Southwest Georgia Financial Corporation Reports Fourth Quarter and Record Full Year 2019 Financial 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 fourth quarter and year ended December 31, 2019. Comparisons are to prior-year periods unless otherwise noted.

2019 was a record year as our team of exceptional bankers grew loans and improved our deposit mix, all while increasing asset yields over 20 basis points and decreasing funding costs by almost 20 basis points. For the fourth quarter, our net interest margin improved to 4.30 percent, 36 basis points higher than the fourth quarter last year,” commented DeWitt Drew, President and CEO. “Our investments in Valdosta and Tifton have been transformational for our Company, and have allowed us to unlock the value of the core funding in our Moultrie and Sylvester operations.”

Mr. Drew added, “We are excited about our agreement to merge with and into The First Bancshares, Inc. (Nasdaq: FBMS). The combination will provide significant new resources and value to our staff, our customers, and most importantly, our shareholders. It is anticipated that, after customary approvals, a closing can occur in the second quarter of 2020.”

Income Highlights

  • Achieved record annual net income of $5.3 million, up $653 thousand, or 14%. On a per diluted share basis, earnings increased $0.25 to $2.08. Net interest income increased 11% or $2.0 million, primarily due to higher yields on loans, lower rates on interest bearing deposits, and improved deposit mix.
  • Higher annual net interest income, and a 15%, or $611 thousand, increase in non-interest income, more than offset the $1.5 million, or 9%, increase in non-interest expenses.
  • Fourth quarter net income was up 20% to $1.3 million, or $0.53 per diluted share, compared with $1.1 million, or $0.44 per diluted share. Net interest income for the quarter increased $775 thousand, or 16%. Non-interest expense was up $563 thousand, or 13%, reflecting higher pension, legal, professional, and post-employment benefits expenses that were up $472 thousand, in aggregate.

Balance Sheet Trends

  • Total assets at year-end were $555.4 million, up 4%. Loans grew approximately 6%, or $21.3 million, to $398.1 million, while continuing to maintain high standards of credit quality. Nonperforming loans to total loans were 0.06%.
  • Total deposits of $473.4 million, were up $17.8 million, or 4%, which reflects a $10.2 million, or 10%, increase in non-interest bearing deposits. Federal Home Loan Bank advances were down slightly to $28.5 million.

Capital Management

  • Book value grew 13% to $19.39 per share.
  • The Company has a Total Risk Based Capital Ratio of 13.06%, a Common Equity Tier 1 Capital Ratio of 12.14%, and a Leverage Capital Ratio of 8.59%, all measurably above the federal “well capitalized” standard.
  • In December 2019 the Company paid a quarterly cash dividend of $0.12 per common share, and for the full year paid $0.48 per share. Southwest Georgia Financial Corporation, or its predecessor, Southwest Georgia Bank, has paid cash dividends for 91 consecutive years.

About Southwest Georgia Financial Corporation

Southwest Georgia Financial Corporation is a state-chartered bank holding company with approximately $555 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.

About The First Bancshares, Inc.

The First Bancshares, Inc., headquartered in Hattiesburg, Mississippi, is the parent company of The First, A National Banking Association. Founded in 1996, The First has operations in Mississippi, Louisiana, Alabama, Florida and Georgia. The Company’s stock is traded on NASDAQ Global Market under the symbol FBMS. Information is available on the Company’s website: www.thefirstbank.com.

Forward Looking Statement

This news release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. In general, forward-looking statements usually use words such as “may,” “believe,” “expect,” “anticipate,” “intend,” “will,” “should,” “plan,” “estimate,” “predict,” “continue” and “potential” or the negative of these terms or other comparable terminology, including statements related to the expected timing of the closing of the merger, the expected returns and other benefits of the merger, to shareholders, expected improvement in operating efficiency resulting from the merger, estimated expense reductions resulting from the transactions and the timing of achievement of such reductions, the impact on and timing of the recovery of the impact on tangible book value, and the effect of the merger on the Company’s capital ratios. Forward-looking statements represent management’s beliefs, based upon information available at the time the statements are made, with regard to the matters addressed; they are not guarantees of future performance. Forward-looking statements are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results or financial condition to differ materially from those expressed in or implied by such statements.

