Southwest Georgia Financial Corporation Reports 13% Net Income Growth for Second Quarter 2019

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 second quarter ended June 30, 2019. Comparisons are with the prior-year period unless otherwise noted.

The strategic investments made to organically grow our franchise are paying off. Loans grew 12% year-over-year with contributions coming from each of our markets. Our loan growth was funded by 13% deposit growth, which included a meaningful amount of noninterest-bearing transaction accounts. We believe continued disruptions in the banking industry will eventually create additional deposit opportunities for SGB,” commented DeWitt Drew, President and CEO. “We are seeing an extraordinary amount of pricing pressure on both sides of the balance sheet; however, we are encouraged by the continuous growth and true expansion of our net interest margin, which we believe is a direct result of our community and customer centric focus.”

Income Highlights

  • Net income increased 13% to $1.3 million, or $0.51 per diluted share, from $1.15 million, or $0.45 per diluted share.
  • Net interest income was up $485 thousand to $5.05 million, due to increased interest and fees on loans of $856 thousand, partially offset by higher costs on interest bearing deposits of $493 thousand. Net interest margin expanded 10 basis points to 4.06%. The provision for loan losses was up $110 thousand to $250 thousand, due to continued loan growth.
  • Noninterest income increased $247 thousand, primarily due to a $244 thousand net gain from the sale of fixed assets. Core noninterest income was up slightly as insurance services growth of 9% offset declines in other business lines.
  • Higher net interest income and noninterest income was partially offset by continued investments to drive growth. Noninterest expense was up $418 thousand, or 10%. The largest component of the increase was within salary and employee benefits, which was up $196 thousand.

Balance Sheet Trends

  • Total assets at June 30, 2019 were $552.5 million, up 9% or $44.3 million. Total loans grew more than 12%, or $42.4 million, to $388.3 million, while continuing to maintain high standards of credit quality. Net charge-offs to average loans were 0.16%.
  • Total deposits were up nearly 13%, or $52.2 million, to $467.6 million at quarter-end. Federal Home Loan Bank Advances were down $13.3 million, due to strong deposit growth. The average cost of all interest bearing liabilities increased 32 basis points to 1.16%.

Capital Management

  • Book value per share grew 12% to $18.48 at June 30, 2019.
  • In June 2019, 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 for 91 consecutive years.

Webcast and Conference Call

The Company will host a conference call and webcast on Tuesday, July 23, 2019 at 1:00 p.m. ET. Management will review the financial and operating results for the second quarter of 2019, 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, July 30, 2019. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13691911, 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 $552 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 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)

June 30,

December 31,

June 30,

2019

2018

2018

ASSETS

Cash and due from banks

$

13,173

$

14,051

$

7,786

Interest-bearing deposits in banks

17,449

21,448

27,292

Certificates of deposit in other banks

2,977

2,732

1,985

Investment securities available for sale

73,713

58,314

59,281

Investment securities held to maturity

32,546

36,827

41,189

Federal Home Loan Bank stock, at cost

1,870

1,820

2,475

Loans, less unearned income and discount

388,268

376,750

345,852

Allowance for loan losses

(3,465)

(3,429)

(3,193)

Net loans

384,803

373,321

342,659

Premises and equipment

14,264

14,574

13,693

Bank properties held for sale

0

0

212

Foreclosed assets, net

38

128

38

Intangible assets

0

4

12

Bank owned life insurance

6,846

6,779

6,636

Other assets

4,796

4,835

4,895

Total assets

$

552,475

$

534,833

$

508,153

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

Interest bearing business checking

$

31,309

$

28,071

$

29,315

NOW accounts

20,773

35,816

54,043

Money market

156,449

158,730

115,022

Savings

33,593

31,849

32,831

Certificates of deposit $100,000 and over

27,257

16,265

22,472

Other time accounts

80,967

81,214

63,449

Total interest-bearing deposits

350,348

351,945

317,132

Noninterest-bearing deposits

117,289

103,695

98,305

Total deposits

467,637

455,640

415,437

 

Other borrowings

6,314

10,457

19,471

Long-term debt

27,386

21,171

27,557

Accounts payable and accrued liabilities

4,079

3,946

3,754

Total liabilities

505,416

491,214

466,219

Shareholders' equity:

