	8,377,283	9,733,269	9,951,076
Noninterest Expenses
Salaries and Employee Benefits	16,691,972	15,564,893	14,632,693
Occupancy and Equipment	3,794,524	3,878,268	3,997,667
Directors' Fees	416,972	465,220	466,075
Legal and Professional Fees	721,322	1,085,881	1,186,884
Foreclosed Property	3,918,128	5,613,316	4,045,245
FDIC Assessment	1,321,981	1,497,974	1,828,799
Advertising	508,292	422,718	508,329
Software	852,475	789,226	660,120
Telephone	778,151	744,930	735,758
ATM/ Card Processing	641,228	511,186	348,221
Other	4,972,404	4,805,418	4,641,046
Noninterest Expense	34,617,449	35,379,030	33,050,837
Income Before Income Taxes	6,963,909	3,842,149	3,637,478
Income Taxes	2,334,864	1,200,851	1,103,883
Net Income	4,629,045	2,641,298	2,533,595
Preferred Stock Dividends	1,508,761	1,435,385	1,400,000
Net Income Available to Common Stockholders	$ 3,120,284	$ 1,205,913	$ 1,133,595
Net Income Per Share of Common Stock, Basic and Diluted (in dollars per share)	$ 0.37	$ 0.14	$ 0.13
Cash Dividends Declared Per Share of Common Stock (in dollars per share)	$ 0	$ 0	$ 0
Weighted Average Shares Outstanding, Basic and Diluted (in shares)	8,439,258	8,439,258	8,439,258

XML

Loans

12 Months Ended

Dec. 31, 2013

Loans [Abstract]

Loans

(4) Loans

The following table presents the composition of loans, segregated by class of loans, as of December 31:

	2013		2012
Commercial and Agricultural
Commercial	$	48,107,448	$	55,684,492
Agricultural		10,665,938		6,210,953
Real Estate
Commercial Construction		52,738,783		53,808,056
Residential Construction		6,549,260		5,852,238
Commercial		341,783,538		334,386,177
Residential		206,257,927		203,844,522
Farmland		47,034,426		49,056,861
Consumer and Other
Consumer		25,675,560		29,777,776
Other		12,405,582		8,428,936
Total Loans	$	751,218,462	$	747,050,011

Commercial and agricultural loans are extended to a diverse group of businesses within the Company’s market area.  These loans are often underwritten based on the borrower’s ability to service the debt from income from the business.  Real estate construction loans often require loan funds to be advanced prior to completion of the project.  Due to uncertainties inherent in estimating construction costs, changes in interest rates and other economic conditions, these loans often pose a higher risk than other types of loans.  Consumer loans are originated at the bank level.  These loans are generally smaller loan amounts spread across many individual borrowers to help minimize risk.

Credit Quality Indicators.  As part of the ongoing monitoring of the credit quality of the loan portfolio, management tracks certain credit quality indicators including trends related to (1) the risk grade assigned to commercial and consumer loans, (2) the level of classified commercial loans, (3) net charge-offs, (4) nonperforming loans, and (5) the general economic conditions in the Company’s geographic markets.

The Company uses a risk grading matrix to assign a risk grade to each of its loans.  Loans are graded on a scale of 1 to 8.  A description of the general characteristics of the grades is as follows:

· Grades 1 and 2 - Borrowers with these assigned grades range in risk from virtual absence of risk to minimal risk.  Such loans may be secured by Company-issued and controlled certificates of deposit or properly margined equity securities or bonds.  Other loans comprising these grades are made to companies that have been in existence for a long period of time with many years of consecutive profits and strong equity, good liquidity, excellent debt service ability and unblemished past performance, or to exceptionally strong individuals with collateral of unquestioned value that fully secures the loans.  Loans in this category fall into the “pass” classification.

· Grades 3 and 4 - Loans assigned these “pass” risk grades are made to borrowers with acceptable credit quality and risk.  The risk ranges from loans with no significant weaknesses in repayment capacity and collateral protection to acceptable loans with one or more risk factors considered to be more than average.

· Grade 5 - This grade includes “special mention” loans on management’s watch list and is intended to be used on a temporary basis for pass grade loans where risk-modifying action is intended in the short-term.

· Grade 6 - This grade includes “substandard” loans in accordance with regulatory guidelines.  This category includes borrowers with well-defined weaknesses that jeopardize the payment of the debt in accordance with the agreed terms.  Loans considered to be impaired are assigned this grade, and these loans often have assigned loss allocations as part of the allowance for loan and lease losses.  Generally, loans on which interest accrual has been stopped would be included in this grade.

· Grades 7 and 8 - These grades correspond to regulatory classification definitions of “doubtful” and “loss,” respectively.  In practice, any loan with these grades would be for a very short period of time, and generally the Company has no loans with these assigned grades.  Management manages the Company’s problem loans in such a way that uncollectible loans or uncollectible portions of loans are charged off immediately with any residual, collectible amounts assigned a risk grade of 6.

The following tables present the loan portfolio by credit quality indicator (risk grade) as of December 31. Those loans with a risk grade of 1, 2, 3 or 4 have been combined in the pass column for presentation purposes.

2013	Pass		Special Mention		Substandard		Total Loans
Commercial and Agricultural
Commercial	$	41,759,281	$	2,770,284	$	3,577,883	$	48,107,448
Agricultural		10,637,705		16,830		11,403		10,665,938
Real Estate
Commercial Construction		42,668,320		1,512,301		8,558,162		52,738,783
Residential Construction		6,341,530		207,730		-		6,549,260
Commercial		317,567,749		10,759,954		13,455,835		341,783,538
Residential		182,977,361		13,523,478		9,757,088		206,257,927
Farmland		44,776,355		507,122		1,750,949		47,034,426
Consumer and Other
Consumer		24,608,175		320,473		746,912		25,675,560
Other		12,356,116		711		48,755		12,405,582
Total Loans	$	683,692,592	$	29,618,883	$	37,906,987	$	751,218,462
2012
Commercial and Agricultural
Commercial	$	49,947,552	$	1,417,735	$	4,319,205	$	55,684,492
Agricultural		6,155,864		-		55,089		6,210,953
Real Estate
Commercial Construction		37,256,301		1,663,588		14,888,167		53,808,056
Residential Construction		5,748,829		103,409		-		5,852,238
Commercial		298,222,139		9,759,473		26,404,565		334,386,177
Residential		183,222,020		11,412,973		9,209,529		203,844,522
Farmland		45,495,038		913,487		2,648,336		49,056,861
Consumer and Other
Consumer		28,839,058		293,467		645,251		29,777,776
Other		8,350,772		8,907		69,257		8,428,936
Total Loans	$	663,237,573	$	25,573,039	$	58,239,399	$	747,050,011

A loan’s risk grade is assigned at the inception of the loan and is based on the financial strength of the borrower and the type of collateral.  Loan risk grades are subject to reassessment at various times throughout the year as part of the Company’s ongoing loan review process.  Loans with an assigned risk grade of 6 or below and an outstanding balance of $250,000 or more are reassessed on a quarterly basis.  During this reassessment process individual reserves may be identified and placed against certain loans which are not considered impaired.

In assessing the overall economic condition of the markets in which it operates, the Company monitors the unemployment rates for its major service areas.  The unemployment rates are reviewed on a quarterly basis as part of the allowance for loan loss determination.

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due.  Generally, loans are placed on nonaccrual status if principal or interest payments become 90 days past due or when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provision.  Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due.

The following table represents an age analysis of past due loans and nonaccrual loans, segregated by class of loans, as of December 31:

	Accruing Loans
2013	30-89 Days Past Due		90 Days or More Past Due		Total Accruing Loans Past Due		Nonaccrual Loans		Current Loans		Total Loans
Commercial and Agricultural
Commercial	$	581,281	$	-	$	581,281	$	1,646,418	$	45,879,749	$	48,107,448
Agricultural		81,036		-		81,036		-		10,584,902		10,665,938
Real Estate
Commercial Construction		139,826		-		139,826		8,221,745		44,377,212		52,738,783
Residential Construction		-		-		-		-		6,549,260		6,549,260
Commercial		2,287,341		-		2,287,341		7,366,703		332,129,494		341,783,538
Residential		5,273,586		-		5,273,586		4,933,420		196,050,921		206,257,927
Farmland		350,718		-		350,718		1,629,611		45,054,097		47,034,426
Consumer and Other
Consumer		453,580		3,991		457,571		307,456		24,910,533		25,675,560
Other		198,451		-		198,451		9,146		12,197,985		12,405,582
Total Loans	$	9,365,819	$	3,991	$	9,369,810	$	24,114,499	$	717,734,153	$	751,218,462
2012
Commercial and Agricultural
Commercial	$	797,612	$	-	$	797,612	$	1,033,371	$	53,853,509	$	55,684,492
Agricultural		28,228		-		28,228		39,213		6,143,512		6,210,953
Real Estate
Commercial Construction		1,309,618		-		1,309,618		14,032,580		38,465,858		53,808,056
Residential Construction		-		-		-		-		5,852,238		5,852,238
Commercial		3,771,106		-		3,771,106		6,629,789		323,985,282		334,386,177
Residential		8,223,174		-		8,223,174		5,429,971		190,191,377		203,844,522
Farmland		140,095		-		140,095		2,413,104		46,503,662		49,056,861
Consumer and Other
Consumer		636,888		4,355		641,243		255,216		28,881,317		29,777,776
Other		4,557		-		4,557		17,491		8,406,888		8,428,936
Total Loans	$	14,911,278	$	4,355	$	14,915,633	$	29,850,735	$	702,283,643	$	747,050,011

During its review of impaired loans, the Company determined the majority of its exposures on these loans were known losses.  As a result, the exposures were charged off, reducing the specific allowances on impaired loans.  Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $968,700, $1,634,600 and $1,639,800 for the years ended December 31, 2013, 2012 and 2011, respectively.