Factors that could cause or contribute to such differences include, but are not limited to (1) the risk that the cost savings and any revenue synergies from the merger may not be realized or take longer than anticipated to be realized, (2) disruption from the merger with customers, suppliers, employee or other business partners relationships, (3) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger Agreement, (4) the risk of successful integration of SGB’s business into the Company, (5) the failure to obtain the necessary approval by the shareholders of SGB, (6) the amount of the costs, fees, expenses and charges related to the merger, (7) the ability by the Company to obtain required governmental approvals of the merger, (8) reputational risk and the reaction of each of the companies’ customers, suppliers, employees or other business partners to the merger, (9) the failure of the closing conditions in the merger Agreement to be satisfied, or any unexpected delay in closing of the merger, (10) the risk that the integration of SGB’s operations into the operations of the Company will be materially delayed or will be more costly or difficult than expected, (11) the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events, (12) the dilution caused by the Company’s issuance of additional shares of its common stock in the merger transaction, and (13) general competitive, economic, political and market conditions. Additional factors which could affect the forward looking statements can be found in the cautionary language included under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in SGB’s Annual Reports on Form 10-K for the year ended December 31, 2018, and other documents subsequently filed by the Company and SGB with the SEC. Consequently, no forward-looking statement can be guaranteed. Neither the Company nor SGB undertakes any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For any forward-looking statements made in this news release, the exhibits hereto or any related documents, the Company and SGB claim protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Additional Information about the merger and Where to Find It

This document does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with the proposed Merger, the Company will file with the SEC a registration statement on Form S-4 that will include a proxy statement of SGB and a prospectus of the Company, as well as other relevant documents concerning the proposed transaction. WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, SGB AND THE PROPOSED MERGER. The proxy statement/prospectus will be sent to the shareholders of SGB seeking the required shareholder approval. Investors and security holders will be able to obtain free copies of the registration statement on Form S-4 and the related proxy statement/prospectus, when filed, as well as other documents filed with the SEC by the Company and SGB through the web site maintained by the SEC at www.sec.gov. Documents filed with the SEC by the Company will also be available free of charge by directing a written request to The First Bancshares, Inc., 6480 U.S. Highway 98 West, Hattiesburg, Mississippi 39402 Attn: Corporate Secretary, Chandra Kidd. The Company’s telephone number is (601) 268-8998. Documents filed with the SEC by SGB will also be available free of charge by directing a written request to Southwest Georgia Financial Corporation, 25 Second Avenue, S. W., Moultrie, Georgia 31768, Attn: EVP and Chief Administrative Officer, Donna Lott. SGB’s telephone number is (229) 985-1120.

Participants in the Transaction

The Company, SGB and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of SGB in connection with the proposed transaction. Certain information regarding the interests of these participants and a description of their direct and indirect interests, by security holdings or otherwise, will be included in the proxy statement/prospectus regarding the proposed transaction when it becomes available. Additional information about the Company and its directors and officers may be found in the definitive proxy statement of the Company relating to its 2019 Annual Meeting of Stockholders filed with the SEC on April 3, 2019. Additional information about SGB and its directors and officers may be found in the definitive proxy statement of SGB relating to its 2019 Annual Meeting of Stockholders filed with the SEC on April 18, 2019. The definitive proxy statement can be obtained free of charge from the sources described above.

Financial tables follow.

SOUTHWEST GEORGIA FINANCIAL CORPORATION

CONSOLIDATED STATEMENT OF CONDITION

(Dollars in thousands except per share data)

 

 

 

(Unaudited)

 

 

(Audited)

 

 

(Audited)

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

 

2019

 

 

2018

 

 

2017

ASSETS

   

Cash and due from banks

$

12,123

 

$

14,051

 

$

11,143

Interest-bearing deposits in banks

25,507

 

21,448

 

22,995

Certificates of deposit in other banks

2,730

 

2,732

 

1,985

Investment securities available for sale

67,826

 

58,314

 

54,364

Investment securities held to maturity

25,487

 

36,827

 

44,591

Federal Home Loan Bank stock, at cost

1,715

 

1,820

 

2,438

Loans, less unearned income and discount

398,065

 

376,750

 

330,173

Allowance for loan losses

(3,604)

 

(3,429)

 

(3,044)

Net loans

394,461

 

373,321

 

327,129

Premises and equipment

13,847

 

14,574

 

12,250

Bank properties held for sale

0

 

0

 

212

Foreclosed assets, net

274

 

128

 

759

Intangible assets

0

 

4

 

20

Bank owned life insurance

6,913

 

6,779

 

6,553

Other assets

4,553

 

4,835

 

