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 fourth quarter and year ended December 31, 2018. Comparisons are to prior-year periods unless otherwise noted.

“2018 was a strong year, highlighted by 14% loan growth and 15% deposit growth. And, while the record level of earnings certainly benefited from lower corporate tax rates, it also reflects significant investments made throughout the organization that were necessary to grow organically in the markets in which we currently operate,” commented DeWitt Drew, President and CEO. “We remain encouraged by our entry into the Tifton market and are keenly focused on achieving strong results in 2019.”

Income Highlights

• Achieved record annual net income of $4.7 million, up $875 thousand, or 23%. On a per diluted share basis, earnings were $1.84, up 23%. Net interest income increased 8%, or $1.3 million, to $18.6 million, primarily due to growth in average total loans of $32.2 million and an improved asset mix. Further benefiting net income was a 57% decrease in income tax expense due to the 2017 Tax Cuts and Jobs Act.
• Growth in net interest income more than offset a higher provision, which reflected strong loan growth, and $736 thousand increase in noninterest expense that was due in large part to investments made in people, products and processes, and infrastructure, including the completion of a full service banking center in Tifton, GA.
• Fourth quarter net income was $1.2 million, or $0.46 per diluted share, consistent with the fourth quarter last year when excluding the $419 thousand deferred tax impairment charge in last year’s period. Net interest income for the quarter increased $324 thousand to $4.8 million due to an $818 thousand increase in interest and fees on loans, which was partially offset by a $568 thousand increase in interest on deposit accounts.

Balance Sheet Trends

• Total assets grew more than 9% to $534.7 million, driven by healthy loan growth of $46.6 million, or 14%, to $376.8 million at period end.
• Growth in the loan portfolio was funded by an increase in total deposits of $58.6 million, or nearly 15%, to $455.6 million at December 31, 2018. Given the increasing rate environment and a new business checking product aimed at retaining deposits, the mix has shifted with interest-bearing deposits up 31% to $351.9 million and noninterest-bearing deposits down 19% to $103.7 million. Federal Home Loan Bank Advances were down $15.4 million at year-end due to the strong deposit gathering activities during the year.

Capital Management

• Book value grew 6% to $17.20 per share.
• The Company has a Total Risk-Based Capital Ratio of 12.91%, a Common Equity Tier 1 Capital Ratio of 12.02%, and a Leverage Capital Ratio of 8.97%, all measurably above the federal “well capitalized” standard.
• In December 2018, the Company paid a quarterly cash dividend of $0.12 per common share and for the full year paid $0.47 per share, up 7%. Southwest Georgia Financial Corporation or its predecessor, Southwest Georgia Bank, has paid cash dividends for 90 consecutive years.

Webcast and Conference Call

The Company will host a conference call and webcast on Tuesday, January 22, 2019 at 1:00 p.m. ET. Management will review the financial and operating results for the fourth quarter and full year 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, January 29, 2019. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13686181, 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 $535 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 CORPORATIONCONSOLIDATED STATEMENT OF CONDITION(Dollars in thousands except per share data)