The following table details impaired loan data as of December 31, 2013:

	Unpaid Contractual Principal Balance		Impaired Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized			Interest Income Collected
With No Related Allowance Recorded
Commercial	$	305,272	$	305,272	$	-	$	216,057	$	24,494		$	25,193
Agricultural		-		-		-		9,803		-			-
Commercial Construction		7,856,411		4,750,157		-		4,105,370		34,908			41,164
Commercial Real Estate		20,120,403		19,252,946		-		13,198,988		493,940			503,392
Residential Real Estate		7,836,718		6,361,592		-		4,564,666		224,439			209,330
Farmland		302,629		302,629		-		1,858,654		803			869
Consumer		313,194		307,456		-		252,944		18,469			21,109
Other		9,146		9,146		-		2,287		556			575
		36,743,773		31,289,198		-		24,208,769		797,609			801,632
With An Allowance Recorded
Commercial		1,452,798		1,452,798		433,714		1,689,125		14,845			20,748
Agricultural		-		-		-		-		-			-
Commercial Construction		5,922,674		3,471,587		830,546		5,025,176		(159	)		-
Commercial Real Estate		5,874,473		5,874,473		423,685		11,072,314		157,536			148,495
Residential Real Estate		1,949,301		1,849,301		526,005		3,661,706		25,739			24,414
Farmland		1,326,982		1,326,982		85,500		663,903		44,638			46,930
Consumer		-		-		-		-		-			-
Other		-		-		-		-		-			-
		16,526,228		13,975,141		2,299,450		22,112,224		242,599			240,587
Total
Commercial		1,758,070		1,758,070		433,714		1,905,182		39,339			45,941
Agricultural		-		-		-		9,803		-			-
Commercial Construction		13,779,085		8,221,744		830,546		9,130,546		34,749			41,164
Commercial Real Estate		25,994,876		25,127,419		423,685		24,271,302		651,476			651,887
Residential Real Estate		9,786,019		8,210,893		526,005		8,226,372		250,178			233,744
Farmland		1,629,611		1,629,611		85,500		2,522,557		45,441			47,799
Consumer		313,194		307,456		-		252,944		18,469			21,109
Other		9,146		9,146		-		2,287		556			575
	$	53,270,001	$	45,264,339	$	2,299,450	$	46,320,993	$	1,040,208		$	1,042,219

The following table details impaired loan data as of December 31, 2012:

	Unpaid Contractual Principal Balance		Impaired Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Collected
With No Related Allowance Recorded
Commercial	$	1,508,236	$	1,041,938	$	-	$	1,052,916	$	27,407	$	28,410
Agricultural		39,213		39,213		-		58,056		-		-
Commercial Construction		10,624,917		6,414,986		-		9,194,360		27,377		51,820
Commercial Real Estate		16,565,971		15,505,907		-		26,482,274		430,339		420,549
Residential Real Estate		4,450,128		4,131,707		-		3,096,151		89,139		123,101
Farmland		2,828,539		2,413,103		-		2,326,180		42,588		55,258
Consumer		297,356		255,216		-		228,181		10,441		12,920
Other		17,491		17,491		-		24,414		1,191		1,291
		36,331,851		29,819,561		-		42,462,532		628,482		693,349
With An Allowance Recorded
Commercial		1,493,432		1,493,432		462,555		942,673		91,888		87,611
Agricultural		-		-		-		-		-		-
Commercial Construction		8,266,649		7,617,594		1,732,534		10,533,468		-		-
Commercial Real Estate		12,758,884		12,745,422		1,236,526		6,398,364		383,356		366,423
Residential Real Estate		5,514,994		4,421,809		840,492		4,288,062		144,661		117,266
Farmland		-		-		-		64,862		-		-
Consumer		-		-		-		-		-		-
Other		-		-		-		-		-		-
		28,033,959		26,278,257		4,272,107		22,227,429		619,905		571,300
Total
Commercial		3,001,668		2,535,370		462,555		1,995,589		119,295		116,021
Agricultural		39,213		39,213		-		58,056		-		-
Commercial Construction		18,891,566		14,032,580		1,732,534		19,727,828		27,377		51,820
Commercial Real Estate		29,324,855		28,251,329		1,236,526		32,880,638		813,695		786,972
Residential Real Estate		9,965,122		8,553,516		840,492		7,384,213		233,800		240,367
Farmland		2,828,539		2,413,103		-		2,391,042		42,588		55,258
Consumer		297,356		255,216		-		228,181		10,441		12,920
Other		17,491		17,491		-		24,414		1,191		1,291
	$	64,365,810	$	56,097,818	$	4,272,107	$	64,689,961	$	1,248,387	$	1,264,649

Troubled Debt Restructurings (TDRs) are troubled loans on which the original terms of the loan have been modified in favor of the borrower due to deterioration in the borrower’s financial condition.  Each potential loan modification is reviewed individually and the terms of the loan are modified to meet the borrower’s specific circumstances at a point in time.  Not all loan modifications are TDRs.  Loan modifications are reviewed and approved by the Company’s senior lending staff, who then determine whether the loan meets the criteria for a TDR.  Generally, the types of concessions granted to borrowers that are evaluated in determining whether a loan is classified as a TDR include:

· Interest rate reductions - Occur when the stated interest rate is reduced to a nonmarket rate or a rate the borrower would not be able to obtain elsewhere under similar circumstances.

· Amortization or maturity date changes - Result when the amortization period of the loan is extended beyond what is considered a normal amortization period for loans of similar type with similar collateral.

· Principal reductions - These are often the result of commercial real estate loan workouts where two new notes are created.  The primary note is underwritten based upon our normal underwriting standards and is structured so that the projected cash flows are sufficient to repay the contractual principal and interest of the newly restructured note.  The terms of the secondary note vary by situation and often involve that note being charged off, or the principal and interest payments being deferred until after the primary note has been repaid.  In situations where a portion of the note is charged off during modification, there is often no specific reserve allocated to those loans.  This is due to the fact that the amount of the charge-off usually represents the excess of the original loan balance over the collateral value and the Company has determined there is no additional exposure on those loans.

As discussed in Note 1, Summary of Significant Accounting Policies, once a loan is identified as a TDR, it is accounted for as an impaired loan.  The Company had no unfunded commitments to lend to a customer that has a troubled debt restructured loan as of December 31, 2013.  The following tables present the number of loan contracts restructured during the 12 months ended December 31, 2013 and the pre- and post-modification recorded investment as well as the number of contracts and the recorded investment for those TDRs modified during the previous 12 months which subsequently defaulted during the period.  Loans modified in a troubled debt restructuring are considered to be in default once the loan becomes 90 days past due.

Troubled Debt Restructurings

2013	# of Contracts		Pre-Modification		Post-Modification
Commercial		1	$	83,748	$	81,277
Commercial Construction		2		228,633		225,959
Commercial Real Estate		1		225,852		225,852
Residential Real Estate		4		1,885,700		1,764,399
Total Loans		8	$	2,423,933	$	2,297,487
2012
Commercial		1	$	107,749	$	107,749
Commercial Real Estate		1		56,835		56,835
Residential Real Estate		5		1,082,585		1,079,614
Total Loans		7	$	1,247,169	$	1,244,198
2011
Commercial		3	$	3,240,469	$	1,541,882
Commercial Construction		3		1,430,147		1,430,101
Commercial Real Estate		9		20,827,349		15,906,547
Residential Real Estate		8		1,505,356		1,456,878
Total Loans		23	$	27,003,321	$	20,335,408

Troubled debt restructurings that subsequently defaulted as of December 31 are as follows:

	2013				2012				2011
	# of Contracts		Recorded Investment		# of Contracts		Recorded Investment		# of Contracts		Recorded Investment
Commercial		1	$	81,277		-	$	-		1	$	1,175,922
Commercial Construction		-		-		-		-		3		4,475,473
Commercial Real Estate		-		-		1		203,291		3		2,322,361
Residential Real Estate		-		-		1		10,000		-		-
Total Loans		1	$	81,277		2	$	213,291		7	$	7,973,756

At December 31, 2013, 2012 and 2011, all restructured loans were performing as agreed.  However, two restructured loans totaling $81,277 and $10,000 at December 31, 2013 and 2012 failed to continue to perform as agreed and, as a result, the loans were charged off in August 2013 and January 2012, respectively.  At December 31, 2011, two restructured loans totaling $999,133 and $51,998 failed to continue to perform as agreed and, as a result, the loans were charged off in March 2011 and December 2011, respectively.

