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Southwest Georgia Financial Corporation Announces Earnings For First Quarter Of 2012

Southwest Georgia Financial Corporation (the “Corporation”) (NYSE Amex: SGB), a full-service community bank holding company, today reported net income of $571 thousand for the first quarter of 2012, up 52% from net income of $375 thousand for the same period in 2011. On a diluted per share basis, net income was up $0.07 to $0.22 in the first quarter of 2012. The growth in net income was driven by increases in net interest income and noninterest income. Net interest income grew $260 thousand on lower funding costs and improved earning asset mix while noninterest income increased $172 thousand primarily as a result of higher income from mortgage banking services.

DeWitt Drew, President and CEO commented, “While the pace of loan growth has slowed and earnings have benefited from lower provisions for loan losses, we expect that credit costs will remain elevated over the near term. We continue to build a specific reserve for foreclosed assets at $75 thousand per quarter and continue to build the loan loss reserve to accommodate the growth we see in Valdosta.”

Return on average equity for the first quarter of 2012 improved to 7.88% compared with 5.57% for the first quarter of 2011. Return on average assets for the quarter increased to 0.71% compared with 0.48% for the same period in 2011.

Balance Sheet Trends and Asset Quality

At March 31, 2012, total assets were $318.8 million, up $4.6 million from March 31, 2011. The earning asset mix improved significantly due to loan growth driven by the Valdosta market. Total loans increased $16.0 million, or 9.5%, to $184.3 million when compared with the same period last year while investment securities decreased $20.0 million. Interest-bearing deposits with other banks remained artificially high at $21.6 million, a $6.0 million increase from the first quarter last year. Nonperforming assets decreased to 0.97% of total assets compared with 1.34% at the end of the first quarter 2011, primarily due to a decline in foreclosed assets of $858 thousand and a $224 thousand decline in nonaccrual loans. The reserve for loan losses increased $373 thousand year-over-year, to $3.2 million.

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