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Southwest Georgia Financial Corporation Reports Fourth Quarter and Full Year 2017 Financial Results
[January 23, 2018]

Southwest Georgia Financial Corporation Reports Fourth Quarter and Full Year 2017 Financial Results


Southwest Georgia Financial Corporation (the "Company") (NYSE American: SGB), a full-service community bank holding company, today reported results of operations for the fourth quarter and year ended December 31, 2017. Comparisons are to prior-year periods unless otherwise noted.

"2017 was an outstanding year in many respects. Loan growth was almost 14 percent, deposit growth was over 6 percent, we substantially completed the migration to a new core processing provider, and core earnings growth was strong against last year," commented DeWitt Drew, President and CEO. "Fourth quarter and full year results were impacted by the new tax legislation. We are looking forward to lower tax rates in the future, but needed to revalue our net deferred tax assets. The result was an impairment charge of $419 thousand negatively impacting the income statement. The effect was a $0.17 reduction in earnings per share for the quarter and year."

Income Highlights

  • Net income for 2017 was $3.8 million, down $227 thousand, due primarily to the revaluing of net deferred tax assets. On a per diluted share basis, earnings were $1.49. Excluding the deferred tax impairment of $419 thousand, net income was $4.2 million, or $1.66 per diluted share, a 5% increase from 2016. Average loan growth of 13% and an improved asset mix grew net interest income over 9%.
  • Annual net interest income was $17.2 million, up $1.4 million. The growth was the result of a $36.7 million increase in average total loans to $317.7 million. Growth in net interest income more than offset the $915 thousand increase in noninterest expense due in large part to higher professional fees, migration to a new core processing provider, and investment in personnel.
  • Fourth quarter net income was $717 thousand, or $0.28 per diluted share. Excluding the deferred tax impairment mentioned above, net income for the quarter was $1.1 million, up 13% over the prior-year period. Net interest income for the quarter increased $441 thousand to $4.5 million primarily due to a $523 thousand increase in interest and fees on loans.

Balance Sheet Trends

  • Total assets grew 9% to $489.2 million, driven by healthy loan growth of $37.7 million, or 13%, to $330.2 million at period end.
  • Growth in the loan portfolio was funded by an increase in total deposits of $25.5 million to $397.0 million at December 31, 2017. Noninterest-bearing deposit accounts grew over 9% to $127.7 million. Federal Home Loan Bank Advances were up $12.6 million at year-end as further funding for loan growth.

Capital Management

  • Book value per share grew over 6% to $16.03.
  • The Company has a Total Risk-Based Capital Ratio of 13.55%, a Common Equity Tier 1 Capital Ratio of 12.64%, and a Leverage Capital Ratio of 8.72%, all measurably above the federal "well capitalized" standard.
  • In December 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.

Webcast and Conference Call

The Company will host a conference call and webcast on Tuesday, January 23, 2018 at 1:00 p.m. ET. Management will review the financial and operating results for the fourth quarter and full year 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, January 30, 2018. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13675051, 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 $489 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.





 
SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF CONDITION
(Dollars in thousands except per share data)
 
    (Unaudited)   (Audited)   (Audited)
December 31, December 31, December 31,
2017 2016 2015
ASSETS
Cash and due from banks $ 11,143 $ 7,700 $ 6,157
Interest-bearing deposits in banks 22,995 18,819 24,923
Certificates of deposit in other banks 1,985 0 245
Investment securities available for sale 54,364 53,566 51,476
Investment securities held to maturity 44,591 54,603 60,889
Federal Home Loan Bank stock, at cost 2,438 1,874 1,869
Loans, less unearned income and discount 330,173 292,524 250,786
Allowance for loan losses (3,044) (3,124) (3,032)
Net loans 327,129 289,400 247,754
Premises and equipment 12,250 11,209 11,158
Bank properties held for sale 212 212 0
Foreclosed assets, net 759 127 82
Intangible assets 20 35 51
Bank owned life insurance 6,553 5,357 5,231
Other assets 4,739 5,599 5,020
Total assets $ 489,178 $ 448,501 $ 414,855
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
NOW accounts $ 25,871 $ 47,420 $ 25,383
Money market 129,040 95,659 108,226
Savings 30,794 29,007 27,721
Certificates of deposit $100,000 and over 46,053 43,235 25,189
Other time accounts 37,579 39,524 50,728
Total interest-bearing deposits 269,337 254,845 237,247
Noninterest-bearing deposits 127,669 116,648 101,769
Total deposits 397,006 371,493 339,016
 
Other borrowings 17,972 8,448 7,591
Long-term debt 29,057 26,029 28,476
Accounts payable and accrued liabilities 4,398 4,109 3,675
Total liabilities 448,433 410,079 378,758
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 32,687 30,333 27,369
Accumulated other comprehensive income (1,694) (1,786) (1,153)
Total 66,988 64,542 62,211
Treasury stock - at cost (**) (26,243) (26,120) (26,114)
Total shareholders' equity 40,745 38,422 36,097
Total liabilities and shareholders' equity $ 489,178 $ 448,501 $ 414,855
 
* Common stock - shares outstanding 2,541,505 2,547,437 2,547,837
** Treasury stock - shares 1,752,330 1,746,398 1,745,998
 

 
SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED INCOME STATEMENT (unaudited*)
(Dollars in thousands except per share data)
 
    For the Three Months     For the Twelve Months
Ended December 31, Ended December 31,
2017*   2016* 2017*   2016
Interest income:
Interest and fees on loans $ 4,303 $ 3,780 $ 16,299 $ 14,796
Interest and dividend on securities available for sale 322 284 1,318 1,078
Interest on securities held to maturity 282 324 1,198 1,346
Dividends on Federal Home Loan Bank stock 29 22 101 90
Interest on deposits in banks 70 38 195 103
Interest on certificates of deposit in other banks   12   0   35     0
Total interest income   5,018   4,448   19,146     17,413
 