XML

Investment Securities

12 Months Ended

Dec. 31, 2013

Investment Securities [Abstract]

Investment Securities

(3) Investment Securities

Investment securities as of December 31, 2013 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale
U.S. Government Agencies Mortgage-Backed	$	273,029,073	$	118,843	$	(13,799,858	)	$	259,348,058
State, County and Municipal		3,978,857		14,963		(83,988	)		3,909,832
	$	277,007,930	$	133,806	$	(13,883,846	)	$	263,257,890
Securities Held to Maturity
State, County and Municipal	$	37,062	$	247	$	-		$	37,309

The amortized cost and fair value of investment securities as of December 31, 2013, by contractual maturity, are shown hereafter.  Expected maturities may differ from contractual maturities for certain investments because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.  This is often the case with mortgage-backed securities, which are disclosed separately in the table below.

	Securities
	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in One Year or Less	$	272,219	$	274,166	$	-	$	-
Due After One Year Through Five Years		1,755,607		1,768,121		37,062		37,309
Due After Five Years Through Ten Years		1,298,122		1,265,127		-		-
Due After Ten Years		652,909		602,418		-		-
		3,978,857		3,909,832		37,062		37,309
Mortgage-Backed Securities		273,029,073		259,348,058		-		-
	$	277,007,930	$	263,257,890	$	37,062	$	37,309

Investment securities as of December 31, 2012 are summarized as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale
U.S. Government Agencies Mortgage-Backed	$	263,186,852	$	833,920	$	(961,698	)	$	263,059,074
State, County and Municipal		3,973,926		34,670		(4,586	)		4,004,010
Corporate Obligations		1,000,000		104,900		-			1,104,900
Asset-Backed Securities		366,623		-		(234,196	)		132,427
	$	268,527,401	$	973,490	$	(1,200,480	)	$	268,300,411
Securities Held to Maturity
State, County and Municipal	$	41,467	$	442	$	-		$	41,909

Proceeds from sales of investments available for sale were $72,672,795 in 2013, $227,690,806 in 2012 and $342,672,937 in 2011.  Gross realized gains totaled $442,124 in 2013, $3,084,666 in 2012 and $2,978,193 in 2011.  Gross realized losses totaled $805,928 in 2013, $247,202 in 2012 and $54,592 in 2011.

Nonaccrual securities are securities for which principal and interest are doubtful of collection in accordance with original terms and for which accruals of interest have been discontinued due to payment delinquency.  Fair value of securities on nonaccrual status totaled $0 and $132,427 as of December 31, 2013 and 2012, respectively.

Investment securities having a carrying value totaling $112,912,815 and $117,450,817 as of December 31, 2013 and 2012, respectively, were pledged to secure public deposits and for other purposes.

Information pertaining to securities with gross unrealized losses at December 31, 2013 and 2012 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
December 31, 2013
U.S. Government Agencies Mortgage-Backed	$	190,063,827	$	(9,440,663	)	$	63,193,601	$	(4,359,195	)	$	253,257,428	$	(13,799,858	)
State, County and Municipal		1,647,043		(83,988	)		-		-			1,647,043		(83,988	)
	$	191,710,870	$	(9,524,651	)	$	63,193,601	$	(4,359,195	)	$	254,904,471	$	(13,883,846	)
December 31, 2012
U.S. Government Agencies Mortgage-Backed	$	142,103,991	$	(961,698	)	$	-	$	-		$	142,103,991	$	(961,698	)
State, County and Municipal		1,430,512		(4,586	)		-		-			1,430,512		(4,586	)
Asset-Backed Securities		-		-			132,427		(234,196	)		132,427		(234,196	)
	$	143,534,503	$	(966,284	)	$	132,427	$	(234,196	)	$	143,666,930	$	(1,200,480	)

Management evaluates securities for other than temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.  Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

At December 31, 2013, the debt securities with unrealized losses have depreciated 5.17 percent from the Company’s amortized cost basis. These securities are guaranteed by either the U.S. Government, other governments or U.S. corporations.  In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred and the results of reviews of the issuer’s financial condition.  The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased.  As management has the ability to hold debt securities until maturity, or for the foreseeable future if classified as available-for-sale, no declines are deemed to be other than temporary.  However, the Company did own one asset-backed security at December 31, 2013 which has been completely written off.  This investment is comprised of one issuance of a trust preferred security and has a book value of $0.  Management evaluates this investment on a quarterly basis utilizing a third-party valuation model.  The results of this model revealed other-than-temporary impairment and as a result, $366,623, $59,568 and $53,058 were written off during the years ended December 31, 2013, 2012 and 2011, respectively.

XML

Employee Benefit Plan

12 Months Ended

Dec. 31, 2013

Employee Benefit Plan [Abstract]

Employee Benefit Plan

(15) Employee Benefit Plan

The Company offers a defined contribution 401(k) Profit Sharing Plan (the Plan) which covers substantially all employees who meet certain age and service requirements.  The Plan allows employees to make voluntary pre-tax salary deferrals to the Plan.  The Company, at its discretion, may elect to make an annual contribution to the Plan equal to a percentage of each participating employee’s salary.  Such discretionary contributions must be approved by the Company’s board of directors.  Employees are fully vested in the Company contributions after six years of service.  The Company made no discretionary contributions in 2013, 2012 or 2011.

XML

Other Borrowed Money

12 Months Ended

Dec. 31, 2013

Other Borrowed Money [Abstract]

Other Borrowed Money

(11) Other Borrowed Money

Other borrowed money at December 31 is summarized as follows:

	2013		2012
Federal Home Loan Bank Advances	$	40,000,000	$	35,000,000

Advances from the Federal Home Loan Bank (FHLB) have maturities ranging from 2017 to 2020 and interest rates ranging from 0.49 percent to 4.75 percent.  As collateral on the outstanding FHLB advances, the Company has provided a blanket lien on its portfolio of qualifying residential first mortgage loans and commercial loans.  At December 31, 2013, the book value of those loans pledged approximated $90,000,000.  At December 31, 2013, the Company had remaining credit availability from the FHLB of approximately $126,490,000.  The Company may be required to pledge additional qualifying collateral in order to utilize the full amount of the remaining credit line.

Other borrowed money of $9,000,000 matures in 2017, with the remainder of $31,000,000 maturing in 2018 and thereafter.  At December 31, 2013, $30,000,000 of FHLB advances are subject to fixed rates of interest, while the remaining $10,000,000 are subject to floating interest rates which will convert to fixed rates of interests after two years.

The Company also has available federal funds lines of credit with various financial institutions totaling $43,000,000, of which there were none outstanding at December 31, 2013.

The Company has the ability to borrow funds from the Federal Reserve Bank (FRB) of Atlanta utilizing the discount window.  The discount window is an instrument of monetary policy that allows eligible institutions to borrow money from the FRB on a short-term basis to meet temporary liquidity shortages caused by internal or external disruptions.  At December 31, 2013, the Company had borrowing capacity available under this arrangement, with no outstanding balances.  The Company would be required to pledge certain available-for-sale investment securities as collateral under this agreement.

In addition, at December 31, 2013, the Company had an available repurchase agreement line of credit with a third party totaling $50,000,000.  Use of this credit facility is subject to the underwriting and risk management policies of the third party in effect at the time of the request.  Such policies may take into consideration current market conditions, the current financial condition of the Company and the ability of the Company to provide adequate securities as collateral for the transaction, among other factors.

XML

Other Real Estate Owned

12 Months Ended

Dec. 31, 2013

Other Real Estate Owned [Abstract]

Other Real Estate Owned

(7) Other Real Estate Owned

The aggregate carrying amount of Other Real Estate Owned (OREO) at December 31, 2013, 2012 and 2011 was $15,502,462, $15,940,693 and $20,445,805, respectively.  All of the Company’s other real estate owned represents properties acquired through foreclosure or deed in lieu of foreclosure.  The following table details the change in OREO during 2013, 2012 and 2011 as of December 31:

	2013			2012			2011
Balance, Beginning of Year	$	15,940,693		$	20,445,085		$	20,207,806
Additions		10,251,006			9,729,174			12,555,622
Sales of OREO		(7,804,080	)		(9,711,890	)		(9,804,669	)
Loss on Sale		(1,563,739	)		(1,818,967	)		(1,102,613	)
Provision for Losses		(1,321,418	)		(2,702,709	)		(1,411,061	)
Balance, End of Year	$	15,502,462		$	15,940,693		$	20,445,085

XML

Allowance for Loan Losses (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Changes in allowance for loan losses [Roll Forward]
Balance, Beginning of Year	$ 12,736,921	$ 15,649,594	$ 28,280,077
Provision for Loan Losses	4,485,000	6,784,767	8,250,000
Loans Charged Off	(6,227,716)	(10,454,175)	(22,850,673)
Recoveries of Loans Previously Charged Off	811,781	756,735	1,970,190
Balance, End of Year	$ 11,805,986	$ 12,736,921	$ 15,649,594

XML

Allowance for Loan Losses

12 Months Ended

Dec. 31, 2013

Allowance for Loan Losses [Abstract]

Allowance for Loan Losses

(5) Allowance for Loan Losses

Changes in the allowance for loan losses for the years ended December 31 are as follows:

	2013			2012			2011
Balance, Beginning of Year	$	12,736,921		$	15,649,594		$	28,280,077
Provision for Loan Losses		4,485,000			6,784,767			8,250,000
Loans Charged Off		(6,227,716	)		(10,454,175	)		(22,850,673	)
Recoveries of Loans Previously Charged Off		811,781			756,735			1,970,190
Balance, End of Year	$	11,805,986		$	12,736,921		$	15,649,594

The following tables detail activity in the allowance for loan losses, segregated by class of loan, for the years ended December 31.  Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other loan categories and periodically may result in reallocation within the provision categories.

