Market Overview

Southwest Georgia Financial Corporation Reports 7% Earnings Growth for Second Quarter 2018

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Southwest
Georgia Financial Corporation
(the "Company") (NYSE:SGB),
a full-service community bank holding company, today reported results of
operations for the second quarter and six months ended June 30, 2018.
Comparisons are to prior-year period unless otherwise noted.

"We are encouraged by our results both in the second quarter and
year-to-date as we continued to achieve higher earnings and balance
sheet growth. During the recent quarter, we completed the modifications
to our deposit offerings, highlighted by the introduction of an interest
bearing business checking account. We see this new product as a valuable
retention tool and early results have been positive as our customers
moved just under $30 million in deposits into that product," commented
DeWitt Drew, President and CEO. "Weather and construction delays on our
Tifton location have us behind schedule, but we are working toward a
late summer opening."

Second Quarter and Six-Month Income Highlights

  • Net income increased 7% to $1.15 million, or $0.45 per diluted share,
    from $1.07 million, or $0.42 per diluted share. Net interest income
    improved 5% to $4.6 million, primarily due to growth in average total
    loans of $24.2 million. An increase in provision for loan losses of
    $65 thousand and an increase in other operating expenses partially
    offset growth in net interest income.
  • For the six months ended June 30, 2018, net income was up over 11% to
    $2.4 million, or $0.94 per diluted share, due mostly to increases in
    net interest income of 7% and lower effective tax rates in the first
    half of 2018. Partially offsetting were higher provisions for loan
    losses, which more than doubled due to continued strong loan growth,
    increased overhead expenses of $225 thousand, or 15%, and lower
    noninterest income.

Balance Sheet Trends

  • Total assets at June 30, 2018, were $508.2 million, up 8%, or $37.8
    million. Total loans grew 7%, or $23.2 million, to $345.9 million, and
    were funded by a 6% growth in total deposits. Higher levels of
    liquidity are being held due to the Company's strong loan pipeline as
    well as concerns about higher interest rates causing disintermediation.
  • Total deposits were up $24.2 million to $415.4 million at June 30,
    2018, with a noticeable shift from noninterest-bearing deposits to the
    new interest bearing business checking account offering.
  • Federal Home Loan Bank Advances were up $12.6 million providing
    further funding for loan growth and liquidity. The average cost of all
    interest bearing liabilities increased 22 basis points to 0.81%.

Capital Management

  • Book value per share grew 4% to $16.47 at June 30, 2018.
  • In June 2018, the Company paid a quarterly cash dividend of $0.12 per
    common share, an increase from $0.11 per common share in March 2018.
    Southwest Georgia Financial Corporation or its predecessor, Southwest
    Georgia Bank, has paid cash dividends for 90 consecutive years.

Webcast and Conference Call

The Company will host a conference call and webcast on Tuesday, July 24,
2018 at 1:00 p.m. ET. Management will review the financial and operating
results for the second quarter 2018, as well as the Company's strategy
and outlook. A question and answer session will follow the formal
discussion.

The conference call can be accessed by calling (201) 689-8263.
Alternatively, the webcast can be monitored at www.sgb.bank.

A telephonic replay will be available from 4:00 p.m. ET on the day of
the teleconference until Tuesday, July 31, 2018. To listen to the
archived call, dial (412) 317-6671 and enter conference ID number
13680878, or access the webcast replay at www.sgb.bank/investor-relations,
where a transcript will be posted once available.

About Southwest Georgia Financial Corporation

Southwest Georgia Financial Corporation is a state-chartered bank
holding company with approximately $508 million in assets headquartered
in Moultrie, Georgia. Its primary subsidiary, Southwest Georgia Bank,
offers comprehensive financial services to consumer, business, and
government customers. The current banking facilities include the main
office located in Colquitt County, branch offices located in Baker
County, Worth County and Lowndes County, and a loan production office
located in Tift County. In addition to conventional banking services,
the Company provides investment planning and management, trust
management, and commercial and individual insurance products. Insurance
products and advice are provided by Southwest Georgia Insurance
Services, which is located in Colquitt County. The Company routinely
posts news and other important information on its website. More
information on Southwest Georgia Financial Corporation and Southwest
Georgia Bank can be found at: www.sgb.bank.

