Southwest Georgia Financial Corporation Reports 2017 Third Quarter Results

MOULTRIE, Ga.--()--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, 2017. Comparisons are to prior-year periods unless otherwise noted.

On a year-to-date basis we continue to trend higher than last year’s record earnings per share pace, despite the significant expenses incurred to migrate to our new core processing provider and our continued expansion into the Tifton market,” commented DeWitt Drew, President and CEO. “We will continue to invest in technology and systems to better serve our customer base and are looking forward to completing construction on our Tifton branch in early 2018. While overall credit quality is still solid, that is an area we will continue to focus on as we grow in both our legacy and new markets.”

Income Highlights

  • For the nine months ended September 30, 2017, net income was up 2% to $3.1 million, or $1.21 per diluted share. Average loans grew $35.8 million, driving strong growth in net interest income of $1.0 million, or 9%. However, increased overhead expenses mostly offset this growth due in large part to higher professional fees, migration to a new core processing provider, and personnel costs related to staffing the Company’s Tifton expansion and greater incentive based income.
  • For the quarter, net income decreased slightly to $952 thousand, or $0.37 per diluted share. Strong net interest income growth of $391 thousand, or 10%, was more than offset by a $329 thousand increase in noninterest expense and a decrease in noninterest income of $91 thousand, primarily within mortgage banking services income. Higher overhead expenses for the quarter were related to a mass reissue of debit cards, other system migration costs and increased salaries and employee benefits.

Balance Sheet Trends

  • Total assets grew 8% to $477.2 million, reflecting exceptional loan growth of $42.6 million, or 15%, to $329.8 million at period end.
  • Total deposits at September 30, 2017, were $384.8 million, up 6%, mostly due to an increase in money market and noninterest-bearing deposit accounts. Federal Home Loan Bank Advances were up $11.5 million at quarter-end as further funding for loan growth.

Capital Management

  • Book value per share grew 5% to $16.10.
  • The Company has a Total Risk-Based Capital Ratio of 13.87%, a Common Equity Tier 1 Capital Ratio of 12.90%, and a Leverage Capital Ratio of 9.00%, all measurably above the federal “well capitalized” standard.
  • In September 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, October 24, 2017 at 1:00 p.m. ET. Management will review the financial and operating results for the third quarter of 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, October 31, 2017. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13671694, 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 $477 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.

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,
2017 2016 2016
ASSETS
Cash and due from banks $ 8,670 $ 7,700 $ 6,515
Interest-bearing deposits in banks 11,618 18,819 26,503
Certificates of deposit in other banks 1,985 0 0
Investment securities available for sale 54,947 53,566 45,338
Investment securities held to maturity 46,955 54,603 56,389
Federal Home Loan Bank stock, at cost 2,464 1,874 1,874
Loans, less unearned income and discount 329,820 292,524 287,226
Allowance for loan losses (3,208) (3,124) (3,093)
Net loans 326,612 289,400 284,133
Premises and equipment 11,891 11,209 11,772
Bank properties held for sale 212 212 0
Foreclosed assets, net 904 127 127
Intangible assets 23 35 39
Bank owned life insurance 5,457 5,357 5,325
Other assets 5,481 5,599 5,015
Total assets $ 477,219 $ 448,501 $ 443,030
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
NOW accounts $ 29,078 $ 47,420 $ 32,983
Money market 116,769 95,659 97,975
Savings 30,982 29,007 30,834
Certificates of deposit $100,000 and over 41,207 43,235 35,393
Other time accounts 38,243 39,524 48,029
Total interest-bearing deposits 256,279 254,845 245,214
Noninterest-bearing deposits 128,477 116,648 119,042
Total deposits 384,756 371,493 364,256
 
Other borrowings 22,114 8,448 8,448
Long-term debt 24,771 26,029 26,886
Accounts payable and accrued liabilities 4,561 4,109 4,349
Total liabilities 436,202 410,079 403,939
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 32,583 30,333 29,612
Accumulated other comprehensive income (1,441) (1,786) (402)
Total 67,137 64,542 65,205
Treasury stock - at cost (**) (26,120) (26,120) (26,114)
Total shareholders' equity 41,017 38,422 39,091
Total liabilities and shareholders' equity $ 477,219 $ 448,501 $ 443,030
 
* Common stock - shares outstanding 2,547,437 2,547,437 2,547,837
** Treasury stock - shares 1,746,398 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 Nine Months
Ended September 30, Ended September 30,
2017*   2016* 2017*   2016*
Interest income:
Interest and fees on loans $ 4,170 $ 3,785 $ 11,996 $ 11,017
Interest and dividend on securities available for sale 326 243 996 793
Interest on securities held to maturity 290 332 916 1,022
Dividends on Federal Home Loan Bank stock 26 22 73 68
Interest on deposits in banks 35 26 125 65
Interest on certificates of deposit in other banks   12   0   23   0
Total interest income   4,859   4,408   14,129   12,965
 
Interest expense:
Interest on deposits 280 243 821 676
Interest on federal funds purchased 0 0 1 0
Interest on other borrowings 62 28 114 76
Interest on long-term debt   130   141   408   430
Total interest expense   472   412   1,344   1,182
Net interest income 4,387 3,996 12,785 11,783
Provision for loan losses   75   45   225   115
Net interest income after provision for losses on loans   4,312   3,951   12,560   11,668
 