2013	Beginning Balance		Charge-Offs			Recoveries		Provision		Ending Balance
Commercial and Agricultural
Commercial	$	981,021	$	(120,690	)	$	55,829	$	100,913	$	1,017,073
Agricultural		296,175		(34,502	)		6,200		26,013		293,886
Real Estate
Commercial Construction		1,890,200		(2,071,162	)		253,459		1,709,682		1,782,179
Residential Construction		138,092		-			-		-		138,092
Commercial		5,162,839		(2,872,408	)		297,984		1,790,861		4,379,276
Residential		3,405,947		(706,242	)		64,583		513,981		3,278,269
Farmland		290,526		(20,977	)		21,762		20,183		311,494
Consumer and Other
Consumer		227,774		(397,822	)		93,520		319,781		243,253
Other		344,347		(3,913	)		18,444		3,586		362,464
	$	12,736,921	$	(6,227,716	)	$	811,781	$	4,485,000	$	11,805,986
2012
Commercial and Agricultural
Commercial	$	1,070,560	$	(653,389	)	$	139,802	$	424,048	$	981,021
Agricultural		297,168		(3,028	)		-		2,035		296,175
Real Estate
Commercial Construction		3,122,594		(4,106,124	)		209,352		2,664,378		1,890,200
Residential Construction		138,092		-			-		-		138,092
Commercial		6,448,064		(4,325,642	)		232,880		2,807,537		5,162,839
Residential		3,695,357		(960,620	)		47,690		623,520		3,405,947
Farmland		364,663		(224,725	)		4,716		145,872		290,526
Consumer and Other
Consumer		205,154		(169,249	)		81,956		109,913		227,774
Other		307,942		(11,398	)		40,339		7,464		344,347
	$	15,649,594	$	(10,454,175	)	$	756,735	$	6,784,767	$	12,736,921

2011	Beginning Balance		Charge-Offs			Recoveries		Provision			Ending Balance
Commercial and Agricultural
Commercial	$	4,414,817	$	(841,887	)	$	127,490	$	(2,629,860	)	$	1,070,560
Agricultural		698,637		(455,165	)		454,453		(400,757	)		297,168
Real Estate
Commercial Construction		4,126,043		(6,957,181	)		557,168		5,396,564			3,122,594
Residential Construction		519,766		(481	)		-		(381,193	)		138,092
Commercial		8,029,525		(12,492,097	)		527,996		10,382,640			6,448,064
Residential		5,941,696		(1,704,887	)		149,173		(690,625	)		3,695,357
Farmland		944,323		(60,447	)		411		(519,624	)		364,663
Consumer and Other
Consumer		3,074,220		(222,878	)		145,279		(2,791,467	)		205,154
Other		531,050		(115,650	)		8,220		(115,678	)		307,942
	$	28,280,077	$	(22,850,673	)	$	1,970,190	$	8,250,000		$	15,649,594

During 2012, the Company changed its loss history period used in calculating the ALLL from a one-year average to a rolling eight-quarter average.  Although at December 31, 2012 the loss history period used was based on the annual loss rate from calendar year 2011 and the first three quarters of 2012, whereas the loss history period used at December 31, 2013 was based on the loss rate from the eight quarters ended September 30, 2013.

During the third quarter, management implemented a change to its methodology for calculating the allowance for loan losses.  This change was intended to better reflect the current position of the loan portfolio.  Prior to the third quarter, the allowance for loan loss calculation incorporated a qualitative factor related to improvements in credit administration.  These improvements, which began in 2008, included organizational changes to credit administration, specifically related to managing past due loans, grading of loans, recognition of losses and underwriting of new loans.  Primary among the organizational changes was the appointment of experienced lending officers to oversee the lending function, as well as the appointment of a chief credit officer.  Management feels these organizational changes are now fully implemented, as evidenced by a lower charge-off rate, and therefore, the qualitative factor is no longer relevant.  The removal of this qualitative factor did not result in a significant adjustment to the recorded allowance for loan loss balance.

The Company determines its individual reserves during its quarterly review of substandard loans.  This process involves reviewing all loans with a risk grade of 6 or greater and an outstanding balance of $250,000 or more, regardless of the loans impairment classification.  Effective March 31, 2013, management increased the dollar threshold of this review process from $50,000 to $250,000.  The threshold change resulted in loans totaling $4.1 million at December 31, 2013 being removed from the individual impairment review process and being placed in the collective review process.  These loans are now subject to general reserves.

Since not all loans in the substandard category are considered impaired, this quarterly review process may result in the identification of specific reserves on nonimpaired loans.  Management considers those loans graded substandard, but not classified as impaired, to be higher risk loans and, therefore, makes specific allocations to the allowance for those loans if warranted.  The total of such loans is $6.7 million and $10.8 million as of December 31, 2013 and 2012, respectively.  Specific allowance allocations were made for these loans totaling $261 thousand and $899 thousand as of December 31, 2013 and 2012, respectively.  Since these loans are not considered impaired, both the loan balance and related specific allocation are included in the “Collectively Evaluated for Impairment” column of the following tables.

At December 31, 2013, impaired loans totaling $2.82 million were below the $250 thousand review threshold and were not individually reviewed for impairment.  Those loans were subject to the bank’s general loan loss reserve methodology and are included in the “Collectively Evaluated for Impairment” column of the following tables.  Likewise, at December 31, 2012 and 2011, impaired loans totaling $1.03 million and $995 thousand, respectively, were below the $50 thousand review threshold and were subject to the bank’s general loan loss reserve methodology and are included in the “Collectively Evaluated for Impairment” column of the following tables.

	Ending Allowance Balance						Ending Loan Balance
2013	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
Commercial and Agricultural
Commercial	$	433,714	$	583,359	$	1,017,073	$	1,542,058	$	46,565,390	$	48,107,448
Agricultural		-		293,886		293,886		-		10,665,938		10,665,938
Real Estate
Commercial Construction		830,546		951,633		1,782,179		7,971,298		44,767,485		52,738,783
Residential Construction		-		138,092		138,092		-		6,549,260		6,549,260
Commercial		423,685		3,955,591		4,379,276		24,757,942		317,025,596		341,783,538
Residential		526,005		2,752,264		3,278,269		6,545,490		199,712,437		206,257,927
Farmland		85,500		225,994		311,494		1,617,206		45,417,220		47,034,426
Consumer and Other
Consumer		-		243,253		243,253		-		25,675,560		25,675,560
Other		-		362,464		362,464		9,146		12,396,436		12,405,582
Total End of Year Balance	$	2,299,450	$	9,506,536	$	11,805,986	$	42,443,140	$	708,775,322	$	751,218,462

	Ending Allowance Balance						Ending Loan Balance
2012	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
Commercial and Agricultural
Commercial	$	462,555	$	518,466	$	981,021	$	2,512,133	$	53,172,359	$	55,684,492
Agricultural		-		296,175		296,175		-		6,210,953		6,210,953
Real Estate
Commercial Construction		1,732,534		157,666		1,890,200		13,892,135		39,915,921		53,808,056
Residential Construction		-		138,092		138,092		-		5,852,238		5,852,238
Commercial		1,236,526		3,926,313		5,162,839		28,205,405		306,180,772		334,386,177
Residential		840,492		2,565,455		3,405,947		8,022,249		195,822,273		203,844,522
Farmland		-		290,526		290,526		2,393,775		46,663,086		49,056,861
Consumer and Other
Consumer		-		227,774		227,774		28,007		29,749,769		29,777,776
Other		-		344,347		344,347		17,491		8,411,445		8,428,936
Total End of Year Balance	$	4,272,107	$	8,464,814	$	12,736,921	$	55,071,195	$	691,978,816	$	747,050,011

	Ending Allowance Balance						Ending Loan Balance
2011	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total
Commercial and Agricultural
Commercial	$	308,211	$	762,349	$	1,070,560	$	2,237,878	$	46,748,224	$	48,986,102
Agricultural		-		297,168		297,168		-		8,421,884		8,421,884
Real Estate
Commercial Construction		2,693,571		429,023		3,122,594		24,212,519		34,333,301		58,545,820
Residential Construction		-		138,092		138,092		-		3,530,502		3,530,502
Commercial		2,060,815		4,387,249		6,448,064		35,715,026		279,565,722		315,280,748
Residential		674,998		3,020,359		3,695,357		5,614,744		188,023,073		193,637,817
Farmland		11,878		352,785		364,663		486,683		47,738,723		48,225,406
Consumer and Other
Consumer		1,632		203,522		205,154		9,596		30,439,707		30,449,303
Other		-		307,942		307,942		-		9,243,739		9,243,739
Total End of Year Balance	$	5,751,105	$	9,898,489	$	15,649,594	$	68,276,446	$	648,044,875	$	716,321,321

XML

Premises and Equipment

12 Months Ended

Dec. 31, 2013

Premises and Equipment [Abstract]

Premises and Equipment

(6) Premises and Equipment

Premises and equipment are comprised of the following as of December 31:

	2013			2012
Land	$	7,790,167		$	7,780,167
Building		23,832,454			23,758,761
Furniture, Fixtures and Equipment		13,846,579			12,923,699
Leasehold Improvements		970,346			948,260
Construction in Progress		236,591			-
		46,676,137			45,410,887
Accumulated Depreciation		(21,799,668	)		(20,494,781	)
	$	24,876,469		$	24,916,106

Depreciation charged to operations totaled $1,527,392 in 2013, $1,676,820 in 2012 and $1,790,041 in 2011.