SAFE HARBOR STATEMENT

This news release contains forward-looking statements, as defined by
federal securities laws, including statements about the Company's
financial outlook.
These statements are based on current
expectations and are provided to assist in the understanding of future
financial performance.
Such performance involves risks and
uncertainties that may cause actual results to differ materially from
those expressed or implied in any such statements.
Important
factors that could cause actual results to differ materially from those
contemplated today include a change in the Company's capital structure,
new or expanded regulatory requirements, the success of the Company's
growth strategy, customer preferences, the interest rate environment and
other factors described in the Company's filings with the Securities and
Exchange Commission, including its Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q under the sections entitled
"Forward-Looking Statements" and "Risk Factors".
The Company
undertakes no obligation to update any forward-looking statements as a
result of new information, future events or otherwise, except as
otherwise required by law.

Financial tables follow.

 
SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF CONDITION
(Dollars in thousands except per share data)
  (Unaudited)   (Audited)   (Unaudited)
June 30, December 31, June 30,
2018 2017 2017
ASSETS
Cash and due from banks $ 7,786 $ 11,143 $ 8,009
Interest-bearing deposits in banks 27,292 22,995 8,086
Certificates of deposit in other banks 1,985 1,985 1,985
Investment securities available for sale 59,281 54,364 58,142
Investment securities held to maturity 41,189 44,591 50,221
Federal Home Loan Bank stock, at cost 2,475 2,438 1,905
Loans, less unearned income and discount 345,852 330,173 322,636
Allowance for loan losses (3,193 ) (3,044 ) (3,096 )
Net loans 342,659   327,129   319,540  
Premises and equipment 13,693 12,250 11,399
Bank properties held for sale 212 212 212
Foreclosed assets, net 38 759 0
Intangible assets 12 20 27
Bank owned life insurance 6,636 6,553 5,423
Other assets 4,895   4,633   5,356  
Total assets $ 508,153   $ 489,072   $ 470,305  
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Interest bearing business checking $ 29,315 $ 0 $ 0
NOW accounts 54,043 25,871 49,290
Money market 115,022 129,040 101,346
Savings 32,831 30,794 30,054
Certificates of deposit $250,000 and over 22,472 22,662 16,944
Other time accounts 63,449   60,970   60,160  
Total interest-bearing deposits 317,132 269,337 257,794
Noninterest-bearing deposits 98,305   127,669   133,435  
Total deposits 415,437   397,006   391,229  
 
Other borrowings 19,471 17,971 8,448
Long-term debt 27,557 29,057 26,029
Accounts payable and accrued liabilities 3,754   3,895   4,284  
Total liabilities 466,219   447,929   429,990  
Shareholders' equity:

Common stock - par value $1; 5,000,000 shares
   authorized;
4,293,835 shares issued (*)

4,294 4,294 4,294
Additional paid-in capital 5,459 31,701 31,701
Retained earnings 34,815 33,021 31,912
Accumulated other comprehensive income (2,634 ) (1,630 ) (1,472 )
Total 41,934 67,386 66,435
Treasury stock - at cost (**) 0   (26,243 ) (26,120 )
Total shareholders' equity 41,934   41,143   40,315  
Total liabilities and shareholders' equity $ 508,153   $ 489,072   $ 470,305  
 
* Common stock - shares outstanding 2,545,776 2,541,505 2,547,437
** Treasury stock - shares 0 1,752,330 1,746,398
 
 
SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED INCOME STATEMENT (unaudited*)
(Dollars in thousands except per share data)
  For the Three Months   For the Six Months
Ended June 30, Ended June 30,
Interest income: 2018*   2017* 2018*   2017*
Interest and fees on loans $ 4,472 $ 4,041 $ 8,765 $ 7,826
Interest and dividend on securities available for sale 363 344 693 670
Interest on securities held to maturity 262 309 540 625
Dividends 35 23 68 47
Interest on deposits in banks 148 40 266 90
Interest on certificates of deposit in other banks   12   10     23   11  
Total interest income   5,292   4,767     10,355   9,269  
 
Interest expense:
Interest on deposits 481 269 854 541
Interest on federal funds purchased 0 1 0 1
Interest on other borrowings 117 26 233 52
Interest on long-term debt   127   139     252   277  
Total interest expense   725   435     1,339   871  
Net interest income 4,567 4,332 9,016 8,398
Provision for loan losses   140   75     356   150  
Net interest income after provision for losses on loans   4,427   4,257     8,660   8,248  
 
Noninterest income:
Service charges on deposit accounts 266 257 491 527
Income from trust services 63 55 122 109
Income from retail brokerage services 97 108 185 197
Income from insurance services 417 378 805 811
Income from mortgage banking services 1 66 1 139
Net gain (loss) on the sale or disposition of assets 7 (10 ) 0 (10 )
Net gain on the sale of securities 0 43 0 167
Other income   209   203     450   444  
Total noninterest income   1,060   1,100     2,054   2,384  
 
