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.

Total deposits grew $4.8 million year-over-year to $261.8 million at March 31, 2012. A 14% year-over-year decrease in public funds accounts was offset by 19% growth in noninterest-bearing personal and business deposits. Overall, noninterest bearing accounts increased $7.6 million, or 15%.

Shareholders’ equity was $29.0 million as of March 31, 2012, up from $26.9 million at March 31, 2011. The Corporation maintains a strong capital position with a total risk-based capital ratio of 16.57% and a Tier 1 leverage ratio of 8.98% at March 31, 2012, well in excess of the minimum regulatory guidelines for a well-capitalized financial institution. Average total capital to average total assets was up to 8.98% at the end of the first quarter of 2012.

Revenue

Total interest income increased $156 thousand to $3.3 million when compared with the first quarter of 2011, reflecting a $286 thousand increase in interest and fee income on loans. Net interest income before provision for loan losses improved to $2.8 million for the first quarter of 2012 compared with $2.6 million for the same period in 2011. The Corporation’s net interest margin was 4.10% for the first quarter of 2012, up 29 basis points from the same period last year. Total interest expense was $492 thousand for the first quarter of 2012, down $105 thousand from the same period a year ago due primarily to interest paid on deposits. The provision for loan losses was $105 thousand for the first quarter of 2012, down $45 thousand compared to the same period last year.

Noninterest income was $1.5 million for the first quarter of 2012, up $172 thousand from the same period in 2011 primarily due to a $264 thousand increase in income from mortgage banking services. Revenue from retail brokerage and insurance services increased moderately during the quarter. Partially offsetting these increases, the Corporation recognized a $56 thousand net loss on the sale or disposition of assets, and service charges on deposit accounts decreased $54 thousand.

Total noninterest expense increased $227 thousand to $3.5 million for the first quarter of 2012 compared with the first quarter of 2011. The largest component of noninterest expense, salaries and employee benefits, increased $116 thousand to $2.0 million for the first quarter mainly due to higher pension contributions and incentive-based compensation. Equipment and data processing expense also increased $42 thousand and $21 thousand, respectively, largely due to our Valdosta expansion and enhancing information technology infrastructure. Other operating expense increased $38 thousand primarily due to higher foreclosed property expenses and other operational losses.

Dividends

In March 2012, the Corporation paid a cash dividend of $0.04 per common share and announced plans to resume paying cash dividends on a quarterly basis. Southwest Georgia Financial Corporation or its predecessor, Southwest Georgia Bank, has paid cash dividends for 84 consecutive years.

About Southwest Georgia Financial Corporation

Southwest Georgia Financial Corporation is a state-chartered bank holding company with approximately

$319 million in assets headquartered in Moultrie, Georgia. Its primary subsidiary, Southwest Georgia Bank, offers comprehensive financial services to consumer, business, and governmental customers. The current banking facilities include the main office located in Colquitt County, and branch offices located in Baker County, Thomas County, Worth County, and Lowndes County. In addition to conventional banking services, the bank provides investment planning and management, trust management, mortgage banking, and commercial and individual insurance products. Insurance products and advice are provided by Southwest Georgia Insurance Services which is located in Colquitt County. Mortgage banking for primarily commercial properties is provided by Empire Financial Services, Inc., a mortgage banking services firm.

More information on Southwest Georgia Financial Corp. and Southwest Georgia Bank can be found at its website: www.sgfc.com.

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. For a discussion of some risks and other factors that could cause the Company’s actual results to differ materially from such statements, please refer to 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)
March 31, December 31, March 31,
2012 2011 2011
ASSETS
Cash and due from banks $ 7,458 $ 6,552 $ 6,407
Interest-bearing deposits in banks 21,584 14,498 15,569
Certificates of deposit in other banks 980 980 0
Investment securities available for sale 26,581 28,641 59,143
Investment securities held to maturity 56,173 52,339 43,737
Federal Home Loan Bank stock, at cost 1,789 1,787 1,650
Loans, less unearned income and discount 184,307 181,302 168,298
Allowance for loan losses (3,244) (3,100) (2,871)
Net loans 181,063 178,202 165,427
Premises and equipment 10,620 9,942 9,204
Foreclosed assets, net 2,327 2,358 3,185
Intangible assets 491 547 589
Bank owned life insurance 4,635 4,593 3,057
Other assets 5,050 5,211 6,185
Total assets $ 318,751 $ 305,650 $ 314,153
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
NOW accounts $ 31,728 $ 29,841 $ 40,828
Money market 54,597 45,638 46,712
Savings 26,138 24,367 23,881
Certificates of deposit $100,000 and over 32,813 32,629 32,121
Other time accounts 58,936 59,950 63,372
Total interest-bearing deposits 204,212 192,425 206,914
Noninterest-bearing deposits 57,566 56,486 50,022
Total deposits 261,778 248,911 256,936
 