Certain Company facilities and equipment are leased under various operating leases.  Rental expense approximated $490,000 for 2013, $447,000 for 2012 and $376,000 for 2011.

Future minimum rental payments as of December 31, 2013 are as follows:

Year Ending December 31	Amount
2014	$	53,458
2015		42,000
2016		42,000
2017		38,500
	$	175,958

XML

Intangible Assets

12 Months Ended

Dec. 31, 2013

Intangible Assets [Abstract]

Intangible Assets

(8) Intangible Assets

The following is an analysis of the core deposit intangible activity for the years ended December 31:

	Core Deposit Intangible		Accumulated Amortization			Net Core Deposit Intangible
Core Deposit Intangible
Balance, December 31, 2011	$	1,056,693	$	(797,435	)	$	259,258
Amortization Expense		-		(35,748	)		(35,748	)
Balance, December 31, 2012		1,056,693		(833,183	)		223,510
Amortization Expense		-		(35,749	)		(35,749	)
Balance, December 31, 2013	$	1,056,693	$	(868,932	)	$	187,761

Amortization expense related to the core deposit intangible was $35,749, $35,748 and $35,749 for the years ended December 31, 2013, 2012 and 2011.  Amortizations expense will continue at an annual rate of approximately $35,749 through the first quarter of 2019, at which point the core deposit will be fully amortized.

XML

Other Real Estate Owned (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Other Real Estate [Roll Forward]
Balance, Beginning	$ 15,940,693	$ 20,445,085	$ 20,207,806
Additions	10,251,006	9,729,174	12,555,622
Sales of OREO	(7,804,080)	(9,711,890)	(9,804,669)
Loss on Sale	(1,563,739)	(1,818,967)	(1,102,613)
Provision for Losses	(1,321,418)	(2,702,709)	(1,411,061)
Balance, Ending	$ 15,502,462	$ 15,940,693	$ 20,445,085

XML

Income Taxes (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Expense [Abstract]
Current Federal (Benefit) Expense	$ 156,642	$ (6,114)	$ 311,174
Deferred Federal (Benefit) Expense	2,178,222	1,204,439	867,006
Federal Income Tax (Benefit) Expense	2,334,864	1,198,325	1,178,180
Current State Income Tax (Benefit) Expense	0	2,526	(74,297)
Income Tax Expense	2,334,864	1,200,851	1,103,883
Difference between financial statement tax expense and amount computed by applying the federal statutory rates to income before income taxes
Statutory Federal Income Taxes	2,367,729	1,306,331	1,228,538
Tax-Exempt Interest	(110,752)	(94,891)	(126,468)
Interest Expense Disallowance	6,445	4,908	8,751
Premiums on Officers' Life Insurance	(111,749)	(59,603)	(52,431)
Meal and Entertainment Disallowance	26,549	25,567	20,693
Other	156,642	16,013	99,097
Actual Federal Income Taxes	2,334,864	1,198,325	1,178,180
Deferred Tax Assets [Abstract]
Allowance for Loan Losses	4,014,035	4,330,553
Other Real Estate	1,404,812	1,668,653
Deferred Compensation	303,380	342,547
Investments	340,000	0
Goodwill	301,238	345,762
Net Operating Loss Carryforward	730,484	2,310,708
Other	343,919	529,706
Total Deferred Tax Assets	7,437,868	9,527,929
Deferred Tax Liabilities [Abstract]
Premises and Equipment	(1,322,377)	(1,232,905)
Other	(2,874)	(4,185)
Total Deferred Tax Liabilities	(1,325,251)	(1,237,090)
Deferred Tax Assets (Liabilities) on Unrealized Securities Gains (Losses)	4,550,362	77,177
Net Deferred Tax Assets	10,662,979	8,368,016
Unrecognized Taxes [Abstract]
Balance, Beginning	38,676	33,368	78,121
Position Taken During the Current Year	7,247	11,794	14,275
Reductions Resulting from Lapse of Statutes of Limitation	(3,596)	(6,486)	(59,028)
Balance, Ending	42,327	38,676	33,368
Net increase in income tax expense	3,651	5,308
Cumulative federal net operating Loss Carryforwards	$ 2,148,335
Cumulative federal net operating Loss Carryforwards expires	2022

XML

Premises and Equipment (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Premises and equipment [Abstract]
Premises and Equipment, Gross	$ 46,676,137	$ 45,410,887
Accumulated Depreciation	(21,799,668)	(20,494,781)
Premises and Equipment	24,876,469	24,916,106
Depreciation	1,527,392	1,676,820	1,790,041
Rental expense	490,000	447,000	376,000
Future minimum rental payments [Abstract]
2014	53,458
2015	42,000
2016	42,000
2017	38,500
Total future minimum payments	175,958
Land [Member]
Premises and equipment [Abstract]
Premises and Equipment, Gross	7,790,167	7,780,167
Building [Member]
Premises and equipment [Abstract]
Premises and Equipment, Gross	23,832,454	23,758,761
Furniture, Fixtures and Equipment [Member]
Premises and equipment [Abstract]
Premises and Equipment, Gross	13,846,579	12,923,699
Leasehold Improvements [Member]
Premises and equipment [Abstract]
Premises and Equipment, Gross	970,346	948,260
Construction in Progress [Member]
Premises and equipment [Abstract]
Premises and Equipment, Gross	$ 236,591	$ 0

XML

Cash and Balances Due from Banks (Tables)

12 Months Ended

Dec. 31, 2013

Cash and Balances Due from Banks [Abstract]

Cash and Balances Due from Banks

Components of cash and balances due from banks are as follows as of December 31:

	2013		2012
Cash on Hand and Cash Items	$	10,531,340	$	9,063,437
Noninterest-Bearing Deposits with Other Banks		15,160,265		20,180,490
	$	25,691,605	$	29,243,927

XML

Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2013

Earnings Per Share [Abstract]

Earnings per share

The following table presents earnings per share for the years ended December 31, 2013, 2012 and 2011:

	2013		2012		2011
Numerator
Net Income (Loss) Available to Common Stockholders	$	3,120,284	$	1,205,913	$	1,133,595
Denominator
Weighted Average Number of Common Shares Outstanding for Basic Earnings Per Common Share		8,439,258		8,439,258		8,439,258
Dilutive Effect of Potential Common Stock
Restricted Stock		-		-		-
Stock Warrants		-		-		-
Weighted-Average Number of Shares Outstanding for Diluted Earnings Per Common Share		8,439,258		8,439,258		8,439,258
Earnings (Loss) Per Share - Basic	$	0.37	$	0.14	$	0.13
Earnings (Loss) Per Share - Diluted	$	0.37	$	0.14	$	0.13

XML

Preferred Stock

12 Months Ended

Dec. 31, 2013

Preferred Stock [Abstract]

Preferred Stock

(13) Preferred Stock

On January 9, 2009 the Company received $28.0 million of equity capital by issuing to the United States Department of the Treasury (Treasury) 28,000 shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the Preferred Stock) and a warrant (the Warrant) to purchase up to 500,000 shares of the Company’s common stock. The Preferred stock qualifies as Tier 1 capital and is nonvoting, other than class voting rights on certain matters that could adversely affect the Preferred Stock.  The Preferred Stock may be redeemed by the Company at the liquidation preference of $1,000 per share, plus any accrued and unpaid dividends.  The Warrant may be exercised on or before January 9, 2019 at an exercise price of $8.40 per share.  No voting rights may be exercised with respect to the shares of the Warrant until the Warrant has been exercised.

On January 29, 2013, the Company’s 28,000 shares of Preferred Stock was sold by the Treasury to the public through an auction.  On June 5, 2013, the Company’s Warrant for 500,000 shares of common stock was also sold by the Treasury to the public through an auction.  Neither the sale of the Preferred Stock nor the sale of the Warrant to new investors resulted in any accounting entries and neither transaction had an impact on the Company’s capital position.

