Southwest Georgia Financial Corporation Reports 16% Net Income Growth for First Quarter 2018

Southwest Georgia Financial Corporation (the “Company”) (NYSE American:SGB), a full-service community bank holding company, today reported results of operations for the first quarter ended March 31, 2018. Comparisons are to prior year-periods unless otherwise noted.

“Our first quarter results continue the trend of solid growth in loans, deposits, and earnings. Response in our new Tifton market has been promising, and our Moultrie and Valdosta markets continue to provide growth and stability. We anticipate another successful and exciting year and are confident that our long-term strategy and focus will continue to deliver value,” commented DeWitt Drew, President and CEO.

Income Highlights

• Net income increased 16% to $1.2 million, or $0.48 per diluted share, from $1.1 million, or $0.42 per diluted share. An adjustment was made to estimated tax accruals in the first quarter, and, absent this adjustment, the Company expects it will be accruing a tax rate of approximately 14% for the remainder
  of 2018.
• Net interest income improved $382 thousand to $4.4 million, primarily due to growth in average total loans of $29.2 million. The increase in provision for loan losses to $215 thousand was necessitated by continued strong loan growth.
• Higher net interest income was mostly offset by a decrease in noninterest income and increases in provision for loan loss and noninterest expense. Noninterest income continues to be impacted by lower service charges as the economy improves and decreased mortgage banking fees as a result of closing Empire Financial Services.

Balance Sheet Trends

• Total assets at March 31, 2018, were $510.1 million, up 8% or $39.2 million. Total loans grew 8%, or $24.5 million, to $335.2 million, while continuing to maintain high standards of credit quality. Net charge-offs to average loans were 0.11%.
• Total deposits were up over 6%, or $25.4 million, to $418.4 million at March 31, 2018. Federal Home Loan Bank Advances were up $12.6 million as further funding for loan growth. The average cost of all interest bearing liabilities increased 18 basis points to 0.77%.

Capital Management

• Book value per share grew 5% to $16.23 at March 31, 2018.
• In March 2018, 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 90 consecutive years.

Webcast and Conference Call

The Company will host a conference call and webcast on Tuesday, April 24, 2018 at 1:00 p.m. ET. Management will review the financial and operating results for the first 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 [phone]. 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, May 1, 2018. To listen to the archived call, dial [phone] and enter conference ID number 13678425, 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 $510 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.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.

SOUTHWEST GEORGIA FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF CONDITION
(Dollars in thousands except per share data)
			(Unaudited)				(Audited)				(Unaudited)
			March 31,				December 31,				March 31,
			2018				2017				2017
ASSETS
Cash and due from banks		$	9,777			$	11,143			$	7,133
Interest-bearing deposits in banks			39,210				22,995				18,106
Certificates of deposit in other banks			1,985				1,985				1,235
Investment securities available for sale			56,228				54,364				59,692
Investment securities held to maturity			43,898				44,591				52,698
Federal Home Loan Bank stock, at cost			2,475				2,438				1,905
Loans, less unearned income and discount			335,185				330,173				310,707
Allowance for loan losses			(3,170	)			(3,044	)			(3,162	)
Net loans			332,015				327,129				307,545
Premises and equipment			12,975				12,250				11,260
Bank properties held for sale			212				212				212
Foreclosed assets, net			0				759				127
Intangible assets			16				20				31
Bank owned life insurance			6,595				6,553				5,390
Other assets			4,747				4,633				5,563
Total assets		$	510,133			$	489,072			$	470,897
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
NOW accounts		$	28,318			$	25,871			$	38,164
Money market			139,728				129,040				114,702
Savings			32,683				30,794				30,190
Certificates of deposit $250,000 and over			22,636				22,662				21,017
Other time accounts			62,186				60,969				60,215
Total interest-bearing deposits			285,551				269,337				264,287
Noninterest-bearing deposits			132,898				127,669				128,720
Total deposits			418,449				397,006				393,007
Other borrowings			19,471				17,971				8,448
Long-term debt			27,557				29,057				26,029
Accounts payable and accrued liabilities			3,330				3,895				4,110
Total liabilities			468,807				447,929				431,594
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			5,459				31,701				31,701
Retained earnings			33,972				33,021				31,118
Accumulated other comprehensive income			(2,399	)			(1,630	)			(1,690	)
Total			41,326				67,386				65,423
Treasury stock - at cost (**)			0				(26,243	)			(26,120	)
Total shareholders' equity			41,326				41,143				39,303
Total liabilities and shareholders' equity		$	510,133			$	489,072			$	470,897
*  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
		Ended March 31,
Interest income:		2018*				2017*
Interest and fees on loans		$	4,293			$	3,785
Interest and dividend on securities available for sale			331				325
Interest on securities held to maturity			277				316
Dividends on Federal Home Loan Bank stock			32				24
Interest on deposits in banks			118				50
Interest on certificates of deposit in other banks			11				2
Total interest income			5,062				4,502
Interest expense:
Interest on deposits			372				272
Interest on other borrowings			116				26
Interest on long-term debt			126				138
Total interest expense			614				436
Net interest income			4,448				4,066
Provision for loan losses			215				75
Net interest income after provision for losses on loans			4,233				3,991
Noninterest income:
Service charges on deposit accounts			224				270
Income from trust services			59				54
Income from retail brokerage services			88				89
Income from insurance services			388				433
Income from mortgage banking services			1				72
Net gain (loss) on the sale or disposition of assets			(7	)			0
Net gain on the sale of securities			0				124
Other income			241				241
Total noninterest income			994				1,283
Noninterest expense:
Salary and employee benefits			2,341				2,298
Occupancy expense			290				279
Equipment expense			190				205
Data processing expense			354				387
Amortization of intangible assets			4				4
Other operating expense			817				728
Total noninterest expense			3,996				3,901
Income before income tax expense			1,231				1,373
Provision for income taxes			(1	)			308
Net income		$	1,232			$	1,065
Net income per share, basic		$	0.48			$	0.42
Net income per share, diluted		$	0.48			$	0.42
Dividends paid per share		$	0.11			$	0.11
Basic weighted average shares outstanding			2,544,922				2,547,437
Diluted weighted average shares outstanding			2,544,922				2,547,437

