SGB Southwest Georgia Financial Corp

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

“We continue to experience solid results. Loan growth exceeded 11%, or nearly $37 million, and deposits were also up 11% year-over-year,” commented DeWitt Drew, President and CEO. “In mid-October, Hurricane Michael impacted a portion of our operating area and, as a result of both continued loan growth and weather events, we anticipate higher provisions for loan losses for the remainder of the year.”

Third Quarter and Nine-Month Income Highlights

• Net income increased to $1.14 million, or $0.45 per diluted share, from $952 thousand, or $0.37 per diluted share. Net interest income improved 9% to $4.8 million, primarily due to growth in average total loans of $32.8 million. An increase in provision for loan losses of $174 thousand and increases in non-interest expenses partially offset growth in net interest income.
• For the nine months ended September 30, 2018, net income was up over 14% to $3.5 million, or $1.38 per diluted share, due mostly to increases in net interest income of almost 8% and lower effective tax rates. Partially offsetting were higher provisions for loan losses, increased overhead expenses of $339 thousand, and lower noninterest income of $321 thousand.

Balance Sheet Trends

• Total assets at September 30, 2018, were $515.4 million, up 8%, or $38.2 million. Total loans grew 11%, or $36.8 million, to $366.7 million, and were funded by an 11% 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 $41.5 million to $426 million at September 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 down $4.1 million. The average cost of all interest bearing liabilities increased 31 basis points to 0.95%. The average cost of interest bearing deposits increased 36 basis points to 0.80%.

Capital Management

• Book value per share grew 4% to $16.67 at September 30, 2018.
• In September 2018, the Company paid a quarterly cash dividend of $0.12 per common share. Southwest Georgia Financial Corporation or its predecessor, Southwest Georgia Bank, has paid cash dividends for90 consecutive years.