The Preferred Stock requires a cumulative cash dividend be paid quarterly at a rate of 5 percent per annum for the first five years and at 9 percent per annum thereafter.  On February 13, 2012, the Company announced the suspension of dividends on Preferred Stock.  Unpaid dividends on the Preferred Stock must be declared and set aside for the benefit of the holders of the Preferred Stock before any dividend may be declared on common stock.  At December 31, 2013 there were accumulated dividends in arrears of $3.12 million, approximately $111 per share, including accrued interest.  Beginning January 9, 2014, cumulated dividends on the Preferred Shares will continue to accrue at a rate of 9 percent per annum.

XML

Supplemental Cash Flow Information

12 Months Ended

Dec. 31, 2013

Supplemental Cash Flow Information [Abstract ]

Supplemental Cash Flow Information

(18) Supplemental Cash Flow Information

Cash payments for the following were made during the years ended December 31:

	2013		2012		2011
Interest Expense	$	7,111,361	$	10,942,113	$	17,204,476
Income Taxes	$	-	$	-	$	390,152

Noncash financing and investing activities for the years ended December 31 are as follows:

	2013		2012		2011
Acquisitions of Real Estate Through Loan Foreclosures	$	10,251,006	$	9,729,174	$	12,555,622
Unrealized (Gain) Loss on Investment Securities	$	13,523,049	$	3,120,540	$	(3,802,320	)

XML

Regulatory Capital Matters (Tables)

12 Months Ended

Dec. 31, 2013

Regulatory Capital Matters [Abstract]

Regulatory capital information

The following table summarizes regulatory capital information as of December 31, 2013 and 2012 on a consolidated basis and for its wholly-owned subsidiary, as defined.

											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2013	(In Thousands)
Total Capital to Risk-Weighted Assets
Consolidated	$	129,569		17.06	%	$	60,791		8.00	%		N/A		N/A
Colony Bank		131,024		17.29			60,638		8.00		$	75,797		10.00	%
Tier I Capital to Risk-Weighted Assets
Consolidated		120,048		15.81			30,396		4.00			N/A		N/A
Colony Bank		121,521		16.03			30,319		4.00			45,478		6.00
Tier I Capital to Average Assets
Consolidated		120,048		10.57			45,419		4.00			N/A		N/A
Colony Bank		121,521		10.72			45,333		4.00			56,666		5.00
As of December 31, 2012
Total Capital to Risk-Weighted Assets
Consolidated	$	122,630		16.47	%	$	59,548		8.00	%		N/A		N/A
Colony Bank		123,463		16.61			59,474		8.00		$	74,342		10.00	%
Tier I Capital to Risk-Weighted Assets
Consolidated		113,283		15.22			29,774		4.00			N/A		N/A
Colony Bank		114,128		15.35			29,737		4.00			44,605		6.00
Tier I Capital to Average Assets
Consolidated		113,283		10.22			44,343		4.00			N/A		N/A
Colony Bank		114,128		10.31			44,282		4.00			55,352		5.00

XML

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Taxes [Abstract]

Income tax expense

The components of income tax (benefit) expense for the years ended December 31 are as follows:

	2013		2012			2011
Current Federal (Benefit) Expense	$	156,642	$	(6,114	)	$	311,174
Deferred Federal (Benefit) Expense		2,178,222		1,204,439			867,006
Federal Income Tax (Benefit) Expense		2,334,864		1,198,325			1,178,180
Current State Income Tax (Benefit) Expense		-		2,526			(74,297	)
	$	2,334,864	$	1,200,851		$	1,103,883

Difference between financial statement tax expense and amount computed by applying statutory federal tax rate to income before income taxes

The federal income tax (benefit) expense of $2,334,864 in 2013, $1,198,325 in 2012 and $1,178,180 in 2011 is different than the income taxes computed by applying the federal statutory rates to income before income taxes.  The reasons for the differences are as follows:

	2013			2012			2011
Statutory Federal Income Taxes	$	2,367,729		$	1,306,331		$	1,228,538
Tax-Exempt Interest		(110,752	)		(94,891	)		(126,468	)
Interest Expense Disallowance		6,445			4,908			8,751
Premiums on Officers’ Life Insurance		(111,749	)		(59,603	)		(52,431	)
Meal and Entertainment Disallowance		26,549			25,567			20,693
Other		156,642			16,013			99,097
Actual Federal Income Taxes	$	2,334,864		$	1,198,325		$	1,178,180

Deferred tax assets and liabilities

Deferred taxes in the accompanying consolidated balance sheets as of December 31 include the following:

	2013			2012
Deferred Tax Assets
Allowance for Loan Losses	$	4,014,035		$	4,330,553
Other Real Estate		1,404,812			1,668,653
Deferred Compensation		303,380			342,547
Investments		340,000			-
Goodwill		301,238			345,762
Net Operating Loss Carryforward		730,484			2,310,708
Other		343,919			529,706
		7,437,868			9,527,929
Deferred Tax Liabilities
Premises and Equipment		(1,322,377	)		(1,232,905	)
Other		(2,874	)		(4,185	)
		(1,325,251	)		(1,237,090	)
Deferred Tax Assets (Liabilities) on Unrealized Securities Gains (Losses)		4,550,362			77,177
Net Deferred Tax Assets	$	10,662,979		$	8,368,016

Unrecognized taxes

The deferred tax assets are included in Other Assets in the consolidated balance sheets.  As discussed in Note 1, certain positions taken in the Company’s tax returns may be subject to challenge by the taxing authorities.  An analysis of activity related to unrecognized taxes as of December 31 follows.

	2013			2012			2011
Balance, Beginning	$	38,676		$	33,368		$	78,121
Positions Taken During the Current Year		7,247			11,794			14,275
Reductions Resulting from Lapse of Statutes of Limitation		(3,596	)		(6,486	)		(59,028	)
Balance, Ending	$	42,327		$	38,676		$	33,368

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) [Abstract]
Net Income	$ 4,629,045	$ 2,641,298	$ 2,533,595
Other Comprehensive Income (Loss), Net of Tax
Gains (Losses) on Securities Arising During the Year, Net of Tax Effect of $(4,597,836), $(1,060,984) and $1,292,789, Respectively	(9,165,323)	(186,830)	4,439,108
Impairment Loss on Securities, Net of Tax Effect of $(124,652), $(20,253) and $(18,040), Respectively	241,971	39,315	35,018
Realized Gains (Losses) on Sale of AFS Securities, Net of Tax Effect of $959, $984,991 and $1,012,064, Respectively	(1,860)	(1,912,041)	(1,964,595)
Change in Net Unrealized Gains (Losses) on Securities Available for Sale, Net of Reclassification Adjustment and Tax Effects	(8,925,212)	(2,059,556)	2,509,531
Comprehensive Income (Loss)	$ (4,296,167)	$ 581,742	$ 5,043,126

XML

Cash and Balances Due from Banks

12 Months Ended

Dec. 31, 2013

Cash and Balances Due from Banks [Abstract]

Cash and Balances Due from Banks

(2) Cash and Balances Due from Banks

Components of cash and balances due from banks are as follows as of December 31:

	2013		2012
Cash on Hand and Cash Items	$	10,531,340	$	9,063,437
Noninterest-Bearing Deposits with Other Banks		15,160,265		20,180,490
	$	25,691,605	$	29,243,927

The Company is required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank based on a percentage of deposits.  Reserve balances totaled approximately $1,252,000 and $6,065,000 at December 31, 2013 and 2012, respectively.