4,633

Total assets

$

555,436

 

$

534,833

 

$

489,072

LIABILITIES AND SHAREHOLDERS' EQUITY

   

Deposits:

   

Interest bearing business checking

$

27,897

 

$

28,071

 

$

0

NOW accounts

24,238

 

35,816

 

25,871

Money market

181,199

 

158,730

 

129,041

Savings

33,555

 

31,849

 

30,794

Certificates of deposit $250,000 and over

25,083

 

16,265

 

22,662

Other time accounts

67,580

 

81,214

 

60,969

Total interest-bearing deposits

359,552

 

351,945

 

269,337

Noninterest-bearing deposits

113,882

 

103,695

 

127,669

Total deposits

473,434

 

455,640

 

397,006

     

Other borrowings

5,814

 

10,457

 

17,971

Long-term debt

22,679

 

21,171

 

29,057

Accounts payable and accrued liabilities

4,093

 

3,945

 

3,895

Total liabilities

506,020

 

491,213

 

447,929

Shareholders' equity:

   

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

authorized; 2,548,510 shares issued (*)

2,549

 

2,546

 

4,294

Additional paid-in capital

18,479

 

18,419

 

31,701

Retained earnings

28,921

 

24,842

 

33,021

Accumulated other comprehensive income

(533)

 

(2,187)

 

(1,630)

Total

49,416

 

43,620

 

67,386

Treasury stock - at cost (**)

(0)

 

(0)

 

(26,243)

Total shareholders' equity

49,416

 

43,619

 

41,143

Total liabilities and shareholders' equity

$

555,436

 

$

534,833

 

$

489,072

     

* Common stock - shares outstanding

2,548,510

 

2,545,776

 

2,541,505

** Treasury stock - shares

0

 

0

 

1,752,330

SOUTHWEST GEORGIA FINANCIAL CORPORATION

CONSOLIDATED INCOME STATEMENT (unaudited*)

(Dollars in thousands except per share data)

For the Three Months

For the Twelve Months

Ended December 31,

Ended December 31,

2019*

2018*

2019*

2018

Interest income:

Interest and fees on loans

$ 5,834

$ 5,122

$ 21,836

$ 18,762

Interest and dividend on securities available for sale

421

368

1,639

1,427

Interest on securities held to maturity

178

236

888

1,027

Dividends on Federal Home Loan Bank stock

26

33

105

145

Interest on deposits in banks

94

128

497

485

Interest on certificates of deposit in other banks

18

13

71

48

Total interest income

6,571

5,900

25,036

21,894

 

Interest expense:

Interest on deposits

849

900

3,849

2,383

Interest on federal funds purchased

0

0

0

1

Interest on other borrowings

24

57

124

396

Interest on long-term debt

139

159

481

542

Total interest expense

1,012

1,116

4,454

3,322

Net interest income

5,559

4,784

20,582

18,572

Provision for loan losses

111

226

857

830

Net interest income after provision for losses on loans

5,448

4,558

19,725

17,742

 

Noninterest income:

Service charges on deposit accounts

227

279

929

1,015

Income from trust services

54

56

221

235

Income from retail brokerage services

83

125

360

399

Income from insurance services

436

409

1,741

1,604

Income from mortgage banking services

0

1

0

2

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

44

(72)

288

(80)

Net gain (loss) on the sale of securities

0

(165)

174

(165)

Net gain on extinguishment of debt

0

 

318

 

143

 

318

Other income

237

224

961

878

Total noninterest income

1,081

1,175

4,817

4,206

 

Noninterest expense:

Salary and employee benefits

2,724

2,564

10,248

9,724

Occupancy expense

285

275

1,259

1,195

Equipment expense

298

349

1,220

933

Data processing expense

429

357

1,649

1,445

Amortization of intangible assets

0

4

4

16

Other operating expense

1,184

808

3,726

3,320

Total noninterest expense

4,920

4,357

18,106

16,633

 

Income before income tax expense

1,609

1,376

6,436

5,315

Provision for income taxes

267

253

1,136

668

Net income

$ 1,342

$ 1,123

$ 5,300

$ 4,647

Net income per share, basic

$ 0.53

$ 0.44

$ 2.08

$ 1.83

Net income per share, diluted

$ 0.53

$ 0.44

$ 2.08

$ 1.83

Dividends paid per share

$ 0.12

$ 0.12

$ 0.48

$ 0.47

Basic weighted average shares outstanding

2,545,362

2,545,776

2,545,672

2,545,565

Diluted weighted average shares outstanding

2,545,362

2,545,776

2,545,672

2,545,565

SOUTHWEST GEORGIA FINANCIAL CORPORATION

Financial Highlights

(Dollars in thousands except per share data)