Common stock - par value $1; 5,000,000 shares

authorized; 2,545,776 shares issued (*)

2,546

2,546

2,546

Additional paid-in capital

18,419

18,419

18,707

Retained earnings

26,758

24,841

23,315

Accumulated other comprehensive income

(664)

(2,187)

(2,634)

Total shareholders' equity

47,059

43,619

41,934

Total liabilities and shareholders' equity

$

552,475

$

534,833

$

508,153

 

* Common stock - shares outstanding

2,545,776

2,545,776

2,545,776

SOUTHWEST GEORGIA FINANCIAL CORPORATION

CONSOLIDATED INCOME STATEMENT (unaudited*)

(Dollars in thousands except per share data)

For the Three Months

For the Six Months

Ended June 30,

Ended June 30,

2019*

2018*

2019*

2018*

Interest income:

Interest and fees on loans

$

5,327

$

4,472

$

10,449

$

8,765

Interest and dividend on securities available for sale

 

415

 

363

 

791

 

693

Interest on securities held to maturity

 

237

 

262

 

487

 

540

Dividends on Federal Home Loan Bank stock

 

21

 

35

 

48

 

68

Interest on deposits in banks

 

130

 

148

 

300

 

266

Interest on certificates of deposit in other banks

 

17

 

12

 

34

 

23

Total interest income

 

6,147

 

5,292

 

12,109

 

10,355

 

Interest expense:

Interest on deposits

 

975

 

481

 

2,025

 

854

Interest on federal funds purchased

 

0

 

0

 

0

 

0

Interest on other borrowings

 

37

 

117

 

73

 

233

Interest on long-term debt

 

83

 

127

 

193

 

252

Total interest expense

 

1,095

 

725

 

2,291

 

1,339

Net interest income

 

5,052

 

4,567

 

9,818

 

9,016

Provision for loan losses

 

250

 

140

 

366

 

356

Net interest income after provision for losses on loans

 

4,802

 

4,427

 

9,452

 

8,660

 

Noninterest income:

Service charges on deposit accounts

 

230

 

266

 

468

 

491

Income from trust services

 

55

 

63

 

112

 

122

Income from retail brokerage services

 

88

 

97

 

195

 

185

Income from insurance services

 

456

 

417

 

893

 

805

Income from mortgage banking services

 

0

 

1

 

0

 

1

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

 

244

 

7

 

245

 

0

Net gain on extinguishment of debt

 

0

 

 

0

 

 

143

 

 

0

Other income

 

234

 

209

 

489

 

450

Total noninterest income

 

1,307

 

1,060

 

2,545

 

2,054

 

Noninterest expense:

Salary and employee benefits

 

2,584

 

2,388

 

5,081

 

4,729

Occupancy expense

 

319

 

295

 

633

 

584

Equipment expense

 

311

 

187

 

618

 

377

Data processing expense

 

405

 

351

 

809

 

705

Amortization of intangible assets

 

0

 

4

 

4

 

8

Other operating expense

 

931

 

907

 

1,821

 

1,724

Total noninterest expense

 

4,550

 

4,132

 

8,966

 

8,127

 

Income before income tax expense

 

1,559

 

1,355

 

3,031

 

2,587

Provision for income taxes

 

261

 

207

 

504

 

207

Net income

$

1,298

$

1,148

$

2,527

$

2,380

Net income per share, basic

$

0.51

$

0.45

$

0.99

$

0.93

Net income per share, diluted

$

0.51

$

0.45

$

0.99

$

0.93

Dividends paid per share

$

0.12

$

0.12

$

0.24

$

0.23

Basic weighted average shares outstanding

 

2,545,776

 

2,545,776

 

2,545,776

 

2,545,351

Diluted weighted average shares outstanding

 

2,545,776

 

2,545,776

 

2,545,776

 

2,545,351

 

SOUTHWEST GEORGIA FINANCIAL CORPORATION

Financial Highlights

(Dollars in thousands except per share data)

At June 30

2019

2018

Assets

$

552,475

$

508,153

Loans, less unearned income & discount

$

388,268

$

345,852

Deposits

$

467,637

$

415,437

Shareholders' equity

$

47,058

$

41,934

 