XML

Loans, Impaired Financing Receivable (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Unpaid Contractual Principal Balance [Abstract]
Unpaid Contractual Principal Balance With No Related Allowance Recorded	$ 36,743,773	$ 36,331,851
Unpaid Contractual Principal Balance With An Allowance Recorded	16,526,228	28,033,959
Unpaid Contractual Principal Balance, Total	53,270,001	64,365,810
Impaired Balance [Abstract]
Impaired Balance With No Related Allowance Recorded	31,289,198	29,819,561
Impaired Balance With An Allowance Recorded	13,975,141	26,278,257
Impaired Balance, Total	45,264,339	56,097,818
Related Allowance [Abstract]
Related Allowance With No Related Allowance Recorded	0	0
Related Allowance With An Allowance Recorded	2,299,450	4,272,107
Related Allowance, Total	2,299,450	4,272,107
Average Recorded Investment [Abstract]
Average Recorded Investment With No Related Allowance Recorded	24,208,769	42,462,532
Average Recorded Investment With An Allowance Recorded	22,112,224	22,227,429
Average Recorded Investment, Total	46,320,993	64,689,961
Interest Income Recognized [Abstract]
Interest Income Recognized With No Related Allowance Recorded	797,609	628,482
Interest Income Recognized With An Allowance Recorded	242,599	619,905
Interest Income Recognized, Total	1,040,208	1,248,387
Interest Income Collected [Abstract]
Interest Income Collected With No Related Allowance Recorded	801,632	693,349
Interest Income Collected With An Allowance Recorded	240,587	571,300
Interest Income Collected, Total	1,042,219	1,264,649
Commercial [Member]
Unpaid Contractual Principal Balance [Abstract]
Unpaid Contractual Principal Balance With No Related Allowance Recorded	305,272	1,508,236
Unpaid Contractual Principal Balance With An Allowance Recorded	1,452,798	1,493,432
Unpaid Contractual Principal Balance, Total	1,758,070	3,001,668
Impaired Balance [Abstract]
Impaired Balance With No Related Allowance Recorded	305,272	1,041,938
Impaired Balance With An Allowance Recorded	1,452,798	1,493,432
Impaired Balance, Total	1,758,070	2,535,370
Related Allowance [Abstract]
Related Allowance With No Related Allowance Recorded	0	0
Related Allowance With An Allowance Recorded	433,714	462,555
Related Allowance, Total	433,714	462,555
Average Recorded Investment [Abstract]
Average Recorded Investment With No Related Allowance Recorded	216,057	1,052,916
Average Recorded Investment With An Allowance Recorded	1,689,125	942,673
Average Recorded Investment, Total	1,905,182	1,995,589
Interest Income Recognized [Abstract]
Interest Income Recognized With No Related Allowance Recorded	24,494	27,407
Interest Income Recognized With An Allowance Recorded	14,845	91,888
Interest Income Recognized, Total	39,339	119,295
Interest Income Collected [Abstract]
Interest Income Collected With No Related Allowance Recorded	25,193	28,410
Interest Income Collected With An Allowance Recorded	20,748	87,611
Interest Income Collected, Total	45,941	116,021
Agricultural [Member]
Unpaid Contractual Principal Balance [Abstract]
Unpaid Contractual Principal Balance With No Related Allowance Recorded	0	39,213
Unpaid Contractual Principal Balance With An Allowance Recorded	0	0
Unpaid Contractual Principal Balance, Total	0	39,213
Impaired Balance [Abstract]
Impaired Balance With No Related Allowance Recorded	0	39,213
Impaired Balance With An Allowance Recorded	0	0
Impaired Balance, Total	0	39,213
Related Allowance [Abstract]
Related Allowance With No Related Allowance Recorded	0	0
Related Allowance With An Allowance Recorded	0	0
Related Allowance, Total	0	0
Average Recorded Investment [Abstract]
Average Recorded Investment With No Related Allowance Recorded	9,803	58,056
Average Recorded Investment With An Allowance Recorded	0	0
Average Recorded Investment, Total	9,803	58,056
Interest Income Recognized [Abstract]
Interest Income Recognized With No Related Allowance Recorded	0	0
Interest Income Recognized With An Allowance Recorded	0	0
Interest Income Recognized, Total	0	0
Interest Income Collected [Abstract]
Interest Income Collected With No Related Allowance Recorded	0	0
Interest Income Collected With An Allowance Recorded	0	0
Interest Income Collected, Total	0	0
Commercial Construction [Member]
Unpaid Contractual Principal Balance [Abstract]
Unpaid Contractual Principal Balance With No Related Allowance Recorded	7,856,411	10,624,917
Unpaid Contractual Principal Balance With An Allowance Recorded	5,922,674	8,266,649
Unpaid Contractual Principal Balance, Total	13,779,085	18,891,566
Impaired Balance [Abstract]
Impaired Balance With No Related Allowance Recorded	4,750,157	6,414,986
Impaired Balance With An Allowance Recorded	3,471,587	7,617,594
Impaired Balance, Total	8,221,744	14,032,580
Related Allowance [Abstract]
Related Allowance With No Related Allowance Recorded	0	0
Related Allowance With An Allowance Recorded	830,546	1,732,534
Related Allowance, Total	830,546	1,732,534
Average Recorded Investment [Abstract]
Average Recorded Investment With No Related Allowance Recorded	4,105,370	9,194,360
Average Recorded Investment With An Allowance Recorded	5,025,176	10,533,468
Average Recorded Investment, Total	9,130,546	19,727,828
Interest Income Recognized [Abstract]
Interest Income Recognized With No Related Allowance Recorded	34,908	27,377
Interest Income Recognized With An Allowance Recorded	(159)	0
Interest Income Recognized, Total	34,749	27,377
Interest Income Collected [Abstract]
Interest Income Collected With No Related Allowance Recorded	41,164	51,820
Interest Income Collected With An Allowance Recorded	0	0
Interest Income Collected, Total	41,164	51,820
Commercial Real Estate [Member]
Unpaid Contractual Principal Balance [Abstract]
Unpaid Contractual Principal Balance With No Related Allowance Recorded	20,120,403	16,565,971
Unpaid Contractual Principal Balance With An Allowance Recorded	5,874,473	12,758,884
Unpaid Contractual Principal Balance, Total	25,994,876	29,324,855
Impaired Balance [Abstract]
Impaired Balance With No Related Allowance Recorded	19,252,946	15,505,907
Impaired Balance With An Allowance Recorded	5,874,473	12,745,422
Impaired Balance, Total	25,127,419	28,251,329
Related Allowance [Abstract]
Related Allowance With No Related Allowance Recorded	0	0
Related Allowance With An Allowance Recorded	423,685	1,236,526
Related Allowance, Total	423,685	1,236,526
Average Recorded Investment [Abstract]
Average Recorded Investment With No Related Allowance Recorded	13,198,988	26,482,274
Average Recorded Investment With An Allowance Recorded	11,072,314	6,398,364
Average Recorded Investment, Total	24,271,302	32,880,638
Interest Income Recognized [Abstract]
Interest Income Recognized With No Related Allowance Recorded	493,940	430,339
Interest Income Recognized With An Allowance Recorded	157,536	383,356
Interest Income Recognized, Total	651,476	813,695
Interest Income Collected [Abstract]
Interest Income Collected With No Related Allowance Recorded	503,392	420,549
Interest Income Collected With An Allowance Recorded	148,495	366,423
Interest Income Collected, Total	651,887	786,972
Residential Real Estate [Member]
Unpaid Contractual Principal Balance [Abstract]
Unpaid Contractual Principal Balance With No Related Allowance Recorded	7,836,718	4,450,128
Unpaid Contractual Principal Balance With An Allowance Recorded	1,949,301	5,514,994
Unpaid Contractual Principal Balance, Total	9,786,019	9,965,122
Impaired Balance [Abstract]
Impaired Balance With No Related Allowance Recorded	6,361,592	4,131,707
Impaired Balance With An Allowance Recorded	1,849,301	4,421,809
Impaired Balance, Total	8,210,893	8,553,516
Related Allowance [Abstract]
Related Allowance With No Related Allowance Recorded	0	0
Related Allowance With An Allowance Recorded	526,005	840,492
Related Allowance, Total	526,005	840,492
Average Recorded Investment [Abstract]
Average Recorded Investment With No Related Allowance Recorded	4,564,666	3,096,151
Average Recorded Investment With An Allowance Recorded	3,661,706	4,288,062
Average Recorded Investment, Total	8,226,372	7,384,213
Interest Income Recognized [Abstract]
Interest Income Recognized With No Related Allowance Recorded	224,439	89,139
Interest Income Recognized With An Allowance Recorded	25,739	144,661
Interest Income Recognized, Total	250,178	233,800
Interest Income Collected [Abstract]
Interest Income Collected With No Related Allowance Recorded	209,330	123,101
Interest Income Collected With An Allowance Recorded	24,414	117,266
Interest Income Collected, Total	233,744	240,367
Farmland [Member]
Unpaid Contractual Principal Balance [Abstract]
Unpaid Contractual Principal Balance With No Related Allowance Recorded	302,629	2,828,539
Unpaid Contractual Principal Balance With An Allowance Recorded	1,326,982	0
Unpaid Contractual Principal Balance, Total	1,629,611	2,828,539
Impaired Balance [Abstract]
Impaired Balance With No Related Allowance Recorded	302,629	2,413,103
Impaired Balance With An Allowance Recorded	1,326,982	0
Impaired Balance, Total	1,629,611	2,413,103
Related Allowance [Abstract]
Related Allowance With No Related Allowance Recorded	0	0
Related Allowance With An Allowance Recorded	85,500	0
Related Allowance, Total	85,500	0
Average Recorded Investment [Abstract]
Average Recorded Investment With No Related Allowance Recorded	1,858,654	2,326,180
Average Recorded Investment With An Allowance Recorded	663,903	64,862
Average Recorded Investment, Total	2,522,557	2,391,042
Interest Income Recognized [Abstract]
Interest Income Recognized With No Related Allowance Recorded	803	42,588
Interest Income Recognized With An Allowance Recorded	44,638	0
Interest Income Recognized, Total	45,441	42,588
Interest Income Collected [Abstract]
Interest Income Collected With No Related Allowance Recorded	869	55,258
Interest Income Collected With An Allowance Recorded	46,930	0
Interest Income Collected, Total	47,799	55,258
Consumer [Member]
Unpaid Contractual Principal Balance [Abstract]
Unpaid Contractual Principal Balance With No Related Allowance Recorded	313,194	297,356
Unpaid Contractual Principal Balance With An Allowance Recorded	0	0
Unpaid Contractual Principal Balance, Total	313,194	297,356
Impaired Balance [Abstract]
Impaired Balance With No Related Allowance Recorded	307,456	255,216
Impaired Balance With An Allowance Recorded	0	0
Impaired Balance, Total	307,456	255,216
Related Allowance [Abstract]
Related Allowance With No Related Allowance Recorded	0	0
Related Allowance With An Allowance Recorded	0	0
Related Allowance, Total	0	0
Average Recorded Investment [Abstract]
Average Recorded Investment With No Related Allowance Recorded	252,944	228,181
Average Recorded Investment With An Allowance Recorded	0	0
Average Recorded Investment, Total	252,944	228,181
Interest Income Recognized [Abstract]
Interest Income Recognized With No Related Allowance Recorded	18,469	10,441
Interest Income Recognized With An Allowance Recorded	0	0
Interest Income Recognized, Total	18,469	10,441
Interest Income Collected [Abstract]
Interest Income Collected With No Related Allowance Recorded	21,109	12,920
Interest Income Collected With An Allowance Recorded	0	0
Interest Income Collected, Total	21,109	12,920
Other [Member]
Unpaid Contractual Principal Balance [Abstract]
Unpaid Contractual Principal Balance With No Related Allowance Recorded	9,146	17,491
Unpaid Contractual Principal Balance With An Allowance Recorded	0	0
Unpaid Contractual Principal Balance, Total	9,146	17,491
Impaired Balance [Abstract]
Impaired Balance With No Related Allowance Recorded	9,146	17,491
Impaired Balance With An Allowance Recorded	0	0
Impaired Balance, Total	9,146	17,491
Related Allowance [Abstract]
Related Allowance With No Related Allowance Recorded	0	0
Related Allowance With An Allowance Recorded	0	0
Related Allowance, Total	0	0
Average Recorded Investment [Abstract]
Average Recorded Investment With No Related Allowance Recorded	2,287	24,414
Average Recorded Investment With An Allowance Recorded	0	0
Average Recorded Investment, Total	2,287	24,414
Interest Income Recognized [Abstract]
Interest Income Recognized With No Related Allowance Recorded	556	1,191
Interest Income Recognized With An Allowance Recorded	0	0
Interest Income Recognized, Total	556	1,191
Interest Income Collected [Abstract]
Interest Income Collected With No Related Allowance Recorded	575	1,291
Interest Income Collected With An Allowance Recorded	0	0
Interest Income Collected, Total	$ 575	$ 1,291