Noninterest income:
Service charges on deposit accounts 260 277 787 808
Income from trust services 54 54 164 157
Income from retail brokerage services 84 90 281 258
Income from insurance services 347 310 1,158 1,124
Income from mortgage banking services 16 89 154 272
Net gain (loss) on the sale or disposition of assets 0 0 (9) 0
Net gain on the sale of securities 20 57 187 169
Other income   188   183   630   596
Total noninterest income   969   1,060   3,352   3,384
 
Noninterest expense:
Salary and employee benefits 2,335 2,222 6,953 6,575
Occupancy expense 290 297 845 864
Equipment expense 215 182 633 633
Data processing expense 375 350 1,146 1,004
Amortization of intangible assets 4 4 12 12
Other operating expense   849   684   2,348   2,059
Total noninterest expense   4,068   3,739   11,937   11,147
 
Income before income tax expense 1,213 1,272 3,975 3,905
Provision for income taxes   261   299   885   873
Net income $ 952 $ 973 $ 3,090 $ 3,032
 
Net income per share, basic $ 0.37 $ 0.38 $ 1.21 $ 1.19
Net income per share, diluted $ 0.37 $ 0.38 $ 1.21 $ 1.19
Dividends paid per share $ 0.11 $ 0.11 $ 0.33 $ 0.31
Basic weighted average shares outstanding   2,547,437   2,547,837   2,547,437   2,547,837
Diluted weighted average shares outstanding   2,547,437   2,547,837   2,547,437   2,547,837
 
 

SOUTHWEST GEORGIA FINANCIAL CORPORATION

Financial Highlights

(Dollars in thousands except per share data)

   
At September 30 2017 2016
Assets $ 477,219 $ 443,030
Loans, less unearned income & discount $ 329,820 $ 287,226
Deposits $ 384,756 $ 364,256
Shareholders' equity $ 41,017 $ 39,091
 
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Performance Data & Ratios
Net income $ 952 $ 973 $ 3,090 $ 3,032
Earnings per share, basic $ 0.37 $ 0.38 $ 1.21 $ 1.19
Earnings per share, diluted $ 0.37 $ 0.38 $ 1.21 $ 1.19
Dividends paid per share $ 0.11 $ 0.11 $ 0.33 $ 0.31
Return on assets 0.81% 0.89% 0.88% 0.95%
Return on equity 9.26% 9.95% 10.27% 10.61%
Net interest margin (tax equivalent) 4.14% 4.12% 4.09% 4.20%
Dividend payout ratio 29.45% 28.81% 27.20% 26.05%
Efficiency ratio 73.21% 70.96% 71.23% 70.50%
 
Asset Quality Data & Ratios
Total nonperforming loans $ 1,549 $ 352 $ 1,549 $ 352
Total nonperforming assets $ 2,453 $ 479 $ 2,453 $ 479
Net loan charge offs $ (37) $ 64 $ 142 $ 54
Reserve for loan losses to total loans 0.97% 1.08% 0.97% 1.08%
Nonperforming loans/total loans 0.47% 0.12% 0.47% 0.12%
Nonperforming assets/total assets 0.51% 0.11% 0.51% 0.11%
Net charge offs / average loans (0.04)% 0.09% 0.06% 0.03%
 
Capital Ratios
Average common equity to average total assets 8.71% 8.97% 8.55% 8.99%
Common equity Tier 1 capital ratio 12.90% 13.18% 12.90% 13.18%
Tier 1 capital ratio 12.90% 13.18% 12.90% 13.18%
Tier 1 leverage ratio 9.00% 9.06% 9.00% 9.06%
Total risk based capital ratio 13.87% 14.21% 13.87% 14.21%
Book value per share $ 16.10 $ 15.34 $ 16.10 $ 15.34
Tangible book value per share $ 16.09 $ 15.33 $ 16.09 $ 15.33
                                         
Quarterly       3rd Qtr       2nd Qtr       1st Qtr       4th Qtr       3rd Qtr
Averages 2017 2017 2017 2016 2016
 
Assets $ 471,643 $ 469,201 $ 466,019 $ 452,865 $ 435,880
Loans, less unearned income & discount $ 324,206 $ 312,848 $ 302,620 $ 291,573 $ 289,978
Deposits $ 385,989 $ 390,268 $ 388,761 $ 374,346 $ 357,421
Equity $ 41,089 $ 40,169 $ 39,054 $ 39,178 $ 39,110
Return on assets 0.81% 0.92% 0.91% 0.89% 0.89%
Return on equity 9.26% 10.69% 10.91% 10.23% 9.95%
Net income $ 952 $ 1,074 $ 1,065 $ 1,002 $ 973
Net income per share, basic $ 0.37 $ 0.42 $ 0.42 $ 0.39 $ 0.38
Net income per share, diluted $ 0.37 $ 0.42 $ 0.42 $ 0.39 $ 0.38
Dividends paid per share $ 0.11 $ 0.11 $ 0.11 $ 0.11 $ 0.11

Contacts

Company:
Southwest Georgia Financial Corporation
Karen T. Boyd, 229-873-3837
Senior Vice President and Treasurer
investorinfo@sgfc.com
or
Investor Relations:
Kei Advisors LLC
Deborah K. Pawlowski, 716-843-3908
dpawlowski@keiadvisors.com

Release Summary

Southwest Georgia Financial Corporation (NYSE American: SGB) reports 2017 Third Quarter Results.

Contacts

Company:
Southwest Georgia Financial Corporation
Karen T. Boyd, 229-873-3837
Senior Vice President and Treasurer
investorinfo@sgfc.com
or
Investor Relations:
Kei Advisors LLC
Deborah K. Pawlowski, 716-843-3908
dpawlowski@keiadvisors.com