At December 31

2019

 

2018

Assets

$555,436

 

$534,833

Loans, less unearned income & discount

$398,065

 

$376,750

Deposits

$473,434

 

$455,640

Shareholders' equity

$ 49,416

 

$ 43,619

   

Three Months Ended December 31,

 

Twelve Months Ended December 31,

2019

 

2018

 

 

2019

 

2018

Performance Data & Ratios

 

Net income

$ 1,341

$ 1,123

 

$ 5,300

$ 4,647

Earnings per share, basic

$ 0.53

$ 0.44

 

$ 2.08

$ 1.83

Earnings per share, diluted

$ 0.53

$ 0.44

 

$ 2.08

$ 1.83

Dividends paid per share

$ 0.12

$ 0.12

 

$ 0.48

$ 0.47

Return on assets

0.96%

0.85%

 

.97%

0.91%

Return on equity

10.89%

10.48%

 

11.28%

11.04%

Net interest margin (tax equivalent)

4.30%

3.94%

 

4.09%

3.99%

Dividend payout ratio

22.78%

27.18%

 

23.06%

25.74%

Efficiency ratio

73.43%

72.12%

 

70.49%

71.86%

   

Asset Quality Data & Ratios

 

Total nonperforming loans

$ 237

$ 1,205

 

$ 237

$ 1,205

Total nonperforming assets

$ 511

$ 1,333

 

$ 511

$ 1,333

Net loan charge offs (recoveries)

$ 12

$ (126)

 

$ 681

$ 444

Reserve for loan losses to total loans

0.91%

0.91%

 

0.91%

0.91%

Nonperforming loans/total loans

0.06%

0.32%

 

0.06%

0.32%

Nonperforming assets/total assets

0.09%

0.25%

 

0.09%

0.25%

Net charge offs (recoveries) / average loans

0.01%

(0.13%)

 

0.18%

0.13%

   

Capital Ratios

 

Average common equity to average total assets

8.84%

8.09%

 

8.56%

8.24%

Common equity Tier 1 capital ratio

12.14%

11.97%

 

12.14%

11.97%

Tier 1 capital ratio

12.14%

11.97%

 

12.14%

11.97%

Tier 1 leverage ratio

8.59%

8.62%

 

8.59%

8.62%

Total risk based capital ratio

13.06%

12.87%

 

13.06%

12.87%

Book value per share

$ 19.39

$ 17.13

 

$ 19.39

$ 17.13

Tangible book value per share

$ 19.39

$ 17.13

 

$ 19.39

$ 17.13

Quarterly

 

4th Qtr

 

3rd Qtr

 

2nd Qtr

 

1st Qtr

 

4th Qtr

Averages

 

2019

 

2019

 

2019

 

2019

 

2018

   

Assets

 

$ 557,026

$ 550,737

$ 545,292

$ 542,361

$ 530,054

Loans, less unearned income & discount

 

$ 398,319

$ 389,531

$ 383,167

$ 377,995

$ 373,324

Deposits

 

$ 474,458

$ 467,055

$ 476,529

$ 469,726

$ 444,256

Equity

 

$ 49,233

$ 48,067

$ 46,067

$ 44,431

$ 42,887

Return on assets

 

0.96%

1.04%

0.95%

0.91%

0.85%

Return on equity

 

10.89%

11.92%

11.27%

11.06%

10.48%

Net income

 

$ 1,342

$ 1,430

$ 1,298

$ 1,229

$ 1,123

Net income per share, basic

 

$ 0.53

$ 0.56

$ 0.51

$ 0.48

$ 0.44

Net income per share, diluted

 

$ 0.53

$ 0.56

$ 0.51

$ 0.48

$ 0.44

Dividends paid per share

 

$ 0.12

$ 0.12

$ 0.12

$ 0.12

$ 0.12

 

Contacts

Company:
T. Garrett Westbrook, CPA
Vice President and Controller
Phone: (229) 873-3832
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 Fourth Quarter and Record Full Year 2019 Financial Results

Contacts

Company:
T. Garrett Westbrook, CPA
Vice President and Controller
Phone: (229) 873-3832
investorinfo@sgfc.com

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