Other borrowings 2,000 2,000 2,000
Long-term debt 22,000 22,000 24,000
Accounts payable and accrued liabilities 3,992 4,188 4,308
Total liabilities 289,770 277,099 287,244
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 31,701 31,701 31,701
Retained earnings 19,602 19,133 18,046
Accumulated other comprehensive income (502) (463) (1,018)
Total 55,095 54,665 53,023
Treasury stock - at cost (**) (26,114) (26,114) (26,114)
Total shareholders' equity 28,981 28,551 26,909
Total liabilities and shareholders' equity $ 318,751 $ 305,650 $ 314,153
 
* Common stock - shares outstanding 2,547,837 2,547,837 2,547,837
** Treasury stock - shares 1,745,998 1,745,998 1,745,998
 
 
SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED INCOME STATEMENT (unaudited*)
(Dollars in thousands except per share data)
     
For the Three Months
Ended March 31,
Interest income: 2012* 2011*
Interest and fees on loans $ 2,701 $ 2,415
Interest and dividend on securities available for sale

232
467
Interest on securities held to maturity 359 266
Dividends on Federal Home Loan Bank stock 6 4
Interest on deposits in banks 18 13
Interest on certificates of deposit in other banks   4   0
Total interest income   3,320   3,165
 
Interest expense:
Interest on deposits 292 391
Interest on other borrowings 11 8
Interest on long-term debt   189   198
Total interest expense   492   597
Net interest income 2,828 2,568
Provision for loan losses   105   150
Net interest income after provision for losses on loans   2,723   2,418
 
Noninterest income:
Service charges on deposit accounts 299 353
Income from trust services 51 55
Income from retail brokerage services 95 70
Income from insurance services 375 353
Income from mortgage banking services 567 303
Provision for foreclosed property losses (75) (75)
Net gain (loss) on the sale or disposition of assets (56) 18
Net gain on the sale of securities 0 32
Other income   213   188
Total noninterest income   1,469   1,297
 
Noninterest expense:
Salary and employee benefits 2,022 1,906
Occupancy expense 234 229
Equipment expense 223 181
Data processing expense 278 257
Amortization of intangible assets 56 52
Other operating expense   659   621
Total noninterest expense   3,472   3,246
 
Income before income tax expense 720 469
Provision for income taxes   149   94
Net income $ 571 $ 375
 
Net income per share, basic $ 0.22 $ 0.15
Net income per share, diluted $ 0.22 $ 0.15
Dividends paid per share $ 0.04 $ 0.10
Basic weighted average shares outstanding   2,547,837   2,547,837
Diluted weighted average shares outstanding   2,547,837   2,547,949
 
 
SOUTHWEST GEORGIA FINANCIAL CORPORATION
Financial Highlights
(Dollars in thousands except per share data)
   
At March 31 2012 2011
 
Assets $ 318,751 $ 314,153
Loans, less unearned income & discount $ 184,307 $ 168,298
Deposits $ 261,778 $ 256,936
Shareholders' equity $ 28,981 $ 26,909
 
Three Months Ended March 31,
2012 2011
Performance Data & Ratios
Net income $ 571 $ 375
Earnings per share, basic $ 0.22 $ 0.15
Earnings per share, diluted $ 0.22 $ 0.15
Dividends paid per share $ 0.04 $ 0.10
Return on assets 0.71% 0.48%
Return on equity 7.88% 5.57%
Net interest margin (tax equivalent) 4.10% 3.81%
Dividend payout ratio 17.84% 67.99%
Efficiency ratio 78.10% 81.36%
 
Asset Quality Data & Ratios
Total nonperforming loans $ 651 $ 875
Total nonperforming assets $ 3,088 $ 4,196
Net loan charge offs $ (39) $ 34
Reserve for loan losses to total loans 1.76% 1.71%
Nonperforming loans/total loans 0.35% 0.52%
Nonperforming assets/total assets 0.97% 1.34%
Net charge offs / average loans (0.09)% 0.09%
 
Capital Ratios
Average common equity to average total assets 8.98% 8.57%
Tier 1 capital ratio 15.32% 15.76%
Tier 1 leverage ratio 8.98% 8.71%
Total risk based capital ratio 16.57% 17.01%
Book value per share $ 11.37 $ 10.56
Tangible book value per share $ 11.18 $ 10.33
                                 
Quarterly     1st Qtr   4th Qtr   3rd Qtr   2nd Qtr   1st Qtr
Averages 2012 2011 2011 2011 2011
 
Assets $ 322,726 $ 300,863 $ 302,256 $ 312,898 $ 314,028
Loans, less unearned income & discount $ 180,796 $ 180,567 $ 179,093 $ 172,367 $ 161,061
Deposits $ 265,993 $ 243,893 $ 245,051 $ 250,335 $ 257,083
Equity $ 28,984 $ 28,458 $ 28,446 $ 27,515 $ 26,909
Return on assets 0.71% 0.53% 0.13% 0.76% 0.48%
Return on equity 7.88% 5.57% 1.39% 8.59% 5.57%
Net income $ 571 $ 396 $ 99 $ 591 $ 375
Net income per share, basic $ 0.22 $ 0.16 $ 0.04 $ 0.23 $ 0.15
Net income per share, diluted $ 0.22 $ 0.16 $ 0.04 $ 0.23 $ 0.15
Dividends paid per share $ 0.04 $ - $ - $ - $ 0.10

Copyright Business Wire 2010

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