Southwest Georgia Financial Corporation Reports 6% Earnings Growth For 2017 Second Quarter

Southwest Georgia Financial Corporation (the "Company") (NYSE American: SGB), a full-service community bank holding company, today reported results of operations for the second quarter and six months ended June 30, 2017. Comparisons are to prior year-periods unless otherwise noted.

Second Quarter and Six-Month Income Highlights
  • For the quarter, net income increased 6% to $1.1 million, or $0.42 per diluted share, on strong net interest income growth of $439 thousand to $4.3 million. Revenue growth was driven primarily by a $33.3 million, or 12% increase in average loan volume. Higher revenue more than offset investment costs for expansion of the Company's Tifton operations.
  • For the six months ended June 30, 2017, net income was up 3.9% to $2.1 million, or $0.84 per diluted share. Net interest income expanded 8% in the first half of 2017, partially offset by a 6% increase in overhead expenses primarily for people, processes and systems to further market penetration.

Balance Sheet Trends and Asset Quality
  • Total assets expanded 11% to $470.3 million at period end as noninterest-bearing deposits grew 22% and interest-bearing deposits were up 10%. Total deposits at June 30, 2017 were $391.2 million.
  • Total loan growth of 12% reflects strong positions in the Company's leading markets. Total loans were $322.6 million at period end. Continued discipline in underwriting standards resulted in solid credit fundamentals, with year-to-date nonperforming loans to total loans at 0.40% and net charge-offs to average loans at 0.12%.

Capital Management
  • Book value per share grew 5% to $15.83.
  • The Company has a Total Risk-Based Capital Ratio of 13.53%, a Common Equity Tier 1 Capital Ratio of 12.59%, and a Leverage Capital Ratio of 8.96%, all measurably above the federal "well capitalized" standard.
  • In June 2017, the Company paid a quarterly cash dividend of $0.11 per common share. Southwest Georgia Financial Corporation or its predecessor, Southwest Georgia Bank, has paid cash dividends for 89 consecutive years.

"We delivered another strong quarter highlighted by the continued expansion of our customer base. On a year-to-date basis, earnings per share have grown 3.7% and are on pace with last year's record performance even as we make significant investments related to our Tifton expansion and growth initiatives," commented DeWitt Drew, President and CEO. "We continue to fortify our structure with technology and talent as we grow into a larger organization. Construction is underway on our full service banking center in Tifton and it is expected to be completed in early 2018. In addition to the Tifton market, our historic Moultrie market is doing well and we believe there remains significant opportunity for growth in Valdosta. Importantly, we are addressing these market opportunities while maintaining our exceptional asset quality."

Webcast and Conference Call

The Company will host a conference call and webcast on Tuesday, July 25, 2017 at 1:00 p.m. ET. Management will review the financial and operating results for the second quarter of 2017, 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.sgfc.com.

A telephonic replay will be available from 4:00 p.m. ET on the day of the teleconference until Tuesday, August 1, 2017. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13665153, or access the webcast replay at www.sgfc.com/investorrelations.cfm, 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 $470 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.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. 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)June 30,2017

(Audited)December 31,2016
(Unaudited)June 30,2016
ASSETS
Cash and due from banks $ 8,009 $ 7,700 $ 5,835
Interest-bearing deposits in banks 8,086 18,819 7,687
Certificates of deposit in other banks 1,985 0 0
Investment securities available for sale 58,142 53,566 43,055
Investment securities held to maturity 50,221 54,603 57,701
Federal Home Loan Bank stock, at cost 1,905 1,874 1,905
Loans, less unearned income and discount 322,636 292,524 288,030
Allowance for loan losses (3,096) (3,124) (3,113)
Net loans 319,540 289,400 284,917
Premises and equipment 11,399 11,209 11,080
Bank properties held for sale 212 212 0
Foreclosed assets, net 0 127 82
Intangible assets 27 35 43
Bank owned life insurance 5,423 5,357 5,295
Other assets 5,356 5,599 4,865
Total assets $ 470,305 $ 448,501 $ 422,465
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
NOW accounts $ 49,290 $ 47,420 $ 28,384
Money market 101,346 95,659 94,093
Savings 30,054 29,007 29,650
Certificates of deposit $100,000 and over 38,335 43,235 33,568
Other time accounts 38,769 39,524 48,817
Total interest-bearing deposits 257,794 254,845 234,512
Noninterest-bearing deposits 133,435 116,648 109,504
Total deposits 391,229 371,493 344,016
 
Other borrowings 8,448 8,448 7,591
Long-term debt 26,029 26,029 28,476
Accounts payable and accrued liabilities 4,284 4,109 3,839
Total liabilities 429,990 410,079 383,922
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 31,912 30,333 28,919

Accumulated other comprehensive income
(1,472) (1,786) (257)
Total 66,435 64,542 64,657
Treasury stock - at cost (**) (26,120) (26,120) (26,114)
Total shareholders' equity 40,315 38,422 38,543
Total liabilities and shareholders' equity $ 470,305 $ 448,501 $ 422,465
 

*  Common stock - shares outstanding
2,547,437 2,547,437 2,547,837

** Treasury stock - shares
1,746,398 1,746,398 1,745,998
 
             

SOUTHWEST GEORGIA FINANCIAL CORPORATION

CONSOLIDATED INCOME STATEMENT (unaudited*)

(Dollars in thousands except per share data)
 
For the Three MonthsEnded June 30,

For the Six MonthsEnded June 30,
2017*     2016* 2017*     2016*
Interest income:
Interest and fees on loans $ 4,041 $ 3,657 $ 7,826 $ 7,232
Interest and dividend on securities available for sale 344 250 670 550
Interest on securities held to maturity 309 340 625 689
Dividends on Federal Home Loan Bank stock 23 23 47 46
Interest on deposits in banks 40 17 90 39
Interest on certificates of deposit in other banks 10 0 11 0
Total interest income 4,767 4,287 9,269 8,556
 