      (Unaudited)   (Audited)   (Audited) December 31, December 31, December 31, 2018 2017 2016 ASSETS Cash and due from banks $ 14,051 $ 11,143 $ 7,700 Interest-bearing deposits in banks 21,448 22,995 18,819 Certificates of deposit in other banks 2,732 1,985 0 Investment securities available for sale 58,314 54,364 53,566 Investment securities held to maturity 36,827 44,591 54,603 Federal Home Loan Bank stock, at cost 1,820 2,438 1,874 Loans, less unearned income and discount 376,750 330,173 292,524 Allowance for loan losses (3,429) (3,044) (3,124) Net loans 373,321 327,129 289,400 Premises and equipment 14,574 12,250 11,209 Bank properties held for sale 0 212 212 Foreclosed assets, net 128 759 127 Intangible assets 4 20 35 Bank owned life insurance 6,717 6,553 5,357 Other assets 4,765 4,633 5,599 Total assets $ 534,701 $ 489,072 $ 448,501 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Interest bearing business checking $ 28,071 $ 0 $ 0 NOW accounts 35,816 25,871 47,420 Money market 158,730 129,040 95,659 Savings 31,849 30,794 29,007 Certificates of deposit $100,000 and over 47,808 46,053 43,235 Other time accounts 49,671 37,579 39,524 Total interest-bearing deposits 351,945 269,337 254,845 Noninterest-bearing deposits 103,695 127,669 116,648 Total deposits 455,640 397,006 371,493   Other borrowings 10,457 17,971 8,448 Long-term debt 21,171 29,057 26,029 Accounts payable and accrued liabilities 3,650 3,895 4,109 Total liabilities 490,918 447,929 410,079 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 18,419 31,701 31,701 Retained earnings 25,005 33,021 30,333 Accumulated other comprehensive income (2,187) (1,630) (1,786) Total 43,783 67,386 64,542 Treasury stock - at cost (**) (0) (26,243) (26,120) Total shareholders' equity 43,783 41,143 38,422 Total liabilities and shareholders' equity $ 534,701 $ 489,072 $ 448,501   * 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 CORPORATIONCONSOLIDATED INCOME STATEMENT (unaudited*)(Dollars in thousands except per share data)

      For the Three Months   For the Twelve Months Ended December 31, Ended December 31, 2018*   2017* 2018*   2017 Interest income: Interest and fees on loans $ 5,122 $ 4,303 $ 18,762 $ 16,299 Interest and dividend on securities available for sale 368 322 1,427 1,318 Interest on securities held to maturity 236 282 1,027 1,198 Dividends on Federal Home Loan Bank stock 33 29 145 101 Interest on deposits in banks 128 70 485 195 Interest on certificates of deposit in other banks   13     12   48     35   Total interest income   5,900     5,018   21,894     19,146     Interest expense: Interest on deposits 900 333 2,383 1,154 Interest on federal funds purchased 0 0 1 1 Interest on other borrowings 57 110 396 224 Interest on long-term debt   159     116   542     523   Total interest expense   1,116     559   3,322     1,902   Net interest income 4,784 4,459 18,572 17,244 Provision for loan losses   226     75   830     300   Net interest income after provision for losses on loans   4,558     4,384   17,742     16,944     Noninterest income: Service charges on deposit accounts 279 218 1,015 1,005 Income from trust services 56 55 235 219 Income from retail brokerage services 125 82 399 362 Income from insurance services 409 365 1,604 1,523 Income from mortgage banking services 1 1 2 155 Net gain (loss) on the sale or disposition of assets (72 ) 0 (80 ) (9 ) Net gain (loss) on the sale of securities (165 ) 0 (165 ) 187 Net gain on extinguishment of debt 318 0 318 0 Other income   213     239   868     870   Total noninterest income   1,164     960   4,196     4,312     Noninterest expense: Salary and employee benefits 2,478 2,297 9,638 9,251 Occupancy expense 275 279 1,195 1,124 Equipment expense 349 217 933 850 Data processing expense 357 368 1,445 1,513 Amortization of intangible assets 4 4 16 16 Other operating expense   825     727   3,338     3,075   Total noninterest expense   4,288     3,892   16,565     15,829     Income before income tax expense 1,434 1,452 5,374 5,427 Provision for income taxes   275     735   691     1,620   Net income $ 1,159   $ 717 $ 4,682   $ 3,807   Net income per share, basic $ 0.46   $ 0.28 $ 1.84   $ 1.49   Net income per share, diluted $ 0.46   $ 0.28 $ 1.84   $ 1.49   Dividends paid per share $ 0.12   $ 0.11 $ 0.47   $ 0.44   Basic weighted average shares outstanding   2,545,776     2,541,505   2,545,565     2,541,505   Diluted weighted average shares outstanding   2,545,776     2,541,499   2,545,565     2,541,504      