SOUTHWEST GEORGIA FINANCIAL CORPORATION
Financial Highlights
(Dollars in thousands except per share data)
At March 31		2018				2017
Assets		$	510,133			$	470,897
Loans, less unearned income & discount		$	335,185			$	310,707
Deposits		$	418,449			$	393,007
Shareholders' equity		$	41,326			$	39,303
		Three Months Ended March 31,
		2018				2017
Performance Data & Ratios
Net income		$	1,232			$	1,065
Earnings per share, basic		$	0.48			$	0.42
Earnings per share, diluted		$	0.48			$	0.42
Dividends paid per share		$	0.11			$	0.11
Return on assets			0.99	%			0.91	%
Return on equity			11.89	%			10.91	%
Net interest margin (tax equivalent)			4.05	%			3.98	%
Dividend payout ratio			22.74	%			26.30	%
Efficiency ratio			70.92	%			70.15	%
Asset Quality Data & Ratios
Total nonperforming loans		$	1,506			$	1,222
Total nonperforming assets		$	1,506			$	1,349
Net loan charge offs		$	89			$	38
Reserve for loan losses to total loans			0.95	%			1.02	%
Nonperforming loans/total loans			0.45	%			0.39	%
Nonperforming assets/total assets			0.30	%			0.29	%
Net charge offs / average loans			0.11	%			0.05	%
Capital Ratios
Average common equity to average total assets			8.33	%			8.38	%
Common equity Tier 1 capital ratio			12.86	%			12.54	%
Tier 1 capital ratio			12.86	%			12.54	%
Tier 1 leverage ratio			8.78	%			8.79	%
Total risk based capital ratio			13.79	%			13.50	%
Book value per share		$	16.23			$	15.43
Tangible book value per share		$	16.23			$	15.42

Quarterly		1st Qtr				4th Qtr				3rd Qtr				2nd Qtr				1st Qtr
Averages		2018				2017				2017				2017				2017
Assets		$	497,562			$	486,699			$	471,643			$	469,201			$	466,019
Loans, less unearned income & discount		$	331,822			$	330,842			$	324,206			$	312,848			$	302,620
Deposits		$	405,827			$	396,746			$	385,989			$	390,268			$	388,761
Equity		$	41,466			$	41,502			$	41,089			$	40,169			$	39,054
Return on assets			0.99	%			0.59	%			0.81	%			0.92	%			0.91	%
Return on equity			11.89	%			6.91	%			9.26	%			10.69	%			10.91	%
Net income		$	1,232			$	717			$	952			$	1,074			$	1,065
Net income per share, basic		$	0.48			$	0.28			$	0.37			$	0.42			$	0.42
Net income per share, diluted		$	0.48			$	0.28			$	0.37			$	0.42			$	0.42
Dividends paid per share		$	0.11			$	0.11			$	0.11			$	0.11			$	0.11

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