Interest expense:
Interest on deposits 269 226 541 433
Interest on federal funds purchased 1 0 1 0
Interest on other borrowings 26 24 52 47
Interest on long-term debt 139 144 277 289
Total interest expense 435 394 871 769
Net interest income 4,332 3,893 8,398 7,787
Provision for loan losses 75 40 150 70
Net interest income after provision for losses on loans 4,257 3,853 8,248 7,717
 
Noninterest income:
Service charges on deposit accounts 257 255 527 532
Income from trust services 55 51 109 103
Income from retail brokerage services 108 88 197 168
Income from insurance services 378 342 811 814
Income from mortgage banking services 66 92 139 183
Net gain (loss) on the sale or disposition of assets (10) (1) (10) (1)
Net gain on the sale of securities 43 84 167 112
Other income 203 186 444 412
Total noninterest income 1,100 1,097 2,384 2,323
 
Noninterest expense:
Salary and employee benefits 2,320 2,178 4,618 4,354
Occupancy expense 276 279 555 567
Equipment expense 212 228 418 450
Data processing expense 384 311 771 654
Amortization of intangible assets 4 4 8 8
Other operating expense 772 680 1,499 1,375
Total noninterest expense 3,968 3,680 7,869 7,408
 
Income before income tax expense 1,389 1,270 2,763 2,632
Provision for income taxes 315 259 624 573
Net income $ 1,074 $ 1,011 $ 2,139 $ 2,059
 
Net income per share, basic $ 0.42 $ 0.40 $ 0.84 $ 0.81
Net income per share, diluted $ 0.42 $ 0.40 $ 0.84 $ 0.81
Dividends paid per share $ 0.11 $ 0.10 $ 0.22 $ 0.20
Basic weighted average shares outstanding 2,547,437 2,547,837 2,547,437 2,547,837
Diluted weighted average shares outstanding 2,547,437 2,547,837 2,547,437 2,547,837
 
               

SOUTHWEST GEORGIA FINANCIAL CORPORATION

Financial Highlights

(Dollars in thousands except per share data)
 
At June 30 2017 2016
Assets $   470,305 $   422,465
Loans, less unearned income & discount $ 322,636 $ 288,030
Deposits $ 391,229 $ 344,016
Shareholders' equity $ 40,315 $ 38,543
 
Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Performance Data & Ratios
Net income $   1,074 $   1,012 $   2,139 $   2,059
Earnings per share, basic $ 0.42 $ 0.40 $ 0.84 $ 0.81
Earnings per share, diluted $ 0.42 $ 0.40 $ 0.84 $ 0.81
Dividends paid per share $ 0.11 $ 0.10 $ 0.22 $ 0.20
Return on assets 0.92% 0.96% 0.91% 0.99%
Return on equity 10.69% 10.63% 10.80% 10.96%
Net interest margin (tax equivalent) 4.15% 4.21% 4.06% 4.25%
Dividend payout ratio 26.11% 25.19% 26.20% 24.75%
Efficiency ratio 70.34% 70.69% 70.25% 70.27%
 
Asset Quality Data & Ratios
Total nonperforming loans $ 1,285 $ 665 $ 1,285 $ 665
Total nonperforming assets $ 1,293 $ 747 $ 1,293 $ 747
Net loan charge offs $ 141 $ (7) $ 179 $ (10)
Reserve for loan losses to total loans 0.96% 1.08% 0.96% 1.08%
Nonperforming loans/total loans 0.40% 0.23% 0.40% 0.23%
Nonperforming assets/total assets 0.27% 0.18% 0.27% 0.18%
Net charge offs / average loans 0.18% (0.01)% 0.12% (0.01)%
 
Capital Ratios
Average common equity to average total assets 8.56% 9.05% 8.47% 8.99%
Common equity Tier 1 capital ratio 12.59% 13.28% 12.59% 13.28%
Tier 1 capital ratio 12.59% 13.28% 12.59% 13.28%
Tier 1 leverage ratio 8.96% 9.22% 8.96% 9.22%
Total risk based capital ratio 13.53% 14.35% 13.53% 14.35%
Book value per share $ 15.83 $ 15.13 $ 15.83 $ 15.13
Tangible book value per share $ 15.81 $ 15.11 $ 15.81 $ 15.11
 
                                           
Quarterly         2nd Qtr 2017       1st Qtr 2017       4th Qtr 2016       3rd Qtr 2016       2nd Qtr 2016
Averages
 
Assets $   469,201 $   466,019 $   452,865 $   435,880 $   420,685
Loans, less unearned income & discount $ 312,848 $ 302,620 $ 291,573 $ 289,978 $ 279,543
Deposits $ 390,268 $ 388,761 $ 374,346 $ 357,421 $ 341,569
Equity $ 40,169 $ 39,054 $ 39,178 $ 39,110 $ 38,080
Return on assets 0.92% 0.91% 0.89% 0.89% 0.96%
Return on equity 10.69% 10.91% 10.23% 9.95% 10.63%
Net income $ 1,074 $ 1,065 $ 1,002 $ 973 $ 1,011
Net income per share, basic $ 0.42 $ 0.42 $ 0.39 $ 0.38 $ 0.40
Net income per share, diluted $ 0.42 $ 0.42 $ 0.39 $ 0.38 $ 0.40
Dividends paid per share $ 0.11 $ 0.11 $ 0.11 $ 0.11 $ 0.10
 

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