XML

Earnings Per Share (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Numerator [Abstract]
Net Income (Loss) Available to Common Stockholders	$ 3,120,284	$ 1,205,913	$ 1,133,595
Denominator [Abstract]
Weighted Average Number of Common Shares Outstanding for Basic Earnings Per Common Share (in shares)	8,439,258	8,439,258	8,439,258
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Weighted-Average Number of Shares Outstanding for Diluted Earnings Per Common Share (in shares)	8,439,258	8,439,258	8,439,258
Earnings (loss) Per Share - Basic (in dollars per share)	$ 0.37	$ 0.14	$ 0.13
Earnings (loss) Per Share - Diluted (in dollars per share)	$ 0.37	$ 0.14	$ 0.13
Shares of common stock equivalents excluded from calculation of diluted earnings per share (in shares)	500,000	500,000	501,855
Restricted Stock [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Dilutive Effect of Potential Common Stock (in shares)	0	0	0
Stock Warrants [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Dilutive Effect of Potential Common Stock (in shares)	0	0	0

XML

Subordinated Debentures (Trust Preferred Securities) (Details) (USD $)	12 Months Ended
	Dec. 31, 2013 Period
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Number of deferred consecutive quarterly periods without default or penalty, maximum	20
Accrued but unpaid interest expense	$ 1,069,769
Trust Preferred Securities [Member] | Colony Bankcorp Statutory Trust III [Member]
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Date	Jun. 17, 2004
Amount	4,640,000
Total Interest rate (in hundredths)	2.92385%
Maturity	Jun. 14, 2034
5 Years Call Option	Jun. 17, 2009
Trust Preferred Securities [Member] | Colony Bankcorp Statutory Trust III [Member] | LIBOR [Member]
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
3 month Libor Rate (in hundredths)	0.24385%
Added Points (in hundredths)	2.68%
Trust Preferred Securities [Member] | Colony Bankcorp Capital Trust I [Member]
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Date	Apr. 13, 2006
Amount	5,155,000
Total Interest rate (in hundredths)	1.7466%
Maturity	Apr. 13, 2036
5 Years Call Option	Apr. 13, 2011
Trust Preferred Securities [Member] | Colony Bankcorp Capital Trust I [Member] | LIBOR [Member]
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
3 month Libor Rate (in hundredths)	0.2466%
Added Points (in hundredths)	1.50%
Trust Preferred Securities [Member] | Colony Bankcorp Capital Trust II [Member]
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Date	Mar. 12, 2007
Amount	9,279,000
Total Interest rate (in hundredths)	1.89685%
Maturity	Mar. 12, 2037
5 Years Call Option	Mar. 12, 2012
Trust Preferred Securities [Member] | Colony Bankcorp Capital Trust II [Member] | LIBOR [Member]
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
3 month Libor Rate (in hundredths)	0.24685%
Added Points (in hundredths)	1.65%
Trust Preferred Securities [Member] | Colony Bankcorp Capital Trust III [Member]
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
Date	Sep. 14, 2007
Amount	$ 5,155,000
Total Interest rate (in hundredths)	1.63585%
Maturity	Sep. 14, 2037
5 Years Call Option	Sep. 14, 2012
Trust Preferred Securities [Member] | Colony Bankcorp Capital Trust III [Member] | LIBOR [Member]
Financial Instruments Subject to Mandatory Redemption by Settlement Terms [Line Items]
3 month Libor Rate (in hundredths)	0.23585%
Added Points (in hundredths)	1.40%

XML

Related Party Transactions

12 Months Ended

Dec. 31, 2013

Related Party Transactions [Abstract]

Related Party Transactions

(19) Related Party Transactions

The following table reflects the activity and aggregate balance of direct and indirect loans to directors, executive officers or principal holders of equity securities of the Company. All such loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than a normal risk of collectibility.  A summary of activity of related party loans is shown below:

	2013			2012
Balance, Beginning	$	4,776,492		$	5,504,230
New Loans		7,610,259			8,075,835
Repayments		(8,322,163	)		(10,510,517	)
Transactions Due to Changes in Directors		-			1,706,944
Balance, Ending	$	4,064,588		$	4,776,492

XML

Deferred Compensation Plan (Details) (USD $)	12 Months Ended
	Dec. 31, 2013 Age	Dec. 31, 2012	Dec. 31, 2011
Deferred Compensation Plan [Abstract]
Minimum age requirement for deferred compensation	65
Accrued liabilities under the plan	$ 892,294	$ 1,007,490
Benefit payments under contracts	188,240	203,904
Benefit provision charged to operations	75,777	82,250	98,901
Fee income recognized with deferred compensation plans	$ 164,073	$ 175,302	$ 154,210

XML

Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2013

Premises and Equipment [Abstract]

Premises and equipment

Premises and equipment are comprised of the following as of December 31:

	2013			2012
Land	$	7,790,167		$	7,780,167
Building		23,832,454			23,758,761
Furniture, Fixtures and Equipment		13,846,579			12,923,699
Leasehold Improvements		970,346			948,260
Construction in Progress		236,591			-
		46,676,137			45,410,887
Accumulated Depreciation		(21,799,668	)		(20,494,781	)
	$	24,876,469		$	24,916,106

Future minimum rental payments

Future minimum rental payments as of December 31, 2013 are as follows:

Year Ending December 31	Amount
2014	$	53,458
2015		42,000
2016		42,000
2017		38,500
	$	175,958

XML

Subordinated Debentures (Trust Preferred Securities)

12 Months Ended

Dec. 31, 2013

Subordinated Debentures (Trust Preferred Securities) [Abstract]

Subordinated Debentures (Trust Preferred Securities)

(12) Subordinated Debentures (Trust Preferred Securities)

Total

3-Month

Added

Interest

5-Year

Description

Date

Amount

Libor Rate

Points

Rate

Maturity

Call Option

(In Thousands)

Colony Bankcorp Statutory Trust III

6/17/2004

$

4,640

0.24385

2.68

2.92385

6/14/2034

6/17/2009

Colony Bankcorp Capital Trust I

4/13/2006

5,155

0.24660

1.50

1.74660

4/13/2036

4/13/2011

Colony Bankcorp Capital Trust II

3/12/2007

9,279

0.24685

1.65

1.89685

3/12/2037

3/12/2012

Colony Bankcorp Capital Trust III

9/14/2007

5,155

0.23585

1.40

1.63585

9/14/2037

9/14/2012

The Trust Preferred Securities are recorded as subordinated debentures on the consolidated balance sheets, but subject to certain limitations, qualify as Tier 1 Capital for regulatory capital purposes.  The proceeds from these offerings were used to fund certain acquisitions, pay off holding Company debt and inject capital into the bank subsidiary.

On February 13, 2012, the Company announced the suspension of the quarterly interest payments on the Trust Preferred Securities.  Under the terms of the trust documents, the Company may defer payments of interest for up to 20 consecutive quarterly periods without default or penalty.  The regularly scheduled interest payments will continue to be accrued for payment in the future and reported as an expense in the current period.  At December 31, 2013, accrued but unpaid interest expense totaled $1,069,769.