Webcast and Conference Call

The Company will host a conference call and webcast on Tuesday, October 30, 2018 at 1:00 p.m. ET. Management will review the financial and operating results for the third 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, November 13, 2018. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13683724, 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 $515 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, and branch offices located in Baker County, Worth County, Lowndes County and 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) September 30, December 31, September 30, 2018 2017 2017 ASSETS Cash and due from banks $ 14,607 $ 11,143 $ 8,670 Interest-bearing deposits in banks 10,911 22,995 11,618 Certificates of deposit in other banks 1,985 1,985 1,985 Investment securities available for sale 58,576 54,364 54,947 Investment securities held to maturity 36,961 44,591 46,955 Federal Home Loan Bank stock, at cost 2,257 2,438 2,464 Loans, less unearned income and discount 366,645 330,173 329,820 Allowance for loan losses   (3,078 )   (3,044 )   (3,208 ) Net loans   363,567     327,129     326,612   Premises and equipment 14,188 12,250 11,891 Bank properties held for sale 212 212 212 Foreclosed assets, net 128 759 904 Intangible assets 8 20 23 Bank owned life insurance 6,677 6,553 5,457 Other assets   5,293     4,633     5,481   Total assets $ 515,370   $ 489,072   $ 477,219   LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Interest bearing business checking $ 26,347 $ 0 $ 0 NOW accounts 20,241 25,871 29,078 Money market 157,631 129,040 116,769 Savings 32,224 30,794 30,982 Certificates of deposit $250,000 and over 24,625 22,662 41,207 Other time accounts   65,019     60,970     38,243   Total interest-bearing deposits 326,087 269,337 256,279 Noninterest-bearing deposits   100,161     127,669     128,477   Total deposits   426,248     397,006     384,756     Other borrowings 12,171 17,971 22,114 Long-term debt 30,600 29,057 24,772 Accounts payable and accrued liabilities   3,900     3,895     4,560   Total liabilities   472,919     447,929     436,202   Shareholders' equity: Common stock - par value $1; 5,000,000 shares authorized; 2,545,776 shares issued (*) 2,546 4,294 4,294 Additional paid-in capital 7,207 31,701 31,701 Retained earnings 35,653 33,021 32,583 Accumulated other comprehensive income   (2,955 )   (1,630 )   (1,441 ) Total 42,451 67,386 67,137 Treasury stock - at cost (**)   0     (26,243 )   (26,120 ) Total shareholders' equity   42,451     41,143     41,017   Total liabilities and shareholders' equity $ 515,370   $ 489,072   $ 477,219     * 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 Nine Months Ended September 30, Ended September 30, Interest income: 2018*   2017* 2018*   2017* Interest and fees on loans $ 4,876 $ 4,170 $ 13,641 $ 11,996 Interest and dividend on securities available for sale 365 326 1,059 995 Interest on securities held to maturity 252 290 791 916 Dividends 45 26 112 74 Interest on deposits in banks 90 35 357 125 Interest on certificates of deposit in other banks   12     12   35     23   Total interest income   5,640     4,859   15,995     14,129     Interest expense: Interest on deposits 630 280 1,483 821 Interest on federal funds purchased 1 0 1 1 Interest on other borrowings 106 62 339 114 Interest on long-term debt   130     130   383     408   Total interest expense   867     472   2,206     1,344   Net interest income 4,773 4,387 13,789 12,785 Provision for loan losses   249     75   605     225   Net interest income after provision for losses on loans   4,524     4,312   13,184     12,560     Noninterest income: Service charges on deposit accounts 246 260 737 787 Income from trust services 56 54 178 164 Income from retail brokerage services 90 84 275 281 Income from insurance services 389 347 1,194 1,158 Income from mortgage banking services 1 15 2 154 Net gain (loss) on the sale or disposition of assets (7 ) 0 (7 ) (9 ) Net gain on the sale of securities 0 20 0 187 Other income   203     187   653     631   Total noninterest income   978     969   3,032     3,353     Noninterest expense: Salary and employee benefits 2,431 2,335 7,160 6,953 Occupancy expense 336 290 920 845 Equipment expense 207 215 585 633 Data processing expense 383 375 1,088 1,146 Amortization of intangible assets 4 4 12 12 Other operating expense   788     849   2,511     2,349   Total noninterest expense   4,149     4,068   12,276     11,938     Income before income tax expense 1,353 1,213 3,940 3,975 Provision for income taxes   209     261   416     885   Net income $ 1,144   $ 952 $ 3,524   $ 3,090     Net income per share, basic $ 0.45   $ 0.37 $ 1.38   $ 1.21   Net income per share, diluted $ 0.45   $ 0.37 $ 1.38   $ 1.21   Dividends paid per share $ 0.12   $ 0.11 $ 0.35   $ 0.33   Basic weighted average shares outstanding   2,545,776     2,547,437   2,545,494     2,547,437   Diluted weighted average shares outstanding   2,545,776     2,547,437   2,545,494     2,547,437       SOUTHWEST GEORGIA FINANCIAL CORPORATION Financial Highlights (Dollars in thousands except per share data)   At September 30   2018     2017 Assets $ 515,370 $ 477,219 Loans, less unearned income & discount $ 366,645 $ 329,820 Deposits $ 426,248 $ 384,756 Shareholders' equity $ 42,451 $ 41,017   Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Performance Data & Ratios Net income $ 1,144 $ 952 $ 3,524 $ 3,090 Earnings per share, basic $ 0.45 $ 0.37 $ 1.38 $ 1.21 Earnings per share, diluted $ 0.45 $ 0.37 $ 1.38 $ 1.21 Dividends paid per share $ 0.12 $ 0.11 $ 0.35 $ 0.33 Return on assets 0.90% 0.81% 0.93% 0.88% Return on equity 10.74% 9.26% 11.20% 10.27% Net interest margin (tax equivalent) 4.08% 4.14% 4.01% 4.09% Dividend payout ratio 26.71% 29.45% 25.29% 27.20% Efficiency ratio 71.01% 73.21% 71.77% 71.23%   Asset Quality Data & Ratios Total nonperforming loans $ 2,123 $ 1,549 $ 2,123 $ 1,549 Total nonperforming assets $ 2,251 $ 2,453 $ 2,251 $ 2,453 Net loan charge offs $ 364 $ (37) $ 570 $ 142 Reserve for loan losses to total loans 0.84% 0.97% 0.84% 0.97% Nonperforming loans/total loans 0.58% 0.47% 0.58% 0.47% Nonperforming assets/total assets 0.44% 0.51% 0.44% 0.51% Net charge offs / average loans 0.40% (0.04)% 0.22% 0.06%   Capital Ratios Average common equity to average total assets 8.36% 8.71% 8.32% 8.55% Common equity Tier 1 capital ratio 12.14% 12.54% 12.14% 12.54% Tier 1 capital ratio 12.14% 12.54% 12.14% 12.54% Tier 1 leverage ratio 8.89% 8.79% 8.89% 8.79% Total risk based capital ratio 12.96% 13.50% 12.96% 13.50% Book value per share $ 16.67 $ 16.10 $ 16.67 $ 16.10 Tangible book value per share $ 16.67 $ 16.09 $ 16.67 $ 16.09   Quarterly     3rd Qtr     2nd Qtr     1st Qtr     4th Qtr     3rd Qtr Averages 2018 2018 2018 2017 2017   Assets $   509,416 $   504,308 $   497,562 $   486,699 $   471,643 Loans, less unearned income & discount $ 356,981 $ 337,092 $ 331,822 $ 330,842 $ 324,206 Deposits $ 417,092 $ 412,133 $ 405,827 $ 396,746 $ 385,989 Equity $ 42,581 $ 41,747 $ 41,466 $ 41,502 $ 41,089 Return on assets 0.90% 0.91% 0.99% 0.59% 0.81% Return on equity 10.74% 11.00% 11.89% 6.91% 9.26% Net income $ 1,144 $ 1,148 $ 1,232 $ 717 $ 952 Net income per share, basic $ 0.45 $ 0.45 $ 0.48 $ 0.28 $ 0.37 Net income per share, diluted $ 0.45 $ 0.45 $ 0.48 $ 0.28 $ 0.37 Dividends paid per share $ 0.12 $ 0.12 $ 0.11 $ 0.11 $ 0.11  

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Company:Southwest Georgia Financial CorporationKaren T. Boyd, 229-873-3837Senior Vice President and Treasurerinvestorinfo@sgfc.comorInvestor Relations:Kei Advisors LLCDeborah K. Pawlowski, 716-843-3908dpawlowski@keiadvisors.com