Noninterest expense:
Salary and employee benefits 2,388 2,320 4,729 4,618
Occupancy expense 295 276 584 555
Equipment expense 187 212 377 418
Data processing expense 351 384 705 771
Amortization of intangible assets 4 4 8 8
Other operating expense   907   772     1,724   1,499  
Total noninterest expense   4,132   3,968     8,127   7,869  
 
Income before income tax expense 1,355 1,389 2,587 2,763
Provision for income taxes   207   315     207   624  
Net income $ 1,148 $ 1,074   $ 2,380 $ 2,139  
 
Net income per share, basic $ 0.45 $ 0.42   $ 0.94 $ 0.84  
Net income per share, diluted $ 0.45 $ 0.42   $ 0.94 $ 0.84  
Dividends paid per share $ 0.12 $ 0.11   $ 0.23 $ 0.22  
Basic weighted average shares outstanding   2,545,776   2,547,437     2,545,351   2,547,437  
Diluted weighted average shares outstanding   2,545,776   2,547,437     2,545,351   2,547,437  
 
 
SOUTHWEST GEORGIA FINANCIAL CORPORATION
Financial Highlights
(Dollars in thousands except per share data)
At June 30     2018     2017
Assets $ 508,153 $ 470,305
Loans, less unearned income & discount $ 345,852 $ 322,636
Deposits $ 415,437 $ 391,229
Shareholders' equity $ 41,934 $ 40,315
 
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
Performance Data & Ratios
Net income $ 1,148 $ 1,074 $ 2,380 $ 2,139
Earnings per share, basic $ 0.45 $ 0.42 $ 0.94 $ 0.84
Earnings per share, diluted $ 0.45 $ 0.42 $ 0.94 $ 0.84
Dividends paid per share $ 0.12 $ 0.11 $ 0.23 $ 0.22
Return on assets 0.91 % 0.92 % 0.95 % 0.91 %
Return on equity 11.00 % 10.69 % 11.44 % 10.80 %
Net interest margin (tax equivalent) 3.96 % 4.15 % 3.97 % 4.06 %
Dividend payout ratio 24.42 % 26.11 % 24.60 % 26.20 %
Efficiency ratio 71.10 % 70.34 % 71.01 % 70.25 %
 
Asset Quality Data & Ratios
Total nonperforming loans $ 1,720 $ 1,285 $ 1,720 $ 1,285
Total nonperforming assets $ 1,758 $ 1,293 $ 1,758 $ 1,293
Net loan charge offs $ 118 $ 141 $ 206 $ 179
Reserve for loan losses to total loans 0.92 % 0.96 % 0.92 % 0.96 %
Nonperforming loans/total loans 0.50 % 0.40 % 0.50 % 0.40 %
Nonperforming assets/total assets 0.35 % 0.27 % 0.35 % 0.27 %
Net charge offs / average loans 0.14 % 0.18 % 0.12 % 0.12 %
 
Capital Ratios
Average common equity to average total assets 8.28 % 8.56 % 8.31 % 8.47 %
Common equity Tier 1 capital ratio 12.68 % 12.54 % 12.68 % 12.54 %
Tier 1 capital ratio 12.68 % 12.54 % 12.68 % 12.54 %
Tier 1 leverage ratio 8.81 % 8.79 % 8.81 % 8.79 %
Total risk based capital ratio 13.59 % 13.50 % 13.59 % 13.50 %
Book value per share $ 16.47 $ 15.83 $ 16.47 $ 15.83
Tangible book value per share $ 16.47 $ 15.81 $ 16.47 $ 15.81
 

Quarterly
Averages

    2nd Qtr     1st Qtr     4th Qtr       3rd Qtr       2nd Qtr
2018 2018 2017 2017 2017
 
Assets $ 504,308 $ 497,562 $ 486,699 $ 471,643 $ 469,201
Loans, less unearned income & discount $ 337,092 $ 331,822 $ 330,842 $ 324,206 $ 312,848
Deposits $ 412,133 $ 405,827 $ 396,746 $ 385,989 $ 390,268
Equity $ 41,747 $ 41,466 $ 41,502 $ 41,089 $ 40,169
Return on assets 0.91 % 0.99 % 0.59 % 0.81 % 0.92 %
Return on equity 11.00 % 11.89 % 6.91 % 9.26 % 10.69 %
Net income $ 1,148 $ 1,232 $ 717 $ 952 $ 1,074
Net income per share, basic $ 0.45 $ 0.48 $ 0.28 $ 0.37 $ 0.42
Net income per share, diluted $ 0.45 $ 0.48 $ 0.28 $ 0.37 $ 0.42
Dividends paid per share $ 0.12 $ 0.11 $ 0.11 $ 0.11 $ 0.11
 

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