Southwest Georgia Financial Corporation Reports Net Income Growth for Third Quarter 2012

Southwest Georgia Financial Corporation Reports Net Income Growth for Third Quarter 2012

MOULTRIE, Ga.--(BUSINESS WIRE)-- Southwest Georgia Financial Corporation (the "Corporation") (NYSE MKT: SGB), a full-service community bank holding company, today reported its results of operations for the third quarter ended September 30, 2012.


Third Quarter and Nine-Month Income Highlights

  • Net income was $421 thousand in the 2012 third quarter, or $0.17 per diluted share, compared with $99 thousand, or $0.04 per diluted share, in the third quarter of 2011. The increase was the result of a $375 thousand reduction in the Company's provision for loan losses.

  • For the nine months ended September 30, 2012, net income was $1.3 million, or $0.51 per diluted share, a 21.8% increase when compared with $1.1 million, or $0.42 per diluted share, for the same period in the prior year.

  • Net interest margin grew to 4.32% for the third quarter of 2012 and 4.22% for the first nine months of 2012, up 19 and 17 basis points compared with the respective prior-year periods. Strengthened net interest margin was mainly attributed to continued loan growth.

  • Net interest income after provision for loan losses increased 29.4% to $2.9 million from $2.2 million in the 2011 third quarter.

Balance Sheet Trends and Asset Quality

  • Total assets at September 30, 2012, were $332.2 million, an increase of 13.1%, or $38.5 million, from September 30, 2011.

  • Total loans increased $20.0 million, or 11.0%, to $202.5 million compared with the same period last year. The growth in loans was funded by increases in noninterest-bearing deposits.

  • Total deposits grew $40.8 million to $277.7 million at September 30, 2012, an increase of 17.2% from the third quarter of 2011.

  • Non-performing asset ratio was 0.78% at September 30, 2012, a 154 basis point improvement when compared with 2.32% at the end of the third quarter 2011.

Capital Management

  • The Company has a total risk based capital ratio of 15.63%, measurably above the federal "well capitalized" standard.

  • Return on equity increased to 5.76% compared with 1.39% in the third quarter of 2011.

  • Tangible book value per share at September 30, 2012, was $11.28, up 4.1% from the end of the third quarter of 2011.

DeWitt Drew, President and CEO, commented, "We are experiencing solid net income growth this year, due mostly to increased loans and noninterest bearing deposits combined with improved credit costs. While other expenses are high, we believe our investment in people and infrastructure in growing communities will allow us to continue to grow at a reasonable pace."

Dividends

In September 2012, the Corporation paid a third quarter cash dividend of $0.04 per common share. 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 $332 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)

September 30,

December 31,

September 30,

2012

2011

2011

ASSETS

Cash and due from banks

$

7,568

$

6,552

$

5,602

Interest-bearing deposits in banks

27,525

14,498

6,862

Certificates of deposit in other banks

1,715

980

0

Investment securities available for sale

13,918

28,641

31,945

Investment securities held to maturity

57,193

52,339

45,297

Federal Home Loan Bank stock, at cost

1,447

1,787

1,943

Loans, less unearned income and discount

202,483

181,302

182,442

Allowance for loan losses

(2,745)

(3,100)

(2,903)

Net loans

199,738

178,202

179,539

Premises and equipment

10,567

9,942

9,669

Foreclosed assets, net

1,837

2,358

2,365

Intangible assets

381

547

602

Bank owned life insurance

4,722

4,593

4,537

Other assets

5,621

5,211

5,393

Total assets

$

332,232

$

305,650

$

293,754

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

NOW accounts

$

42,975

$

29,841

$

27,314

Money market

38,840

45,638

46,411

Savings

25,688

24,367

24,411

Certificates of deposit $100,000 and over

39,721

32,629

31,274

Other time accounts

57,343

59,950

60,116

Total interest-bearing deposits

204,567

192,425

189,526

Noninterest-bearing deposits

73,084

56,486

47,361

Total deposits

277,651

248,911

236,887

Other borrowings

2,000

2,000

2,000

Long-term debt

20,000

22,000

22,000

Accounts payable and accrued liabilities

3,462

4,188

4,651

Total liabilities

303,113

277,099

265,538

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

20,123

19,133

18,736

Accumulated other comprehensive income

(885)

(463)

(401)

Total

55,233

54,665

54,330

Treasury stock - at cost (**)

(26,114)

(26,114)

(26,114)

Total shareholders' equity

29,119

28,551

28,216

Total liabilities and shareholders' equity

$

332,232

$

305,650

$

293,754

* 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

For the Nine Months

Ended September 30,

Ended September 30,

Interest income:

2012*

2011*

2012*

2011*

Interest and fees on loans

$

2,921

$

2,605

$

8,403

$

7,708

Interest and dividend on securities available for sale

136

297

560

1,190

Interest on securities held to maturity

362

312

1,097

878

Dividends on Federal Home Loan Bank stock

6

4

22

11

Interest on deposits in banks

12

7

42

27

Interest on certificates of deposit in other banks

5

0

13

0

Total interest income

3,442

3,225

10,136

9,815

Interest expense:

Interest on deposits

274

324

843

1,070

Interest on federal funds purchased

0

0

0

2

Interest on other borrowings

18

13

40

30

Interest on long-term debt

177

191

556

590

Total interest expense

469

529

1,439

1,693

Net interest income

2,973

2,696

8,698

8,122

Provision for loan losses

105

480

315

780

Net interest income after provision for losses on loans

2,868

2,216

8,383

7,342

Non-interest income:

Service charges on deposit accounts

320

360

920

1,033

Income from trust services

51

53

153

164

Income from retail brokerage services

81

73

282

248

Income from insurance services

272

273

975

935

Income from mortgage banking services

340

346

1,358

1,119

Provision for foreclosed property losses

(75)

(75)

(225)

(225)

Net gain (loss) on the sale or disposition of assets

16

(111)

(80)

(164)

Net gain on the sale of securities

0

156

338

377

Net loss on the impairment of equity securities

0

0

0

(12)

Other income

158

113

534

450

Total noninterest income

1,163

1,188

4,254

3,924

Non-interest expense:

Salary and employee benefits

2,030

1,966

6,732

5,782

Occupancy expense

261

262

742

717

Equipment expense

239

216

683

578

Data processing expense

277

257

840

775

Amortization of intangible assets

54

56

166

164

Other operating expense

690

624

1,964

1,970

Total non-interest expense

3,551

3,381

11,126

9,985

Income before income tax expense

480