Three Months Ended June 30,

Six Months Ended June 30,

2019

2018

2019

2018

Performance Data & Ratios

Net income

$

1,298

$

1,148

$

2,527

$

2,380

Earnings per share, basic

$

0.51

$

0.45

$

0.99

$

0.93

Earnings per share, diluted

$

0.51

$

0.45

$

0.99

$

0.93

Dividends paid per share

$

0.12

$

0.12

$

0.24

$

0.23

Return on assets

 

0.95%

 

0.91%

 

0.93%

 

0.95%

Return on equity

 

11.27%

 

11.00%

 

11.17%

 

11.44%

Net interest margin (tax equivalent)

 

4.06%

 

3.96%

 

3.68%

 

3.97%

Dividend payout ratio

 

23.53%

 

24.42%

 

24.18%

 

24.60%

Efficiency ratio

 

70.70%

 

71.10%

 

71.62%

 

71.01%

 

Asset Quality Data & Ratios

Total nonperforming loans

$

1,609

$

1,720

$

1,609

$

1,720

Total nonperforming assets

$

1,647

$

1,758

$

1,647

$

1,758

Net loan charge offs (recoveries)

$

152

$

118

$

330

$

206

Reserve for loan losses to total loans

 

0.89%

 

0.92%

 

0.89%

 

0.92%

Nonperforming loans/total loans

 

0.41%

 

0.50%

 

0.41%

 

0.50%

Nonperforming assets/total assets

 

0.30%

 

0.35%

 

0.30%

 

0.35%

Net charge offs (recoveries) / average loans

 

0.16%

 

0.14%

 

0.17%

 

0.12%

 

Capital Ratios

Average common equity to average total assets

 

8.45%

 

8.28%

 

8.32%

 

8.31%

Common equity Tier 1 capital ratio

 

12.18%

 

12.68%

 

12.18%

 

12.68%

Tier 1 capital ratio

 

12.18%

 

12.68%

 

12.18%

 

12.68%

Tier 1 leverage ratio

 

8.76%

 

8.81%

 

8.76%

 

8.81%

Total risk based capital ratio

 

13.07%

 

13.59%

 

13.07%

 

13.59%

Book value per share

$

18.48

$

16.47

$

18.48

$

16.47

Tangible book value per share

$

18.48

$

16.47

$

18.48

$

16.47

Quarterly

2nd Qtr

1st Qtr

4th Qtr

3rd Qtr

2nd Qtr

Averages

2019

2019

2018

2018

2018

 

Assets

$ 545,292

$ 542,361

$ 530,054

$ 509,416

$ 504,308

Loans, less unearned income & discount

$ 383,167

$ 377,995

$ 373,324

$ 356,981

$ 337,092

Deposits

$ 476,529

$ 469,726

$ 444,256

$ 417,092

$ 412,133

Equity

$ 46,067

$ 44,431

$ 42,887

$ 42,581

$ 41,747

Return on assets

0.95%

0.91%

0.85%

0.90%

0.91%

Return on equity

11.27%

11.06%

10.48%

10.74%

11.00%

Net income

$ 1,298

$ 1,229

$ 1,123

$ 1,144

$ 1,148

Net income per share, basic

$ 0.51

$ 0.48

$ 0.44

$ 0.45

$ 0.45

Net income per share, diluted

$ 0.51

$ 0.48

$ 0.44

$ 0.45

$ 0.45

Dividends paid per share

$ 0.12

$ 0.12

$ 0.12

$ 0.12

$ 0.12

 

Contacts

Company:
Karen T. Boyd
Senior Vice President and Treasurer
Phone: (229) 873-3837
investorinfo@sgfc.com

Investor Relations:
Deborah K. Pawlowski
Kei Advisors LLC
Phone: (716) 843-3908
dpawlowski@keiadvisors.com

Release Summary

Southwest Georgia Financial Corporation (NYSE American: SGB) reports 13% net income growth for the second quarter of 2019.

Contacts

Company:
Karen T. Boyd
Senior Vice President and Treasurer
Phone: (229) 873-3837
investorinfo@sgfc.com

Investor Relations:
Deborah K. Pawlowski
Kei Advisors LLC
Phone: (716) 843-3908
dpawlowski@keiadvisors.com