Interest expense:
Interest on deposits 333 259 1,154 935
Interest on federal funds purchased 0 0 1 0
Interest on other borrowings 110 27 224 104
Interest on long-term debt   116   144   523     573
Total interest expense   559   430   1,902     1,612
Net interest income 4,459 4,018 17,244 15,801
Provision for loan losses   75   45   300     160
Net interest income after provision for losses on loans   4,384   3,973   16,944     15,641
 
Noninterest income:
Service charges on deposit accounts 218 278 1,005 1,086
Income from trust services 55 53 219 210
Income from retail brokerage services 82 84 362 342
Income from insurance services 365 354 1,523 1,478
Income from mortgage banking services 1 83 155 354
Net gain (loss) on the sale or disposition of assets 0 38 (9 ) 38
Net gain on the sale of securities 0 0 187 169
Other income   239   186   870     782
Total noninterest income   960   1,076   4,312     4,459
 
Noninterest expense:
Salary and employee benefits 2,297 2,191 9,251 8,766
Occupancy expense 279 276 1,124 1,140
Equipment expense 217 228 850 861
Data processing expense 368 364 1,513 1,368
Amortization of intangible assets 4 4 16 16
Other operating expense   727   704   3,075     2,763
Total noninterest expense   3,892   3,767   15,829     14,914
 
Income before income tax expense 1,452 1,282 5,427 5,186
Provision for income taxes   735   280   1,620     1,152
Net income $ 717 $ 1,002 $ 3,807   $ 4,034
 
Net income per share, basic $ 0.28 $ 0.39 $ 1.49   $ 1.58
Net income per share, diluted $ 0.28 $ 0.39 $ 1.49   $ 1.58
Dividends paid per share $ 0.11 $ 0.11 $ 0.44   $ 0.42
Basic weighted average shares outstanding   2,541,505   2,547,602   2,541,505     2,547,778
Diluted weighted average shares outstanding   2,541,499   2,547,602   2,541,504     2,547,778
 
 
SOUTHWEST GEORGIA FINANCIAL CORPORATION
Financial Highlights
(Dollars in thousands except per share data)
 
At December 31     2017     2016
Assets $ 489,178 $ 448,501
Loans, less unearned income & discount $ 330,173 $ 292,524
Deposits $ 397,006 $ 371,493
Shareholders' equity $ 40,745 $ 38,422
 
Three Months Ended December 31, Twelve Months Ended December 31,
2017 2016 2017 2016
Performance Data & Ratios
Net income $ 717 $ 1,002 $ 3,807 $ 4,034
Earnings per share, basic $ 0.28 $ 0.39 $ 1.49 $ 1.58
Earnings per share, diluted $ 0.28 $ 0.39 $ 1.49 $ 1.58
Dividends paid per share $ 0.11 $ 0.11 $ 0.44 $ 0.42
Return on assets 0.59% 0.89% 0.80% 0.94%
Return on equity 6.91% 10.23% 9.41% 10.51%
Net interest margin (tax equivalent) 4.08% 3.97% 4.09% 4.14%
Dividend payout ratio 39.07% 27.97% 29.44% 26.53%
Efficiency ratio 69.32% 71.06% 70.75% 70.64%
 
Asset Quality Data & Ratios
Total nonperforming loans $ 1,675 $ 246 $ 1,675 $ 246
Total nonperforming assets $ 2,434 $ 373 $ 2,434 $ 373
Net loan charge offs $ 239 $ 14 $ 381 $ 68
Reserve for loan losses to total loans 0.92% 1.07% 0.92% 1.07%
Nonperforming loans/total loans 0.51% 0.08% 0.51% 0.08%
Nonperforming assets/total assets 0.50% 0.08% 0.50% 0.08%
Net charge offs / average loans 0.29% 0.02% 0.12% 0.02%
 
Capital Ratios
Average common equity to average total assets 8.53% 8.65% 8.55% 8.90%
Common equity Tier 1 capital ratio 12.64% 13.03% 12.64% 13.03%
Tier 1 capital ratio 12.64% 13.03% 12.64% 13.03%
Tier 1 leverage ratio 8.72% 8.87% 8.72% 8.87%
Total risk based capital ratio 13.55% 14.04% 13.55% 14.04%
Book value per share $ 16.03 $ 15.08 $ 16.03 $ 15.08
Tangible book value per share $ 16.02 $ 15.07 $ 16.02 $ 15.07
 
 
Quarterly     4th Qtr     3rd Qtr     2nd Qtr     1st Qtr     4th Qtr
Averages 2017 2017 2017 2017 2016
 
Assets $ 486,700 $ 471,643 $ 469,201 $ 466,019 $ 452,865

Loans, less unearned income & discount

$ 330,842 $ 324,206 $ 312,848 $ 302,620 $ 291,573
Deposits $ 396,746 $ 385,989 $ 390,268 $ 388,761 $ 374,346
Equity $ 41,498 $ 41,089 $ 40,169 $ 39,054 $ 39,178
Return on assets 0.59% 0.81% 0.92% 0.91% 0.89%
Return on equity 6.91% 9.26% 10.69% 10.91% 10.23%
Net income $ 717 $ 952 $ 1,074 $ 1,065 $ 1,002
Net income per share, basic $ 0.28 $ 0.37 $ 0.42 $ 0.42 $ 0.39
Net income per share, diluted $ 0.28 $ 0.37 $ 0.42 $ 0.42 $ 0.39
Dividends paid per share $ 0.11 $ 0.11 $ 0.11 $ 0.11 $ 0.11
 


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