SOUTHWEST GEORGIA FINANCIAL CORPORATIONFinancial Highlights(Dollars in thousands except per share data)

  At December 31     2018       2017 Assets $ 534,701 $ 489,072 Loans, less unearned income & discount $ 376,750 $ 330,173 Deposits $ 455,640 $ 397,006 Shareholders' equity $ 43,783 $ 41,143   Three Months Ended December 31, Twelve Months Ended December 31, 2018 2017 2018 2017 Performance Data & Ratios Net income $ 1,159 $ 717 $ 4,682 $ 3,807 Earnings per share, basic $ 0.46 $ 0.28 $ 1.84 $ 1.49 Earnings per share, diluted $ 0.46 $ 0.28 $ 1.84 $ 1.49 Dividends paid per share $ 0.12 $ 0.11 $ 0.47 $ 0.44 Return on assets 0.87% 0.59% 0.92% 0.80% Return on equity 10.77% 6.91% 11.09% 9.41% Net interest margin (tax equivalent) 3.94% 4.08% 3.99% 4.09% Dividend payout ratio 26.37% 39.07% 25.55% 29.44% Efficiency ratio 71.11% 69.32% 71.60% 70.75%   Asset Quality Data & Ratios Total nonperforming loans $ 1,205 $ 1,675 $ 1,205 $ 1,675 Total nonperforming assets $ 1,333 $ 2,434 $ 1,333 $ 2,434 Net loan charge offs (recoveries) $ (126) $ 239 $ 444 $ 381 Reserve for loan losses to total loans 0.91% 0.92% 0.91% 0.92% Nonperforming loans/total loans 0.32% 0.51% 0.32% 0.51% Nonperforming assets/total assets 0.25% 0.50% 0.25% 0.50% Net charge offs (recoveries) / average loans (0.13%) 0.29% 0.13% 0.12%   Capital Ratios Average common equity to average total assets 8.12% 8.53% 8.27% 8.55% Common equity Tier 1 capital ratio 12.02% 12.64% 12.02% 12.64% Tier 1 capital ratio 12.02% 12.64% 12.02% 12.64% Tier 1 leverage ratio 8.65% 8.72% 8.65% 8.72% Total risk based capital ratio 12.91% 13.55% 12.91% 13.55% Book value per share $ 17.20 $ 16.19 $ 17.20 $ 16.19 Tangible book value per share $ 17.20 $ 16.18 $ 17.20 $ 16.18   Quarterly       4th Qtr     3rd Qtr     2nd Qtr     1st Qtr     4th Qtr Averages 2018 2018 2018 2018 2017   Assets $ 529,955 $ 509,416 $ 504,308 $ 497,562 $ 486,699 Loans, less unearned income & discount $ 373,324 $ 356,981 $ 337,092 $ 331,822 $ 330,842 Deposits $ 444,256 $ 417,092 $ 412,133 $ 405,827 $ 396,746 Equity $ 43,016 $ 42,581 $ 41,747 $ 41,466 $ 41,502 Return on assets 0.87% 0.90% 0.91% 0.99% 0.59% Return on equity 10.77% 10.74% 11.00% 11.89% 6.91% Net income $ 1,159 $ 1,144 $ 1,148 $ 1,232 $ 717 Net income per share, basic $ 0.46 $ 0.45 $ 0.45 $ 0.48 $ 0.28 Net income per share, diluted $ 0.46 $ 0.45 $ 0.45 $ 0.48 $ 0.28 Dividends paid per share $ 0.12 $ 0.12 $ 0.12 $ 0.11 $ 0.11  

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Company:Karen T. BoydSenior Vice President and TreasurerPhone: (229) 873-3837investorinfo@sgfc.comInvestor Relations:Deborah K. PawlowskiKei Advisors LLCPhone: (716) 843-3908dpawlowski@keiadvisors.com